When Can I go Full Time...

Question

I currently have no properties, but am waiting for the moment to where I can go full time property management / or have enough cash reserves saved up to go landlord / brrrr full time. I have saved approx. 590k in cash and am basically waiting to pull the trigger and/or am in analysis paralysis. Is there anywhere in the country I can go full time with this amount of cash.? As I have saved and saved and saved I have watched house prices rise almost as fast as my savings and am starting to worry I will not outpace this market and may never be able to go full time. I live in colorado springs, and prices here make impossible to go full time with the amount of cash I have.

For full disclosure, I have access to VA loan, 590k cash, currently make about 75k per year. Idk what to do.... My original plan was to wait until prices drop out and get a VA Loan (house hack it) the primary residence and buy some with cash, but I think I'm screwed... Any ideas? I have no illusions to hard it will be managing properties, and I don't expect a handout, but any job is better then what I have now, haha.

Stuart Grazier · Answer

@Michael Ilizaliturri The best time to buy real estate was yesterday. The next best time is today. Don't wait any longer, just take action. 1) Use your VA loan and get into a house in Colorado Springs to house hack. That costs you very little money and you can get tenants to pay your mortgage for you. That's a no-brainer. Colorado Springs is a great market and it's not going down anytime soon. 2) Use your cash to either start lending money to flippers, or invest as a limited partner in bigger commercial syndications, or go buy some rental properties in the mid west where it is cheaper and the numbers make sense. This comes down to networking and finding the right investors that you get to know and trust. Stop sitting on the sidelines and go get after it. You won't get anywhere by just stockpiling money in a bank account; you are technically losing money, due to inflation. Go get your money working for itself.

Aaron W. · Answer

@Michael Ilizaliturri Congrats on saving so much as this will only a give you an advantage moving forward.Before you decide to jump in full time, what are your goals in investing in real estate? What is your why? How much income do you need to bring in to cover your expenses? Why would someone hire you to manage their properties? If you are going to wait for the market to drop out, you could be waiting for a long time. Nobody knows if or when this will happen. Even if it does, Is it going to be a 2008 style crash? Who knows. If you are going to jump in and make mistakes, then it may be wise to do it while you have a stable paying job. This can mitigate any mistakes you make and also help you qualify for additional lending should you wish to use something other than the VA loan.Best of luck!

Stuart Grazier · Answer

@Michael Ilizaliturri There is no longer a limit on the VA loan. You have as much purchasing power as you can afford and qualify for. My advice is to start building out your team and take action on finding a property to live in and house hack - it starts with finding a great Realtor and a Lender that are both investors and can help you look at properties and loans with an investor's mindset.

Daniel Haberkost · Answer

First I want to echo @Stuart Grazier - house hacking works extremely well here and is a very easy place to start. It's really hard to go wrong house hacking.IMO you're looking at this wrong. It's not a matter of having enough cash to go full time in real estate, it's about having the experience and skillset. Yes, you need reserves set aside but it's really about knowing what you're doing. Trying to jump in full time with a bunch of cash and no experience is a great way to end up getting taken advantage of. Figure out what you're trying to accomplish (which it sounds like you have), pick a strategy that will get you there and then stick with it over the long term and avoid getting distracted.

Jon Kelly · Answer

@Michael Ilizaliturri only you can answer the question, "when can I go full time..." It depends on your goals. How much monthly/annual cash flow is enough for you to go full time? No reason to quit your job until there is a need to... With $590k in cash, I would target $1-2M multi-family properties. Ideally there is a market within ~1 hour of you where the cap rates still make sense to invest. Use additional funds and the annual cash flow from the multi-family property to fund your next ones

Benjamin Aaker · Answer

Since you can get a VA loan, you won't have to put up too much of your cash if you are willing to live there. A four-plex is a great way to start.

Michael Ilizaliturri · Answer

Thanks for all the replies. I am a single dude with zero debt, so I would only need about 3k monthly cash flow to justify going full time. I have not seen many duplex/triplex/quad in my area that are priced anything I could get with my VA loan. This was my initial plan and then moved to the idea of house hacking, since its what my friend is doing and working well for him. Yes, the loan goes up to 500K buying power technically.I'm on the list for a bunch of new builds for my VA, but most of them have more people on the list than available total lots, so I'm just sitting here waiting...The house hack is for sure, should I buy another with cash and just refinance it to a conventional loan and repeat? Thanks for all the help.

Ben Scott · Answer

I agree on the house hack. Doesn't your VA loan allow you to go up to $500k in buying power? I'd buy a multi-family and live in the unit with your VA loan. And then take the savings and buy SFH in a consolidated area so you can learn more about that pocket of the real estate community. You could own 8-10 doors in a few months with minimal personal housing expenses. Then keep the W2 job until you don't want to work there anymore. Either way, you're in a great position.

David M. · Answer

@Michael IlizaliturriOkay. I don't know your market. So, its really dependent on if you think the deal is "good for you."I would say, just be careful about putting all your eggs in one basket. For example, what if another covid-type issue (or even a general depression) happens and your renters can't pay? Now you are really screwed. I guess that is what is the most perplexing with your post. Most investors I hear of "grow" into using their rentals for their retirement. They don't just buy three properties, clear $3k/mo, and say they are retired.Not to add to you analysis paralysis, but being a landlord isn't for everybody --- just in general. You probably will run into a "rough patch" with tenants. And maybe this is just your post on a public forum and you have plenty of other plans and alternatives...I don't know what your living situation is now, but you could always buy one of the investment properties first. See how it works out. See if all your analysis is correct...Anyway, I hope this helps (somehow). Good luck.

Don-Carlos Moniz · Answer

@Michael Ilizaliturri, there is a lot of good advice in the above posts. I hope you see the trend, which is to figure out your goals and then invest accordingly. You are in a very strong position to start investing in real estate, but you are also in a very dangerous one. The funds that you have can and will disappear very quickly if you do not make good decisions. Find a realtor in your area that works with investors and get a property under contract that works for you. Network with people actively involved in the market and surround yourself with people taking action. Don't get in a rush to spend your money; real estate is a marathon, not a sprint. Good luck.