182: Pros and Cons of Being a Full-Time Real Estate Investor

SHOW NOTES FOR EPISODE 182: PROS AND CONS OF BEING A FULL-TIME REAL ESTATE INVESTOR

Making the decision to become a full-time real estate investor requires a lot of research and education, including an assessment of the advantages and disadvantages of full-time investing.  In this podcast, Bill will discuss some of the pros and cons to give you a bigger picture of what it is like to dedicate your time, effort, and money to this kind of full-time job.

I know we have a broad, diverse listening audience.

• Of course of primary target are those that are 50 plus that are either approaching retirement but already there
• But there is also a broad cross-section of millennials, Gen Y and Xers and others ranging from their 20s to late fourties

And many are either trying to leave their full-time time W2 jobs or are getting ready to transition into retirement and what may translate to another full-time job, but this time as a real estate investor.

That’s the focus of today’s Fun Fact Friday

As one of those people who took the plunge and is now a full-time (plus) real estate investor, I thought I would just outline/prepare you for what to expect

Making the decision of being a full-time real estate investor needs a lot of research and education on its advantages and disadvantages.  In this podcast, I will discuss some of the pros and cons to give you a bigger picture of what it is like to dedicate your time, effort, and money to this kind of full-time job.

A full-time real estate investor is a person who works full-time in real estate investing with no other regular job on the side.  Here are few ways on how to make money in real estate through a full-time job:

• Buying and managing income property.
• Wholesaling
• House flipping.
• Buying deeds & liens
• Being a real estate agent.
• Etc.

First, let’s look at some of the disadvantages of being a full-time real estate investor.

There is no doubt that you’ve heard of the wealth, free time and other rewards of a job in real estate investing.  However, as any other job, it is a two-edged sword.

Starting with the disadvantages can have its advantages:  you either take the cons of real estate investing and turn it into an advice on things you shouldn’t do as a full-time real estate investor, or you get saved from indulging in a career you’re not ready for.

Here are some of the cons of being a full-time real estate investor:

• You will be self-employed.  Not everyone is comfortable with the new responsibilities of running their own business – and believe me, it is a business – especially if your real estate income is the majority or sole source of your income.
• It’s time-consuming, especially in the beginning. Combination of direct mail and phone canvassing
• There is risk involved. Of course, you can say that you a W2 job as well but the stakes or financial risks can be substantial. You have mortgages to pay, expenses that need to be covered, vacancies to fill, property issues, economic factors, etc.
• Becoming a full-time real estate investor means that you’re going to quit your current job, granted you have one, and indulge in this inconsistent world of financial ups and downs.
• The risk of losing your safety net (guaranteed income) from your W2 job for a not so guaranteed one with real estate investing as a full-time job. The decision to leave a job with a good annual income to pursue what, in essence, is a “business start-up” career of potential failure is naturally considered somewhat reckless.
• If you make a major mistake, you don’t have the “fall-back” of a full-time job.  Every decision you makes will have a direct impact on your income.  You may have the stress of making a wrong move that will lead to failure.
• You will be losing the extra money you can gain by working as a part-time real estate investor: part-time real estate investing means that you get to enjoy two incomes, so there the extra money that you could sock away in savings or invest in properties, will now meet your living expenses. When you give up your regular job, you will lose that advantage.
• You are now responsible for tracking and paying your income tax instead of having it automatically withheld from your paycheck
• There is also the stress or pressure that comes with finding and closing good deals. Sometimes an investor can go months with no income due to lack of deals. If you have a W2 job covering your living expenses, that’s not a big deal.  The inconsistency of this kind of job can be scary for people who have never been self-employed.
• Real estate investing means carefully tracking, monitoring and keeping ongoing costs low. Being a landlord, for example, means that you need to carefully maintain your investment properties in order to maintain steady cash flow. Maintenance costs and vacancies can directly affect your personal income.
• You will be handling multiple tasks that are meant for more than one person.  You will be a manager, an accountant, a stock clerk, marketing director, head of acquisitions, and so on.  However, as the money comes rolling in, you can hire people to do these things for you. So, this is only an extra trouble at first or when it takes you long before achieving success.
• It is not the perfect job for introverts (my struggle – amazing that I was in Pr and marketing for 20 years): a job in real estate investing means that you need to deal with strangers, clients, bankers, investors and many others on a regular basis. It is a relationship business! You also need to maintain a patient, convincing, and cheerful mask whenever you’re meeting with people to propose or close a deal.  So, if you struggle with anger issues, don’t like people or you’re not a patient person, it’s better a more passive type of real estate investing.

Now, let’s look at the advantages of being a full-time real estate investor

Now that we have gotten the cons of full-time real estate investing out of the way, we will touch on all the benefits of being a full-time investor:

• You don’t need a special degree or license.  Anyone can become a real estate investor. Of course, you need to educate yourself if you want to do well, but that can and will be ongoing as well.
• First of all, being a full-time real estate investor means that you’re your own boss. You decide on your working hours – how much or how little you work. If you can manage your time well, you can work fewer hours and spend the rest of the day doing other activities you enjoy, like spending more time with your family and friends.  Read The 4-Hour Work Week by Tim Ferris for tips on better managing your time and delegating.
• The cash flow is incredible. When you get through the first months of being a beginner at the job, you can start earning more money than from your previous regular job.  There really is no limit.
• You have the advantage of having more time to learn about the real estate field than a part-time real estate investor who has to balance his/her full-time working hours and part-time ones to include education.
• You’ll also have more time to search for the best investment properties and deals without the pressure of juggling your real estate related activities with having enough time for your family and friends.
• Full-time real estate investing also gives you the time and freedom to explore other businesses because you will have the time and money to pursue that option.
• Meeting all kinds of interesting people and making new friends which will widen career horizons and open new opportunities and adventures.
• No more routine: being in the independent real estate field means that no day is like the other; you’re not seeing the same people or working certain hours every day. You have tons of variety and can do as much or as little in whatever areas you so desire.
• You have the flexibility to expand.  As an entrepreneur, you can either keep things small and simple or hire employees and expand.
• You can create a legacy.  Not only will the properties you acquire become a legacy you can hand down to your children, you can create a “family business” that will provide job and career opportunities to your children and grandchildren.

The Bottom line

If you have a pension, a nest egg or retirement fund or reserves that will carry you for a while or other passive income sources, it’s better – at least until you get up and going.  You can also collect Social Security but, keep in mind, if you have the real estate income (up until 65 or 66 -not sure which), they may cut the amount received if the RE income is too much.

In summary, real estate investing is a very interesting and ever-changing field. I would recommend you listen to my podcast number 006 How to Get Started in Real Estate Investing.  If you take the proper steps, you will do just fine.  Just be wise.  Remember that good planning and management can turn any disadvantage into an advantage.

My advice to you is to stay educated and always seek the most updated information on any field you’re trying to making a career in.  If you need to learn more information or useful facts about real estate investing topics, check out the Old Dawg’s REI Network website.  We have tons of articles, podcasts and other resources that can help you become a successful real estate investor.  Here are some of our podcasts that address both part-time and full-time investing.

003: Growing a Real Estate Empire While Working a Full-Time Job

115: Overcoming Barriers to Entry in Apartment Investing

071: Part-Time Real Estate Investing

061: W2 Employee Kickin’ it with Real Estate Investing

107: My First Real Estate Investment Was an Office Building

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