Why you shouldn’t jump into real estate hoping to avoid a job

[Shiloh Lundahl]

On a lot of new investor posts, I read that they want to replace their full time income with passive income from real estate investing. Which all in all is not a bad thing but I think their time frames to do this is not very realistic. 

Many newer investors look at work as if it is a bad thing and they get fascinated with the idea of getting paid passively. They seem to want to skip the working hard part and jump straight to the getting paid passively part.

I discourage this. Not just because I believe that hard work is a principle of success but also because I don’t think it is very realistic. Let me explain. If you don’t already have money to invest, then it is very difficult to acquire properties. You can work hard to get investors to partner with you on flipping properties to accumulate cash so that you can put money down for down payments on rental properties. However, once you do that, you will likely only start cash flowing a few hundred dollars a month for months of work. You will need to eat during that time along with pay rent and other monthly bills. How will you be paying those bills? If you use your flipping money then you won’t have investing money. And by the way, the more involved in real estate I get the more I realize that flipping is a job. So for everyone who gets into real estate in order to get out of a job, I’m sorry to disappoint, but flipping is a job. It is a small business. And there is nothing wrong with that but I just want people to realize that it is trading one job for another.

A better alternative in my point of view would be to learn to love to work. Jump into the job market as hard as you can. But do it with a strategy. Find an area or industry where you can charge a lot for your service and become really good at what you do. Excel at customer relations, build a great network, save money as best as you can, then go off on your one with your own small business. Stabilize that business and start accumulating money to use to invest in real estate. Have your business invest in real estate rather than you as a person. With the flexibility of owning your own business, you can more easily invest in real estate without a boss looking over your shoulder wondering what you are doing with your time. This whole process can take 5 or 10 years, but doing this will set you up to better succeed at becoming a real estate investor. 

What are your thoughts?

[Mike Dymski]

cart before the horse...let's get one property under our belt before deciding it's the key to "retirement"