Ah, the dream isn’t it? To be able to quit your job, work in your PJ’s, not have to ask for vacation time – it’s the ultimate goal for many investors. And one that is achievable in just a few years. How many years? Please don’t shoot the messenger, but here is our take on the matter;
Yes it would be great to become full time investors and quit your day job within a year or two. But in reality, the large majority of investors will find that their investments won’t sustain their lifestyle until year 7-10. Yup, sorry, I know that’s not what you wanted to hear, but that’s the reality of what we’ve seen.
That’s not to say that you won’t have benefited in many ways before that – cashflow that can offset life’s expenses, pay for extra vacations or allow you to lessen your conventional work hours are welcome benefits to investing that can be realized rather quickly.
Refinances, property sales or Joint Venturing can bring in chunks of cash that can pay off or pay down debt, pay for kids educations or buy once in a lifetime experiences.
These are fantastic benefits that investors can enjoy along the way, but to really experience the power of real estate, time is needed. And I’ll repeat, with the ‘average’ investor, this usually means 7 years before real life changes start to happen; legacy type stuff where your life has changed and you have the ability and power to change the lives of others around you – children and grandchildren, parents and those less fortunate should that be part of your plan.
For those buying properties with Joint Ventures, qualifying for mortgages will not be as important to you but for any buying property on your own, one of the toughest obstacles you will have to climb is the ability to qualify – and that’s if you ARE working, nevermind if you are not. Without income, qualifying will be difficult and expensive at best, and not even possible, at worst. While you are in your buying stage, it is close to imperative that you keep a job, or have access to someone that does (Joint Venture Partner, Spouse etc). Talk to your mortgage broker for more info, and certainly before quitting your job if you plan to continue to buy.
Also, depending on where you live, health insurance is worth its weight in gold and if leaving a job means leaving those benefits, the price that self insurance will take out of your cashflow is often not worth it. Once you’ve had your properties for awhile, and the real power of real estate is working for you while you sleep (see Cashflow To Wealth page) self insuring may become a non issue at that point.
Few things are sadder to watch in our industry than seeing a super enthusiastic newbie risk it all to quit and go full time into investing, just to have to turn around and go back to that job, tail between legs, bank account emptied and much of their initial hard work in real estate, negated. Save yourself some pain and hang in a little longer at work – you won’t regret it.