Real estate - a long-term/retirement tool only?

Question

Hello,I've been laid off, so I don't have any income coming in right now. So at this time, I am interested in both - creating income now and investing long-term. I was thinking about going into real estate investing, but then something occurred to me...all the stories I hear are about a long-term gain. Even if I buy a couple of rental properties now, the rental income will not cover all my expenses.Am I missing something or are all RE investors working daytime jobs and doing this on the side until they have enough income coming in from RE? Anybody has a story where they or someone they know did this full time from the start, without a daytime job?Thanks.

Ujwal Velagapudi · Answer

@Olga Huxoll Like the others have said, I do think most people have another daytime job while they initially start to invest. You can go full time into wholesaling, which takes very little money to get started, or flipping. Investing in rentals may be a bit longer approach, but it's all relative to what your needs are and what you're working with in capital to begin. The only few people I know that jumped into RE full time were real estate agents or wholesalers. I would of course still suggest you work a job, and use RE to supplement your salary, and slowly you'll have a point where your RE income will be able to cover all of your expenses or exceed your salary. After investing for nearly 3 years, I can say I've equaled/exceeded my salary in RE income. It feels like a long time, but definitely was not a retirement plan for me. I still keep the day job though to help with additional capital to re-invest.

Jean Bolger · Answer

It's not easy to make money quickly in real estate. You're better off planning for the long term. That said, the sooner you start the sooner you'll get results.It's true that you have almost no chance of getting a bank loan without a current source of income, so unless you have enough money sitting around to do some cash deals you'll need to come up a different approach. There's tons of information on BP about wholesaling and flipping, which are activities you might be able to start with. Both of those require a certain mindset and persistence but there are examples within the BP community of people who have thrown themselves into one of those and achieved success pretty quickly

David Dachtera · Answer

@Olga Huxoll,REI is a marathon, not a sprint. It takes time to build up an income stream from rentals unless you can snag a 30+ unit multi-family. 30 units netting $100 positive cash flow each brings in $3,000 a month at 100% occupancy. Remember to plan some vacancy into your numbers.Remember that in any economic doom-saying RE will be impacted like many other sectors, but that is a result of something much larger, likely impacting jobs which has a direct impact on the availability of quality renters.We're actually in a housing shortage right now. This is supporting rents and housing values for the time being.

Olga Huxoll · Answer

Arghh, guess I do need that darn job. Just talked to somebody who is convinced real estate is about to bust again and there will be lots of good deals in about a year...

Olga Huxoll · Answer

It does, Erick. Thank you!

Erick Tran · Answer

Hello @Olga Huxoll,There are two way to make quick cash, wholesaling and fix and flip.If you want to build long term then you can buy and hold (rentals). Hope this help!

Olga Huxoll · Answer

Well, I am looking for a full-time job, but who knows when/if I'll find one. And we (my husband and I) do have some money we can invest. I was wondering if I should focus on this full time, but it does sound like I need to find that job first...Thanks!

Chris Chesser · Answer

Olga Huxoll I think this would depend a lot on what type of investing you want to do, if you are financially set and have a large chunk of money ready to invest, and ultimately, how hard you want to work at it. If you are looking at flipping and end up not being able to sell for a 6-9 months can you sustain yourself with no income for that amount of time? Also, as Travis said, you will have a huge issue getting financing for any projects so you would need to be a cash buyer or use creative financing. If it were me, I'd find a W-2 job at least until you could sustain absolutely no income for 12 months or so.

Travis Dawson · Answer

Many people here are looking to replace or compliment their W-2 jobs right now. Many people have been successful.It will take more than a couple of rental properties, and assuming you need a loan the banks won't touch you until you've had a steady job for a while, so I doubt anyone has done it without a day job to start with.