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Should You Quit Your Job To Go Full Time Into Real Estate Investing?
To be honest, probably every person who steps into real estate investing, whether as a flipper or landlord, is motivated in some part by a desire to quit working for someone else.
But the timing of quitting your job is a really tough question to answer conclusively.
Some people don’t really find their jobs repulsive and have no issues with staying employed. They invest in real estate with the mindset of dipping their fingers in the cookie jar. And if somehow it takes off, will they seriously consider submitting their resignations to HR.
Others believe that in order to do something right, they need to give it 100% focus. And therefore quit their jobs as soon as they made a decision to go into real estate investing on a full-time basis.
If you are currently at the crossroads of whether to stay or quit your job, here are some things to ponder before making that decision final.
1) A rental property strategy takes time to grow
There are various way that can churn profits relatively quickly from real estate. These include speculating, flipping, sub-selling, wholesaling, etc.
But if you are into the landlording business plan, it’s not going to make you rich in the short term.
You need patience in wealth building.
This means that you are not going to quit your job within a month of starting the landlording lifestyle.
You might already be struggling being a part time landlord, but if that is the case, then you are probably not generating enough income to replace your current salary.
However, if you have a huge pile of cash sitting in your savings account and have no issues with a lesser income compared to being employed, then you are in a better position to decide on whether to quit the job.
This inevitably leads to the following question…
2) Are you ready to become a business owner?
Too many landlords are having their lives run into the ground from the commitment required to be a success.
Are you ready?
While you were still a part time investor, you can still excuse yourself for making mistakes and being less knowledgeable on real estating matters. You can get away with this when you are managing just one or 2 rental houses.
But when you need an operation big enough to provide you a full time income playing the “I don’t know” card is no longer a viable excuse for incompetence.
You need to grow your portfolio like a business. You need to pick up knowledge and know-how constantly. You need to hire and manage people. And you definitely won’t be sitting at home waiting for fat rental checks to arrive.
There’s nothing wrong with being a part-timer. The income today might be insufficient to maintain your current lifestyle. But in future when you retire, it could be enough to live on without having to scrape through the days.
A big reason why landlords can fail even after years in the game is that they have little to no interest in real estate.
It would really be a big ask to commit the rest of your career into real estate when you don’t feel an instinctive drive that motivates you… that makes you look forward to managing your assets.
3) Is it necessary to quit your job?
Even if you have worked your way into a rental income equivalent to your job salary, quitting should not be seen as a default thing to do.
Let’s put it this way.
If you have come up with all the smart management techniques to make part-time landlording so easy that it does not affect your full-time job, why quit?
Unless you have massive plans to build up your property empire, do think twice before resigning.
If for example you are drawing a salary of $5,000 and have now built up a rental income of $5,000, quitting your job will in effect cut down your personal income by 50%!
That is not the smartest thing to do when building wealth is on the back of your mind.
Keeping that combined $10,000 income and allowing it to accumulate can be more than handy when attractive deals to acquire more rental property arrive.
Why quit your job and forgo $5,000 per month when you are easily managing your obligations of holding a full-time job and receiving a hefty rental income?
In other words, if you are considering quitting to live the stress-free life and having no plans to expand your operations, it’s not really the best thing to do.
But if you need to quit your job because the landlord commitments are becoming too great from expanding operations, then quitting would make a lot of sense.
4) The measuring stick
Ultimately there is no right or wrong answer to whether quitting is right for you.
Some people quit their jobs and go bankrupt within a year. Some jump full-time into property investing and become multi-millionaires.
But if you are a risk-adverse and prudent investor, it is generally accepted that quitting your job is safe when your rental income is between two to three times your salary.
This is taking into account the risky nature of doing business and possible pitfalls of market movements.
Some people are happy just to get by with a rental income similar to their previous job salaries. And nobody can fault them for carving out their own lifestyle preference.