“You want to leave your job and do what??!!”
This was the initial comment family and friends said to us when we shared that we wanted to quit our jobs to become real estate investors full time.
Here is the next question we often got as a follow up to the first question:
“What will you do about health insurance???”
Love that question. It is certainly a valid question, but not a question that should be the sole reason we should or should not quit our jobs!
Hi, Everyone! Liz back this week to share some key actions to consider before you and/or your spouse quits your jobs. My husband, Matt, and I have some experience with this topic since (between the two of us) we left our jobs three different times over the past 9 years.
Back in 2005, only after having one year under our belts of real estate investing (which included selling our first buy and hold deal and doing a 1031 exchange into a multi-unit) did my husband decide to quit his safe and secure sales job and become a full time real estate investor.
Related: 4 “Real Estate” Side Income Streams to Sustain You As You Pursue Investing Full Time
Then in 2008, I decided to leave my consulting job and join my husband full time in our real estate business we started together. We worked together full time for two years and it did NOT work. I ended up going back to my consulting job from 2010 until I left again in 2013 to give birth to our son and simultaneously got involved once again with growing our real estate business.
It is going much better the second time around. Thus, I wanted to share some suggestions and tips to consider before you and/or your spouse quits your jobs. Here they are in no particular order…
8 Considerations to Contemplate Before Leaving Your Job to Invest in Real Estate
1. Have a Well-Defined Personal Budget
Even though we all “know” to have a personal budget, many people still do not actually have one!
Before you quit your job or your spouse quits his or her job, having a very clear idea of what your income and expenses will be (and currently are) is crucial to your success. We had a general idea of our expenses back when my husband quit his job, but we could have done a better job with budgeting. One of the tools we now use that is incredibly helpful for managing expenses is a free app called Mint.
In addition to understanding where you are spending your money, it is very important to have a handle on your income. It might seem obvious, but when I decided to leave my job back in 2008 and join Matt full time, we did not do a great job at outlining all the places we would earn income. We had savings, and we always said if worse comes to worse, we will tap into the savings to live on.
Because we didn’t have clear income projections, we ended up tapping that savings very quickly. This was a mistake in hindsight. We should have been clearer and more focused on how we were going to earn income in the short term as we built wealth in the longterm.
2. Practice “Delayed Gratification”
It is imperative that you practice “delayed gratification” if you want to become a real estate entrepreneur.
Related: So You Want to be a Full Time Real Estate Investor?
The terrific Brandon Turner here at BiggerPockets wrote a phenomenal blog recently about living below your means, and I can’t agree with this more. Delaying gratification goes hand in hand with living below your means.
When we bought our primary residence in 2005, Matt still had his day job. So we could have “afforded” more of a mortgage and home. However, we both wanted financial independence more than a bigger home at the time, so we bought a home that we could afford even if Matt decided to quit his job and we only had my income. This choice has made all the difference. Our longterm dreams of financial independence out weighted our short term interest of a larger home.
3. Gain a Support Network & Supportive Partner/Spouse
Acquiring a support network and supportive partner are necessary as you embark full time in real estate investing.
Before my husband and I began investing together, we shared the same interests and values. We both wanted financial independence and abundance in our lives, and we agreed to do whatever it took to get us there.
In addition to a supportive partner, it is very helpful to find a support network as well. This can be a local real estate investing club, the BiggerPockets community, an entrepreneurial MeetUp group, etc. As the old saying goes, you become who you surround with. Surround yourself with people who are going to support and encourage you vs. thinking you are crazy to leave your job.
4. Become Clear of Your Strengths and Weaknesses
Before embarking on your own, it will help to get very honest with yourself and assess your strengths and weaknesses. You want to do this for many aspects — your personality, your leadership ability, your skills, your experiences, your knowledge, etc.
You want to evaluate yourself in each and every area that will help or hinder your real estate investing venture. There are some insightful surveys and assessments out there in the market to help identify some of these areas. You can also ask those colleagues, friends and family who are close to you (and that you respect) to give you some of this feedback as well.
Once you know your strengths and weaknesses, you can identify the types of people who you will need as you begin to build a team and form partnerships.
5. Find a Mentor
I really wish we had done a better job with this one! I wish …read more