Is it time to quit my day job?

Question

Hey everyone!  I wanted to reach out an here your thoughts on my situation.

I have recently been presented with an amazing opportunity and am weighing my choices.  My company has gone through a round of layoffs (financial services industry is always laying off) and I was given the option to take a package.  The package is pretty amazing, basically I am paid from now through February with the same pay, same benefits, same everything....  I lose about $5k in company vested 401k but that is it.

This presents an amazing opportunity to expand my portfolio, I currently own 2 duplexes which are cash flowing very well (about $1k p/m), but this is no where near my monthly expenses. I believe I can get another couple of units and possibly a larger multi (16 units) by February and then find a job if I have not replaced my income with real estate.

While it is a great opportunity I am not sure if I really need to quit my job to do these deals and continue growing my portfolio. I am hesitant to stay at my job because and I know that I will not work as hard at finding new deals if I don't have some pressure to make it happen. If I have to go out and build an income stream to feed my family I will be very motivated. I have a wife (worlds hardest working stay at home mom) and two toddlers.

On the other hand though I have a pretty easy job which pays really well and allows me time to work on real estate while I am at work.  I am the only breadwinner in my family and two young kids depend on me.  That being said, I am confident I can get a promotion and a raise to stay with my company...   My boss is very upset at the prospect of me leaving,

Its a tough call and I am on the fence.... Any thoughts?

Shawn Thom · Answer

If you took the offer, what specifically would you be doing if you weren't going to a 9-5?

Would you require loans to get additional properties?  If so, do you think you would qualify for a loan?

Do you have a source to give you enough houses/leads to optimize the time off?  Finding deals around here is not that easy.

Personally, I'd seriously consider taking the offer.  Then I would find another job and use the extra money from the old job for investments.

Elizabeth Colegrove · Answer

Honestly this sounds like the opportunity of a life time ! You get to "try" real estate out. If it fails you look for a new job in feb! You have to weigh the pros and cons. I will say as someone who had a forced 13 month unemployment due to my husbands relocation and my inability to find a new job right away. I kick myself daily for not using my time better! You better believe if it happens again I will enjoy it and use it to it's fullest!

Chris Soignier · Answer

I lost my job in mid-Feb. this year, without a package, and decided to do real estate full-time.   It took a while to get started, but I have a rehab under progress, just wholesaled my first deal, and am partnering w/ my mentor on another rehab.   I wouldn't say I'm making a real living out of it yet, but I expect to be there by the end of the year if not sooner.

One bit of advice is that it takes a lot of capital to replace a good salary w/ passive income, but you can bridge that gap in the meantime w/ more active forms of investing like wholesaling, rehabs, etc.

As you're probably aware, the market in Collin County (and DFW in general) is very tight, but go north and/or east, and you'll find less competition.

Dmitri L. · Answer

It's very easy to accidentally waste this free time you are given. As others have said, unless you have deals in the pipeline right now, you're going to potentially burn through the first 3-6 months without seeing any deal close.

I would take the package, then immediately turn around and find another job that at least covers your expenses but isn't too demanding on time. 9-10 months of salary as a lump sum is a great bankroll for your future investments, while you still have some w2 income to help qualify for loans .

Joshua Nudell · Answer

@Mark Swoveland

I think you have an opportunity to accelerate your real estate portfolio here.

You can take the package, and then find another financial services job (they're always hiring as well) and have a double salary.  With the double salary you can invest in twice the amount of properties, and go full time in a shorter time span.

If you're really aggressive, you can also rollover your 401k into an SDIRA because you've left your current employer and now qualify that type of activity with the 401k (keep it where it is, rollover to an IRA, or any of the other options you have for leaving your employment).  Depending upon the size of your 401k, this gives you even more resources to accelerate your real estate holdings than you would have if you stay in the same job.

Dmitri L. · Answer

Exactly! Well put, Chris!

For the average couple making 51k a year, they might be able to with some effort, save 10k/yr to put towards a rental portfolio. But do a few wholesale deals on the side and you could double your "savings" rate with a relatively small time commitment.

Linda Weygant · Answer

This would be my dream come true.  But I am an empty nester with a working partner, not a sole provider with toddlers, so not only is it not apples and oranges, it's barely a comparison between any food groups at all.

I like what others have suggested of getting another job and using the salary from the old job to invest while living off the new salary.

Hattie Dizmond · Answer

I'm with Dmitri...take the package and get another job immediately. If nothing else, look at it as a way to turbo charge your investing, because you can put away a lot of capital.

Bhekizwe M. · Answer

So the potential lurks like a giant within?

staying at the job,while doing real estate on the side seems plausible at least until the portofolio income far exceeds monthly expenses & salary

Is it time to quit my day job?

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