When is REI not worth it?

Question

Kind of a hypothetical here:

I'm curious how much money people feel they would have to make annually at an enjoyable "regular" job (working non-crazy hours) in order to decide that real estate investing is not worth their time?

I honestly don't know what the number is for me...

Arianne L. · Answer

@Tom Hertel It depends on the person. For me, it wasn't about the money. It was more about freedom with my time.

A job will always be a job. With real estate investing, you have the ability to make money work for you. You can eventually trade money for time instead of trading time for money.

My job was in the medical field where working all holidays were normal and I'd be lucky to get coverage for a week if I wanted to use PTO. Doing it during the holidays would be impossible. Now, for a lot of my coworkers it was fine because their family was a short drive away, or even just a 5 hour plane ride away. They'd just work the holiday still be able to see their families / extended families

For me, it was a 24 hour flight around the world to see my mom and siblings. It wasn't going to work.

It had to be something else. Starting my real estate investing career has been amazing. Now I don't have to choose between making money and spending time with my family. We're actually spending almost a month overseas this year and I'm not worrying about paying the bills. It's awesome!

Now, that's just for me. I do have team members. And for them it's a job, right? But I try my best to make it a win-win for them. And I'd love to keep them happy and motivated and continuing to grow with me and our company. I want to make them as much money as they'd want, given that they're willing to grow and work for it.

Arianne L. · Answer

@Tom Hertel I guess your real question was a little different from what I thought you asked.

Yes, I understand that there probably is a turning point in terms of $/hr for most people.

I see lots of people with a good chunk of $ spend a LOT of time trying to find a deal, or trying to learn how to get started, and at the end of the day buy a not so good deal, and what they made would was less than they would've made as a passive investor (that requires no work and time) on one of our deals.

There are people who invest with us passively who make a good amount in their W-2s. They get a flat % interest rate and just get a check in the mail or ACH from us. Whenever I talk to people who want to get started, I always present all the ways we could work together. 1. they could buy our wholesale deals and be a landlord/flipper themselves. 2. they could be passive partners and get a flat % which is usually comparable to rental returns

Chris Lemire · Answer

@Tom Hertel It very much depends on your goals.

Are you building long term wealth as a substitute or supplemental retirement fund?

Are you trying to quickly build capital to jump start another business, or pursue a dream?

For us it was about freedom. We have the freedom to work, or not to work. We are free to visit our families whenever we want, wherever they may be. We don't have to worry about losing that 9/5 job, because we've built a business that can support us. We can choose to keep our earnings, or give them away to a cause that's been tugging on our hearts.

For us, earning money is pretty straight forward. How do you earn more time?

Real estate is pretty awesome in that you can choose your own salary. You get to determine what is enough, and how hard you want to work to get it. The harder you work, the faster you get there, but there's absolutely nothing wrong with the slow, steady route, picking up a deal here and there as the opportunity strikes with the extra income you earn from a day job.

It's completely feasible to flip a property or two a year, or buy a few rental properties a year, without affecting your full time day job. That's exactly how we started. Was it easy? No. Was it worth it? For us the answer was most certainly yes, and after a couple of years building our business, it has completely eclipsed the income potential we were earning at our day jobs.

Tom Hertel · Answer

Your mention of the stock market is partly what I'm getting at. I think that most would agree that if you got paid $50,000/hr to do a job you like, it's more fiscally prudent to work overtime at that job and invest the overtime money in the stock market (since that literally takes a couple hours a year) rather than spend that same time on REI. Obviously my example is ridiculous because so few people make $50,000/hr. But what if your job paid you $100/hr, $200/hr, or $500/hr. Would your answer change?

Thomas S. · Answer

Investing is not worth your time if you are happy with your standard of living and your pension will maintain it.

I invest to insure my retirement standards are maintained for my wife after my death. I will cash out and put it in secure funds to guarantee the income to her death.

For most people they invest because they believe they do not have enough. The problem for them is that there will never be enough.

When is REI not worth it?

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