Transition from W2 to full-time REI-- Starting a Property Management LLC?

Question

I am a new real estate investor, and my current strategy is to leverage the VA Loan with a 4-plex to reduce my monthly rent expense. The goal is to free up more money to reinvest. I am aiming to have a portfolio of 2-3 long-term rentals within the Colorado market by 2026. I plan do this with creative financing. I am also exploring wholesale strategies to help reinvest those earnings back into the market.

I also have a full-time w2 job where I find myself working close to 55-60 hours per week. I am a regional clinical director where I oversee multiple facilities serving individuals with severe and persistent mental illness. I have done this type of work majority of my career in both short-term and long-term supportive living environments and have often joked about how I am the "therapist landlord". I have amazing analytical and assessment skills, from screening tenants to having hard conversations i.e. complaints, evictions etc. The areas I lack experience in would include construction, repairs and handyman work.

So now, to my question... has anyone successfully developed a Property Management company to help them transition into the REI world? What was your experience? What are the pros and cons? My thoughts are that it would help create more exposure in REI, give me real-world experience, appease the VA when approving my multi-family property and also help me make the plunge out of my W2 (which, admittedly, is slowly sucking the life out of me).

All thoughts, suggestions, feedback and shared experiences are welcomed. Thank you!

Drew Sygit · Answer

Recommend keeping your W2 job for as long as possible while building your PMC business.

Typically, one needs 75-125 properties under management to actually make a living.

This approach will also force you to automate your PMC business and maybe even hire a Remote Worker or two as you're able to afford.

Because the PMC industry is low margin, you need efficiencies to actually be profitable.

Good luck!

Meghan Begue · Answer

Thank you Account Closed! What a great idea. I had never considered such a thing.

Account Closed · Answer

Hey Meghan, Someone like you in your position might find success in buying an existing property management company rather then starting one fresh. Just my two cents!

Seth Wilcock · Answer

I'm happy to help!  Let me know if I can help answer any other questions or be a resource for you, and good luck with next steps.

Meghan Begue · Answer

@Seth Wilcock Thank you so much for the warm welcome and for your thoughtful advice! I appreciate the insight, especially regarding property management. I agree that gaining hands-on experience in property management before fully diving in is crucial. Partnering with someone who has experience in that space is definitely something I will consider. Your point about working with a realtor or someone in property management who’s looking to scale also resonates with me, as I’m always open to collaborating and learning from others in the industry.

I’ll definitely keep in mind the financial considerations you mentioned when transitioning careers or starting a new business. It’s helpful to have that in the back of my mind as I work toward building a strong foundation for my rental portfolio in Colorado. I also don't want to trade one stressful job for another when I'm ultimately working for freedom.

Thanks again for taking the time to offer such great advice—I’m excited to see where this journey leads and to connect with others like you along the way!

Seth Wilcock · Answer

Hi @Meghan Begue,

Welcome to BP and thank you for your service!  I love the vision and plan.  It sounds like you're off to a good start and I think putting together 2-3 rentals in Colorado by 2026 is certainly doable/attainable.  I know a few Realtors that have created their own property management company.  They do real estate as their main job, and property management as a secondary stream of income.  It sounds like you have a good amount of expertise in management and oversight, so that will definitely be a plus in the property management area.  You may want to consider partnering up with a realtor or someone that already has a property management company that is looking to scale.  I think it would probably also be a good idea to work in property management for at least a year to see if you even like it before fully committing to starting a property management company.  With switching to an entirely different field, it would probably be a good idea to get a little bit of experience in the day to day operations of property management, as well as familiarizing yourself with some of the Colorado fair housing laws, minimum property requirements, etc.  I would also recommend partnering up with someone that has experience in the repairs/construction side of things as that will come up quite often in property management.  Lastly, if you're considering a career change or starting your own business, it will be difficult to qualify for a mortgage until you can show stable/consistent income.  With a brand new W-2 job in a different trade/profession, you may need to be in that new job for 6 months.  If you end up starting your own business and getting out of your current job, you'll generally need to provide 2 years of self-employed tax returns to support your income.  This should be something to consider since you're planning on building up the rental portfolio in the next couple years as well.

Meghan Begue · Answer

This is really valuable information @Drew Sygit! This definitely changes a few things for me. I am going to hold onto this W2 salary for as long as possible, aiming to re-invest 40-50% of my earnings. I am hoping that by 2026 I have 3-4 LTRs which can help me ease out of my job.

Transition from W2 to full-time REI-- Starting a Property Management LLC?

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