Quit Your Job Through Real Estate Investing
by Christopher Levarek
“What we fear doing most is usually what we most need to do.”
- Tim Ferriss
The “J O B” for many can often seem like a burden holding one back from living the life of their dreams. Often people reference the job with phrases such as “back to the grind” or “got to go work for the man”, none of which emphasis a happy place. Yet, so many refuse to leave their job as they have mixed feelings on money, supporting a family and uncertainty of any other option.
Let me say, that it is entirely possible to leave a job you dislike at any time. It is always an option. Yet there should be a strategy in place to support your lifestlye and loved ones if possible. Today, I want to share a simple method for allowing you to quit your job through real estate investing. I did this strategy, in fact I quit a few weeks ago! This is no lie. I worked a 12 year IT career and was able to step away due to real estate investing in four years time.
!Special Notice for Those Who Love THEIR JOB!
If you love your job or enjoy what you are doing, no worries! You can continue to fulfill your passion or purpose while building a backup plan or real estate portfolio by investing passively. Although, you might not want to “quit your job”, this article will help you plan for the future in any case.
With that mentioned, let’s move into the strategy :
Step 1 - What’s it Going to Take?
This is the starting question for the journey, what’s it going to take for you to fund your lifestyle without your job? What’s the number or income needed for you to feel good about stepping away? This number is the total amount of money that would cover your monthly expenses and then some.
How does one find this number? Well, if you simply look at your monthly expenses you will have a good idea or starting point. So if you have $3,000 in expenses for month 1, $4000 for month 2 and $3500 for month 3, you would have an average of $3500 as a monthly expense number.
Add a bit extra to take into account the unknown, perhaps 10%, and you have your number : $3,850. If you can come up with $3850 per month in passive income, you could leave your job. You could focus on another hobby, career or passion generating X income knowing that your expenses are paid by your passive income streams.
Step 2 - Now Build That Passive Income
Alright, so building on the number above, you need to generate $3850 a month in passive income. How are you going to do that? Well with real estate of course. Yet, It’s not the only method, you could always add in other income streams from side hustles, online activities, a book, etc. However, investing into real estate is able to generate a good amount of the income passively you will need.
For example, let’s say you take $50,000 and invest into a short term rental with partners instead of your 401k or retirement plan. The property generates $120,000 gross revenue for the year, of which $35,000 is cashflow. It took 3 other partners to fund the capital and the cashflow is split four ways. This property thus earns you $8750 a year or $729 a month.
Now let’s look at a more passive investment like a real estate syndication. A apartment or mobile home park syndication typically generates 8%-12% return for the first 2-3 years and 12-18% when the sale proceeds are factored in.
Let’s say, this same $50,000 from the syndication would ultimately return a 16% per year once sale proceeds are factored in, so roughly $40,000 total returns. Yet we will not include that as we are simply looking at cashflow for now.
If we just look at cashflow, and take $50,000 and invest it into a real estate syndication making 8% the first year, 10% the 2nd and 12% the third. This would generate $333 a month the first, $416 the second year and $500 the third year.
So in total with $100,000, you could be generating $1062 the first year per month, $1145 the second year per month and $1229 the third year per month.
Now that is just the start. If you take the proceeds for years 1, 2,3 and reinvest them in similar projects you would start to compound. It starts to become visible how in year 4 or 5, you would have some real true passive income chipping at your number.
Step 3 - Take Note
In the beginning it might not seem like you are making any headway, but just like a snowball, as your returns start to build and compound, the speed picks up until the snowball becomes an avalanche. I encourage you to keep track of how you are doing. Note down what passive income you are building for year one, year two, year three and watch how you get closer to your number.
Not only will tracking this progress keep you in the game, it will let you celebrate the wins and ensure you do not get distracted by the shiny items along the way. Keep the goal in the headlights and that number will become a reality.
In Final
It’s worth understanding that every journey starts with that first step. If you never get started, you will never know. Start exploring the various strategies out there for building passive income. I recommend digging into our website and blog articles to read into the various passive investments in real estate or get some ideas.
Or just have a call by joining our Investor Club by clicking the button below where we can help guide you in this decision and help you structure your investing strategy.