How to decide when to start cutting back W2 hours?

[Dallin Watson]

When should you start thinking about cutting back your W2 hours, so you can do something more productive with those hours? I closed on a duplex a month and a half ago now, and just resigned the tenant that I inherited to a new year lease. I have to live in the other side for the first year, so the property doesn’t cash flow right now, but with some remodeling I should be able to raise rents enough to get $100 from each unit in cash flow. I forced myself to be cut back the lifestyle when I decided to get into real estate and I cut my lifestyle to be 25-30% of my monthly income. I was able to save up for a 3.5% down payments in a matter of months. I did find that this harsh lifestyle cut back was very hard and ended being unsustainable, so I now am living on 50% of my monthly income and saving the rest. Because of these lifestyle cut backs, it will not take very many properties to be financially independent. Because of my lifestyle cutbacks, and now that I have some phantom cash flow coming in to pay part of the mortgage, should I cutback from 40 hours a week, to work on more productive things like the real estate investing, or should I keep working the 40 hours and keep putting the extra income away for a while longer? The 50% that was saving each month for the down payment, now covers the Morgage and utilities, and with the phantom cash flow coming in now, it can now cover part of the mortgage as well. I don’t have anything going toward cap x or anything like that right now, but all the major things have been done within the last 10 years, with the furnace, water heater, and roof done within the last 3 years. I have worked cap x into the final numbers of when both units are remodeled and rented out. With the phantom cash flow coming in and covering part of the mortgage now, should I cut back part or all the hours that equals the phantom cash flow, and spend that time working on the real estate business or keep saving all that I can for the next property and work on the real estate business when I can? I am lucky to get 5 hours a week to work on the business part right now. I get a yearly raise, and if I keep lifestyle creep at bay I could save even more to be able to buy more properties, but I don’t think the bank will let me have more than one because of my income level from the W2. I absolutely hate my job and it is pretty much a dead end job as well. I’ve got big ideas for what I want to do and accomplish, and I can’t do them working a W2, and I can’t do it without having money as well. When did you decide to make the jump and out of the W2 world and truly into real estate investing world?