Is this all worth it?

[Rivy S.]

I currently earn a six figure salary at a pretty non-pressure, but full time, job.  We have 4 small children and would like to have more.  So we've been trying to build our rental portfolio so that I can replace my income and retire, but it's slow going.   

These last couple weeks have been really crazy, selling one house, under contract on one, and starting renovations on a third.  My husband made a comment that really gave me pause.  He said "We're making ourselves totally nuts now, so that when our kids are grown up we won't have to work. "

It's ironic, because of course the whole point in our real estate ventures is to enable me to be more present for our children. But on the way there... it's even harder to be present for our children.  Catch 22.  I'm interested in hearing different perspectives on this.  Any other working moms out there who want to share how they made this work?

[Anthony Gayden]

@Rivy S.

A six figure income seems like a lot of money until you actually get there and realize that you are not as wealthy as you had originally imagined you would be.

Don't abandon your family, but at the same time, don't settle for less than your true goals.

[Christopher Blanco]

I have a six figure job in a relatively stable company, matching 401K, the works. I hate my job however, REI is what I want to do. Why should I sit in a cubicle all day doing something I hate, or even something I just tolerate? Weren't we meant for more than that??

[Rivy S.]

@Anthony Gayden a six figure income doesn't even seem like a lot of money when your kids are in private (faith based) school :/

The thing is, building up enough rental to cover even just that, at true cashflow of about 200/door is slooooow, and kind of discouraging.  And until we scale to that level, there's a ton of headaches that consume our headspace, all of which has impact on our family.

[Rivy S.]

@Christopher Blanco I feel for you! Hating your job is for sure an added incentive.  I don't love mine, but I don't hate it either. 

I'm not sure I'm allowed to ask this in our egalitarian age, but do you feel there's a difference to a father having lots of side projects, and a mother? (In terms of the impact on the kids)

[Michael Boyer]

Good prompt... I think you can try to time your real estate investing with your life cycle some... 

Like you mention, you may have synced (by accident or design) the busiest time in your rental business (acquisitions, renovations, sales) with the busiest time in your personal life (full time job, full, young family, etc). That can be tough.

I sort of did that, too. It worked partly because I had more energy when I was younger. 

But now I have the rentals and renters closer to autopilot with long term tenants and stabilized properties that I know pretty well. 

And so it is sort of the like being the Maytag repairman now (no one calls).... And the kids are getting to the age they don't want a tag-along parent. 

Oddly, I am not sure I will use the lull to acquire anything (partly because of real estate price and partly as you allude my day job and other investments generate enough income)...

Probably looking at scale is key. What works for your stage in life and long term plans. For some folks it is a couple of condos and others want to tackle much more.  

As the saying goes, more isn't always better; better is better. 

Running the numbers on index funds and etfs and seeing how those returns compare to your real estate returns may be enlightening (and figure in all the time, capital and risk you are taking on with real estate). It may cause you to pause that next acquisition for now and put the money to work in an alternate investment--for both financial and/or lifestyle reasons.

Best of luck!

[Christopher Blanco]

@Rivy S. I would say it depends on the Father and the Mother. I have six kids, I am involved in their lives to the fullest extent. For the most part I attend every game, every performance, etc. My wife and I are partners. We have structured our lives to sacrifice a big house, big cars, etc so that she could stay at home. I go to work and I run the business. She runs the house and helps with marketing etc. In our situation, who is "more important"? I would argue that if you are doing this as an endeavor and do not have the full support of your family, and structure your life around the endeavor so that the family is taken care of equally along side the business, then you will struggle. 

[Rivy S.]

@Michael Boyer oddly enough, my busy time in life actually prompted me to get involved in real estate.  Since we are planning to grow our family more, and I felt like I was being pulled in too many directions, I wanted to be able to "retire".  However, I'm starting to feel like retiring is a pipe dream, and meantime, I've just added another direction to be pulled in.  

The goal of having my all my rentals on autopilot is what I'm going for.  How long did it take you to do that?

[Rivy S.]

@Christopher Blanco  It sounds like you really have a great balance. Good for you! 

My husband is also incredibly busy with his job, which he is very passionate about, so he can't always fill in when I've got one too many things going on.  So, yes, that is definitely contributing to my struggling to judge if this can even happen in a worthwhile way. 

[Account Closed]

Depending upon how far you are into six figures, by the time you calculate taxes, the cost of going to work and the cost of private education for four, you might not clear much. Have you considered homeschooling?

[Rivy S.]

@Account Closed it absolutely does not go far! That is why it is the minimum of what I'd need to replace in order to retire.  At 1-200/door, that's a lot of doors...

Home schooling is not something we'd consider for our kids at this time. 

[Jay Hinrichs]

first off its a complete pipe dream to think you can just live running rentals and its not a full time job.

you seeing it now with the few you have what do you think it will be like with 50. or 100.. which is what you need to replace your income. at least according to your math.

many will say PM does it.. well there goes a big chunk of your income and you need more doors to afford someone else to deal with the three TTTs....

personally I would look at a combination.. some rental income to supplement your income .. but to fully replace it .. not so sure in your market.. some markets in the US.. were you can buy rentals for the price of cars.. well that can work.. in higher priced markets pretty tough and unrealistic .. so don't get discouraged.. just get real.. and deal with reality..  landlording is not easy .. some love it.. like some posted above that's what they love and want to do .. others think they do until they actually do it.. then they hate it and sell out and get into the note business or.. buy any other kind of business... many many other business's that make good money.

I just sold a home I built to a lady that owns a Montassori school.. she loves kids... she makes 300k a year NET on that one school.. gets to be with 40 plus rug rats a day  :)  We all love kids we have 5 and 7 grandkids.. so I hear ya loud and clear.

[Caleb Heimsoth]

Jay Hinrichs this is sort of unrelated but I just listened to your podcast the other day, and wanted to say I really enjoyed it

[Jay Hinrichs]

@Caleb Heimsoth  well and unrelated  thank you for the kind words back at ya.. !!!

[David Faulkner]

A few thoughts come to mind.

First, reminds me of the quote that goes something like  "An entrepreneur is somebody who will work 100 hrs a week in order to avoid working 40 hours a week" The humor with that comes with a thread of truth.

Second, I was in a similar situation. My wife and I worked our tails off for many years and sacrificed on many things and I can distinctly remember thinking at times if it was all worth it. However, we were fortunate enough to do this largely before having kids (we had kids later in life and only had 2). Because of this, my wife can now stay at home with the children, who are home schooled, and we can still afford to raise them in a nice neighborhood. I keep my W2 job, and it is similarly easy, and I still invest on the side, but in a more passive way with lower returns but much lower work and stress. I could probably quit, but it is just not worth it to me at this time as it is easy money and affords us more margin to save and invest ... this is the optimal trade of for us at this moment, but took a long while to reach that point.

Third, I think you may need to reassess your strategy. As Jay eluded, getting it done on cash flow alone at $100-$200/door, assuming that this amount does not increase significantly each and every year, is quite possibly the hardest way to get it done IMO. If that $100-$200/door is just on the first day, but they are super high quality doors with a long history of appreciation in both rents and prices, then that is a totally different story and that would accelerate your progress and you will get there much faster than you may think. On the other hand, if they are non-appreciating assets (that trade well below replacement cost), then IMO you need MUCH greater cash flow to make it worth your while and offset the work, risk, and fact that you may be losing value in inflation adjusted terms by holding. You might find the higher cash flow in the multi-family space if that's the direction you want to go, or in higher quality doors with appreciation potential on the other end if you want to take that route. I also do realize that all of this is easier said than done in a hot market ... so yes we all do need to exercise some discipline in our acquisitions to make sure we can still manage our risks and make the payoff worth the risk and effort, regardless of what sort of properties we are going for, or else don't buy if it is not.

[Michael Boyer]

Thanks for the response.. I am not sure there was an exact time I can recall when a given rental veered towards autopilot (popular book on that topic, too, btw, Landlording on Autopilot)... It may depend on where you start (buying a new place versus a real fixxer for example; with a bunch of problem tenants to cycle out or mostly vacant units); and the complexity of the property (an older multiplex with quirks takes longer than a newer condo for example)...

There are some good past topics on "seasoning" of rentals generally on BP... A term I think about as the adjustment period, where you get the immediate property and people problems basically solved (no chaos or daily trips or worries...), the kinks worked out and rents coming in steadily.

For example, you have all the squeeks and leaks repaired and the units filled with good tenants (usually tenants you select). 

You might cycle out prior tenants (not renewing them unless they are up to snuff). Or others want to start with a clean slate (making vacancy a contingency). 

Then you start to implement your maintenance and capital improvement plan for the building and wrap your head around the needs of the place; and you get good paying, respectful tenants settled in and renewing their leases. 

My own definition of seasoning is "when the property starts doing the work instead of me"..

 I still help it along being responsive to tenant concerns and maintenance as needed but it no longer needs hand holding. And we get closer to what people talk about as "passive income" (fyi, self managing has never been totally passive for me as I am pretty hands on shoveling snow and painting etc)....

I know for me I basically develop a working relationship with the property and the people within a year or so... from knowing the sound of the sump pump working correctly to knowing the proclivities of the tenants. I feel I know a property pretty well in a year or two but I still can get a wrinkle or two later on....

I suspect the timing towards autopilot is variable and may depend on your resources and situation. 

But if you are buying and selling, I would see it still off on the near term horizon--probably at least towards the end of the one year leases of your first tenants on the new property you are purchasing. There are bound to be some surprises in the early stages..

It also sounds a bit like you may be mixing strategies if you are buying and selling alot (the frenetic pace of fix and flips, for instance, versus the slow and steady long term buy and hold rentals). 

Or if you keep adding properties, I would foresee a constant process of learning new properties, getting and onboarding new tenants, etc.. Part of growing... (but then you might get a system in place or borrow one if you are buying several properties a year)...Sort of a quick seasoning formula that works for you... Outsourcing some tasks may help, too...

I am pretty small scale by design --but lots of folks on BP own large portfolios and add rentals regularly (how many also have FT jobs in full families sort of goes to your prompt)...So they can chime in and some probably have a template for a part timer to add a few rentals every year--and keep sane!

Best of luck!

[Mary White]

I absolutely understand where you are coming from. My husband has an excellent W-2 job and works long hours. I run an Ebay/Amazon business, homeschool our 3 kids and manage our 10 doors (multi-units). We are beginning our first BRRR property and I am on my own to make the decisions. My amazing husband fully trusts me to do this, but there is a definite cost to our children. It would be far easier if he handled the rentals, but his job provides vital income and he loves it. Our strategy is to flex our plans according to the needs of the kids. Right now I should be ripping out moldy walls in our BRRRR 4-plex, but my son made the Little League All Stars Team so it will have to wait. To make this work we are using cash for purchases and repairs. We are also fully renovating each property to minimalize repair needs over the next 15 years. Time is a most precious commodity and we are prepared to sacrifice some income/wealth building opportunities for the needs of our children. Best of luck to you striking a balance. I suggest reading Christy Wright's Book "Business Boutique." She also has an excellent podcast and is a champion of time management. As a mother and business owner she is a great source for good advice.

[Christopher B.]

I can relate to this pretty well. It's always been my goal to build a lifestyle business for myself but honestly am not there yet. It sound like you, just like me, are operating an inefficient business. I have begun to break my business down, constantly looking at how it can be made more efficient and am actually planning to take a step back this fall through winter to reorganize. This is talked about ad nasuem here but in reality it's difficult to get your business there. It's why franchises are so popular, they do that for you. 

Maybe you should think about taking a step back. Slow things down for a few months, focus on improving the operations of your business. Maybe it will allow you to keep your sanity while operating at the same volume you are now or perhaps even allow you to scale your business larger.

[Account Closed]

@Rivy S. We bit the bullet when we started having kids. My wife quit her job, stayed home and we bought our first house, a fixer in a nice neighborhood. It put a lot of pressure on me to provide. We gave up some things but we got sooo much more. My motto at the time was "Honey, we don't want to raise the kids Twice." That is, once while they are young and the other when they are grown up and in therapy for the rest of their lives. These days it would be in the basement in their shorts playing computer games at 30 with no jobs. Don't get me wrong, my wife had a fantastic career that she loved and is highly educated. But, kids need their parents around. Most pregnancies for teenage girls happen between 1:00pm and 5:00pm. Now why do you think that is? (Oh yeah, parents are at work.) Our kids turned out great (according to the neighbors) and are very successful now each in their own right. We've been married 38 years and it is because we understood the priorities. When I was in the corporate world, I couldn't be there. But when I switched and because of the flexibility of real estate I was able to "be there" for all of the important events. We are "tight" as a family as a result.

[Albert Bui]

Originally posted by @Rivy S.:

@Anthony Gayden a six figure income doesn't even seem like a lot of money when your kids are in private (faith based) school :/

The thing is, building up enough rental to cover even just that, at true cashflow of about 200/door is slooooow, and kind of discouraging.  And until we scale to that level, there's a ton of headaches that consume our headspace, all of which has impact on our family.

This is where doing value add buy and holds and using leverage strategies to acquire more, larger, and faster can really help super charge things for you.

However, with leverage comes great responsibility because there will be times when you have the ability to buy a deal but it doesn't quiet meet your normal criteria. Like Anthony Robbins says, in the moment of decisions your future will be shaped.

[Albert Bui]

Originally posted by @Account Closed:

@Rivy S. We bit the bullet when we started having kids. My wife quit her job, stayed home and we bought our first house, a fixer in a nice neighborhood. It put a lot of pressure on me to provide. We gave up some things but we got sooo much more. My motto at the time was "Honey, we don't want to raise the kids Twice." That is, once while they are young and the other when they are grown up and in therapy for the rest of their lives. These days it would be in the basement in their shorts playing computer games at 30 with no jobs. Don't get me wrong, my wife had a fantastic career that she loved and is highly educated. But, kids need their parents around. Most pregnancies for teenage girls happen between 1:00pm and 5:00pm. Now why do you think that is? (Oh yeah, parents are at work.) Our kids turned out great (according to the neighbors) and are very successful now each in their own right. We've been married 38 years and it is because we understood the priorities. When I was in the corporate world, I couldn't be there. But when I switched and because of the flexibility of real estate I was able to "be there" for all of the important events. We are "tight" as a family as a result.

 Very cool to hear Ken that RE was able to give you the freedom of time to be there when things mattered the most.

Do you stay local for REI in your area of maricopa county or do you expand to Pima county and other states too?

[Andrew Johnson]

Rivy S. I can give you the "child" perspective on this one. If you grow up in it you don't know better. You don't know that it's a little odd holding a can of nails while your dad nails up new fencing in the back yard of a rental. You don't know that trashing out a vacant unit is weird. You don't know driving by to pick up rent at 8 pm is a little different. You don't know that your classmates don't time themselves to see how long it takes to change a door lock. And you also hear the endless droning from your parents about how "these will pay for you college". Guess what, they did. Both parents worked full-time and then owned far more than 3 rentals.

My point is that you can choose to spend time away from your kids doing this. You. An also spend time with your kids on your REI adventures. One day I'll run the math on how many open houses I went through as a kid. It's thousands, I know that. Not for nothing, it doesn't hurt that REI becomes the beating "you are going to college" drum on those weekends doing paint touch-up and wondering "what exactly am I scraping off of this stove?"

[David Faulkner]

Originally posted by @Andrew Johnson:

Rivy S. I can give you the "child" perspective on this one. If you grow up in it you don't know better. You don't know that it's a little odd holding a can of nails while your dad nails up new fencing in the back yard of a rental. You don't know that trashing out a vacant unit is weird. You don't know driving by to pick up rent at 8 pm is a little different. You don't know that your classmates don't time themselves to see how long it takes to change a door lock. And you also hear the endless droning from your parents about how "these will pay for you college". Guess what, they did. Both parents worked full-time and then owned far more than 3 rentals.

My point is that you can choose to spend time away from your kids doing this. You. An also spend time with your kids on your REI adventures. One day I'll run the math on how many open houses I went through as a kid. It's thousands, I know that. Not for nothing, it doesn't hurt that REI becomes the beating "you are going to college" drum on those weekends doing paint touch-up and wondering "what exactly am I scraping off of this stove?"

I can relate ... and as an added bonus, it is a motivator for going to college too, because you figure out very quickly that you sure as heck don't want to be a painter, or trash collector, or cleaner for a living :)

[Ian Walsh]

It might be worth setting the end goal in mind and working backwards to decide how much money/time you can achieve and at what cost.  Many times you will find there is a lot of time wasting activities you can cut out and still achieve the same income level in real estate investing.

[Rocky Griffin]

I earn high six figures and still feel that real estate is the best long term goal.

[Peter Mckernan]

@Rivy S. This is great prospective in a busy family based life! It comes down to what you actually want for your family, as the sacrifice will only seem long while in the moment, because the more you get your experience the more you will become quicker at those not so common areas of real estate. 

It you keep up the hard work now, you are bound to find it becoming easier and easier to set systems in place and become very good at what you do! You just need to get over that first learning curve hump, then it will feel like that first drop on a roller coaster.