Making the transition from a part-time real estate investor to a full-time one is a big decision. In doing so, you are allocating most of your time and all of your projected income into your investing business. While this is certainly the right move for many investors, it may not be for everyone. Like everything else, there are pros and cons to every decision. There are things you should discuss and ask yourself before making such a big move. Change is never easy, but if you have a solid plan in place and a vision of your business moving forward, it will greatly help ease the transition.
The first thing you need to ask yourself is whether or not your income would increase if you invested full-time. This sounds obvious enough, but just because investing would be easier doesn’t mean it makes sense to quit your full-time job. To contemplate such a change, you need to have enough business in place to substantiate investing full-time. This not only means looking at your current pipeline, but having contacts and leads that can generate deals for the foreseeable future. It is only at the point that you feel you are losing business that a change should be made. If you are quitting just to have more free hours or a flexible schedule, you are not doing it for the right reasons.
You are giving up a lot to invest full-time. In addition to a steady income and health insurance, you are now fully responsible for your own income. Many investors welcome this pressure, but there are also many who cannot handle the new-found burden and wish they had a paycheck coming in. Before you commit to invest, you need to have a budget in place, reserves in the bank and a business plan in order. Investing full-time means treating it like you would any other business you would open. Completing a couple of successful transactions doesn’t necessarily mean you are ready to jump right in. If you aren’t ready to treat investing like a business, you will quickly regret your decision.
Investing full-time means changing the way you live your life. If you have a spouse and family, it will be an adjustment that needs to be discussed beforehand. The first few months may be lean until you get a few deals closed. Even if you have closings right away, it will be an adjustment in how you get paid. Instead of getting paid every week or two, you may see a larger amount every month or six weeks. This means you need to budget and spend accordingly. There will also be changes to how you prepare for tax season and what you need to do with your bank accounts. The bottom line is that you need to have your family on board with your new schedule and your new business. Business may be robust, but if it causes too much stress it may not be worth it, or it may take longer to adjust than you anticipated.
Even if you have invested for a while, committing full-time is an adjustment. This means that you need to have an idea how to maximize your day. Talk to as many seasoned investors and find out exactly what they do with their day. If they do a brunt of their work online or with some form of technology, it is possible that you may not have to quit your current job. The key to any good investor is maximizing their time wisely. If you quit your day job and sit around all day and wait for deals, you are not quitting for the right reason. You need to feel that you can do a mailing campaign or oversee more rehab projects with your time. Before you quit, have an idea of how you would spend your new-found time and how that equates to your income.
Finally, many investors think they have everything in place when they start, but find they are quickly overwhelmed on their own. Before you go at it full-time, make sure you have enough capital, contacts, resources and support before you start. Quitting your job and trying to figure it out as you go sounds like a good idea, but it could lead to disaster. It is better to wait a little longer before you know you have things lined up and can handle the business rather than quitting and waiting for it to come. You will need capital to support your full-time business. If you start out with a minimal budget, you can turn to credit cards and borrowing to support your business. This can lead you to chase your tail even if you are closing deals. Take the time and wait until you are fully ready before you get going.
Investing full-time can be the move that propels your business to the next level, but it is not to be taken lightly. Look at the pros, cons and real advantages of having more time to dedicate to your business. If you feel they are worth it, it is time to make the leap. However, if you have doubts, you should stick with your full-time job for as long as you can.