Should I Quit My FT Job and Build My Portfolio?

Question

So, I bought my first property in 2013, my first rental (duplex) in 2015. Fast forward, we just closed on our 10th property today. We did a couple flips in the mix for some capital but now im focusing on building my portfolio and increase our passive income.

We have reached the point that our monthly cash flow + my wife working Part Time is a bit more then us simply both working full time (not including my full time work income) which has me thinking it may be best for me to stop working and focus on real estate "full/my time"

At this point, my employment doesn't help us to get more mortgages, so other then the income (which I don't really need anymore) Benefits (which my wife has) and pension (which is what my real estate is now for) I don't really need my job any more.... but the leap to actually do it is a different story. We have a family/kids etc. but I believe I can increase not only our income but our wealth faster and less stressful by not working my day job anymore. We originally planned for my wife to stay at home with kids but now we are thinking it may be best for her to work part time and i do real estate full time until we reach the point for her not to need a job.

As we cant get anymore "conventional" mortgages, we have figured other avenues to continue to build our real estate portfolio, income and wealth, so i am thinking my job is more of a waste of time then anything, I make a average income etc but the reason we are buying houses is to get away from needing a job.

Id like to hear some of you who are either in my position and on the fence to make the leap or those who have done it and how its been, also those who didn't do it....

Thanks!

Nick V. · Answer

Thanks,Its been a long hard road, its not easy. its not oh just buy some houses and rent it out like a lot on here would understand. My main concern is interest rates. even though we have great cash flow on all of our properties and we have all fixed mortgages, there is still that concern. I am thinking that I should reach 150% of my income 1st, in case that happens then i have room to play with if needed... but I am having people come to me and wanting to partner and buy houses so I can technically go buy a bunch of properties but then the time that's evolved, and working full time and my kids and family. Something has to give soon...

Nick V. · Answer

She is full time, will be going to 4 days a week, 9-4 vs 9-5. She will still have benefits yes, not as good with me because im employed with a local municipality, but still good coverage. I would say when we are nearing the point for her to stop working (and assist more with real estate) we would want to have 1-2 more properties simply to cover a private benefit package as with kids i defiantly want coverage.

Larry Turowski · Answer

@Nick Van Dyk This is something you want to plan out. - Income replaced? CHECK- Health insurance covered? CHECK- Emergency funds in place for your business? (What if you get a wave of expenses, non-payments, whatever?)- Access to cash for acquisitions? (Yours or someone's)- Qualification for mortgages in place? You can definitely get commercial mortgages and your W2 income and debt-to-income ratio may play a large role in that. Have you spoken with a mortgage broker and presented your plan.- Being able to work independently without outside structure?- Goals written out?- Pros/Cons written out?I still work full time, and could theoretically easily quit, but I haven't answered all these questions for myself, especially the structure issue.

Rob Massopust · Answer

I would consolidate. Sell off all the properties and exchange into one or two bigger properties that can yield better cashflow. Then with a w-2 income and the solid cashflow or create a corporation to give you a w-2 , start buying another 10 properties. That is the goal to increase cash flow, reduce expenses etc or are you building equity etc.

Nick V. · Answer

Thanks,Id like to hear from those in my position and how it it worked out. nonetheless, If i don't do it, then when will I?

Josh Inglis · Answer

Nick, that is awesome! Congrats on your 10th property! I have been helping my friend acquire rentals over the last 3 years and he is on his 16th property (Well him and his wife, let me explain). He got married and we were very strategic that we keep each rental property owned individually so they can each have 10 which would be 20 combined. Since he makes a very good salary and his wife is a teacher, they are both very bankable and easy to get loans. Once they hit the 20 mark, then I will have them work with local banks and have them purchase rentals it in the business so they can own unlimited rentals. He is planning to quit once he hits 20 so he can focus on the rental business and no longer can take advantage of consumer loans. As far as advising you to keep the job or not, I think the biggest question you should ask yourself is" is this job hindering me from acquiring more rentals?" If it is, dump it and continue building your long term wealth. Best of luck!

Rob B. · Answer

Hats off to you, Nick! This is where opportunity meets preparation and it definitely sounds like you've both planned this out really well. I'm curious to see other BP members responses, but kudos to you! Sometimes making the leap can be extremely hard, but other times when you've really researched it through and through (when you know in your gut that there is no other path), it just feels right. Best of luck to you and the family!

Rob B. · Answer

@Nick V. I have to say I am super impressed, Nick. Definitely makes sense to have those bases covered before taking the leap. Question - since it sounds like your wife is currently full time but you mention she might possibly take the part-time, while you focus fulltime on real estate, would health care coverage still apply through the part-time?

Nick V. · Answer

- Income replaced? CHECK- Health insurance covered? CHECK- Emergency funds in place for your business? (What if you get a wave of expenses, non-payments, whatever?) - I have "savings" but more is always better to be safe.- Access to cash for acquisitions? (Yours or someone's) - Yes, private funds as well as working with multiple new JV Partners- Qualification for mortgages in place? You can definitely get commercial mortgages and your W2 income and debt-to-income ratio may play a large role in that. Have you spoken with a mortgage broker and presented your plan. Either commercial lending, JV Partners who qualify, or private money. I have spoken with multiple mortgage people.- Being able to work independently without outside structure? What do you mean here?- Goals written out? Yes- Pros/Cons written out? YesAnother main drive for me is my kids, I'm sure im not the only one but I not only want to be there with them more, but have the luxury to afford stuff for them.