Investing WITH or WITHOUT a Job?

Question

Hi all,

I recently left a NY job I was unhappy in.  I would like to move to Los Angeles and start fresh there.

My goal is to get heavily involved in real estate investments to a) earn short-term money to live on and b) build long-term wealth through multi-family cash-flow.  So I was thinking I could Fix-and-Flip a few houses in my first year to make a little living money, and the remainder of my time is spent BRRRR-ing (Buy, Renovate, Rent, Refinance, Reinvest) with multi-family to grow long-term equity and cash-flow.  I have no experience with this, but have been devouring investing books and BP podcasts.

I have $100,000 to invest, and have access to investors with money.

My question is, should I just begin my real estate investing career full-time and go all-in?  Or, should I find another nice-paying job in LA and invest on the side?  What are the pros and cons of each path?  My fear is that if I get another job, I basically have no time for anything other than weekends, and will be stuck in the rat race forever, instead of building wealth.

I would so appreciate your expertise and opinions.

Thanks,

Solomon

Brian Garrett · Answer

I'm currently still in the learning and education phase myself but I will be moving forwards with REI full-time once I dive in on my first deal. It's ultimately up to you what your level of comfort and risk tolerance is. For me personally I'm doing as much due diligence and inundating myself with as much information as possible so that I'm as prepared as I can be once I start investing.

Andrew Johnson · Answer

@Solomon Ganz The answer to this question may have a lot to do with your personal reserves.  If you have $100K to invest does that mean you have another $100K in reserves to live off of?  Do you have reserves separate from the $100K as a "just in case" fund for properties you buy?  Or is $100K the entire nest egg that you have to invest, live off of (until income comes in), and use as a reserves fund for properties when some random thing inevitably goes sideways?  Not to mention that access to capital (investors with money) will change over time.  Meaning if they invest in Project A how quickly can get reload for Project B?  If the stock market hits a hiccup will they feel quick as comfortable investing or will they be more conservative with their capital.  Having even a decent W2 gives you the option to go to the bank for conventional financing.  So the standard job is a nice economic back-stop until you're up and running and a back-stop in case your access to capital changes.

Thomas S. · Answer

Basically two options. Take it slow with a job and well defined business plan or jump into the deep end and learn how to swim as you are sinking to the bottom.

Sounds about right.

Sam M. · Answer

Solomon, my thoughts for you would be to start full-time investing, specifically in fix-and-flips so you can generate income. Try it out for a year and set a strict agenda with definite goals for yourself. Should you meet your goals in that first year, continue on. Should things not unfold as expected, however, and money is getting tight, I would then look into landing a job and using the knowledge and resources you've obtained in that past year to develop a more streamlined business you can work on during nights/weekends. That's just my two sense, and I hope it helps (from one recently resigned employee to another).

Thomas S. · Answer

What is your experience level with real estate investing. You need to understand you are starting a business, which is OK, but most do go bankrupt in the first 5 years.

A 9-5 is not the terrible rat race it is made out to be it is simply a means to an end when properly applied. You trade your time for money and you then use the money for investing. Working for someone else to provide funding to invest is the easiest and least stressful way to that end. Get a good paying job, make a satisfactory effort and you will be handsomely rewarded.

90% of all successes in life develop from a positive attitude.

My opinion is you should stay far clear of CA. It is to expensive for investors and likely to crash at some point in time. The market is far to volatile. If you are free to move be more selective. Make a better business plan. Go where you can actually have a reasonable chance to succeed.

Linda S. · Answer

Definitely do it on the side at first.. Get your feet wet first, see if you like it, it's definitely not for everyone.   Decide on your strategy, that fits your situation best..  don't go for what looks like easiest money, go for what falls in line with your skills and time.

David Zheng · Answer

I think you should find a job first and do real estate on the side starting out. You're going to have a VERY hard time finding a lender without a W2 job. on top of that, you are trying to go into the LA market with just 100k (and a couple investors who may or may not actually invest) so any good deals will be extremely hard to find. Its not that hard to do a fulltime while investing. right now my Cashflow far outweighs my salary at wells fargo and I'm in securities. Of course, I don't have a family and I pull 80-90 hours a week, but it'll be worth it in the end.

David Stafford · Answer

Hi @Solomon Ganz,

I'm sure, to your point, there are many valid reasons for going it either way, however, in my experience, I think if you are really serious about investing and want to succeed, jump in with both feet. If you continued to work (or, got another W2) and then became successful, you'd likely quit your day job and maybe wonder why you ever bothered. The thought of not collecting steady income might be scary but the excitement of being a full time investor and doing things on your terms should outweigh that fear.  Before you know it, you'll be making great money but more importantly, you 'll be living on your own terms. Just my two cents as a full-time investor.

-Dave