Selling everything and leaving job to Travel! Tips for setting myself up for success?

Question

Does anyone have tips or ideas on what I should do right now, while I still have a W2 job that I will very likely leave in the next year, to set myself up for success in the real estate market after a 6-12+ month voluntary unpaid sabbatical?  Essentially I am asking if there is anything I can do besides save money while I still have a W2 job that would make things easier for me to buy more properties later on?

Current plan: After the "sabbatical" I am planning on doing some type of house hack.  I will use my skills to renovate it for some sweat equity and then rent it out for an additional stream of income.  Maybe I will do this multiple times?

Current Situation: I have a few long term rentals and have managed a couple successful STRs for several years in the past.  I will have rental income that I can survive off of, along with a savings cushion, 401k, Roth IRA, and equity in properties.  My primary job is not real estate focused, however, I was told if I started working a new job in the same industry after the sabbatical, I should be able to be immediately approved for a loan considering that income on top of my rental income.Any other general advice is also welcome as there is not really a playbook for what I'm doing.

Thanks!

Zach Lemaster · Answer

Make sure to use financing options prior to potentially not returning to the W2.  Just a thought.

JD Martin · Answer

To me, it sounds like you are going to essentially be burning your savings. That doesn't bode well for investing. You listed 401k, Roth IRA, and equity in your LTR properties as money that you can (will?) survive off of. That's more or less the opposite of investing.

I guess my tip or trick would be to travel based solely off the cash you set aside/are saving for the travel, and not touch any of the rest of it. Then when you get back from your sabbatical you'll at least have a base to build on.

And here's where I get to tell a story. About 25 years ago or so, the drummer in my band decided he was taking a sabbatical to do your version of travel, namely hike the entire Appalachian Trail (we live near it). At the time he made this decision, we (me and him) were probably more or less even in net worth. Being his most reasonably trustworthy friend, I agreed to be the "at home" support network for his adventure, ie sending him mail drops, paying his bills from his bank account, shuttling him to the starting point and doing some pickups, etc. Before he left he sold his paid-for truck to pad his savings, took his sabbatical from his job, and off he went. He ended up not making it all the way to the end because he ran out of money (made it to Connecticut, which is well over 1,000 miles). 25 years later, I've retired from a career in public service with a pension, own a rental property business, and could hike the trail every year from now until I was dead if I so chose without any money worries. He is still working, been through bankruptcy, and barely has two nickels to rub together. I'm sure he enjoyed his trail hike, but if future him could have looked into the future a little better he may have just done some mini-hikes and postponed some of that self-indulgence.

I don't know how old you are - I get the sense you're a young guy - but the ability to postpone gratification is a major factor in being a successful investor. Isn't there any way you can travel *and* still have a job? Millions of people do it every year.

Tim Ryan · Answer

What's the purpose of the sabbatical? Is it all travel and no work? I guess I just don't understand.  If I would give any advice, make the real estate business your sabbatical from the job it sounds like you hate or are burned out on.

Jonathan R McLaughlin · Answer

Actually, I’d buy as much real estate as you can before you go.

Ben Lin · Answer

Go to safe yet affordable countries like Malaysia, Vietnam or Portugal. There are many more other countries. I lived one year in Spain and my expenses was 30 percent lower. If you live in Malaysia or Vietnam you may cut your expenses by 50-60 percent. Next save as much dollar as possible. Enjoy your travels.

Bryan Daels · Answer

No, I listed those as my financial tools that I have to work with when I am ready so people could make recommendations on anything I may need to do now. For example, I understand I can purchase properties using my 401k as long as the cash flows go back into the 401k. This may be a great idea after I get my income to a decent level again and want to start building more retirement funds.

I will be traveling essentially cost neutral and should be in the same if not better financial situation later on because I may also pickup some type of remote work using my skill sets after 2-3 months due to likely boredom to fill my spare time.  I have no debts, bills, or kids and my HSA will easily cover all my healthcare insurance and expenses.

My reasoning for doing this is actually to use some of my “retirement” now instead of risking dying or getting some type of disease later on that keeps me from enjoying life to the fullest when I’m too old to walk around big cities and climb mountains. However, I want to be smart and not pass up any opportunities that exist due to my ignorance which is why I am asking the community experts what you all would do to prepare for my situation with a focus on wanting to invest afterwards to be able to drop a W2 for good! :)

Bryan Daels · Answer

I love to travel and would like to take advantage of having unlimited time to explore different countries.  I would work a little here and there but the main purpose is to take time off from working to focus on travel, learning new skills, and finding a new direction for my career instead of working a typical 9-5.  I am mainly curious if there is any type of tricks of the trade I could get rolling now to get a jumpstart later.  For example I have considered going ahead and getting approval for a HELOC on one of my properties.

Selling everything and leaving job to Travel! Tips for setting myself up for success?

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