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Long hours at the office, a micromanaging boss and a wage that hasn’t gone up in years—it’s easy to fantasize about quitting your day job and going all-in on real estate investing. That’s especially tempting when you’ve already got a small portfolio that’s performing well. Why would you spend your life working for someone else when you can be in charge of your own schedule and income?
It sounds like a dream, and for some people, it is. For others, quitting a steady source of income and assuming the risks of becoming a full time real estate investor turns out to be a nightmare. Real estate investing is more than fixing and flipping properties, being a landlord and having a great eye for a bargain. It requires a specific skill set, capital and dedication to make it your full-time job. Here’s what to ask yourself before you give your two weeks’ notice.
But first, before you look at becoming a full time real estate investor, click the link below for a free strategy call to develop a financing plan that will support you investments for the long haul.
Are you ready to quit your day job and become a full time real estate investor?
You might be emotionally ready to quit your day job, but this requires a different perspective. Think about it in terms of whether you should do it rather than whether you want to do it. (Of course, wanting to quit your day job is important. If you love your job, it might benefit you to stay there—even on a limited basis—than to switch to the life of a full time real estate investor.)
First, consider your financial situation. Real estate investment doesn’t guarantee a steady month-to-month income, even if you’re a landlord. You should ensure that your debts are paid down as much as possible, so there are few—if any—bills you’ll need to pay on a monthly basis. You’ll also need a sizable nest egg for emergencies, and a source of investment capital, too.
If those are out of reach at the moment, it’s wise to wait until you’re more financially secure. You can still make investments while you build your savings. In fact, keeping a day job while you invest is a good way to ensure you’ll hold out for the right opportunities rather than the first one that comes along.
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Do you have the right skill set to be a full time real estate investor?
Living as a full time real estate investor requires building a specific skill set. No real estate investor is born knowing how to pull off a flawless investment and property transaction—those things are learned over time. Here are some of the most important skills you can develop.
If you’ve been reading this website for a while, you’ve probably noticed that nearly every article exhorts you to do your research. It’s hard to overstate how much research you’ll need to do when you invest become a full time real estate investor. Research is the key to learning about different markets, types of properties, how to analyze a property’s potential profit and which professionals to work with—and that’s just the tip of the iceberg.
Communication and management
Good full time real estate investors are also great communicators. Sometimes the best way to learn this skill is to get hands-on experience. You’ll need to start building a network (if you haven’t already) of trusted professionals. If you’re a landlord, you must learn how to effectively screen tenants, set boundaries and manage expectations. When you work with a partner, you’ll learn to voice your expectations and write down your agreements. Communication is the key to getting what you want out of your investments, tenants, partners and network.
Risk management ties into research skills: you need to understand your market well enough to make savvy investment decisions. After all, you are solely responsible for how much time and money you spend on an investment, which will directly affect how much profit you make. Analyzing a property’s potential—and risk—will help you determine what to do next.
Are you a self-starter? (We’re not just talking about what everyone says on their resumes or in cover letters, either.) Not everyone is cut out to be their own full-time boss. As a full time real estate investor, you’ll be in charge of setting goals, making executive decisions, doing your own research and following up on opportunities. A truly wise investor knows where they fall short, and either limits their investing or hires a great support staff.
A desire to learn
Doctors, lawyers, accountants, real estate agents and other licensed professionals are often required to attend a certain number of continuing education courses per year. As a real estate investor, there’s no one forcing you to do it—but it behooves you to commit yourself to learn more. Even listening to podcasts and reading books in your spare time will help you develop your hard skills.
Patience and pragmatism
Sometimes investments immediately work out—and pay off big-time. Other times, you’ll need to exercise a lot of patience as you wait for your investments to generate profits. A truly excellent investor is patient and pragmatic. As Kenny Rogers once sang, you’ve got to know when to hold ‘em, and know when to fold ‘em—and not let your emotions get in the way.
Finally, real estate investors spend a lot of time crunching the numbers. If you’re naturally inclined toward quantitative skills, so much the better. Should that not be your forte, consider taking basic accounting and related courses at a local community college before you jump in with both feet.
Why do you want to do it?
Ultimately, any truly driven person can become a full time real estate investor—but it’s worth asking yourself why you want to do it. Make sure that your expectations are realistic. When you’re seemingly trapped in a miserable day job, real estate investing sounds like a legitimate get-rich-quick scheme. Who wouldn’t want to be a property mogul? However, many people are surprised at just how much work, dedication and capital it takes to establish yourself. In many cases, it’s best to build your portfolio—and your passive income—for a few years before you decide whether to go all-in.
Now if you are ready to take the next step to becoming a full time real estate investor, click the link below to book a free strategy call to learn more about where you should go next.