Real Estate Investing Full-time

Multi-Family and Apartment Investing
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Real Estate Investing Full-time

Dean Taylor
New to Real Estate · Layton Utah · Member since 2018 · 14 posts · 2 votes

Hello Bigger Pockets friends,

I have been reading books about real estate investing and reading blog posts on Bigger Pockets trying to get educated. I want to lay a good foundation for starting my business. I am currently working full-time, but realize that if my goal is to do this full-time, I will need to cover health insurance. I have some questions transitioning to doing this full-time. I have a couple of partners with whom I am working as well. We have been working to develop a team with whom we can work. We have identified a CPA, a real estate attorney, and are establishing relationships with real estate agents. We have met with our CPA and been advised about business entity structure. However, we have not yet created it. We have a draft operating agreement, but need to meet with our attorney to finalize and set up business entity structure. We are also working on identifying a lender(s) with whom we can work. However, I have questions and wanted to see what advice others might have that have blazed this trail before on establishing your business. Here are some of my questions:

1. What are you doing to cover your health insurance for you/family (if applicable)? 

2. What were the steps you followed to set up your business?

a. Did you create your business entity first? 

b. Do you have a checklist of things that you would recommend following in order to lay a strong foundation?

3. Anything that you think would be important to do to set up the business?

I know that is a lot to consider. If you have any recommendations on books or websites about setting up business that you have used, I would be interested to know that as well.

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Larry Turowski
Flipper/Rehabber · Rochester, NY · Member since 2014 · 1k+ posts · 1k+ votes
7y

@Dean Taylor Your post makes you sound like you are unfocused and getting way ahead of yourself.  You start off talking about going full time and that entails covering health insurance.  Then you talk about getting a team together, then oh, you have partners, and ask how should you set up your business.

Full time is way off, unless you expect your partners to pay you a salary.  Focus on finding a deal.  If you don't have a deal all this over stuff is just busy work.  Once you have a deal then focus on your partnership.  Do a bunch of deals and then start thinking about going full time.

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  • Larry Turowski
    Flipper/Rehabber · Rochester, NY · Member since 2014 · 1k+ posts · 1k+ votes
    7y

    @Dean Taylor Your post makes you sound like you are unfocused and getting way ahead of yourself.  You start off talking about going full time and that entails covering health insurance.  Then you talk about getting a team together, then oh, you have partners, and ask how should you set up your business.

    Full time is way off, unless you expect your partners to pay you a salary.  Focus on finding a deal.  If you don't have a deal all this over stuff is just busy work.  Once you have a deal then focus on your partnership.  Do a bunch of deals and then start thinking about going full time.

    5Reply
  • David Steinbok
    Rental Property Investor · Toronto · Member since 2018 · 126 posts · 106 votes
    7y

    I agree with Larry. You are making it way to complicated. All that work and set up so you can buy 1 house and split the 300$/mth cashflow 3 ways. Just buy some property and when your portion of the cashflow is greater than your day jobs income, then reevaluate where your at and quit your day job.

    4Reply
  • Scott SmithPro Member
    Attorney · Austin, TX · Member since 2014 · 1k+ posts · 932 votes
    7y

    Real estate investing is often about taking baby steps. If you get ahead of yourself you can get into a ton of trouble. I got into a partnership with a friend while in law school and it helped pay for my education, but at the end of it I realized how fortunate I was with a good partner and solid investment. As my investments grew, so did the infrastructure that you are discussing. Full-time investing is something that takes time to move into. 

    I would honestly agree with the comments above. Start by exploring every deal you can find and find mentors and professionals who will coach you. Get into something personally so you can see the ins-and-outs without your entire livelihood is invested into real estate. Once you build up some experience and have a list of people who you can work with, then you can consider full-time. It is a great goal, but you are leaving a tremendous amount to chance for a small amount of income - things always go wrong and you need to be experienced to anticipate them and roll with the punches.

    I do wish you the best in your investing! It is worth it when you approach it from the right angle! But I have seen many crash and burn because they jump in too soon, try keep your options open as much as possible.

    Podcast Guest on Show #109
    4Reply
  • Luke Miller
    Investor · Front Royal, VA · Member since 2013 · 586 posts · 418 votes
    7y

    @Dean Taylor plenty of people have bought investment property, decided it wasn't for them and quit. I would suggest putting the attorney meetings and health care worries on the back-burner until you buy property and decide it's for you. It took me five years to quit my job and become full-time even though I wanted to day one. Even still, my wife works just in case. 

    2Reply
  • Breanna Muse
    Specialist · GA · Member since 2019 · 8 posts · 2 votes
    7y

    Sounds like you could use a little guidance, maybe try joining a coaching program. I can refer you to a really great opportunity. PM me for details!

    Best wishes on your journey!

    1Reply
  • Dean Taylor
    OP
    New to Real Estate · Layton Utah · Member since 2018 · 14 posts · 2 votes
    7y

    @Luke Miller, @Scott Smith, @David Steinbok, @Larry Turowski Thank you all for your honest and open feedback. This is one of the reasons that I have really enjoyed the Bigger Pockets community. You are able to post questions and learn from others experience and expertise. Your comments are really appreciated. I am learning that it does take time and patience. Thank you again for your feedback and sharing your insights. 

    1Reply
  • James ReyPro Member
    Ellicott City, MD · Member since 2014 · 60 posts · 23 votes
    7y

    @Dean Taylor I agree with all that has been said. Plus, there is a lot less pressure to do a deal because you have to( no other income) vs it being a good deal.

    1Reply
  • Dean Taylor
    OP
    New to Real Estate · Layton Utah · Member since 2018 · 14 posts · 2 votes
    7y

    Thank you @James Rey for your comments as well. 

    For anyone else reading this thread, I should probably clarify my original post. I am not looking to leave my current job right away and start into real estate full-time. I apologize that I wasn't clear in my original post. Some day I would like to do this full-time, but that is not reality right now. I really appreciate everyone's comments. In a general sense, I was wondering for those that have transitioned to doing real estate investing full-time, is there a "blueprint" you followed or did you just deal with things gradually as they came up as you acquired more properties, etc?

    0Reply
  • Luke Miller
    Investor · Front Royal, VA · Member since 2013 · 586 posts · 418 votes
    7y

    @Dean Taylor i'd suggest just searching the forums and looking for articles. I can't say I followed any blueprint because if I did, i'd probably gotten there much faster. Here's and article from @Brandon Turner https://www.biggerpockets.com/renewsblog/2013/07/1...

    1Reply
  • Theo Hicks
    Rental Property Investor · Tampa, FL · Member since 2015 · 1k+ posts · 969 votes
    7y

    I wouldn't create the business entity, operating agreements, etc. until you are close to identifying an investment opportunity. Legal costs will run into the thousands, so you need to be 100% certain that you are going to close on a deal with the entity/group.

    Your next step should be to find a property management company that specializes in the type of deal you are interested in investing in. Then, start underwriting deals sent to you by your broker. Once you find a deal you want to submit an offer on, you can start the legal process.

    In regard to insurance, I am on my wife's insurance. Others, I assume, purchase private insurance for their family.

    3Reply
  • Bjorik Mutize
    Real Estate Broker · Minneapolis, MN · Member since 2016 · 530 posts · 398 votes
    7y

    @Dean Taylor

    Hello!

    As some of the feedback above, a lot of these items are crucial to consider, however it would be best to simplify the first few steps as focusing on buying a property. Wouldn't want to spend too much time focusing on an LLC than take time away from you learning to analyzing deals, looking at properties and closing on them.

    But again, not saying they are not important things to consider.

    1Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    7y

    @Dean Taylor

    Are you talking about investing in real estate, or starting a real estate related business?

    The reason I ask is that in the last 10 years the term investing in real estate, and real estate investor has commonly been misused for people who are in a real estate BUSINESS, not real estate INVESTING.

    Examples of a real estate business are wholesaling, fix and flip, hard money lending, etc. investing is buying a property for the rental income, appreciation, and tax benefits.

    Now there is some aspect of each in every deal, but we are talking about which part of the spectrum your on.

    If you really mean real estate investing, then finding a property to invest in is the first and only priority, while educating yourself. Identifying lenders is basically a waste of time until you have a property under contract, ditto for interviewing attorneys, accountants, etc.

    If on the other hand you want to set up say a wholesaling and fix and flip operation, then taking the time to set up infrastructure is appropriate. Type of entity takes on greater importance, tax planning, especially with new tax law, isn’t as straightforward, finding a satisfactory lender for the type of business you will be in is of importance.

    The reason experienced investors, or real estate business operators are so negative on this ‘ create my team’ stuff, is that it’s what’s taught by the ‘gurus, who either have never actually invested in real estate, or who were unsuccessful at it. It’s used as filler because the gurus ideas about where and how to find deals are so lacking in accuracy or specifics. Some gurus have an even darker motivation to suggest newbies spend time developing ‘a team’ first. They offer a money back guarantee for a limited time, say 3 months after purchasing there mentor ship program. If they keep the mentored busy with developing a team for those three months, they won’t have the negative experience of finding out the programs extreme limitations until after the money back guarantee period expires.

    Private Mortgage Financing Partners, LLC
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    2Reply
  • Greg Dickerson
    Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
    7y

    There is a consistent process to starting any business but I haven't seen a written blueprint yet. I am going to put one together since I am a serial entrepreneur and have started 12 companies from scratch in my career.

    The first thing you need to do is to decide on what type of business or property investing you want to focus on. This will determine the rest of your legal, corporate and tax planning and structure. 

    You can start doing deals while working full time but you will need a solid team to handle the day to day depending on what type of deals. Since this is the multifamily forum I am going to assume you want to do apartment investing. The best way to do that is to first get educated, if you have money partner with an experienced operator or invest passively in someone else's  deal and learn through them. If you want to jump right in then find a mentor, this will cut your learning curve way down.

    See answers to your specific questions below:

    1. What are you doing to cover your health insurance for you/family (if applicable)?

    Private policy my entire career. You can also get a group plan when you form your business entity.

    2. What were the steps you followed to set up your business?

    1. Concept or idea 2.draft a business plan (this can be simple 1 page outline) 3.set up the entity and tax ID 4. open bank account 5. take action on the plan. It's that simple. First comes the idea, then faith in it followed by the implementation. That is how success proceeds.

    a. Did you create your business entity first?

    Yes alway. After discussing with my accountant and legal team (tax attorney and business attorney)

    b. Do you have a checklist of things that you would recommend following in order to lay a strong foundation?

    Find a mentor or partner with an experienced operator

    3. Anything that you think would be important to do to set up the business?

    See above

    I know that is a lot to consider. If you have any recommendations on books or websites about setting up business that you have used, I would be interested to know that as well.

    There is a lot of info here https://www.score.org/

    3Reply
  • Scott Morongell
    Investor · Charlotte, NC · Member since 2017 · 791 posts · 479 votes
    7y

    @Dean Taylor I am assuming that your speaking in regards to syndication? If so I would heavily take all the dollars you allocated to setting up your entity and structures etc and hire a coach or join a program. You do not want to enter this business alone and without an education. By hiring the right coach/group these other questions will be answered and fall into place accordingly. I am not trying to sound negative in any way. I love your passion for entering the real estate investment world. 

    1Reply
  • Marisa R.
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    7y

    Agree with what most are saying here.

    For me its the KISS strategy (keep it simple stupid)......

    Just start researching and understanding the numbers, the deals that make sense. 

    Educate yourself on how and why markets rise, where are the good markets to jump into today for appreciation. 

    Cash flow is great, however growing capital is also critical

    All the best... keep working it.... 

    1Reply
  • Dean Taylor
    OP
    New to Real Estate · Layton Utah · Member since 2018 · 14 posts · 2 votes
    7y

    I am so appreciative of all the advice offered on my post. Very helpful and I am truly grateful for you taking a few minutes to reply and share your advice. Your responses have encouraged me to keep going! 

    0Reply
  • Dean Taylor
    OP
    New to Real Estate · Layton Utah · Member since 2018 · 14 posts · 2 votes
    7y

    @Don Konipol, to answer your question, I am interested in starting a real estate related business...buying property for the rental income, tax benefits, etc. I really appreciate your advice and taking time to respond to my post. Very much appreciated.

    0Reply
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