Should I stay or should I go now?

Question

I work in a controversial job... the dilemma is - it's not in real estate.

Pros to my current position: Secure, w2, pay is above average, benefits are stellar, schedule is somewhat flexible (can leave if I need to without penalty; vacation when I want - utilizing banked time on both), 3 miles from home, and hopefully a pension in 17 years.

Cons: Not a happy industry - everyone has a story or opinion and they're usually negative. It's not my 'best life' job.

I've wanted to get into real estate for a long time but typically moving into that realm in a w2 position means a decent pay cut and probable loss of all the other good stuff. This is counter-intuitive to my goal - slow and steady save to purchase our first investment property (with more to follow).

I ask you - is it worth it to make the move, take the cut, leave the boat and jump into the sea with just a floatie in order to get more experience in the field and chase a dream? I know I'm the only one that can answer that, but what's your opinion?

Bonnie Low · Answer

Not sure what your job is but of all the benefits you listed, I'd be the most skeptical about the promise of a pension. Almost all pension plans are woefully underfunded even if it's not well known by the general public. Do some research on this and you'll find plenty of information. The likelihood that your pension is there at the level you're expecting and when you're expecting is statistically pretty low so don't let that be the thing that holds you in a job you don't like. I worked in local government for nearly 20 years. CalPERS was considered the gold standard of pension programs but it's a shell of its former self due to mismangement and unfunded liabilities. I still may have a pension some day if I'm lucky, but it's not going to look like the heydays of pension plans when you could retire with 100+% of your pay.

Marcus Auerbach · Answer

Okay, that IS a really tough job, I can see that draining one emotionally. I assume by going into real estate you mean investing and for that a W2 income is critical as it allows you to get financing. Also, it takes on average a decade before you can live off a real estate portfolio. So, investing on the side is the way to go - it certainly was for me and it took me 8 years before I was confident that I can quit my corporate job. And then I got licensed and created another job for myself, but that's a different story. I'll say two more things: buying a rental property is not rocket science: find a good agent who is an investor (easier said than done) and you'll figure out the rest as you go. So you don't need to work in real estate.

The question remains, how do you want to generate active income? You could get licensed: I would join a team, as this allows you to shorten your learning curve, but you will be about 6 months without income and it takes a couple years to get good. 85% of new agents give up in the first year, and almost as many in the second. Just so you have realistic expectations. On the flip side, there is no limit on how much money you can make. But I don't think it made me a better investor, actually, it really slowed my investing down for a few years, because it took 110% of my focus.

You just responded to an 8 months old post, so this must be weighing on you. I'll leave it with some encouragement: don't be afraid to make a move! It is scary to quit your job and change career, but life does not evolve in a straight line and there will always be another job.

Theresa Harris · Answer

Lots of people who invest in real estate have jobs that are not in the field.  What type of job would you want and what are your goals?  Benefits, a steady income and pension are a extremely valuable.  You can do what many of us to and use the stability of the W2 to get mortgages and buy rentals.

Glen Wiley · Answer

Don't leave your w2 until your RE portfolio can support your minimum requirements AND you can see a path to continued growth in the RE portfolio. If you leave the job but dont have the means to further expand your RE portfolio you may end up having to return to working the w2.

The challenge is to honestly assess what your minimum requirements are. Most of us spend a lot more than we need to.

Marcus Auerbach · Answer

It's not an either or question. Most of us didi RE on the side for 5 to 10 years before quitting the W2. I am not sure if RE is a happy industry, the grass looks greener. I think happiness is overrated, being content is much more important and feeling accomplished. And I think you have a good amount of control whats happening in your own head, even if you are in an unhappy industry. BTW, now I am really curious what that is!?

Bruce Woodruff · Answer

Can you do both? I mean, I know there are only so many hours in the day, but it would be awful do jump in 'with only a floatie' and have your first (or second) deal go bad....And they do go south all the time, we all have had that happen.....

Michael Thach · Answer

This is very true. One thing which holds true is that the people managing the retirement funds know not much than we do. Otherwise we wouldn't have retirement funds restructure and renaming them every 15-20 years. It's better to care for your own retirement fund, I am pretty sure most of us will do a better job.

Keep in mind that retirement funds are managed too, big investment companies like Blackrock, Goldman Sachs and Co are tapping into those funds to fund their deals oftentimes unfavorable for the retirement fund. The person managing it, is a goverment employee it's a sheep compared to deal makers of investment companies.

Michael Thach · Answer

As you said, " Only you can answer that ". I am a businessperson and never worked one day in my life for someone else. For me real estate gives me the freedom I need. I can choose my projects and fields I want to discover. I can choose to add a long-term rental, fix a property and flip it for quick cash, buy a multifamily add value and convert to MTR to save taxes on flips, I can help family and friends and build them the same. I can share knowledge and help people around me, which is very fulfilling.

I know that real estate is a big word because it's a whole industry. There is of course the agents, the brokers, the mortgage and lending side, the title companies but also the whole construction side would be part of real estate. Then there is a difference between residential and commercial. So if you say you want to go into real estate, I am very sure you will find something that you like.

Of course investing is a big part of real estate and most likely the scariest part. The funny thing about real estate is, that it starts very difficult and very challenging from the beginning but it get so easy over time. You seems to be on a conservative side, which is good, it means your project will be calculated and less likely to fail but being conservative means also missing out on opportunities based on being to hesitant.

So no matter how you want to enter the real estate field, just do it. It all leads to investment and growing wealth. I see contractors, mortgage loan officers, title office workers, brokers, inspectors, appraisers and so many more most of the time investing into real estate themself.

The importance is to make a step towards the life you want, then you are a step already closer. As long as you keep going, you will get there. At the end the beautiful thing is not the destination but the journey. If you think you can, you can... if you think you can't, you can't.

Alecia Loveless · Answer

@April VanCleve Hi April. I had a not so great job except I didn’t even have really decent pay. The only good thing was that it was enough to qualify for mortgages because I’d worked in the same line of work for years.

Perhaps you could stick your job out a little while longer like I did and start building up a portfolio of rentals to provide you with enough income to be able to give you some cushion income to quit your current W-2 and make the transition to a new job you like better.

It took me 4 years to be able to buy 8 properties (had to sell 1 but that is a different story) so have 7 currently with 25 units which is just enough for me to get by on and to be able to pay my contractor each month.

If you figure out how much you would need to have passively to just get by bare minimum, and still get the occasional coffee or take out then you can figure out what you would need to buy for property to achieve this.

In many markets for a lot of people that’s only like two 4 unit buildings. Which can seem daunting but theirs plenty of ways to figure out how to do this. There’s a great book in the BP Bookstore on how to finance deals.

Should I stay or should I go now?

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