Hey, you! Yes, you with the W2 job feeling bad about how you are “just over broke (J.O.B)”! Take a second, turn off the Andrew Tate video, Hormozi, or whatever entrepreneurship video and listen to this. Your W2 is your superpower. Contrary to common BiggerPockets and entre-influencer, your W2 is most times your best asset to financial freedom, by increasing your lendability, constraining your time, and counterbalancing the highs and lows in the business world.
There’s a large limiting mindset looming in the real estate world and common to BiggerPockets. You may know what I am talking about but if not, I will break it down.
Financial freedom is not a race. It’s not about who’s first.
Financial freedom is a marathon. I heard a great quote the other day (unknown who said it), “If you are persistent, you’ll get it. If you are consistent, you’ll keep it.”
We all want to keep, not just get it. If not, 70% of lottery winners would NOT go broke (according to fortune.com). Consistently, they do and so will you if you sprint so hard and burn out.
Now, before we dive into why your W2 is a superpower, there are players in the real estate space who have built fast and long-lasting financial freedom. I am extremely humbled to meet them but am not telling you to bet on replicating their exact speed and results. Will you get there? Yes. Will you get there as fast? Maybe or maybe not. Understand that patience and consistency guarantees you success, nothing else. You can do everything perfect but it doesn’t mean overnight you will be financially free. Great, now that’s out of the way. Let’s break down why you have a superpower that will build major generational wealth.
Increasing your “lendability” may be your top value-proposition as a W2. Many of us are inspired by Rich Dad Poor Dad (R. Kiyosaki), and he states the importance of leverage versus liability. When the bank views you as a borrower, they see stability due to your J.O.B.; while new “pure” entrepreneurs have no financial asset to leverage against. If the goal is wealth over everything, rental investing should be our investment strategy, whether it’s househacking, BRRRs, etc..
So your steady paycheck lowers your DTI, makes underwriting easier, yields the best terms (rates, points, etc.), and makes it easier to stack wealth. New entrepreneurs have little to no asset to match your W2. They are forced to find partners to fill the money needs, giving up equity or substantial profit(s) in order to get started. Otherwise, new entrepreneurs will have to become "boots on the ground" or "real estate gophers" for bigger enterprises to get substantial knowledge to build intellectual capital to secure more equity or profit(s) in the same deal. Last option, new entrepreneurs have to build cash flow businesses, then turn around and buy real estate to build wealth, while the W2 workers need to advance in W2 pay, buy real estate, and build wealth. Both have the same goals but one has significantly less steps to achieve it, making it more achievable.
Constraining your time: Time constraints force the W2 employee to build a business, not another job. I often remind my client that money is a tool to buy time. Money is infinite, time is not. I can concede that new entrepreneurs do have a competitive advantage over W2 employees, which is more time. However, all of our life, humans are used to structure. In school, we have time-blocks for each class, due dates for assignments, and tests for assessments. Entrepreneurship doesn’t have that. There’s very little intrinsic feedback loop. Good entrepreneurs must create that. All W2 employees are given some sort of structure. Your job might have a limited or strict structure, but there’s a structure. If not, you wouldn’t have a job.
This structure forces you to find people you can fill those gaps, building a company or business structure. Otherwise, you build another outside job that taxes more of your time, which may lead to inevitable failure if you cannot transition out of your W2 in an accelerator manner.
Through the highs and lows, your W2 builds a level of stability, whether it’s placebo or not. For some jobs, your W2 is not stable. However, considering an average person with a J.O.B., there is an immense stability that a steady paycheck can provide during times of crisis. In the E-Myth Revisited (M.Gerber), the author talks about building systems that run without you during times of crisis (i.e. bad health of you or loved ones, vacationing, personal turmoil). Where the average entrepreneur gets caught is on the rise, building their passive business. During this process (before completion), something terrible happens that severely limits their ability to work on their business (“not in their business” -M.Gerber), resulting in partial or complete stops in their revenue generation.
Now, you can see why people without related financial resources (i.e. spouses, parents, family) can struggle to build wealth alone. Consequently, the W2 job might be the great weapon against market changes, personal stumbling blocks, and other highs/lows in business.
So what now? As much as you may hate having a W2 job, understand the great privilege you have to be qualified to be for a job and be reading an article/post from 2023, talking about escaping the 9-5 through real estate. My grandparents grew up where people begged for work to feed their family. My in-laws fled Detroit, MI in 2008 where their wages were cut by 50% overnight due to economic collapse. In 2023, we live with immense privilege. In my opinion, it is our duty to our current and future family to appreciate the privilege and continue to build something even greater.
You have all the tools at your disposal to build wealth and escape the 9-5. I encourage you to accept the slow and steady grind to build generational wealth. It can be fun to exist in the present and envision your future self, thinking back to this very moment. My goal was not to convince you to work a job forever. In fact, I think you should be working towards leaving the W2 world, but take it slow. Go out and make tons of money. Keep re-investing until it’s stupid to continue working.
