Investing in real estate is one of the few professions you can earn a full-time income in part time hours. You don’t need to stare at a computer screen or punch numbers for eighty hours a week to earn a living. With just a few deals a year can supplement, or in some cases even exceed, your full-time income. However, most investors get to a point where trying to balance both can be difficult to handle. You may get unexpected tasks or responsibilities at work that eat up most of your time. You will be put in a position to choose between real estate and the security of your full-time paycheck. Knowing when to commit to real estate and when to only invest part time can be difficult. Here are five tips to you realize if you are ready to invest full time.
- Do you have an investing goal? Prior to deciding if investing full time is for you it is a good idea to think about you long term goals. Simply put, what do you want out of real estate? Not everybody has dreams of global real estate domination. Some investors are perfectly content with closing one deal a year with a partner and seeing where it takes them. There is no license or continuing education you must maintain annually. You can invest how much or how little you want. If you are fed up with your job and think you have reached your peak now may be a good time to explore your options. What is important to remember is investing full time is much more difficult than what you may have experienced with the handful of deals you have dealt with. Like any other business, it will be a grind with plenty of ups and downs.
- Do you think about real estate all the time? What makes investing in real estate unique from other investments is that you largely control your fate. Sure, the market plays a role, but you make the decisions and choose your own path. There is truly nothing like competing a successful real estate deal. There is a lot that goes into it from start to finish and when it is done you will feel a sense of joy, relief and accomplishment. Inevitably, you will want to do it again. If you have caught the real estate bug and spend your free time researching markets, looking at listings and reading investing articles you are on the right path. Even though you can invest part time, successful investing takes a full-time commitment. You need to constantly stay on top of trends, changes and fads. A trend from even three months ago may be obsolete just 90 days later. If you have a thirst for real estate knowledge and you think about deals constantly you may be ready for a career change.
- Financial stability. As high as your financial ceiling is in real estate nothing is guaranteed. There are no full-time paychecks to fall back on. If you walked in your office and quit today you would not have income coming in for at least a few months. An average house flip can take anywhere from 90 days to six months. The return at the end of the deal is often worth it but you need to be able to live lean during this time. If you do not have reserves to fall back on it is a good idea to wait until you do to get started. You don’t necessarily need them to dive into the business, but you will need them to live. Investing without a safety net forces you to press and often make poor decisions based on finances. You will cut corners or try to expedite the process when deep down you know you shouldn’t. There is never a perfect time to start investing, but you should wait until you can go at least a few months without getting paid.
- Do you have free time at your current job? Some jobs are better for part time investors than others. It would be extremely difficult, if not impossible, to invest if you are a doctor or a nurse. On the flip side if you are a real estate agent, mortgage broker or insurance agent you often don’t have anyone looking over your shoulder. You can see a new listing when it becomes available or pick up the phone when a call needs to be made. If you have a job where you have some flexibility to come and go when you, please you may have the best of both worlds. Feeling overwhelmed juggling both income streams may just be a matter of organization than anything else.
- You have a system in place. Being ready to invest full time means you have a seamless business already in place. You have leads coming in, deals to work on and a strong team by your side. You may have had to pass up deals because of your employment and see too much opportunity. If you are at this point, you are probably ready to tackle the world of real estate. If you have just closed your first deal you should probably hold your horses and evaluate the situation. Did the deal fall on your lap or do you think you can replicate the process again? As we mentioned, there will be a euphoric feeling after closing your first deal, but you can’t fall for fool’s gold until you know it is sustainable.
The truth is you will never really know you are ready until you do it. That being said, don’t dive into real estate until you know what you are getting into.