Are You Making a Living?

Question

Hi all. I want to get a feel for how many on here actually make a decent living in real estate verses are just doing "OK". Obviously I realize we probably cover the spectrum from no real estate income all the way to huge real estate income. I realize the term "making a living" is pretty broad and I'm not asking for hard numbers on your income, that would be rude, but for me it would mean the ability to quit my job as an engineer and live solely off my real estate income while growing it at a consistent rate, maybe 10% a year. I currently do pretty well for an engineer earning a little more than most in my field. I'm not 6 figures but have the potential to be there in a few years if the right promotions come along but not much more is possible within the corporate structure in which I work. I know it can be done as others have obviously done it, but I'd like to know how common it is. I plan to do a mix of buy and hold and an occasional flip just for fun, but if I'm going to go down this road I want to know that with hard work the odds are in my favor of succeeding.

Tom

Steve L. · Answer

Just like most businesses, in real estate, it takes many years of "doing well" before you feel it.  You start with enough money to do 1 project at a time, than you get up 2.  After 5 years we could have 20-25 projects going at once.

It is pretty compelling though:

• you are creating something that can add value unrelated to how much time you invest
• your income has no "ceiling"
• you have freedom to do what makes sense, not what your boss makes you do
• retirement probably isn't as scary
• no one can "fire" you

Being full-time definitely isn't for everyone and I think employees really underestimate how it's easier to build a long-term portfolio with a W2 (especially at the start).  But I guess that's not glamorous.

Good luck.

Michael Washburn · Answer

I still have a W-2 job and do my REI on the side.  I live off my regular income and save the cashflow from my rentals to fund my next property and build my real estate business.  I am a teacher and can retire in 5 years.  When I retire I will draw my retirement and work my REI fulltime.

Mike

Chris Masons · Answer

While I continuw to work my W-2 day job my income from Real Estate is very quickly approaching my W-2 income level. I feel that using thw 2 types of income together I can continue to grow both and have them work together synergetically.

While the thought of going full blown RE investor seems alluring and sounds great I think at this point I would be cutting off my nose to spite my face as I have great medical benefits, great 401k with company match as well as other Corp. benefits that I am not ready to give up yet.

As an example: by maxing out my company 401k , this year (I believe the max is 17,500) which I am able to do, due to my supplemental RE income) I am able to reduce my taxable income by that much allowing me to be able to claim more passive losses on my Real estate income. You are allowed a special 25k passive loss based on your income level which starts to get phased out @ 100k and completely eliminated when you reach 150k.

regards,
Chris

Aaron Montague · Answer

Building a Real Estate business is like building any other type of business.  You need to bring in more money than you pay out, easy equation.

Personally I look at Real Estate a good sum of money that will allow me to switch to teaching, a lower paying profession, earlier than I would have following a more conventional 401k route.

Elena T. · Answer

I have been an RE investor for 1 year now. I have one property in my portfolio that I earn a positive cash flow of $250/mo from. I am very new to this. Although, I am still an employee, my goal is to be a full-time investor within the next 5 years. Right now, I am using my employee status to research and educate myself on what it is to be an investor. My biggest challenge as I raise my financial IQ is to change the life-long bad habits and mindset I have. This is not an easy process.  I am committed.

Ryan R. · Answer

Just a part-time venture for me right now, although it consumes a lot of my time..

Last year, I only made about $5,000 on real estate. This year I expect to do about 10 times that.

As James mentioned, it is harder for those of us with above-average incomes from our corporate gigs to pursue real estate full-time.

I'm shooting to retire (live comfortably off my real estate investments and still grow my wealth) in my mid forties.

Bottom line is that I enjoy it.

James H. · Answer

RE investing is supplemental for me. I don't foresee it ever replacing my W-2 income. If you are making, say 95K/year, you would have to invest at least 630K of your own money at a 15% COC net return to get up to 95K W-2 job. Is it possible? Sure. Is it likely? Depends. Do you want to work 10 times harder in RE than you do as an engineer to make the same amount?

Are You Making a Living?

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