Q. for Full-Time Investors & Realtor/Investors - Posted by Doug

Real Estate Investing
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Posted by Gerald-DC on July 03, 2001 at 10:25:15:

Thanks for taking the time to respond JT-IN. I have been advised by a couple of people not to quit my job and do this full time.

This weekend, I will review my business plan and make sure that I have at least planned to make as much from r.e. investing this year as I have made from my job. If so, I will know I am well on my way.

What I have learned from investing the year that I have been doing it is that it is hard work, and it is anything but a get rich quick scheme. All of the courses in the world cannot make you any money unless you go out there and make things happen. I think someone wrote about highs and lows of investing. Well I got that part down.

Hopefully, I will close on a rehab/retail deal this month. When I do, boy ! will I have a post for you guys. Don’t want to jinx it so I want say anymore about this until I have my check in hand.

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Q. for Full-Time Investors & Realtor/Investors - Posted by Doug

Posted by Doug on July 02, 2001 at 09:37:52:

I currently have a well paying career outside of real estate and want to transition into becomming a full-time real estate investor or a full-time Realtor/investor (selling properties for others while prospecting for my own investment properties).

I’m trying to chart a course to make this happen. What I’ve come up with so far is the following:

  1. Obtain Real Estate Sales License
  2. Become a Realtor
  3. Try to secure a part-time sales agent position with a broker.
  4. Purchase a home for myself that has potential to be rented out later. (or purchase an owner-occupier duplex or something)
  5. While working as a part-time sales agent, gradually acquire a few income properties.
  6. Continue to develop a client base as a sales agent and acquire investment properties until my income from home sales and investments is sufficient enough to leave my old career behind.
  7. Log into creonline.com and share my setbacks and successes with newbies interested in the path I took!! :slight_smile:

My question is whether the above is even feasible. I’ve received mixed information as to whether you can be a sales agent for a broker part-time. Two brokers I’ve spoken with aren’t interested in that arrangement, yet I’m told people are out there doing it. Another question is whether I should be looking to start as an appraiser. Perhaps part-time work is a little more do-able that way.

If any full-time investors out there who have made the transition from an unrelated career field are reading this, I could really benefit from your insight and would greatly appreciate your comments.

Thank you,

Doug

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The decision is one of personality… - Posted by David Alexander

Posted by David Alexander on July 03, 2001 at 07:55:01:

Me I couldnt have a job and do RE… Scratch that… I couldnt have a job. I think the answer to what your looking for is in your personality…

Read the book the cashflow quadrant. I remember growing up people would say I’d get a job at McDonalds if I needed to to feed my family, when your personality changes and you cross quadrants… You no longer see a job as an alternative means of income… Working for Money is not an option… You only work to build your Business and your business is to build businesses, and RE that build personal wealth.

This is my take anyway.

If I were to start over fresh… however I would do it a different way. I would as Scott Britton says learn to generate quick cash.

I would build 3 months worth of cash reserves… once I got to 3 months worth, I would then spend my building 1 years worth of cash reserves…

I would then spend my time on a 50/50 split of doing deals.

50% of the time would managing 50% of the years accumaltion and trying to capital gain the money in a 6 month period… example a years worth of money being 50k then I would take 25k and put into deals that I knew I could cash out and when 6 months I would have the orignal 25k back and 25k more to show… this would done in a C Corp.

I would also be doing deals for cashflow trying to do deals using None of my own money and produce cashflow, maybe setting a goal of gaining 100-200 a month cashflow. At the end of the 6 months you would then have reduced your living by 600-1200 a month, and your need to turn the money over a 100% each 6 months would diminish… although I would still keep with that plan.

My thoughts anyway, from someone who doesnt know what a stinkin’ job is, nor any rememberance.

Another perspective at the least.

David Alexander

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Re: Q. for Full-Time Investors - Posted by Matt B

Posted by Matt B on July 02, 2001 at 12:38:48:

I made the transition to real estate investor from an unrelated field and I can tell you, I never once had to get a real estate license or get a job as a real estate agent. I also never had to “gradually” acquire contacts by being a realtor and slowly acquire property. I just went right into acquiring properties and making money from them.

While I do agree that if your aim is to go the conventional route and qualify for a bank mortgage to buy rental properties, keeping your job is a good idea, there are plenty of ways to acquire property that do not require this. I personally have chosen lease options, but there are plenty of other effective, creative ways to acquire property.

If you haven’t already, read through the how to articles on this site. Get a basic idea of the ways to buy real estate creatively, then look into getting a course or 2 from this site. There is a good selection on a number of different methods. You don’t need to go from one “job” to another to get into real estate investing full time.

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Re: Full-Time Investors & Realtor/Investors - Posted by GL

Posted by GL on July 02, 2001 at 11:55:02:

Right off the bat: Keep your present job as long as you can. Anyone who has quit a job to live off their RE investments too soon, has regretted it. You NEED that job to put food on the table and pay your bills.It is indispensible for a credit rating too. As soon as you quit your job investing becomes harder, not easier. Your ability to borrow is shot to hell.

Until you are in the millionaire class keep your job and invest in your spare time. How do you know when it is time to quit? Live on your job income ONLY. Everything you make in RE save and plow back into investments. When your investment income exceeds your job income, quit your job. This may be in as little as a year or 2 if you are as smart as you think you are LOL.

By the way it may only be necessary for one party in a marriage to have a job. I know a schoolteacher whose husband quit his job to invest in fixer uppers and work on them full time. They did very well in the end but that steady paycheck sure kept them afloat the first few years.

You can be a RE saleperson or broker, or you can be an investor but not both. They are 2 different things. If you fancy a career as a salesman RE is a good product but that’s all. Selling real estate will not help you as an investor in fact it will harm you. For example it creates a conflict of interest and can result in potential lawsuits if someone decides you are using your position to take advantage.

If you chose to be an investor only then I recommend you take the RE sales license course anyway. This course is not expensive and it will teach you plenty about RE law, salesmanship, surveying, zoning etc. etc. which is very valuable and not available from any other course or “guru” since it is tailored specifically to your area. You will never be intimidated by a RE saleperson again, you will know when they are blowing smoke and when they know what they are talking about.

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Going To The Show - Posted by Gerald-DC

Posted by Gerald-DC on July 03, 2001 at 24:05:12:

To GL,

I read your post with particular interest b/c I too strive to quit my job and invest full time. I noted that you stated that one should not give up their job until they are in the millionare class. You then went on to say that one is ready to go full time when their investment income exceeds their annual salary. Could you please clarify.

Also, would it be prudent to get a big line of credit while employed and subsequently quit your job? Could the lender revoke the LOC if you did this?

As much as I am motivated to give my notice, prudent advice such as yours as helped me remain the course and put myself in a better position to succeed when I do take the plunge. My target date is March 1, 2001.

Thanks again.

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Re: Full-Time Investors [long response] - Posted by Ronald * Starr

Posted by Ronald * Starr on July 02, 2001 at 19:37:51:

Doug--------

I like GL’s post. I have never been a real estate licenee, so you might take that into account.

First, I agree about taking the same courses the licensees take. I took a couple of them here in CA at the community college. There were four classes, I think. Low cost, with knowledgeable instructors.

I have met real estate salespersons who did come investing. So I tend to think you can do both.

I’m wondering if there aren’t two different categories here: one is a parttime investor who has a regular career or job, the other is somebody who is a (more or less) full-time real estate business person. In a way, this second category is not an “investor” in the same sense as the first is, but that is what we call
him/her, lacking a distinctive name. S/he has a “job” of working with real estate to make money.

Anyway, you might not be able to be a full time investor-type person and a full time licensee, but you probably can be a standard part time investor and a full time licensee.

Active licencees have the advantage of occasionally noting a good deal on the listing service or in their office and getting it for themselves. They also are very active in the market and so know the values and can move very quickly when they spot a good deal.

I know one licensee who has even developed a few properties over the years.

I think you can do both sales work and investing.

Good InvestingRon Starr*********

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Re: Going To The Show - Posted by JT - IN

Posted by JT - IN on July 03, 2001 at 06:50:34:

Gerald:

GL and Ron Starr have made some great points that you should respect and follow.

In regard to your question concering this LOC; could the lender rescind? Yes. These are generally renweable for a short term, sothat the banker can review a changing situation. Re investing is seen as high-risk (speculative), when there is no other income to offset these obligations. Bankers are looking at things in a what if scenario, until you have “immunized” the risk, and can withstand several, possible negative downturns.

My advice, and I am a full-time investor, for the past 4 - 5 years, is to wait until you are busting at the seems, and can no longer afford to stay at your present JOB. This is difficult to be objective about, since your desire is to “pull the switch”, and go full-time, but until you are overwhelmed with business that you are not able to handle, making sure that you have a proven comodity in your business approach, then and only then, would I leave the security of a JOB. Additionally, as previously stated, when you do make this move, you will diminish your ability to leverage, without the other stability. Now if you are able to buy/sell enough property w/o the use of outside funds, so be it. However, the use of borrowed funds definitely has a place in the typical RE investment scheme. My recommendation is for your RE income to be at least double what it is from your current salary, net of any routine business expenses. (Or if you have substantial net worth, the kind with a looooot of zerooooos on it, then make the move). You should not be looking to replace your income, but to increase it, as I am sure that you are. Every dollar that you take away from your RE investing to meet living expenses, becomes a direct expense to your business, as opposed to funding your living exp. via another income.

It is better to make the decision to make this move too late, rather than too early.

Just the way that I view things…

JT - IN