Which real estate strategy works best to escape the 9-5 rat race?

[Rodney Love]

My question for anyone that escape the 9-5 rat race is. What real estate strategy did you use?  Example if you had between $20,000-$70,000 to invest in real estate.  How would you use that to replace your income of  $7,000 a month from your job? Fix and flips, tax liens, mortgage notes,  rentals,  Airbnbs?

[Joe S.]

Quote from @Zachary Jensen:

Quote from @Joe S.:

Quote from @Zachary Jensen:

I would look into buying small businesses. Real estate everyone is trying to make a buck in, and it makes the "market" unsophisticated on the buyer and seller side where each is trying to push and unfair deal most of the time. You can buy a business with that money and replace your income fairly easily compared to buying properties. You need much more capital for real estate, as it is a wealth protection and cashflow engine for large sums of money when done right IMO 

What kind of business any ideas you would suggest?

 High cashflow, recession resistant like a plumping company or another core service company would be my suggestion  

Thanks for the quick reply.
What companies have you bought that you would recommend others?

[Rodney Love]

Quote from @Joe S.:

Quote from @Zachary Jensen:

Quote from @Joe S.:

Quote from @Zachary Jensen:

I would look into buying small businesses. Real estate everyone is trying to make a buck in, and it makes the "market" unsophisticated on the buyer and seller side where each is trying to push and unfair deal most of the time. You can buy a business with that money and replace your income fairly easily compared to buying properties. You need much more capital for real estate, as it is a wealth protection and cashflow engine for large sums of money when done right IMO 

What kind of business any ideas you would suggest?

 High cashflow, recession resistant like a plumping company or another core service company would be my suggestion  

Thanks for the quick reply.
What companies have you bought that you would recommend others?

Zachary for example buying a franchise right?

[Zachary Jensen]

Quote from @Joe S.:

Quote from @Zachary Jensen:

Quote from @Joe S.:

Quote from @Zachary Jensen:

I would look into buying small businesses. Real estate everyone is trying to make a buck in, and it makes the "market" unsophisticated on the buyer and seller side where each is trying to push and unfair deal most of the time. You can buy a business with that money and replace your income fairly easily compared to buying properties. You need much more capital for real estate, as it is a wealth protection and cashflow engine for large sums of money when done right IMO 

What kind of business any ideas you would suggest?

 High cashflow, recession resistant like a plumping company or another core service company would be my suggestion  

Thanks for the quick reply.
What companies have you bought that you would recommend others?

I highly recommend ATM investing for folks getting started.  

[Zachary Jensen]

Quote from @Rodney Love:

Quote from @Joe S.:

Quote from @Zachary Jensen:

Quote from @Joe S.:

Quote from @Zachary Jensen:

I would look into buying small businesses. Real estate everyone is trying to make a buck in, and it makes the "market" unsophisticated on the buyer and seller side where each is trying to push and unfair deal most of the time. You can buy a business with that money and replace your income fairly easily compared to buying properties. You need much more capital for real estate, as it is a wealth protection and cashflow engine for large sums of money when done right IMO 

What kind of business any ideas you would suggest?

 High cashflow, recession resistant like a plumping company or another core service company would be my suggestion  

Thanks for the quick reply.
What companies have you bought that you would recommend others?

Zachary for example buying a franchise right?

 no franchises for me! You can get better value outside of that world IMO 

[V.G Jason]

Quote from @Joe S.:

Quote from @Zachary Jensen:

I would look into buying small businesses. Real estate everyone is trying to make a buck in, and it makes the "market" unsophisticated on the buyer and seller side where each is trying to push and unfair deal most of the time. You can buy a business with that money and replace your income fairly easily compared to buying properties. You need much more capital for real estate, as it is a wealth protection and cashflow engine for large sums of money when done right IMO 

What kind of business any ideas you would suggest?

 Logistics, Trades, and Fast Food. Logistics you need to go franchise-based because it's impossible to do this without the network. But you can do parts of it sort of semi-franchise. I own 3 UPS Stores across two cities, in a full-franchise model. Then I own in a semi-franchise model,  basically own the trucks and buy routes and employ drivers to fulfill the logistics; you can contract with fedex, amazon, any shipping carrier, and get a ton of business quick. So I call it two businesses, cause they are but they feed off on another. I am (slowly) growing this out. This is the most beginner friendly, but still requires lots of capital. 

Trades-- the plumbing & electrician is incredibly resilient to downturns. It's probably one business that just only sees some massive spikes, and almost no lows but rather steadiness. It's hard to create a business in this if you don't have the intel to do it yourself. So this one will take time to mature, but it's a great one if you do it right. It's really hard though to do it right; these trades people don't respect someone that doesn't have the same skills. I have one that does pretty well, but it took the texas storm to make it positive after 2 years. Since then, it's been a really good 3 years. And I think the systems in place will keep it going strong. I would not recommend this one if this is where you are putting all your marbles. 

Fast food, you can go local and not franchise with this. But if you do,  you have to come in and  multiply quick which is inherently more risky. You're San Antonio based, so you know Whataburger. We have about 7, but all franchises aren't really the same. Whataburger really puts emphasis on scale, because truly owning a fast food franchise and only 1 will just be a deephole for probably 3-5 years and you'll be waking up at 5am to do the morning shifts. So they want you scale, and scale quick. McDs, Wendys, I am not sure about. Whataburger let's you get off the grind quicker and scale, if you can, so that was my route and why I chose it. I am going to continue to grow this and hope they let me enter other markets. This is the most capital intensive(going the fast food and especially whataburger) route but maybe the most rewarding if you want to buy time. 

I also own parking lots, near arenas & downtown. And rent those out for parking day passes for work, monthly for work, events like concerts. Those in just 1 city though. Do not recommend this though. 

[Carlos Ptriawan]

very sophisticated input, learnt a lot here!

[Joe S.]

Quote from @V.G Jason:

Quote from @Joe S.:

Quote from @Zachary Jensen:

I would look into buying small businesses. Real estate everyone is trying to make a buck in, and it makes the "market" unsophisticated on the buyer and seller side where each is trying to push and unfair deal most of the time. You can buy a business with that money and replace your income fairly easily compared to buying properties. You need much more capital for real estate, as it is a wealth protection and cashflow engine for large sums of money when done right IMO 

What kind of business any ideas you would suggest?

 Logistics, Trades, and Fast Food. Logistics you need to go franchise-based because it's impossible to do this without the network. But you can do parts of it sort of semi-franchise. I own 3 UPS Stores across two cities, in a full-franchise model. Then I own in a semi-franchise model,  basically own the trucks and buy routes and employ drivers to fulfill the logistics; you can contract with fedex, amazon, any shipping carrier, and get a ton of business quick. So I call it two businesses, cause they are but they feed off on another. I am (slowly) growing this out. This is the most beginner friendly, but still requires lots of capital. 

Trades-- the plumbing & electrician is incredibly resilient to downturns. It's probably one business that just only sees some massive spikes, and almost no lows but rather steadiness. It's hard to create a business in this if you don't have the intel to do it yourself. So this one will take time to mature, but it's a great one if you do it right. It's really hard though to do it right; these trades people don't respect someone that doesn't have the same skills. I have one that does pretty well, but it took the texas storm to make it positive after 2 years. Since then, it's been a really good 3 years. And I think the systems in place will keep it going strong. I would not recommend this one if this is where you are putting all your marbles. 

Fast food, you can go local and not franchise with this. But if you do,  you have to come in and  multiply quick which is inherently more risky. You're San Antonio based, so you know Whataburger. We have about 7, but all franchises aren't really the same. Whataburger really puts emphasis on scale, because truly owning a fast food franchise and only 1 will just be a deephole for probably 3-5 years and you'll be waking up at 5am to do the morning shifts. So they want you scale, and scale quick. McDs, Wendys, I am not sure about. Whataburger let's you get off the grind quicker and scale, if you can, so that was my route and why I chose it. I am going to continue to grow this and hope they let me enter other markets. This is the most capital intensive(going the fast food and especially whataburger) route but maybe the most rewarding if you want to buy time. 

I also own parking lots, near arenas & downtown. And rent those out for parking day passes for work, monthly for work, events like concerts. Those in just 1 city though. Do not recommend this though. 

 I knew you had your hands in a lot of pots, but I never knew you had them in that many.  I was feeling a bit overwhelmed just reading some of the things you have going. I’m assuming you have several good people over seeing your assets and operations.. To have that many operations going  seems like a major feat.

Most people will never have Capital to open a Whataburger. You obviously had a lot of Capital at your disposal.

[V.G Jason]

Quote from @Joe S.:

Quote from @V.G Jason:

Quote from @Joe S.:

Quote from @Zachary Jensen:

I would look into buying small businesses. Real estate everyone is trying to make a buck in, and it makes the "market" unsophisticated on the buyer and seller side where each is trying to push and unfair deal most of the time. You can buy a business with that money and replace your income fairly easily compared to buying properties. You need much more capital for real estate, as it is a wealth protection and cashflow engine for large sums of money when done right IMO 

What kind of business any ideas you would suggest?

 Logistics, Trades, and Fast Food. Logistics you need to go franchise-based because it's impossible to do this without the network. But you can do parts of it sort of semi-franchise. I own 3 UPS Stores across two cities, in a full-franchise model. Then I own in a semi-franchise model,  basically own the trucks and buy routes and employ drivers to fulfill the logistics; you can contract with fedex, amazon, any shipping carrier, and get a ton of business quick. So I call it two businesses, cause they are but they feed off on another. I am (slowly) growing this out. This is the most beginner friendly, but still requires lots of capital. 

Trades-- the plumbing & electrician is incredibly resilient to downturns. It's probably one business that just only sees some massive spikes, and almost no lows but rather steadiness. It's hard to create a business in this if you don't have the intel to do it yourself. So this one will take time to mature, but it's a great one if you do it right. It's really hard though to do it right; these trades people don't respect someone that doesn't have the same skills. I have one that does pretty well, but it took the texas storm to make it positive after 2 years. Since then, it's been a really good 3 years. And I think the systems in place will keep it going strong. I would not recommend this one if this is where you are putting all your marbles. 

Fast food, you can go local and not franchise with this. But if you do,  you have to come in and  multiply quick which is inherently more risky. You're San Antonio based, so you know Whataburger. We have about 7, but all franchises aren't really the same. Whataburger really puts emphasis on scale, because truly owning a fast food franchise and only 1 will just be a deephole for probably 3-5 years and you'll be waking up at 5am to do the morning shifts. So they want you scale, and scale quick. McDs, Wendys, I am not sure about. Whataburger let's you get off the grind quicker and scale, if you can, so that was my route and why I chose it. I am going to continue to grow this and hope they let me enter other markets. This is the most capital intensive(going the fast food and especially whataburger) route but maybe the most rewarding if you want to buy time. 

I also own parking lots, near arenas & downtown. And rent those out for parking day passes for work, monthly for work, events like concerts. Those in just 1 city though. Do not recommend this though. 

 I knew you had your hands in a lot of pots, but I never knew you had them in that many.  I was feeling a bit overwhelmed just reading some of the things you have going. I’m assuming you have several good people over seeing your assets and operations.. To have that many operations going  seems like a major feat.

 I have others too. I consider Whataburger just one of my businesses, I don't call it 7. Payroll business, car shops, etc. 

For the most part, yes, I have great teams. And I am currently doing that in real estate, building teams out and trying to get this venture going strongly. People get very focused on making that extra penny, instead of realizing how to make extra dollars. For a REI board, that's property management. Forget just the 10% & lease fee you're losing, you're taking liability now engaging with the tenants. There's a lot of things that can be done better to just move stronger. I also prefer to go deep in most of these rather than wider like I see some others do.

Most read this and probably want to ask how do you do it? I did (very) well in my W2 and could grow out. The same thing you're trying to do, but you factor in luck too. Getting out of the W2 is hard, it's not going to happen for everybody so expectations must be realistic. For the most part, you're better off in the W2 and working this REI as a side gig. I got (very) lucky and realize I was fortunate; I also realize how easy it is to lose everything via marriage, people targeting you, etc., so you got to put yourself in situations where you're a rookie often and you realize you're working at a deficit. To keep that ability to try to learn more and respect the processes.

This year though I'm trying to change things, and as we get further down the timeline, and be more proactive with the kids. A 4th due here in spring, and that's going to be my focus during summers. And REIs during winter. 

[Marcus R.]

Well done @V.G Jason!  Been very interested in the franchise/small biz model for a while now.  Still learning for now and saving up so I can do it right.

Scaling fast food with a full-time job is not easy (like you said, if someone calls in sick you gotta show up) but after diving into the economics it isn't worth it IMO if you don't scale.  Single store just doesn't cut it and the model lends itself well to economies of scale...supply chain, GM across multiple stores, etc...

Only looked at fast food and gyms but I'll check out UPS.  Gyms are more of a passion project but even with that the numbers are hard to justify.  Capital intensive, over subscription, high competition, etc...  

[Dave Rodwell]

Quote from @V.G Jason:

Quote from @Joe S.:

Quote from @Zachary Jensen:

I would look into buying small businesses. Real estate everyone is trying to make a buck in, and it makes the "market" unsophisticated on the buyer and seller side where each is trying to push and unfair deal most of the time. You can buy a business with that money and replace your income fairly easily compared to buying properties. You need much more capital for real estate, as it is a wealth protection and cashflow engine for large sums of money when done right IMO 

What kind of business any ideas you would suggest?

 Logistics, Trades, and Fast Food. Logistics you need to go franchise-based because it's impossible to do this without the network. But you can do parts of it sort of semi-franchise. I own 3 UPS Stores across two cities, in a full-franchise model. Then I own in a semi-franchise model,  basically own the trucks and buy routes and employ drivers to fulfill the logistics; you can contract with fedex, amazon, any shipping carrier, and get a ton of business quick. So I call it two businesses, cause they are but they feed off on another. I am (slowly) growing this out. This is the most beginner friendly, but still requires lots of capital. 

Trades-- the plumbing & electrician is incredibly resilient to downturns. It's probably one business that just only sees some massive spikes, and almost no lows but rather steadiness. It's hard to create a business in this if you don't have the intel to do it yourself. So this one will take time to mature, but it's a great one if you do it right. It's really hard though to do it right; these trades people don't respect someone that doesn't have the same skills. I have one that does pretty well, but it took the texas storm to make it positive after 2 years. Since then, it's been a really good 3 years. And I think the systems in place will keep it going strong. I would not recommend this one if this is where you are putting all your marbles. 

Fast food, you can go local and not franchise with this. But if you do,  you have to come in and  multiply quick which is inherently more risky. You're San Antonio based, so you know Whataburger. We have about 7, but all franchises aren't really the same. Whataburger really puts emphasis on scale, because truly owning a fast food franchise and only 1 will just be a deephole for probably 3-5 years and you'll be waking up at 5am to do the morning shifts. So they want you scale, and scale quick. McDs, Wendys, I am not sure about. Whataburger let's you get off the grind quicker and scale, if you can, so that was my route and why I chose it. I am going to continue to grow this and hope they let me enter other markets. This is the most capital intensive(going the fast food and especially whataburger) route but maybe the most rewarding if you want to buy time. 

I also own parking lots, near arenas & downtown. And rent those out for parking day passes for work, monthly for work, events like concerts. Those in just 1 city though. Do not recommend this though. 

Wow, you've certainly got your hands full Jason, thank you for sharing. Did you purchase an electrical contracting business or build it from the ground up? Did you have a trade background? Would love to hear your story! - I'm a former master electrician in the UK and Australia, recent American transplant > 3 years. 

[V.G Jason]

Quote from @Dave Rodwell:

Quote from @V.G Jason:

Quote from @Joe S.:

Quote from @Zachary Jensen:

I would look into buying small businesses. Real estate everyone is trying to make a buck in, and it makes the "market" unsophisticated on the buyer and seller side where each is trying to push and unfair deal most of the time. You can buy a business with that money and replace your income fairly easily compared to buying properties. You need much more capital for real estate, as it is a wealth protection and cashflow engine for large sums of money when done right IMO 

What kind of business any ideas you would suggest?

 Logistics, Trades, and Fast Food. Logistics you need to go franchise-based because it's impossible to do this without the network. But you can do parts of it sort of semi-franchise. I own 3 UPS Stores across two cities, in a full-franchise model. Then I own in a semi-franchise model,  basically own the trucks and buy routes and employ drivers to fulfill the logistics; you can contract with fedex, amazon, any shipping carrier, and get a ton of business quick. So I call it two businesses, cause they are but they feed off on another. I am (slowly) growing this out. This is the most beginner friendly, but still requires lots of capital. 

Trades-- the plumbing & electrician is incredibly resilient to downturns. It's probably one business that just only sees some massive spikes, and almost no lows but rather steadiness. It's hard to create a business in this if you don't have the intel to do it yourself. So this one will take time to mature, but it's a great one if you do it right. It's really hard though to do it right; these trades people don't respect someone that doesn't have the same skills. I have one that does pretty well, but it took the texas storm to make it positive after 2 years. Since then, it's been a really good 3 years. And I think the systems in place will keep it going strong. I would not recommend this one if this is where you are putting all your marbles. 

Fast food, you can go local and not franchise with this. But if you do,  you have to come in and  multiply quick which is inherently more risky. You're San Antonio based, so you know Whataburger. We have about 7, but all franchises aren't really the same. Whataburger really puts emphasis on scale, because truly owning a fast food franchise and only 1 will just be a deephole for probably 3-5 years and you'll be waking up at 5am to do the morning shifts. So they want you scale, and scale quick. McDs, Wendys, I am not sure about. Whataburger let's you get off the grind quicker and scale, if you can, so that was my route and why I chose it. I am going to continue to grow this and hope they let me enter other markets. This is the most capital intensive(going the fast food and especially whataburger) route but maybe the most rewarding if you want to buy time. 

I also own parking lots, near arenas & downtown. And rent those out for parking day passes for work, monthly for work, events like concerts. Those in just 1 city though. Do not recommend this though. 

Wow, you've certainly got your hands full Jason, thank you for sharing. Did you purchase an electrical contracting business or build it from the ground up? Did you have a trade background? Would love to hear your story! - I'm a former master electrician in the UK and Australia, recent American transplant > 3 years. 

I'll answer this, but the point of this topic should revert back to my former & original post.

Built plumbing ground up, then added electrician work post Texas winter storm. No skills in the trade department, which is why I mentioned it's really a difficult business to build. No one that you employ will respect you, if you don't have the knowledge. They'll learn to respect you once you understand business, but that takes a long time to mature. If it had gone another year or two, as is, I would've folded on it. If you're a master electrician, then you can lead by example. I couldn't, hence why I think if you're looking to start a business this may not be the one if you don't have the skills native to it. In your case, that does not apply.

With that said, my first response here is more or less indicative on how exiting the rat race is more a pipe dream than anything. I understand BP has this constant notion of trying to secure "financial freedom", but I know people to this day that make a very healthy living(low 7 figures) and the race never ends. True freedom isn't buying 5-6 houses and hoping for the best, it's a combination of suffering(by eliminating expenses, material items, immediate gratification areas) and betting on quality growth(delayed gratification, asset accumulation, perseveration, etc.) and managing the tail and head winds that come with this. 

The whole quit the W2 should be put on the backburner, focus on this as a hobby. If you're successful enough to make it your main work force, that's a great problem. Otherwise, keep yourself healthy and employed.

Remember I always say, fast solutions have slow problems. Delayed gratification is the most pivotal and it's agnostic to really any inputs and outputs, it's paramount you have conviction to combat it and resist immediate gratification type results. 

[Timothy Hero]

Everyone is different. What works for one may not work for someone else. Luckily, there's many ways to make a fortune in RE.

I have never wholesaled, but I've spoken with many who made $20k+ on their first deal, which is 6 months salary at a 9-5 for many.

For me, I escaped the 9-5 just 3 months after joining the mortgage side.

I'd say rental investing and being a realtor would take the most time, however.

[Leo R.]

@Rodney Love repetitive house hacking.  

I house hacked a new place every 12 months for years, living in the smallest (least valuable) room in the house to minimize my expenses. Eventually, I built up enough wealth and cashflow that I could start occupying the nicer spots, and eventually stepped up to nicer and nicer homes for myself. I was pretty much free of the rat race by about age 32. I haven't house hacked in years, but if I was starting over from $0, I'd do it all again.

Making sacrifices in my 20s and early 30s paid off in the long run.

[Carlos Ptriawan]

also there's problem in question, the problem is you choose 9 to 5 as "rat race" , but if you want to make 9 to 5 as the "gold race", then your 9 to 5 maybe your dream ....

and for some of us, the 9 to 5 and real estate chase is both "gold race".

[V.G Jason]

Quote from @Leo R.:

@Rodney Love repetitive house hacking.  

I house hacked a new place every 12 months for years, living in the smallest (least valuable) room in the house to minimize my expenses. Eventually, I built up enough wealth and cashflow that I could start occupying the nicer spots, and eventually stepped up to nicer and nicer homes for myself. I was pretty much free of the rat race by about age 32. I haven't house hacked in years, but if I was starting over from $0, I'd do it all again.

Making sacrifices in my 20s and early 30s paid off in the long run.

This strategy just does not apply to today's world. Go find a house hack with 5% down that you can rinse & repeat yearly, your DTI would exceed before you could even buy property #2.

House hacking in today's world for one's with limiting means trying to scale is 10-15% down and every 3-7 years. A way different approach and prohibitive to family formation. It's still a solid route, but this is not the way to grow in the house shortage/higher rate era. Just doesn't work that way.

If you want to grow with quantity/volume, have deep pockets and re-circulate capital in high RTP areas and get a few houses a year. If you want to grow with quality/price point, have deep pockets and buy quality houses and understand you may subsidize the RTP and get a house every 1-3 years. Both carry risk, in my opinion, the former more so and the latter is the better route. That's my opinion though, the fact is the consistent part of "deep pockets" in both of them. REI is now a scarcity game and with rates likely higher for the next 10 years than the previous 10 years, it's not a "low-risk", intrinsic asset. It got inherently more risky with higher cost of capital, higher capex, and higher house prices.

All the vanilla advice passed here from 2012-2022 just doesn't work anymore.

[Joe S.]

Quote from @Leo R.:

@Rodney Love repetitive house hacking.  

I house hacked a new place every 12 months for years, living in the smallest (least valuable) room in the house to minimize my expenses. Eventually, I built up enough wealth and cashflow that I could start occupying the nicer spots, and eventually stepped up to nicer and nicer homes for myself. I was pretty much free of the rat race by about age 32. I haven't house hacked in years, but if I was starting over from $0, I'd do it all again.

Making sacrifices in my 20s and early 30s paid off in the long run.

 I’m assuming you were single while doing the house hacks?

[Leo R.]

@Joe S. I had a girlfriend, but wasn't married.  For a married person or a person with kids, house hacking a small multifam property is probably the move.  Does house hacking require sacrifice? Yes. Most things worthwhile require sacrifice. I didn't particularly enjoy all those years living in tiny rooms, sharing my place with housemates, surviving on a shoestring budget...but I'm glad I did it!

@V.G Jason Yes, the numbers for house hacking pencil differently than a few years ago. That's the case for every REI strategy under the sun--there aren't any REI strategies today that pencil the same today as they did 2-4 years ago. C'est la vie--such is life.

House hacking definitely DOES work in today's market, it just doesn't work exactly the same as it did several years ago, so you have to adjust your expectations and approach to the realities of the market (just like any REI strategy). Some people will be able to acquire a new property every 12 months, but some might only acquire a new property every 2-5+ years...it all depends on their market, and their other sources of income.

When I was house hacking, my w2 income was modest, and a lot of folks starting house hacking today have a better w2 income than what I had when I started.

I have a friend who's about 12 years younger than me, she's just started her career, and she's always complaining that it's impossible to break into real estate. Whenever I suggest she house hack, she says "it's not possible anymore--when you did it, houses were cheaper, and rates were lower", to which I say: "yeah, and my w2 income was a third of yours!" (my w2 career path is pretty low-paying, but she's in a much higher-paying career)...not to mention I have another friend her age who has a lower w2 income than hers, who is literally a year into her first successful house hack, and planning her second! So, while she's busy complaining that house hacking isn't possible in today's market, one of her peers (who has a lower income) is out there house hacking...There's always a million reasons not to invest in real estate, but somehow, successful RE investors keep finding ways to make it happen....

If a person is inexperienced in REI, has a fairly average income, and their goal is to actually own real estate, house hacking is usually the best way to start. This is because (compared to more advanced strategies like BRRRR'ing, flipping, wholesaling, etc.), house hacking is relatively straightforward, relatively lower risk, relatively slower-paced, it teaches you all the fundamental lessons of REI and property management (which is crucial if you want to branch out into more advanced REI strategies), and it simultaneously lowers your expenses while increasing your income. It's not for everyone, but for most people, it's the best entry point to investing in real estate.

[Becca F.]

This is a very informative thread. If someone had $70,000 to invest in real estate, not sure how that would work to try to escape the 9 to 5 in today's market. I have more than that amount and I'm still working my W2 job. I have equity I could pull from California properties (a SFH rental and my primary home, can't touch the multi-unit because it's co-owned) but for me taking out more mortgages at 7% rates is risky. I've already leveraged what I feel is comfortable. I don't want to do private lenders and risk someone else's money since I already did 2 bad deals in 2023 (don't buy Class C in the Midwest for "cash flow on paper" which there is none). BRRRR didn't work for me in Indiana - ARV not high enough, renovation costs over budget and I'm at a huge disadvantage being 2000 miles away.

The people I've seen do this in recent years are high earning tech workers in CA making $200,000+ for a single person or $400,000+ married couple and they were able to scale pretty quickly from 2015 to the present and leave their W2 jobs. I didn't ask what their salaries were but I'm estimating by looking at Glassdoor. They used different strategies: house hack in CA, STR, buy off market, buy OOS, SFH, multi-units, buy large apartment complex with other investors, etc.

Thoughts on 1031 exchange to DSTs to try be more passive (no more dealing with PM, renovations, repairs,  tenant issues) but I've heard the money is trapped for 2 to 5 years depending on the operator, still researching DSTs. Or for accredited investors, syndications who have apartment complexes, self storage, car washes? I've heard it's not a good time to invest in syndications now. 

Hmmm.... ATMs and franchises were mentioned in this thread. What about laundromats or vending machines? I'd consider vending machines because the cost of renting out space in the Bay Area for a laundromat or any other business would be high.

[Jessie Dillon]

if you have that one finite nest egg to work with & will not be able to quickly keep saving more, then your best option is going to be either BRRRing or gator lending. my opinion!

i was at a retreat a year or so ago with a girl who started with an 80k nest egg BRRRing single-family homes in dallas, and has scaled to i believe over 80 of them? starting with just that original 80k of her own money! her and her husband both retired from their day jobs and have all these gorgeous renovated SFRs. the key was that they got better and better at BRRRing and the nest egg grew just a little bit with each cashout/refi, so they could do bigger/better deals, then multiple deals at once. this obviously took time, but they're getting ALL the perks of REI: debt paydown, appreciation, tax benefits, cashflow, the opportunity to provide beautiful safe housing in the city they live in... if you BRRR'd your way to a few STRs instead of LTRs, you could probably arrive at that 7k/mo number pretty quick. also consider BRRRing to MTRs.

gator lending is short-term / transational lending, usually to wholesalers for deposits. pace morby has a course on it. most people i'm sure take the course, do nothing with the information, make no money, then complain and say the course didn't work lol. but i do know tons of people actually make great money gator lending.

flips obviously work too but you usually LOSE money on the first one, break even if you're fortunate... it's very active work too, so doing flips while you're still working full time, idk, not a fan personally. you'd have to KEEP flipping to KEEP making 7k/mo, vs with BRRRing you'll eventually get to that 7k/mo and can stop or regroup.

[NA Edg]

Quote from @Chris Seveney:

@Rodney Love

Notes all day long. You are not chasing deals.

Hey Chris,

Where would one just starting out get into Notes?  Any suggestions on where to get training and maybe a mentor?

[Travis Biziorek]

I've done this.

I had ~$50k in savings but supplemented it with a $130k HELOC.

Then I started buying SFH's in Detroit for $40k-$55k, putting a little work into them, then refinancing after the seasoning period. That was 2019... prices are higher then.

I ended up building a 12-door rental portfolio in 2.5 years doing this. It was hectic, a lot of work, and had some challenges. But that portfolio now generates ~$16,500/mo in gross rents.

It's also gone up 2.5x in value and I have literally nothing invested in these properties at this point.

[Matthew Kwan]

There multiple ways to do it Rodney. However, the question is what is your timeline, comfort level, risks that you are willing to take to achieve that goal right?

You can do House Hack and repeat that process if your income allows that. Once, you reach to a certain milestone, you can open a line of credit to pull some equity out and start buying some investment properties, where you would need more capital but lesser income to qualify vs buying that property as a primary where it require less capital, but more income required to qualify. @Carlos Valencia @Albert Bui

[Raju Balakrishnan]

It is not as easy as it is often projected. In real estate you should have invest time, money (or combination of both) into it to get disproportionate income to time eventually. I would not want to use the term passive, it is never zero effort as the term passive suggest. Flipping/wholesaling etc at one end of the spectrum need time but less money. Notes, buy and holds with property manager etc are the other end which you put less time, more capital, often with lower returns. 

So if you have a bit of money I would say either be ready to be still in "rat race" but a different kind like flipping etc. Or if you can manage your living expenses, invest passively and and wait for long time to get rich. There are mixes of all these depending on how much money, time, and other resources you have. But in short there is no free lunch anywhere. 

I am not saying real estate is not good, it can serve you really well if you have right expectations, strategies, goal and above all patience. But be really be ready for that long haul, not a quick jump to "passive income". 

[Crystal Smith]

Quote from @Rodney Love:

My question for anyone that escape the 9-5 rat race is. What real estate strategy did you use?  Example if you had between $20,000-$70,000 to invest in real estate.  How would you use that to replace your income of  $7,000 a month from your job? Fix and flips, tax liens, mortgage notes,  rentals,  Airbnbs?

Since you have given a wide range of funds -$20K-$70K I have 2 answers.  If I was starting over and only had $20K I'd be looking for partners, be they silent or active. In my opinion, $20K  is a good start to start discussions with others who may only have $20K to $30K about what we could potentially do together.  And it really doesn't matter what the strategy is, fix and flips, tax liens,.... it doesn't matter. 

On the other spectrum if I was starting over and had $70K, I'd be looking for partners while at the same time getting pre-approved for a fix and flip loan from either a private money or hard money lender.  Also at the same time finding someone with experience in fix and flips.  My strategy- Fix and flip 2 to 3 homes, then use the cash to purchase a buy and hold.  Rinse and repeat the process while learning about other strategies.  This is what we did. 

[Chris Battaglia]

@Chris Seveney what do you recommend for learning more on the notes topic? I've seen it discussed lightly on the forums but never looked into it too much.