When to say “sayonara” to your day job and “hello” to full-time wholesaling.
Real estate wholesaling is addictive. The freedom and money that wholesaling provides are hard to give up once you’ve had a taste. But it’s just as hard to give up a steady job in favor of an uncertain, if potentially lucrative, side hustle.
When I quit my job to work in real estate on a full-time basis, it was the second time I had done something like that. I was nervous but extremely excited about what I was setting out to do.
We weren’t making enough revenue to replace my income, but I was able to take the leap because I had saved up six months of living expenses. It took the full six months (and my entire savings) before I was able to collect my first paycheck. I don’t regret it, but I also don’t deny that it was a foolhardy move that could have put me in dire straits if things hadn’t worked out.
Anyone looking to make the transition to full-time wholesaling faces a similar dilemma. Wholesaling is not necessarily a get-rich-quick scheme; it requires commitment, hard work, and strong financial planning. Not everyone is cut out to leave the security of a steady 9-to-5 job behind.
Once you start down the wholesaling path, however, it’s hard not to want to make that leap. But how do you know whether a full-time career in real estate is the right decision for you?
The Wholesaler’s Dilemma
Before you even begin to think about a full-time focus on real estate, it’s important to understand one thing: You don’t have to quit your job right away. According to a recent study published in Inc., entrepreneurs who kept their day jobs were more likely to succeed in a new pursuit than those who quit.
As the months (or years) pass and real estate takes up more and more of your life, you’ll eventually have to make a choice — there are only so many hours in a day, after all. To decide whether you want to commit to real estate fully, you must first assess yourself and your situation.
Do you have dependents, or are you single? Do you have a partner who is willing and able to support you both during the transition? How much money do you have saved up? The answers to these questions will change the calculus of whether you should say goodbye to your day job.
Most importantly, however, you need to decide just how passionate you are about wholesaling. Are you already giving up expenses — going to restaurants, taking vacations, or even dating — in favor of real estate ventures? Do you find yourself enjoying real estate more than those leisurely pursuits? If that’s the case, then you should seriously consider taking the next step.
Just make sure you look before you lead — the last thing you want to do is realize after the fact that real estate was just a passing fancy.
How to Make the Transition
If you’re confident that you want to leap into a career in real estate, the next step is figuring out how to land on your feet. Here are a few things to consider that will help you get where you want to be:
Make sure you can afford the switch.
To feel confident about quitting, you’ll want to have a track record of at least three months that shows your current side hustle can cover your living expenses. If that’s not an option, you should have enough cash saved up to cover your living expenses for six months (at the very least, you’ll want to save enough money for three months).
Figure out where your money will go.
One of the biggest mistakes new wholesalers make is assuming that all the money that comes in from a wholesaling deal is pure profit. In reality, most of that money should either be put back into your business or set aside for taxes. The cash that comes out of your first few deals, for instance, should go toward marketing instead of savings.
Even for wholesaling champions, money management is a challenge. That’s why it’s important to decide in advance how much of your revenue you want to keep for yourself and how much you need to earmark for other things.
Plan to scale.
If you’re working full time on your wholesaling business and reach a point where you cannot make any more appointments, congratulations! That means you’re doing a lot of deals. Your next step should involve figuring out how to scale your operation.
It’s not enough to hire an acquisitions manager and hope he or she will figure out the process that works best for you. Systematize and document your processes, and then hire your first team member to run those processes for you. You’re not changing how you conduct business — you’re hiring people who can help you run your existing operation at a larger scale.
Just remember that you don’t need to rush to quit your day job. If you’re not passionate about pursuing this new path or worried about your finances, nothing is forcing you to take the plunge. But if you think you’re ready, you have enough funds to feel comfortable, and you’re serious about real estate, then there’s no time like the present.