Why You Should Stop Talking About Quitting Your Job Before You Have Your 1st Property

[Jonathan Greene]

This trend has been growing increasingly, but it's actually hurting most new investors. I've read so many posts from people in their early 20s talking about getting out of the rat race before they are even in it. Maybe it's social media. Sometimes, it's just not wanting to work. Or work for someone else. But it won't help you get more properties if you quit your job too early.

Please stop talking about quitting your job before you have your first property—or your second—or your third. Keep your job as long as you can. And then keep it two years longer. Here's why:

1. Having a steady job with steady and expected pay is the foundation you need to invest because you know the money will keep coming in as long as you don't get fired. You want a strong foundation that is compounding, not a house of cards with no base.

2. Having full-time employment is what makes you lendable. Traditional lenders don't care about your savings or net worth; they care about your employment and earnings.

3. Your job is your runway. You want to build the longest runway possible. You don't want one where you can barely land and take off. You want one with plenty of room to land and turn around while another plane takes off. (You're welcome to the pilots out there.)

4. If you use your job as a springboard and keep getting raises, you keep increasing your lendability and ability to get more properties. Don't just do your job, be the best at it. No matter your industry, being good at your job will help you as a real estate investor.

5. Your mindset is corrupted if you only think about leaving your job to be free. Owning rental properties is not freedom. If you self-manage, you will probably work more hours than you did before. A lot of people realize later that they traded a steady, easy job with the weekends off for an unpredictable, annoying job that is 24/7.

Remember that you aren't chasing financial freedom; you are chasing time freedom. Time freedom is different for everyone. If you make $100k working 10-5 Monday through Friday with 3 weeks of vacation and your weekends are free, that might be time freedom to you.

If you are into the FIRE movement, why do you want to retire early? Retire from what? When you love what you do, it's not something you retire from. But you have to grow into that.

Add any more to the list in your responses.

[Taylor Dasch]

I agree, I actually just lost my w2 job as a firefighter but there was always that other side of me that said well what if I go all in on real estate? So thats what I am doing now by force aha. I also think that is the best way to do it anyways but you just have to actually do something. I dont think anyone is just quitting their job to sit at home and do nothing. 

[Jonathan Greene]

Quote from @Taylor Dasch:

I agree, I actually just lost my w2 job as a firefighter but there was always that other side of me that said well what if I go all in on real estate? So thats what I am doing now by force aha. I also think that is the best way to do it anyways but you just have to actually do something. I dont think anyone is just quitting their job to sit at home and do nothing. 

Sometimes that job loss is the impetus to go full time a little earlier and it works. I worry that some people think that passive income from rental properties is sitting on a beach in Maui when it's really unclogging toilets on weekends when your handyman is out of town.

[Caleb Brown]

Amen! Why would you leave an income source that can further investments, fun, etc. If you hate the job find a new one. If you have a portfolio/properties take a pay cut but REI will not be the shiny ticket out.

[Joe S.]

Unless you basically been self-employed, almost all of your life and didn’t have a job to quit. Lol.

[Nathan Gesner]

People underestimate the amount of cash flow required. They don't build a proper reserve, failing to account for turnover costs, vacancies, capex, etc. I'm dealing with a 70-year-old owner who has spent decades spending every bit of her monthly cashflow. When she gets hit with a vacancy, she panics because she loses the income. When a 40-year-old furnace goes out, she gets vendors to piece it together with duct tape and kicks the can down the road a little longer. It's a constant battle.

Keep working the W-2. Put all your cash flow into improving your existing rentals or buying more. When you have 100% more cash flow than you think you need, then you may be ready to leave your W-2.

[Jeff S.]

@Jonathan Greene 100% agree but sometimes people (like myself) have to learn the hard way. 

Now it used to be if you got a job with the government and could count on a fat pension then life could be good and with a few rentals excellent. Maybe not so much anymore. 

Now as far as unplugging toilets just call a rooter and write a check. If you own long enough you should not have to lift a finger. 

[Jonathan Greene]

Quote from @Nathan Gesner:

People underestimate the amount of cash flow required. They don't build a proper reserve, failing to account for turnover costs, vacancies, capex, etc. I'm dealing with a 70-year-old owner who has spent decades spending every bit of her monthly cashflow. When she gets hit with a vacancy, she panics because she loses the income. When a 40-year-old furnace goes out, she gets vendors to piece it together with duct tape and kicks the can down the road a little longer. It's a constant battle.

Keep working the W-2. Put all your cash flow into improving your existing rentals or buying more. When you have 100% more cash flow than you think you need, then you may be ready to leave your W-2.

That example is the exact reason not to be a landlord. To use all of your cash flow to gum stuff together for twenty years to only gain appreciation is silly. If the appreciation is great, ok, but the house is likely pieced together like you said.

[Jonathan Greene]

Quote from @Jeff S.:

@Jonathan Greene 100% agree but sometimes people (like myself) have to learn the hard way. 

Now it used to be if you got a job with the government and could count on a fat pension then life could be good and with a few rentals excellent. Maybe not so much anymore. 

Now as far as unplugging toilets just call a rooter and write a check. If you own long enough you should not have to lift a finger. 

Yeah, I also think it goes both ways these days. Companies don't value their employees and employees don't value their company. It's a double-edged sword, but for the smart ones who work hard and actually try at their W2, they will get that option to leave much, much sooner and not have to leap.

[Jeremy H.]

It's a funny thing - there's a thread on the front page right now asking if $300/month is good cashflow? The general consensus is "yes". 

What the f are you going to do with that big $300/month? How long will it take you to build a reserve? How long will it take to diversify your investments? How long will it take you to retire? Do you plan to live off the land in a tent? 

I mean the number of houses you'd need that even purely cashflow, say $500/mo is so many that quitting the W2 makes zero sense for 99.9% of people. 

Let's say you make 100k/year gross - you'd need 16-17 properties that pure cashflow (profit) $500/month. Most people will never own a single investment property. Then most "mom & pop" landlords just own a few properties. Just based off statistics the vast majority of people (nevermind the vast majority of RE investors) will never replace their W2 income w/ RE income. So the probability of someone replacing their W2 income is extremely low.  

W2 income is stable, predictable and as the statistics show, likely much higher than someone will ever earn going in on RE full time. On top of that - you're simply creating a new job for yourself when it comes to rehabbing, managing, generating leads, analyzing deals, making offers etc - so now you have to scale and outsource responsibility. This is not an easy feat - I am honestly so impressed by the people who have created successful growing companies in the RE industry. Some of these "turnkey" companies have really taken off. The reality is they have created a new job - yes they may make more and retire early, and I'm sure it's better than their old W2 - but I'd be 100% sure they are incredibly busy most of the time. 

This idea of FIRE in your 20s (dare I say 30s and even 40s) makes zero sense - the idea is propagated by what we see on social media (Some 26 year old walking by his G-Wagon and sipping martinis on the beach 300 days out of the year talking about his billions in RE). Then there is a sort of echo chamber where social media spreads this idea to more and more people and somehow it becomes realistic. 

Long story short - quitting your W2 does not make sense for 99.99% of people and likely never will 

[Jonathan Greene]

Quote from @Jeremy H.:

It's a funny thing - there's a thread on the front page right now asking if $300/month is good cashflow? The general consensus is "yes". 

What the fuc k are you going to do with that big $300/month? How long will it take you to build a reserve? How long will it take to diversify your investments? How long will it take you to retire? Do you plan to live off the land in a tent? 

I mean the number of houses you'd need that even purely cashflow, say $500/mo is so many that quitting the W2 makes zero sense for 99.9% of people. 

Let's say you make 100k/year gross - you'd need 16-17 properties that pure cashflow (profit) $500/month. Most people will never own a single investment property. Then most "mom & pop" landlords just own a few properties. Just based off statistics the vast majority of people (nevermind the vast majority of RE investors) will never replace their W2 income w/ RE income. So the probability of someone replacing their W2 income is extremely low.  

W2 income is stable, predictable and as the statistics show, likely much higher than someone will ever earn going in on RE full time. On top of that - you're simply creating a new job for yourself when it comes to rehabbing, managing, generating leads, analyzing deals, making offers etc - so now you have to scale and outsource responsibility. This is not an easy feat - I am honestly so impressed by the people who have created successful growing companies in the RE industry. Some of these "turnkey" companies have really taken off. The reality is they have created a new job - yes they may make more and retire early, and I'm sure it's better than their old W2 - but I'd be 100% sure they are incredibly busy most of the time. 

This idea of FIRE in your 20s (dare I say 30s and even 40s) makes zero sense - the idea is propagated by what we see on social media (Some 26 year old walking by his G-Wagon and sipping martinis on the beach 300 days out of the year talking about his billions in RE). Then there is a sort of echo chamber where social media spreads this idea to more and more people and somehow it becomes realistic. 

Long story short - quitting your W2 makes does not make sense for 99.99% of people and likely never will 

Boom, great stuff. The FIRE movement is the biggest fallacy in existence and like you said, a giant echo chamber that will implode and then everyone will say they were scammed when they were just looking for a hack to retire early. Who wants to retire? That sounds terrible to me. I love working. I just love working in fields that I love.

The main reason people get into apartment investing is because they realize exactly what you said. I am going to need to manage 15 different properties in different states just to make enough to do ok so why not scale this out?

These quit early propagators don't tell the "students" that nothing in real estate is actually passive other than syndications and you still need to crush the due diligence to not get taken for a ride. Passive income in real estate still takes work, and most of time, that second job.

The worst part of all this FOMO about quitting is that people don't even try at their jobs anymore. They wonder why Brian got a promotion, but it's because Brian tries and appreciates a steady paycheck and the company that pays his insurance.

[Adam Michael Andrews]

Working is how society accesses our individual talents and abilities. I think people who dream of never working are blinded by working the wrong job or a job they hate. Work is important to who we are and how we were made.

[Marie Paul]

Quote from @Adam Michael Andrews:

Working is how society accesses our individual talents and abilities. I think people who dream of never working are blinded by working the wrong job or a job they hate. Work is important to who we are and how we were made.

"...blinded by working the wrong job or a job they hate." ----> Bingo!
I also believe social media plays a big role in people not really wanting to work, especially with younger folks. The pics, snippets and videos of influencers living a particular lifestyle are selling people emtpy dreams. They don't realize that a lot of what they see is all smoke and mirrors. 

[Jonathan Greene]

Quote from @Adam Michael Andrews:

Working is how society accesses our individual talents and abilities. I think people who dream of never working are blinded by working the wrong job or a job they hate. Work is important to who we are and how we were made.

I completely agree. Even when you don't love your job, taking pride in doing a good job is a trait everyone should have. No one I know wants to retire, they just want to create more income streams to have time freedom. And time freedom still incorporates working.

[Nathan Gesner]

Financial independence is a worthy goal. Retirement is not.

I can understand retiring if you are old and broken. Retiring when you are healthy and capable of being productive makes no sense. Man was not created to lounge all day. Our society no longer views elderly as valuable contributors to society because everyone is expected to retire at 65 and wither away in a corner somewhere.

[Jonathan Greene]

Quote from @Marie Paul:

Quote from @Adam Michael Andrews:

Working is how society accesses our individual talents and abilities. I think people who dream of never working are blinded by working the wrong job or a job they hate. Work is important to who we are and how we were made.

"...blinded by working the wrong job or a job they hate." ----> Bingo!
I also believe social media plays a big role in people not really wanting to work, especially with younger folks. The pics, snippets and videos of influencers living a particular lifestyle are selling people emtpy dreams. They don't realize that a lot of what they see is all smoke and mirrors. 

I think most people know it's smoke and mirrors, but they want it not to be. It's why everyone is looking to hack everything (do it quicker) instead of focusing on the principal of compound interest in everything they do.

My dad taught me a great lesson once when I was driving. I was annoyed because we were stuck behind someone and other people were weaving in and out like crazy and passing us. He said, just until the next toll booth, stay here and let's see who gets to the toll booth first, us or them. I laughed at it him because it was so obvious that car would already be in Conencticut. Sure enough, I stayed steady (compound interest) and they didn't (hacking driving) and I beat them to the next toll booth by about a quarter of a mile.

[Nicholas L.]

@Jeremy H.

yep agree.  i think there are obviously a few different aspects to the FIRE movement - 

1. discipline on saving and spending.  this is good.

2. saving up a bunch of cash to "retire" as quickly as possible, putting 100% of it in stocks, and then obsessing about the safe withdrawal rate for the rest of time.  this is bad.

[Marie Paul]

@Jonathan Greene Slow and steady will win the race every time.

[Mark Cruse]

I think most of those are included within the high influx of newbies that roll through who are not serious. They come in with fancy spread sheets, break downs, proformas or cool looking power points with pictures and graphs. They respond to a few questions then never heard from them again. Overall its part of the get rich quick generations. Sounds cool and trendy to say and believe you will fire your boss in a few months from REI. Others are getting sucked in from gurus promising this after a 20k bootcamp. Then they finally get hit with reality and understand it's not easy, so they move on to the next thing like selling cruises or bitcon.

[Jay Hinrichs]

Quote from @Jeremy H.:

It's a funny thing - there's a thread on the front page right now asking if $300/month is good cashflow? The general consensus is "yes". 

What the fuc k are you going to do with that big $300/month? How long will it take you to build a reserve? How long will it take to diversify your investments? How long will it take you to retire? Do you plan to live off the land in a tent? 

I mean the number of houses you'd need that even purely cashflow, say $500/mo is so many that quitting the W2 makes zero sense for 99.9% of people. 

Let's say you make 100k/year gross - you'd need 16-17 properties that pure cashflow (profit) $500/month. Most people will never own a single investment property. Then most "mom & pop" landlords just own a few properties. Just based off statistics the vast majority of people (nevermind the vast majority of RE investors) will never replace their W2 income w/ RE income. So the probability of someone replacing their W2 income is extremely low.  

W2 income is stable, predictable and as the statistics show, likely much higher than someone will ever earn going in on RE full time. On top of that - you're simply creating a new job for yourself when it comes to rehabbing, managing, generating leads, analyzing deals, making offers etc - so now you have to scale and outsource responsibility. This is not an easy feat - I am honestly so impressed by the people who have created successful growing companies in the RE industry. Some of these "turnkey" companies have really taken off. The reality is they have created a new job - yes they may make more and retire early, and I'm sure it's better than their old W2 - but I'd be 100% sure they are incredibly busy most of the time. 

This idea of FIRE in your 20s (dare I say 30s and even 40s) makes zero sense - the idea is propagated by what we see on social media (Some 26 year old walking by his G-Wagon and sipping martinis on the beach 300 days out of the year talking about his billions in RE). Then there is a sort of echo chamber where social media spreads this idea to more and more people and somehow it becomes realistic. 

Long story short - quitting your W2 does not make sense for 99.99% of people and likely never will 

Keep in mind 10 to 12 years ago when I first got on BP.. the big question was what was your number ?  IE how much net spendable rent money would you need to feel financially free and quit your job..  And folks from the mid west would say 3 to 4k  and some would say 5k with most folks thinking these days 10k is enough.. and then just as you say work the math backwards at 300 a month which is pretty tough to make if your max leverage and you have your answer of how many houses you have to own and manage. So for 10k its 33 and if your self managing basically C class rentals thats a full time job maybe not full time but its anything but passive.

Since the theme of this was quitting your W 2 most had never been self employed and I dont think they really comprehend how your expenses go up.

[Jonathan Greene]

Quote from @Mark Cruse:

I think most of those are included within the high influx of newbies that roll through who are not serious. They come in with fancy spread sheets, break downs, proformas or cool looking power points with pictures and graphs. They respond to a few questions then never heard from them again. Overall its part of the get rich quick generations. Sounds cool and trendy to say and believe you will fire your boss in a few months from REI. Others are getting sucked in from gurus promising this after a 20k bootcamp. Then they finally get hit with reality and understand it's not easy, so they move on to the next thing like selling cruises or bitcon.

All. Of. This. They show up and ask three questions and then get one negative response, go crazy, and tomorrow they are in a day trader forum.

[Alan F.]

Jobs have; PTO, medical insurance, Company matched 401k's, structure etc. Lending favors w2 employment.

Self employed have; Non of the above.

[James Wise]

Quote from @Jonathan Greene:

This trend has been growing increasingly, but it's actually hurting most new investors. I've read so many posts from people in their early 20s talking about getting out of the rat race before they are even in it. Maybe it's social media. Sometimes, it's just not wanting to work. Or work for someone else. But it won't help you get more properties if you quit your job too early.

Please stop talking about quitting your job before you have your first property—or your second—or your third. Keep your job as long as you can. And then keep it two years longer. Here's why:

1. Having a steady job with steady and expected pay is the foundation you need to invest because you know the money will keep coming in as long as you don't get fired. You want a strong foundation that is compounding, not a house of cards with no base.

2. Having full-time employment is what makes you lendable. Traditional lenders don't care about your savings or net worth; they care about your employment and earnings.

3. Your job is your runway. You want to build the longest runway possible. You don't want one where you can barely land and take off. You want one with plenty of room to land and turn around while another plane takes off. (You're welcome to the pilots out there.)

4. If you use your job as a springboard and keep getting raises, you keep increasing your lendability and ability to get more properties. Don't just do your job, be the best at it. No matter your industry, being good at your job will help you as a real estate investor.

5. Your mindset is corrupted if you only think about leaving your job to be free. Owning rental properties is not freedom. If you self-manage, you will probably work more hours than you did before. A lot of people realize later that they traded a steady, easy job with the weekends off for an unpredictable, annoying job that is 24/7.

Remember that you aren't chasing financial freedom; you are chasing time freedom. Time freedom is different for everyone. If you make $100k working 10-5 Monday through Friday with 3 weeks of vacation and your weekends are free, that might be time freedom to you.

If you are into the FIRE movement, why do you want to retire early? Retire from what? When you love what you do, it's not something you retire from. But you have to grow into that.

Add any more to the list in your responses.

 Nothing is more cringe than the people who wanna quit their job to become an investor. Where you gonna get the money to invest bro? Best case scenario it's gonna take at least 5 years to recoup a 25% down payment on one rental lol.

[Jonathan Greene]

Quote from @James Wise:

Quote from @Jonathan Greene:

This trend has been growing increasingly, but it's actually hurting most new investors. I've read so many posts from people in their early 20s talking about getting out of the rat race before they are even in it. Maybe it's social media. Sometimes, it's just not wanting to work. Or work for someone else. But it won't help you get more properties if you quit your job too early.

Please stop talking about quitting your job before you have your first property—or your second—or your third. Keep your job as long as you can. And then keep it two years longer. Here's why:

1. Having a steady job with steady and expected pay is the foundation you need to invest because you know the money will keep coming in as long as you don't get fired. You want a strong foundation that is compounding, not a house of cards with no base.

2. Having full-time employment is what makes you lendable. Traditional lenders don't care about your savings or net worth; they care about your employment and earnings.

3. Your job is your runway. You want to build the longest runway possible. You don't want one where you can barely land and take off. You want one with plenty of room to land and turn around while another plane takes off. (You're welcome to the pilots out there.)

4. If you use your job as a springboard and keep getting raises, you keep increasing your lendability and ability to get more properties. Don't just do your job, be the best at it. No matter your industry, being good at your job will help you as a real estate investor.

5. Your mindset is corrupted if you only think about leaving your job to be free. Owning rental properties is not freedom. If you self-manage, you will probably work more hours than you did before. A lot of people realize later that they traded a steady, easy job with the weekends off for an unpredictable, annoying job that is 24/7.

Remember that you aren't chasing financial freedom; you are chasing time freedom. Time freedom is different for everyone. If you make $100k working 10-5 Monday through Friday with 3 weeks of vacation and your weekends are free, that might be time freedom to you.

If you are into the FIRE movement, why do you want to retire early? Retire from what? When you love what you do, it's not something you retire from. But you have to grow into that.

Add any more to the list in your responses.

 Nothing is more cringe than the people who wanna quit their job to become an investor. Where you gonna get the money to invest bro? Best case scenario it's gonna take at least 5 years to recoup a 25% down payment on one rental lol.

Yup. I always say what are you planning to invest with if you want to be an investor? Free time doesn't close deals. Then I wait for the hairbrained ideas about seller finance and sub to because they watched YouTube once.

[Mike Dymski]

Quote from @Nathan Gesner:

Financial independence is a worthy goal. Retirement is not.

I can understand retiring if you are old and broken. Retiring when you are healthy and capable of being productive makes no sense. Man was not created to lounge all day. Our society no longer views elderly as valuable contributors to society because everyone is expected to retire at 65 and wither away in a corner somewhere.

or become president...

[Jay Hinrichs]

Quote from @Alan F.:

Jobs have; PTO, medical insurance, Company matched 401k's, structure etc. Lending favors w2 employment.

Self employed have; Non of the above.

exactly my point if your going to be self employeed you need to make a bunch more than your salary with bene's.