Wanna leave job - advice/lessons learned? - Posted by Erin

Posted by Brian_wa on February 02, 2008 at 17:11:15:

If you just start out, it’s better to keep your day job and spend no more than $300 a month in marketing. But you have to live, eat, and breathe real estate otherwise you’ll fail. Think of a hobby that you like the most. Think of the time and effort you put into it. Did it feel like work or did you enjoy it so much? Treat real estate like your most favorite hobby even though it’s a hobby that you can make tons of money out of…

So if you see a rental sign while driving somewhere, get the phone number and then talk to the owner. If you see an ugly house, take down the address… if you see an “i buy houses” sign, call the investor and see if you can learn something from him. Go search in the newspaper for FSBOs and call them all. Go to Craigslist.com and look for FSBOs within your area. Call call talk talk. Do this religiously and you will see the result.

Don’t give up too easily man.


Wanna leave job - advice/lessons learned? - Posted by Erin

Posted by Erin on January 31, 2008 at 20:31:57:

I have been rehabbing (part time) for the last 10 years, which has equated to 9 houses (5 of which we are renting). I have credit lines (through cards and the bank) of about $200k. Credit scores of about 730-750. $10k in the bank. Wife would help me out on the job (she has no job now, thus no income, and cannot work).

I am looking to find out what lessons you full timer’s learned when you took the leap that could help me out in my preparations (its not a matter of if, but when).

Thanks for any and all replies.


Re: Wanna leave job - Posted by trial run first

Posted by trial run first on February 04, 2008 at 17:07:31:

Will the 200k credit line be sufficient for your market? How long will the 10k cover your personal expenses? Do you plan to buy all cash? Or access bank loans with a hefty down? Are you looking at doing major or minor rehabs? About how much rehab expense are you planning for each project? What are your acquisition/marketing plans? Overhead costs? Holding costs? Living costs? Etc. Do you have these all mapped out? Have you done a rehab with the wife before? Or could it put a strain on the marriage - especially if finances got tight? What if one of you got hurt or sick? Or you got sued? Do you have independent medical insurance? The proper business format and insurance? You need contingency plans. What is your expected turnaround time and profit margin on each project? How many deals could you afford to do at once? Have you done a fast rehab flip before? In today’s market?

If everything else is ready and on track, before quitting I would do a trial run of a real deal (or two) first - as if you were totally on your own with no job or income in order to test your plans. Use none of your regular income to qualify or to pay for anything including living expenses. Make allowances for nothing except for time (as you would still be working your regular job). This might be like working a double shift for awhile but this should shake out any weaknesses in your plans - which you may want to work on first before quitting the day job. Evaluate the dry run with an impartial eye. If you can do it once successfully, you then know you can probably repeat the same performance and do it without the “safety net” of a regular job.

What is the worst that could happen?? - Posted by Chris

Posted by Chris on February 03, 2008 at 07:14:37:

If it doesn’t work OMG!! What will you do , your family will be living in the street, you’ll probably get divorced, go BK, etc etc. NOT, guess what if it doesn’t work, you burn through your reserves, tenants don’t pay, just go back to work. If you have a job and you are fairly certain that in your field of work if need be you could get re-hired somewhere else then go for it. Yeah you might accumulate a little debt for taking the risk, but go back to work, lick your wounds and figure out what went wrong, now that is worst case scenerio.

We have been FT for 6 yrs now, there were times when it was slow so I got a job, as well as my husband, we would use our CC to live, we’d have to go back to work for awhile, learn our lesson and get back on our feet. There were times when the money would come in so fast we couldn’t believe it, other times when we were on a strict budget. We love the game, the independence the ups and downs. If you can handle it and take it all on as an “adventure”, then you’ll be fine, if you are easily stressed, overwhelmed, then it doesn’t matter how much in reserves you have stick with that 9-5 paycheck.

Re: Wanna leave job - advice/lessons learned? - Posted by Alan Brymer

Posted by Alan Brymer on February 01, 2008 at 13:55:59:

I would do what you really want to do for a living and do deals in your spare time to live comfortably without the obligation of HAVING to buy and HAVING to sell houses.

Unless, of course, real estate is so thrilling to you that it’s what you want to eat, sleep, and breath every day.

Re: Wanna leave job - advice/lessons learned? - Posted by Brian_wa

Posted by Brian_wa on February 01, 2008 at 11:10:39:

You should find a bunch of cheap houses first. Lets say if it’s worth 300k in as-is condition (you should know how to evaluate a property after 10 years of doing this) and you can buy it for 180k. Buy about 4 of these and get 4 HELOCS with high limits from these 4 properties. You should buy 2 in your name only and the other 2 in your wife’s name only.

Use money from these HELOCs to finance your living expenses and for down payment on future great deals. As long that you can find great deals routinely (one a month) then you have nothing to worry about.

Between my spouse and I, we have 6 HELOCS combined with about 110k limit average on each line. I acquire about 15 houses a year for the past 3 years. Some I flipped immediately and some I keep. Been doing this only about 5.5 years. The past 4 years have been full time.


Re: Wanna leave job - advice/lessons learned? - Posted by Steve

Posted by Steve on February 01, 2008 at 05:40:04:

Hey Erin-

This is a good question and seems hard to find good answers probably because it is so personal and everyone’s financial situation is different.

For me I have been in real estate for 15 years and got serious about 5 years ago. My goal has been to go full time REI as well. Last year I went part time on the J.O.B. to have more time to do my REI. So far so good. For me it is a mix of cash now deals and passive income. The passive income I feel is what will make full time REI work. The cash now deals is where I make the money.

So, I think you may need more that 10K in reserves. I am currently putting 6 months of reserves for income and an equal amount as back-up for the REI buisness. And I will need to maintain those reserve levels when I go full time REI.

This is how I see it. Anyone else??

Not Ready Yet - Posted by Jimmy

Posted by Jimmy on February 01, 2008 at 05:30:44:

you don’t have nearly enough cash to even think about quitting you day job.

let’s say you need $7500 a month to live your life. when your net cash flow from the rental properties is about $10,000 a month, you could quit. not gross rents, mind you. I mean net.

the minute you quit your job, your ability to borrow will be severely impaired. that job of yours gives the bank an extra layer of comfort. and right now, comfort is something lenders really want to have.

Holy SHHHEEEIIITTEE - Posted by Truth Teller

Posted by Truth Teller on January 31, 2008 at 22:53:59:

Ok reality will hit when your renters all stop paying the first month you quit…

WIsdom says that when you have 3 months of all bills paid in advance ( All Mortgages ( personal and Rentals), car notes, Lights, gas, Etc ETC) I mean PRE PAID not in the bank as savings that WILL get attached to REHAB projects… Then leaving the Job is a Good move until then build you rental Base until it pays all the bills the work like heck for 6 months and SAVE the three month cushion…

With a Spouse that CAN NOT work Full time means discipline and Planning PREplanning DID i Say PREPLANNING as in BEFORE you quit!

My husband gave me the foundation to GROW upon but we planned out 8 months in advance and ate like we were in College RAMEN i love RAMEN…NOT!

It is well worth it to go full time but just because you have credit on cards and banks does not mean your deals will sell and then where will the income come from!

my 2 cents But it is worth PLANNING to go full time especially with 10 years under your belt

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Re: Wanna leave job - advice/lessons learned? - Posted by dt

Posted by dt on February 02, 2008 at 02:32:22:

Hey Brian,
What kind of method do you use to find so many good deals, if you don’t mind sharing. You must have some secret weapon of some sort, cause I’m in Cali and have been having a hard time finding anything good. Maybe I gotta move to WA :-)…Cheers

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Re: Wanna leave job - advice/lessons learned? - Posted by Natalie-VA

Posted by Natalie-VA on February 01, 2008 at 06:54:57:

I’m conservative, but I don’t think 6 months is enough. I would save for one year, and this should only be for personal living expenses. You’ll need separate reserves for business expenses.

I’ve heard some say the time to go full time is when your RE income exceeds the income from your other job.


Re: Wanna leave job - advice/lessons learned? - Posted by Brian_wa

Posted by Brian_wa on February 02, 2008 at 12:46:00:

Marketing. Lots of marketing. With money, this business can be a lot easier. Then you also have to know how to evaluate a property’s value really well. After that, it’s a matter of talking to the motivated seller and offer him exactly what he needs. Not what he thinks he needs but what he truly needs. You have to do it in a sincere and professional manner. I don’t often get 300k deals for 180k but I do get 300k deals for 220k to 230k. With my low overheads, resources, and experience, I can handle these deals without much trepidation. Of course, the real key is knowing your market really really well. If properties have been going down, you don’t want to use an appraisal even if it is 2 months old. You have to do your own analysis and also take in worse case scenarios where properties may go down even more after you purchased it. So if the market drops too rapidly, I’d get even more conservative in term of values.


Re: Wanna leave job - advice/lessons learned? - Posted by Steve

Posted by Steve on February 01, 2008 at 09:50:20:

Are you full time REI Natalie?

Re: Wanna leave job - advice/lessons learned? - Posted by BigV

Posted by BigV on February 05, 2008 at 10:59:36:


If you don’t mind me asking, do you concentrate on one speciffic area (if so how big) or do you just go for the deal?

Also, it seems that 300K home may not cash flow, if you end up holding it later. What is your exit strategy for these homes?

Re: Wanna leave job - advice/lessons learned? - Posted by dt

Posted by dt on February 02, 2008 at 13:55:38:

Thanks, Brian! There are so many things gurus tell you to do and I did lots of different things. I did marketing to pre-foreclosures also…Money has been very tight for me. I probably mailed things for 6 month, spending about $400-500/month. I don’t know if you would consider this as “lots of marketing” or not. The market was hot at that time and nobody was calling me. I also felt that there were so much competition going on and wasting my money. Ya think I stopped too soon? I’m thinking about getting back in the marketing again, then I might just get calls from people without equity with the way things are right now. Thanks again for your input! You are a good guy. Cheers.