Should I do this full time or just part time

Question

I currently have a business partner in eight buildings.  Three of the buildings are single family and the rest are multi.  In total there are 21 units.  I own one single family home myself.    We owe approx. 250k on values of 470k.  We started this in 2009 with $3500 from each of us thrown in to get started.  We have purchased properties that have needed a lot of work.  They are not perfect and they are all not done.  We have tried to remodel or replace with the understanding that it will be a long term investment.  All remodels have come strictly out of cash flow.  We have pocketed some money but have not made much for each of us.   We have rolled it into the  next purchase.

The marketplace where we are located is a small town of 10,000 people in western Illinois.  There have not been the real high real estate runup or the fallout.  There has been some but not much.

My partner works a very good and high paying position. He has no intention of doing this full time.  He is doing it for retirement purposes only. I work a decent job with long hours but am not happy in it.  My wife also works in a position that is decent pay and great hours.  Here is the question...  At what point could I do this fulltime?  I have a good friend that already does this and appears to make good money and is happy doing it.  He would be a competitor so I really don't want to ask him for advise.

This is a short breakdown of situation.  I'm sure there are many things that need to be listed to get an accurate picture of situation.  Any comments would be appreciated.

Nuhan Demirkan · Answer

Keith, I am actually pondering the same question myself. I currently have 10 homes with decent cash flow but not yet enough to surpass my employment income. I guess the short answer is when you can replace your income comfortably. However, I am assuming you will be either wholesaling or rehabbing to sustain yourself. Have you done either successfully so far? I have not. My plan is to do a few wholesale and retail flips while I'm still employed, which would give me the experience and the cash. I will most likely lose my ability to do fannie backed cash out mortgage strategy which I've been doing so far due to my employment income. Ask yourself "Why Do I Want To Do This". If the answer is convincing, plan your move and execute. It is a marathon not a sprint...
Good luck,

Mike McKinzie · Answer

My answer was simple.  When my NET INCOME from rentals became TWICE as big as my GROSS INCOME from working, I retired.  While my wife is still working, she can quit any time she wants, but she LOVES her job.

Account Closed · Answer

This is my problem too, with wholesaling.. I am always chasing my next deal which is easy to do but wholesaling at the end of the day is a job.. I think for this year, I may continue to wholesale, pick up a part time job (bar tending), Since I am completely debt free, I can use the wholesale checks to invest in rentals free and clear and live on my bar tending money… I have my condo paid for, all student loans paid, cars paid cash etc but my next goal is definitely rental properties

David Jayne · Answer

I was going to post a very similar topic:  When is enough enough?  I keep hearing people just chase random numbers vice an actual goal.  Thanks, Mike M.  That is a clear, defined objective.  Love it!

Anthony Martin · Answer

Excellent response, Mike M.  That is my plan and it seems like the most logical.  Activue Duty military personnel aren't paid the greatest, but if I can double my Gross income to include my health benefits, I will no long continue extending my enlisted service.  And with the growing pay with promotions and such, it gives that much more of a challenge.  I definitely do no like the job I accomplish, so I understand, Keith.  But that should drive you harder to to reach your goals that much quicker!

Leon Y. · Answer

Personally I think it is best to build up some more rentals or passive income before considering getting into real estate full time. Rehabs are a good way of making money but you are always chasing the next deal. The best is to try to reduce some of your expenses, start investing into rentals, and once you feel comfortable with the cash flow then you can get into rehabbing without having to worry about the next deal coming around.

Keith Brown · Answer

A couple reasons why I am thinking about switching to full time.  I currently work a job that is second shift out of town.  I want to be around the family more than I currently get to see them. If the income is less, it will end up working out to be the same since I will have reduced expenses. So far the properties I have been involved have turned out as expected.  I enjoy taking care of the properties.

I haven't asked my friend directly for help/advise.  I know he will be straight with me on anything I ask however I also know he will want to protect himself.  I don't blame him for protecting his assets and livelihood.  He has given me advise when I have asked before.  We send each other leads if we know the other has an opening.  We have gone up against each other on bidding on houses.  He has won two of them.

I love the rehab part of real estate.  I would ideally like to have two workers working on the projects while I spend time locating and purchasing future rentals.  I would like to spend about 60% of the time on future projects.

Jodi M. · Answer

Keith Brown
I'm thinking about the same thing. We invest in Eastern Iowa (not to far from you). Started last March and currently have 6 units in Burlington. We've also rehabbed and sold 2. We hope to expand fast enough to consider doing it full time. Our goal is to do it when the income from our real estate is more than we make at our W2 jobs. I'm also getting my realtor license that way I can add extra income even if we are investing full time.

What's the market like over there? Wondering if Western IL is going about the same way Burlington is. I've seen quite a few houses for sale right accross the river from us.

Good luck!

Ben Hughes · Answer

I love my current job but as soons as I can replace the income I am out of here.  I think that is how you should approach it as well.  It seems like this is what you want to do so why not do it when you are able to.  I love real estate and don't want to do anything else.  Unless you are doing it just to suppliment your retirement income why would you not want to do this fulltime if that opportunity presents itself.

Jesse Holmes · Answer

Welcome to BP, Keith! You've come to the right place to learn. If you haven't been reading the forums already, dig in; there is a breath wealth of experience here in the community.

To get right to your question, the most simple answer is that you can go full time when your family won't starve if you quit your job. The truth is, if you had a year's salary stocked away (or six months, if you're really a maverick—I'm not!), then you can probably afford to give it your best shot. The Real Estate Guys explored the same question recently In their podcast here. The turning point has also been revealed by a number of interviewees on the Bigger Pockets podcast. You might be surprised to find all the different paths to full-time investing.

The more complicated answer I am sure you will get from other members is, “It depends." Maybe your spouse will give you her blessing and support the family. Maybe when your education and experience bring you to the level where your part-time earnings eclipse your current job. Whatever path you take, good luck!

I wanted to ask you—if you have a friend that is already doing what you want to do, shouldn't you be going to him for advice? You may find yourselves working together at something bigger rather than competing in a small market. Surround yourself with people you want to emulate!

Head over to the New Member Introduction forum to introduce yourself. Welcome!

Should I do this full time or just part time

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