There are many part-time real estate investors who ask this one specific question, “Am I ready to transition from part-time real estate investing to full-time?” I know from my own experience this question is an important one. I started investing in real estate 10 years ago, part-time, and five years ago I transitioned to full-time, leaving my corporate career It is a critical question for many reasons, and warrants a lot of consideration.
Like many of you, I had a corporate career and worked full-time while investing in real estate part-time. I began to understand, and see how my part-time real estate investing could transform into a sustainable, full-time business. The turning point for me was at about at the five-year mark, when I decided to could transition to full-time investing, and leave the security of my full-time career. I will be sharing with you what I focused on while I navigated this life decision, as I’m sure many of you would like to do.
Income and Lifestyle Status Quo
First, let’s discuss the obvious, income. We’ve got to have personal income in order to support ourselves and our families. And to support our everyday expenses and chosen lifestyle.
The point in time when many investors get comfortable transitioning to full-time investing is when the income generated from their real estate investing matches or exceeds the income they are generating from their current employment. This seems a bit obvious and fundamental. But ideally that is the place, you as a part-time investor, will find yourself. You will have the confidence, you will have an income being generated from your investing that will replace your income. Ultimately, leaving behind your current employment. With this in mind, a transition to full-time real estate investing becomes much easier.
Now let’s be realistic. There’s a little bit of a chicken and egg scenario here. You may be thinking well, “I can’t generate the income from my part-time real estate investing business to replace my current income from my employment, until I become a full-time investor. I also, need the time, energy and resources to generate or replace that income.” This is the conundrum where you can’t see from there to here. Perhaps you’re generating a sufficient income with your part-time activity but realistically, if you generate and dedicate more time to your investing, you’d be able to generate more income. Ultimately, exceeding your current income from your employment. But you can’t do that because you don’t have the time available as a result of your employment. If you are one of those whose situation is just that, then you need to look at whether you have the funding, an income source or alternative you could access to make up the difference. Assess, in depth, what your part-time income generates, and what your current minimum income requirements are. Maybe you have savings set aside or you have to put in place a savings plan in the near future so you can exit your current employment. Essentially, take your current part-time investing income, supplement it with savings or alternative forms of income while you grow your investing business into a full-time business. To the point where your investing income will support your lifestyle.
Stable, Lead Generating Machine
You must understand and feel comfortable putting a plan in place where you’ll be able to build a full-time business and sustain that business. The key in a real estate investing business is in your own ability to generate motivated seller leads. You will never achieve your real estate income goals if you don’t have the ability to generate motivated seller leads. Those individuals who are motivated to sell their properties to you, as is, for cash, quick close, closing cost paid etc., are not necessarily on the MLS. Even though you may be able to purchase a great deal on the MLS. In order to build and sustain a full-time real estate investing business, you must have the ability to generate leads to source those motivated sellers. Eventually, generating the income you need.
For me, the difference going from part-time to full-time by scaling and sustaining lead generation, was my purchase of a Homevestor franchise in Dallas, Texas. Granted, that may not be the answer for you and its definitely not the answer for everybody. But at the core of my decision was the ability to generate leads, execute marketing, and create a brand that would support the home buying volume I needed to become a full-time investor. It also helped with generating profits, and then the income I wanted to generate. I’m encouraging you to think about your lead generation because, regardless of what your goals are, without lead generating capabilities, it is impossible to achieve your income goals. To recap, know the income you need first and foremost. As you peel back that layer, underneath is your ability to generate leads which will generate your income.
Capital is Key
Lastly, let’s talk a little bit about capital. In order for you to scale your business full-time, you need capital. Once again, this applies whether you’re a buy-and-hold investor who will need a large amount of capital, fix-and-flip investor who may need a little less capital, or you wholesale properties. Either way, you will need capital. Capital allows you to scale and sustain your business no matter how much income you believe you will generate or how much income you are currently generating. If you remove your capital funding from that scenario, everything comes to a screeching halt. So, capital is key when we talk about income, and about your ability to scale and sustain a full-time business.
I can assure you as an experienced investor, these same three components are just as critical today as they were when I transitioned to full-time investing. My ability to generate income, my ability to scale and sustain my business, and my ability to continually source capital for my business. And my point is, if these are important to you now, if you have these three components already in place, you might be ready to become a full-time investor. And there is a good chance you will be a successful full-time real estate investor in the future. These three components will continue to be of utmost importance to your business sustainability and to your success.
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About the Author
Kevin Guz is a Dallas, Texas-based residential real estate investor with more than 10 years of investing experience. He owns a HomeVestors (or “We Buy Ugly Houses”) franchise as well as the Clear Key companies, which focus on residential real estate wholesaling, rental property management and self-storage leasing. He also is a licensed real estate agent in the state of Texas. He enjoys sharing his ongoing personal experiences, perspectives and learnings from his start as a part-time or “weekend investor” and full-time corporate professional through his ultimate transition to a full-time real estate investor and business owner. You can listen to his podcasts at http://www.blogtalkradio.com/kevinguz.