Metrics to meet before quitting 9-5?

Question

My personal goal:

1M + Net worth

50k/ year in passive income

300k in cash for house flipping plus a line of credit

These are my minimum metrics before I would go full-time if I decided to. Just curious what other people's metrics are/were before they quit their 9-5?

Hunter Purnell · Answer

That is a very valid point. It is scary to not have a consistent income from a W2, but I have enough experience that worst comes to worst I find another job. With the amount I'm spending I could find a job that pays 1/2 much and still be fine. Health insurance is a big deal, and other benefits. But there is a potential to double or even triple my salary + benefits based on the returns I've had on previous flips. So there is also a large opportunity cost of staying with a W2. Its just uncomfortable and intimidating.

Scott E. · Answer

Those are very sound goals. Perfect in fact. I wouldn't change a thing.

With that being said, they will be easier said than done to achieve. I had similar goals when I was in Corporate America and looking to head out to pursue real estate full time. I only ended up checking 2 of those 3 boxes before I decided to leave, but still felt confident to take the leap.

There was 1 more personal goal that I didn't even have on my list, but when I achieved it, I knew I was ready. And that was:

Experience.

When I left Corporate America I had flipped dozens of houses over the prior 10 years. I had bought and sold short term rentals, long term rentals, and commercial property. I had built a spec home from the ground up. I had built up a network of agents, wholesalers, designers, contractors, and lenders.

In hindsight, that experience and network was even more valuable than the financial milestones.

Chris Evans · Answer

Great question! My wife and I consider that our "Base Camp 1" as in relation to the first camp at Everest. In full disclosure, we're in professionals in the real estate industry, so I don't have a 9-5.

Our requirements were 150k/year in gross rents with zero debt.

This is going to be a very early retirement for us so we will be paying off all the debts before leaving our daily responsibilities so we remove most of the risk from the portfolio before taking the leap.

Account Closed · Answer

It really depends on the average cost to buy a home in your area, when I had enough to buy a house cash with enough left over for the repairs and a years worth of savings I made the jump into full time investing.

I make a lot more money working for myself, my quality of life is a lot better and I'm chipping up to retire sooner. It isn't great all the time, I work a lot! There is always pressure to find deals so I've had to adapt to stay in business. Overall I enjoy what I do and will probably continue to do it until I drop dead.

There is one thing that you left off of your list, that I also didn't have when I quit my job! I highly recommend having a real estate license, it has saved me a small fortune buying and selling my deals! I have better access to deals, market data and I actually make a lot of extra income with it now. Without my license, land deals and new construction I'd be back working for the man.You will know when the time is right because you will feel that you have too much to do and are losing money by working 9 to 5.

Ian Walsh · Answer

Once my real estate income surpassed my other income for 3 months in a row, I was ready.

Brian Phan · Answer

@Hunter Purnell Making the first leap to self-employment is always scary especially if you're going to RE investing full-time. But I promise you the view is spectacular once you make the jump. Good luck friend.

P.S. I own a health insurance agency. I help self-employed and small business owners find affordable health coverage. Feel free to reach out if you have any questions.

Adam Martin · Answer

This is something I’ve thought a lot about.  When I feel I’m getting close my plan was to test it out.  The last couple years of work the plan was to live off my rental income alone and not touch my 9-5 money but max out all retirement savings with it and invest the rest or possibly pay down debt with it.  My main concern is healthcare rates so I’ll have to do some research on what that would cost when the time comes.  If it works while I’m working with a comfortable buffer I’ll assume I’m ready and worst case if I’m wrong I had a nice break and can go back for a few years.

Chris Seveney · Answer

My metrics were:

1. Money put away to fund both kids colleges

2. 2 years of salary in the bank

3. Ability to maintain my current income at consistent rate (not fluctuating month to month)

I had discussed this years in advance with my spouse on what was needed to have her ok with everything.

Metrics to meet before quitting 9-5?

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