Advice for getting out of the rat race?

Question

Hello everyone, I'm new to bigger pockets. I am 35 years old and I currently own 2 rental properties that are paid for. They each rent for $625 per month. I work in the utility industry also and make a very good living. The problem is I am subject to mandatory callouts and mandatory overtime. I feel like I don't have control over my life. I have young children and I absolutely hate missing out on things. I hate getting home in the evening only to see them for a few minutes before bed. I currently have no debt other than my mortgage. What are some steps I can take to make the leap to being financially independent?

Nathan Gesner · Answer

Before you start you will have to put pen to paper. How much money do you need every month? How many houses or units will you need to achieve that level of income?  Let's say you need $5,000 a month income and a typical SFH cash flows $200 after expenses (including setting aside for CAPEX, maintenance, vacancy, etc.). You would need 25 homes to meet your monthly income requirements. You can usually accelerate this with multi-family units so maybe it will only take five 4-plexes (20 units) to make the same income. I can't tell you the answer but that's the basic gist of how you can start to figure it out.

Get the entire family on board. You can't do this if your spouse is fighting with you about it. If she's not ready, you'll have to educate her until she can see it through your eyes. Find something that speaks to her so she can get involved. For example, maybe she's good with numbers and can evaluate properties while you're at work or she can pre-screen each property and funnel it down to just the best options so you're not spending as much time evaluating them.

You'll need money to fund the transactions. Start scrimping and saving. Look for friends or family that can invest with you and share the profits. Talk to lenders and see what your options are for traditional or commercial loans.

I also recommend you research markets that produce the best cash-flow and invest there instead of in your own back yard. Many people purchase property out-of-state and actually put more money in their pocket after paying the property manager. That will also reduce your workload so you can spend your time focused on family and growing instead of plunging toilets or chasing down rent. Check out "Long Distance Real Estate Investing" by David Greene in the BP bookstore for some great advice.

Lori Greene · Answer

You said you have two properties you own free and clear? Why not keep one for cash flow and sell the other for down payments to buy several more properties. Maybe some flips for more cash to invest and some as cash flow properties or buy a multi-family as suggested above or do some as BRRRR, Buy, Rehab, Rent, Refinance for more cash out, Repeat.

Lee Bell · Answer

you won’t be sipping pina coladas on the beach everyday.

Thank God. I prefer mountains. And beer. :>)

Matt M. · Answer

@Justin Dar

Just a piece of advice, before you go and quit your job look into what health insurance will cost you on your own.

Plumber friend of mine’s wife works a measly little job just because her employer provides them with great health insurance at a small cost compared to if they were on their own. Her $18k/year job is worth over $40k with the insurance factored in.

Dennis M. · Answer

don’t be in such a rush to get out of the rat race to free up time . I say that because having dozens of rentals may give you good income but you are basically buying a second job you won’t be sipping pina coladas on the beach everyday . Your new rat race will be racing to your properties dealing with repairs tenant issues and all that goes into running rentals . Multiply the issues you have now operating a couple houses by ten or twenty and then you can get a glimpse of your new job

Bob B. · Answer

Set short term and long term goals.  Write them down.  Have the wife on board.  Keeping track of reaching goals will help by having a sense of accomplishment.  Also be realistic, you are providing for your family and most people don't retire early.  Also it's not a race, it's life.

Matt Brown · Answer

@Justin Dar

I'm in the same boat, same age, great paying job, hate missing out on the family. What I'm looking at is a few angles.

First, SFRs at 3/2/2 are our niche. We'll keep after that as a foundation.

Next, the wife a realtor that is gaining more experience and contacts in the field. Eventually she'll be a broker and we're looking to start our own PM business. I'm more of the investor type, working deals, doing the analysis, etc. So we complement each other.

Also looking at other less time-intensive strategies such as storage to pad the income. Working that right now so I can't say if this is successful or not, but my preliminary analysis is that it will be.

Right now 100% of my wife's income and rental income go to more investments. Plan is to keep this up for a couple years and then quit the rat race and finally work for ourselves. I think the key is hedging risk and having multiple streams of income.

Ali Boone · Answer

Gotta focus on passive income, and only passive income. Income you don't directly have to work for on-call. For rental properties, buy turnkeys or other properties that a property manager can run for you. Invest in notes, etc. Anything that doesn't require your time. There's plenty of options out there!

Rachel H. · Answer

@Justin Dar Great to hear about your rental properties! You want to evaluate your portfolio. See how things are going with the types of neighborhoods and tenants that you have. If you feel comfortable with the areas and types of tenants, you can always continue to buy in those neighborhoods. One thing you may want to do is look into buying a multifamily if you want to scale up. Depending on your comfort level, some here on BP have done that and lived in it to get the owner occupied financing. But again, it will depend on your comfort level. Good luck with your real estate investing journey!

Caleb Heimsoth · Answer

@Justin Dar. You need a lot more units to make it work.  So figure that out like @Nathan G said and go from there.

For me I’m probably looking at 100 or so units before I’d go full time investor and very little or no debt on my portfolio.  However I’m giving myself around 20 years to reach that goal.

Advice for getting out of the rat race?

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