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?

[Abel Curiel]

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?

 Hello Rodney!

Great question, you came to the right platform!

Each strategy listed above requires different experience, risk tolerance, network/connections, project management and initial capital investment.

Have you tried looking further into those strategies? I'd suggest you weed out the ones that don't fit your end goal and schedule.

Rentals and Air bnb seem to be the most common routes for investors in your situation. Depending on the cost of living in your local market and availability to 2-4 unit properties, house-hacking may be a strategy worth exploring.

All the best!

Abel

[Rodney Love]

Hey Abel, thanks again for the reply. I think house hacking would be a great strategy! I was looking into all of these strategies,  but I'm leaning towards airbnb and tax liens

[Travis Timmons]

The one where you build a rock solid financial position over time. My path was owning a business that I sold and acquiring real estate along the way. I like the position of Wes Moss from his books and podcast - more than 1 source of income (RE + something else), paid off primary residence, a pile of liquid cash or investment reserves (he suggests $500k+). I realize that this is likely not the answer that you were looking for; however, It's going to take  more time than you were planning and be harder than you thought. 

Real estate doesn't pay you well if you need the money. It's like the house knows you need the cash - something is going to break and deplete all of the cash flow for that year. 

As far as a strategy goes, I would suggest leaning into your current skill set and knowledge to find an unfair advantage. Flipping, short term rentals, tax liens, etc. are all great strategies if you are good at them and terrible strategies if you are not. If I had 20-70k, I'd buy a house hack in Dallas if your DTI is solid. I'd then work my a$$ off to pile up another down payment, and buy another as soon as possible.

[Rodney Love]

Thanks Travis for the advice! I'll have to check out Wes Moss podcast. Your right it's best to have a solid foundation. It sounds like house hacking is a good idea

[Chris Seveney]

@Rodney Love

Notes all day long. You are not chasing deals.

[James Carlson]

@Rodney Love

A couple thoughts from what I've seen at least here in Colorado:

The process is longer than you think
Replacing W2 income with rental cash flow is a longer process than most think. Unless you're super aggressive, it's probably 10 years or more.

House-hacking might be quickest way
If you have to live somewhere, then might as well get paid for it. 

I've seen a few people accelerate financial freedom by aggressively house-hacking in Denver and Colorado Springs. Buy a 5br, rent the four other rooms for $800-$1000, so that's $3200. Save what you would have spent on rent. Buy another in a year (renting out the 5th bedroom in the original), and repeat over and over for five or six years. Voila! 

Flipping is just another job
I think fix and flips are just another job. They're not an investment. If you stop working, the cash stops flowing. I think buy-and-hold is the way to long-term wealth. And within that realm, STRs/Airbnb are often your best bet for cash flow.

(Just need to make sure you're within the STR laws. Like, here in Denver, short-term rental laws are city to city and vary widely.)

Good luck!

-- 

[Rodney Love]

@James Carlson thank you for the advice! I Like the example you provided I'll start looking for some multi-family  properties in Texas!

[James Carlson]

Quote from @Rodney Love:

@James Carlson thank you for the advice! I Like the example you provided I'll start looking for some multi-family  properties in Texas!

 Awesome. Wish you the best. 

[Glen Wiley]

The strategy you chose depends mostly on what you will enjoy most and will be good at. AirBNB is really a hospitality business more than a REI activity (it just uses real estate).

I like long term rentals most because it provides predictable, stable income and that suits me and my wife better. Our short term rental (airbnb) is a little more exciting but causes me more lost sleep due to seasonal fluctuations.

Consider your risk tolerance, try a little of a few strategies and figure out what you like. Any of these can be exited if you decide to, then the capital can be moved to the one you like.

[Bruce Lynn]

House hack, but it's not escaping the rat race, just trading one race for another.

Buy a 5 bedroom, live in one and divide the others in 1/2.  So now you have 4bedx2 house and one master.  Rent bedrooms.  Now this is probably not legal in most places and risky, and creates a full time job for you.  Rent your bedroom and live on a cot in the garage when you can.  Maybe clear $5000/month doing this.  When you have enough extra cash, do it again on the same block or same neighborhood.  If you can hire a house manager, try it again with a 3rd house.

Another hack I don't really hear anyone talking about is buying some cheap used travel trailers.  Put them in an RV park, rent by the night or month.   Not sure what those would cost, but could you pick some up for $5000 each?   Rent for $500/month+lot rent.  Pretty soon you have enough money to buy the park.  That will not be easy street.  

The other thing is buy a single family.  Live it in for a year, then do it again.  One of my very wealthy mentors moved with his wife and kids 27 times in 25 years.  So make sure if you partner up with someone they have the same vision.   But keep working your day job so you can do this...that's your cash cow and buy as many rentals as you can....1 a year...1 every 2-3 years.

[Glen Wiley]

Quote from @Bruce Lynn:

House hack, but it's not escaping the rat race, just trading one race for another.

This is a great point but not necessarily a bad thing :)

Trading the 9-5 rat race for independence as a rental property owner really appeals to me! I love the self determinism of being an operator and I love all the things (well,most of the things) related to income properties.

The key here is to not expect to be sipping cocktails on the beach as a RE investor unless you manage to scale out pretty large.

[Bruce Lynn]

Quote from @Glen Wiley:

and for some people going from punching a keyboard and sipping Starbucks, to changing dirty sheets, cleaning other people's toilets, and putting up with all the customer service craziness is not as fun as it looks on TV.

[Basit Siddiqi]

is the $7,000 Gross wages or net after tax?

If you do it through rentals, you have to figure out what your cash-flow per door is.
If you are able to get $200 a door, and you are talking about $7,000 after tax, you would need 35 doors.

If your $7,000 is gross, and it is $5,000 Net, you would need 25 doors.

This is assuming the rental income would be sheltered by depreciation.

[Alecia Loveless]

@Rodney Love I’ve been able to replace my income in 4 years comparably to the level you are looking for.

However to keep expanding my portfolio I'm doing a refinance on one property that will allow me to buy several more properties using DSCR loans.

I’m currently working limited part time hours at my previous job to make sure I have a little income still coming in.

It might have been better if I’d have stayed full time one more year and done the refinance and bought the properties while still working but after being my own boss for 15 years right out of college before spending 14 years in a W-2 I was just done and took the plunge.

As far as number of doors go I do currently have 25.

[Carlos M.]

@Rodney Love

I escaped the rat race. We started out with $60k in home equity. It took 10 years of grinding ridiculously hard. We both worked full time jobs the entire time, self managed , did all the renovations ourselves. My wife just quit her w-2 last year which is 15 years in the business. We used the Brrrr method. It can be done but it’s going to take 10 years of sacrifice, living below your means , and hustle!

[Wale Lawal]

@Rodney Love

Real estate investing is a common means of escaping the 9–5 grind, although the methods used to do this vary greatly depending on the investor's background, abilities, risk tolerance, and the health of the market in the desired investment region. Careful planning and strategy selection are crucial when starting with an investment of $20,000 to $70,000 and trying to replace a $7,000 monthly salary. What each of the aforementioned strategies may accomplish in order to reach this aim is briefly summarized here:

Fix and Flips: Your initial capital could serve as a down payment and renovation fund for a single property to start. Success in this area requires a keen eye for undervalued properties and a solid understanding of renovation costs and ARV (After Repair Value).

Tax Liens: With limited capital, investing in tax liens can be a way to start small. However, turning tax lien investments into a steady income stream is less direct than other strategies and might not quickly replace a $7,000 monthly income.

Mortgage Notes: Investing in mortgage notes can provide a steady income stream if you acquire notes at a discount. However, building up to a $7,000 monthly income would likely require a significant portfolio of notes, more than the initial capital might allow for starting.

Rentals: With $20,000-$70,000, you could potentially use leverage to acquire one or two properties in markets where this capital suffices for down payments. Selecting the right location and property type is crucial to maximizing rental income and minimizing vacancies.

Airbnbs: Your initial capital could cover the down payment on a property in a location with high Airbnb demand. Success requires excellent hospitality and marketing skills to maintain high occupancy and nightly rates.

Achieving a monthly income of $7,000 requires a mix of strategic investment, reinvestment of earnings, and perhaps most critically, time. It's also beneficial to continually educate yourself on real estate investment strategies, market trends, and financial management to adapt your strategy as you grow your portfolio. Networking with experienced investors and leveraging professional advice can also significantly impact your success.

Good luck!

[Robin Simon]

Generally it should be based more around your skill set, abilities, risk tolerance and time but in a vacuum the BRRRR Method really checks the most boxes - since it recycles the same capital over and over (like flips) while building ongoing wealth and cash flow (like holds).

David Greene does a great breakdown on this in the opening chapters of the BRRRR Book

[Rolly Weaver]

I have 12 Airbnbs an 7 long-terms.

Make sure when youre constructing how you want your life to be that you don't change the 9-5 for a full-time job managing Airbnbs.

Airbnbs are much more hands on than my long-term rentals. 

[Glen Wiley]

Quote from @Carlos M.:

@Rodney Love

I escaped the rat race. We started out with $60k in home equity. It took 10 years of grinding ridiculously hard. We both worked full time jobs the entire time, self managed , did all the renovations ourselves. My wife just quit her w-2 last year which is 15 years in the business. We used the Brrrr method. It can be done but it’s going to take 10 years of sacrifice, living below your means , and hustle!

I love reading things like this :)

[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 

[Avery Moore]

I'm a bit skeptical on doing AirBnb in my city (Atlanta) the HOAs are getting stricter here & also been a method for squatters. I have a 3BD townhome & like to know more about how would you manage "house hacking" ? Would you have a lease for every tenant there? Would are the risk of house hacking vs renting? 

[Rodney Love]

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  

 I been looking into that too, I'll send you a message 

[Rodney Love]

Quote from @Rolly Weaver:

I have 12 Airbnbs an 7 long-terms.

Make sure when youre constructing how you want your life to be that you don't change the 9-5 for a full-time job managing Airbnbs.

Airbnbs are much more hands on than my long-term rentals. 

Nice!!! Would love to hear more about your journey

[Rodney Love]

Quote from @Glen Wiley:

The strategy you chose depends mostly on what you will enjoy most and will be good at. AirBNB is really a hospitality business more than a REI activity (it just uses real estate).

I like long term rentals most because it provides predictable, stable income and that suits me and my wife better. Our short term rental (airbnb) is a little more exciting but causes me more lost sleep due to seasonal fluctuations.

Consider your risk tolerance, try a little of a few strategies and figure out what you like. Any of these can be exited if you decide to, then the capital can be moved to the one you like.

Great information would love to connect

[Rodney Love]

Quote from @Wale Lawal:

@Rodney Love

Real estate investing is a common means of escaping the 9–5 grind, although the methods used to do this vary greatly depending on the investor's background, abilities, risk tolerance, and the health of the market in the desired investment region. Careful planning and strategy selection are crucial when starting with an investment of $20,000 to $70,000 and trying to replace a $7,000 monthly salary. What each of the aforementioned strategies may accomplish in order to reach this aim is briefly summarized here:

Fix and Flips: Your initial capital could serve as a down payment and renovation fund for a single property to start. Success in this area requires a keen eye for undervalued properties and a solid understanding of renovation costs and ARV (After Repair Value).

Tax Liens: With limited capital, investing in tax liens can be a way to start small. However, turning tax lien investments into a steady income stream is less direct than other strategies and might not quickly replace a $7,000 monthly income.

Mortgage Notes: Investing in mortgage notes can provide a steady income stream if you acquire notes at a discount. However, building up to a $7,000 monthly income would likely require a significant portfolio of notes, more than the initial capital might allow for starting.

Rentals: With $20,000-$70,000, you could potentially use leverage to acquire one or two properties in markets where this capital suffices for down payments. Selecting the right location and property type is crucial to maximizing rental income and minimizing vacancies.

Airbnbs: Your initial capital could cover the down payment on a property in a location with high Airbnb demand. Success requires excellent hospitality and marketing skills to maintain high occupancy and nightly rates.

Achieving a monthly income of $7,000 requires a mix of strategic investment, reinvestment of earnings, and perhaps most critically, time. It's also beneficial to continually educate yourself on real estate investment strategies, market trends, and financial management to adapt your strategy as you grow your portfolio. Networking with experienced investors and leveraging professional advice can also significantly impact your success.

Good luck!

Mr . Wale how are you? We talked before let's connect again