One of the great things about real estate investing is that you can do it as much or as little as you like. If you have a successful full-time job and want to invest only as a hobby there is nothing preventing you from doing so. If you are stuck between careers and want to give real estate a try full-time you can certainly go that route as well. Knowing when to turn your passion for real estate into a career is always one of the tougher decisions you will make. On one hand it can be difficult leaving a steady paycheck for the uncertainty of real estate. On the other hand, not having a cap on your income is appealing. Prior to committing to real estate there are a few things you should have in place. Here are five indicators that you may be ready to handle investing full-time.
- You have a nest-egg. Real estate investing success does not happen overnight. Unless you enter the business with a handful of leads in the pipeline and a few deals on your plate the odds are you will go through a period of adjustment. It is not uncommon for you to wait several weeks, if not months, before you see your first paycheck. When you do finally close, it will be worth it, but you need to brace for the lull. It is essential that you have a financial nest egg to help you get through this period. You need enough to handle at least three months of bills, mortgage payments, etc. Things may break right for you and you can generate income quicker, but you need to consider the worst-case scenario. Without this nest egg you will be consumed with finding a deal and may end up making poor decisions that impact you long-term.
- You can confidently talk real estate. Investing in real estate is a contact sport. Education and knowledge of numbers can help, but it is the contacts you make that can shape your fortunes. The best investors are constantly learning and always looking for ways to add to their investing tool box. With that, they network like crazy and are around as many fellow investors as possible. When you get to the point that you are comfortable listening and talking about the business you know you may be ready to make a change. Real estate investing certainly isn’t easy, but it isn’t rocket science either. The more you immerse yourself in the business the quicker you will pick things up. With that the easier it will be for you to feel comfortable and confident networking. The more you get out there and network the quicker you will find your next deal and build your pipeline. If you can hold a conversation about the business, you should have no reservations dipping your toe in the real estate waters.
- Turning away leads. Determination is only a small part of investing success. There are many investors who want to be successful and are willing to work hard to get there. However, the results are what separates you from your competition. If you want to make the leap to investing full-time you should be turning away leads because your current schedule isn’t conducive to working on them. If you have a job where you have some down time and can sneak in some real estate work, you should consider staying there. It is only when you get to a point where you feel you are leaving money on the table that you should consider leaving. Simply proclaiming that you want to be an investor doesn’t mean you will immediately have deals to work on. Building a business and generating leads often takes time. If you have put in the legwork and have established contacts in place you may be ready to make a seamless leap into the business.
- Deals in the pipeline. It is a good idea to have worked on at least a few deals prior to making a change. Regardless of how much you know there is always a small period of adjustment. The best way to avoid this is by having current deals in your pipeline. This could be an existing rehab project that needs to be turned over or a few offers just waiting to be accepted. Not only does this help reduce the turn until you generate income, but it helps springboard you for everything else you do. You won’t have to immediately spend money on marketing & lead generation and can go right to attacking your project.
- You have already made sacrifices. It is unrealistic to simply snap your fingers and start investing. Even if you think you know the business there are always nuances and areas that are difficult to grasp. A great indicator that you are ready to invest full-time is that you have already made changes and sacrifices for the business. Even if you haven’t closed a deal simply going to networking meetings gives you an advantage. You’ll have an idea of what to expect, what you need to do and how you plan on doing it. The real estate business doesn’t follow traditional 9 to 5 hours. Making that adjustment isn’t for everyone. It is recommended that you go to a few meetings and make time for some seminars or classes prior to getting too far.
Investing full time is a commitment you should only make when you have everything in place. Having these five indicators in place will help you free your mind and give you the best possible chance for real estate success.