Updated: Mar 7
COVID-19 has impacted every person’s lives on this planet. Restaurants, bars, gyms, and more are either closed or working in a limited capacity. Though not everyone has been impacted financially from the economic shut down, it does emphasizes how dependent many people are to their employers. Many feel they lack control over their future and are extremely exposed to whatever comes next. This need to take control over your life and have a stable and reliable income is bringing many to consider transitioning to real estate as a full-time career.
If you are one of these people, then this article is for you. In this article, I’ll discuss the benefits of full-time real estate investing versus a traditional job. Next, I’ll cover how to actually establish yourself and get started as an investor. Finally, I’ll discuss a few keys to succeed in the business of real estate investing. I will share with you tools to get started as a full-time real estate investor and how you can best use them to assess the possibility of taking the plunge into the world of commercial real estate.
The Two Types of Full-Time Real Estate Investors
Generally speaking, there are two types of full-time real estate investors: the passive investor and the active investor. A passive investor is someone who invests in a real estate deal but is not involved in the management or the operations. If you purchased a single-family home and you collect rents from your tenants or call the plumber to fix the toilet, then you are not a passive investor; you are an active investor. A passive investor usually invests in a syndication or a REIT, and pay others to manage the investment for them.
An active investor is someone who manages the property for either themselves or for others. A great example is a syndicator, who finds deals, raises capital from investors, and manages the asset for them.
Benefits of Full-Time Real Estate Investing vs. the “Traditional 9-5”
Whether you are a passive or an active real estate investor, the major benefit of becoming a full-time real estate investor is having control of your own time. No more bosses, artificial deadlines, or fear of being laid off. Deadlines are a thing of the past when you are choosing your own hours, and you’re really able to fit your work around your life. For example, not having to worry about a rigorous commute to an office. But most importantly, you’re controlling your destiny and determining your own success.
If you want to become a full-time passive investor, make sure you understand that you need to be patient and invest in the right deals to grow your wealth-income until you don’t need a W2 job. Wealth takes time to build. For example, say you work as an engineer and have $100,000 in savings. You invest the money in a deal that pays you 7% cash on cash every year. That’s $7,000 a year, which is not enough to have the cash flow to sustain you, so you can't quit your day job. Now, after 5 years the syndicator sells the deal and your $100,000 turns into $200,000. You reinvest the money again in a deal that pays 7% returns and turns the $200,000 into $400,000 5 years later. Of course, this is a simplified example, but my goal here is to show you that it takes time to build wealth.
If you want to become a syndicator, you can work as hard or as easy as you want, and of course, your success will be in line with the quality of your work. When I transitioned to syndication from my very cushy, 6 figure tech job, I quickly found out that I was working harder than I was working prior to syndication. I had, and still do, very ambitious goals so working hard is what keeps me going. However, you can choose to focus on one area of syndication (e.g. asset management) as an active real estate investor and live pretty comfortably. I chose to start and scale a syndication business, which is a different level of commitment than taking on just one part of active investing.
What Does a Typical Day Look Like for a Full-Time Real Estate Investor?