Aug 13

Should You Quit Your Job & Invest Full Time?

Turnkey real estate investing

Over the years, many aspiring real estate investors have come to me for guidance. They typically have pages of questions, which I  patiently answer.   Here is a real estate investing question I am often asked:

 

Q.  I’m married and have a family of four to feed and house.  I hate my job (or my job is okay, but leading nowhere).   I am so excited about real estate that I want to do deals full-time. When should I leave my job?

A.  I wouldn’t turn in my two weeks’ notice just yet.  Your job provides many benefits:

  • Predictable steady income
  • Employee benefits:  including health insurance and paid time off
  • Contact with other human beings
  • Good performance on the job, which enhances one’s sense of self-esteem.

Real estate offers some terrific benefits:  income, wealth accumulation, total control of your time, enhanced self-esteem, potentially making the world a better place, and it’s lots of fun. Each of us has to make our own decision based on our specific life situation and on our self-knowledge.

When To Quit Your Job & Invest Full Time

I would not leave a job except  under the following conditions:

** Your real estate income after taxes is equal to the job income after taxes (be sure to include the cost of health insurance).

**Your real estate income after taxes isn’t as much as you made from the job, but is enough to meet your living expenses.

**Your spouse works and willingly agrees to allow you to seek a real estate fortune, foregoing your paycheck.  The working spouse in this situation might set a time frame for you to produce results.  If this is the case, put your heart into your efforts.  In my own experience, my hard-working wife was far from delighted when I reported to her the details of my work day.  She didn’t really like to hear how much I enjoyed my one-hour nap or my hour of thinking about the purpose of life when she’d had a tough day at the office.  As an option, you might leave your job while your spouse works full-time, but bring in some income through part-time employment.

** You strongly believe and are totally confident that you could earn more money making real estate deals in a year than you could from your job.  Ideally, you have enough money socked away that you could meet your living expenses for a long time. Incidentally, I view a job as an income-producing asset.  If you earn $40,000 per year and anticipate you could earn a 10% rate of return,  an asset worth $400,000 producing $40,000 a year of income produces as much as your job.  I’d rather have a real estate investment than a job. You could be in the unfortunate position of being unemployed and longing to do real estate, but a job provides you with predictable cash flow.  If you are uncertain which direction to go,  find a job for the time being and work toward eventually having enough real estate income to leave the job.