RE Investing Part-Time VS Full-Time: Which is Better?

[Shiloh Lundahl]

People who have their job or career that can support their families, and who invest on the side in real estate, seem more resistant to market corrections.  Yet it seems like the “thing to do” is to leave the job market and become a full time investor.

With it getting harder and harder to find deals in real estate, and with the margins getting smaller and smaller in general, will investors who have left the 9-5 to persue their dreams of investing in real estate full time be forced back into seeking a job to pay the bills?

What do you think?

[Jay Hinrichs]

Shiloh,

For me its just trading one job for the other one is your self employed the other your working as an employee.  Or you can be a hybrid 1099  ..   it just seems to me those that really fancy doing landlording for a career tend to have more cube type jobs and did not like the structure.. were as if I look at myself.. I have never worked for anyone always been 1099 for 40 some years.. so to me its a life style.. There are simply very many ways to cut the real estate cake landlording is simply one of them.  But its the easiest to understand and the most popular ergo the competition for deals and the strengthening of the market.. 

I look at all these folks that say hey there are no deals its tough I am going to sit on the sidelines until it crashs and jump back in.. well that's fine from a land lord or own a rental perspective.. but this year will be our best in new construction. 

I sold all my rentals  350 of them to a partner 5 years ago.. you talk about the happiest day of my life.. I look at it like I just want out.. and I look at all these folks aspiring to own as many doors as possible..  there is just a ton of debt you have to take on and as we age we get debt adverse.. now in new construction we take on debt of course but we retire it.

and yes its a job.. but when its in the right market cycles boy is it a good one  Can make more on one new build in 9 months than a rental house in 20 years.. so its just scale. and what you want to do .. 

But the reason you have this run on rentals is as stated the financing is there for landlords easiest to get you need no qualifications to get at least your first 4 loans etc.. 

One reason I don't predict a major crash again well a few.. and why I think fence sitters may get a sore butt.

is that so many of the NEW crop of landlords are better prepared than pre 08  they have more money into the deals they are far more educated.. the turn key business is far more mature and reliable than pre 08... so that helps those markets. 

financing has been locked in at historic lows 5 % and under long term money is ridiculously good.. also this crop of landlords had the best buying seasons ever coming out of 08 to 2011.. so asset values were reset to under replacement values and under by a long shot in some markets.. 

So I know I am kind of rambling but that's how I see it so yes there is a romanticism of hey I get to not work for the man and I am going to start my own business this can be done in hundreds of different ways real estate landlording is just one.

WE are mainly on the debt side and I have clients that live strictly on note income.. Now you talk about passive.. no tenants no toilets no heavy lifting.. most of these folks though that have large note portfolios sold their fixed asset to TRULY get passive income.. and get out of the day to day..  

And then it comes down to regions  some regions you can do the landlording gig. look at all these 30 somethings that have built up nice portfolios mainly in the mid west.. you can do that there when your price points are where they are at basically the cost of new cars. however that becomes much more difficult in the coast markets.. and those folks can also buy a nice home to live on for 200k  were in Silicon valley its 2 million  !! 

So region ,  time in the cycle  and desire to work in your own job.

Most of my closer friends or colleagues are self employed small business owners..  And they all have different gigs and many are wildly successful.. my partner in our airplane for instance has a big underground contracting company 100 plus employees make huge bank.. and invest in real estate as well short term and long term.. and now started a container home building company LOL.  Garbage is huge money and so on and so forth.