Create full-time benefits from part-time real estate investing
Insight Weekend Investor

Create your own full-time benefits from part-time real estate investing

In writing this blog post, I am going to draw on my own experience as a part-time real estate investor who was employed full-time in corporate America.

Hindsight is 20-20. I will admit I did not see the full-time benefits I was building with my part-time real estate investing at the time. But now—looking back on what I achieved as a part-time investor—it is crystal clear that the benefits I created for myself were equivalent and ultimately even better than the benefits that corporate America was providing to me as a full-time employee.

I hope that full-time employees today, whatever they may be—accountant, lawyer, doctor, business person, etc.—are enjoying some type of benefit package from their employers.

For simplification, those benefits probably fall into one or perhaps all three of these fundamental buckets:

  1. Some form of annual raise. Whether a merit increase based on an annual performance review or compensation increase as a result of promotion or new job with your employer, I hope you are getting some kind of annual compensation increase or raise.
  2. Some form of retirement income. Perhaps you are lucky enough to have a pension plan with your current employment. I did when I was in corporate America—and it was a good plan—but not many people have those anymore. What does your full-time employer provide you in the way of a future retirement income plan?
  3. A retirement savings plan. Once again, I was fortunate enough to have a retirement savings plan—for example, a 401(k) or stock option plan. Ideally, you are enjoying some type of long-term wealth-building plan facilitated by your corporate employer, who may even be contributing to this savings plan in the form of a matching contribution.

Hopefully, you have all three buckets with your full-time employer.

I did, and I had all the bells and whistles with all three benefit buckets. However, like many employees, especially those who may not have any of these three benefits, I wanted to enhance them or supplement them. I was concerned about my financial future, so I was trying to be proactive and plan for my retirement. That is what drove me initially as a full-time employee into part-time investing. I wanted to enhance, supplement or improve these three buckets—my annual compensation, my future retirement income and my retirement savings.

From part-time investing to full-time benefits

Fast-forward to today: I am now a full-time real estate investor and serve as an example to you that the potential is there to really build a quality and robust benefit plan for yourself as an investor. I no longer enjoy the benefits from a full-time corporate employer, but I was able to replace them and build my own as a full-time real estate investor who started out as a part-time real estate investor.

Let’s review these three buckets as they relate to my personal experience:

Raises

That annual raise you get from promotions or from a merit increase through a performance review is that first bucket.

Create your own full-time benefits from part-time real estate investingWe all want to make more money. Many of us depend on an annual increase in income as a way to make more money. We work hard. We get our reviews, and we hope those all equate to more compensation. It’s tough, though. You are at the mercy of your employer. What is your employer’s merit increase program this year? One percent? Three percent? Five percent? Are merit increases even offered? Are there any promotion opportunities? Can you get another job in your company where you can get a raise with a promotion?

Those are all relevant questions and real challenges for most full-time employees. They were for me, too. And that is what excited me about real estate investing. I arrived at the solution that I was going to create my own compensation increases through real estate investing.

What I realize—not then, but now—was that when I, as a part-time real estate investor, bought a new rental property, I was literally giving myself a raise. Every time I purchased a property, it increased my monthly cash flow, which equated to an annual increase in cash flow. I was giving myself an annual raise every time I bought a rental property. If my annual cash flow was “X,” when I added another property I increased my annual income to “Y” and gave myself a raise.

That became very exciting to me when I realized I was now in control of my annual increases in income. If I bought a property, I got a raise. I could control it. I could predict it. I could even dictate how much that raise was going to be.
When you have that type of freedom and ability, it is very empowering. The ability as a part-time investor to give yourself a raise is very exciting and enticing for those of you out there who are full-time corporate employees looking at real estate as a way to increase your income.

Retirement income

Secondly, I wanted to ensure I would have monthly income the rest of my life even after I was done with my Create your own full-time benefits from part-time real estate investing blog by Kevin Guzcorporate career—specifically, when I entered retirement.

I was not comfortable depending on Social Security, and though I had a pension plan, I wanted to supplement that and make sure I had peace of mind that I was going to have some form of passive income for the future when I retired.

Once again, my solution was rental real estate. Instead of depending on Social Security or a pension plan, I bought rental real estate and created monthly income—inherently I was creating annuities for myself. Every property created monthly income today, and for the future. There it was—my own self-created retirement income plan.
This form of retirement income only increases as you get older.

The longer you hold those properties—and assuming you financed those properties—as those properties get paid off, the cash flow that had been paying the principal and interest now goes into your bank account. That is what is really exciting about that retirement income plan. You create passive income for your retirement that is only going to increase as your residents pay down those properties and pay off those loans for you. It is like getting a raise when you are retired!

Retirement savings

Create your own full-time benefits from part-time real estate investing.
One of Kevin’s houses he bought that enabled him to create full-time benefits from his part-time real estate investing.

Finally the third bucket: create your own retirement savings plan.

I had my 401(k) and employer-matching funds, and that was wonderful.

But I wanted to supplement and improve on that situation. As a part-time investor, I once again turned to rental real estate.

Every time one of my residents pays rent, a portion of that rent goes to principal on the loans on those properties. That is as good as having someone place money each month in your personal savings account.

That money goes in today and sits there forever as equity in that property. Whether you choose to pull that money out today, tomorrow or 20 or 30 years from now in the form of refinancing or selling the property, it is an incredible retirement saving plan. It’s just like your 401(k) plan—and it might even be better.

Those residents are making deposits into your retirement savings plan every month when they pay you rent and you pay off a portion of the principal on that property.

That is equity you capture and you never let it go until you sell the property or refinance it. It makes for a very nice retirement savings plan.

A part-time investor can create full-time benefits

So what you see here is how a part-time investor can create his or her own full-time benefits. I did it unknowingly, but as I look back in hindsight, I see the value of my part-time real estate investing and how it created full-time benefits:

  • Raises—Every time I bought a property I gave myself a raise in the form of annual cash flow.
  • Retirement income—As I built my rental portfolio, I was building more and more monthly income that is here today but, more importantly, will be here tomorrow when I retire. Even better, it will only increase as I pay down the principal on those properties.
  • Retirement savings—I had a 401(k), but now my rental properties are my savings account, and my residents make deposits into that savings account every month when they pay rent. As they pay down the principal, I capture the equity. I can ultimately enjoy that savings in the future when I refinance the properties or sell them.

Those are the three buckets you as a part-time real estate investor can create and enjoy. This will resonate with you full-time employees because you can see the power of your real estate investing and how it can supplement or ultimately even replace the benefits you currently enjoy as a full-time employee.

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