Hi,
I’m looking for some perspective from those who have already made the jump.
At what level of real estate net worth or cash flow did you quit your W2 job to focus full-time on real estate investing?
I believe I may be at that point financially, at least on paper. My portfolio is stable and generating consistent income, and I don’t enjoy my salaried job anymore. That said, I’m honestly scared to make the leap and walk away from the security of a paycheck, even though the job itself makes me unhappy.
For those who’ve done it:
- What metrics gave you confidence (cash flow vs expenses, reserves, net worth, etc.)?
- In hindsight, did you jump too early, too late, or right on time?
- Any regrets or things you wish you had prepared better before quitting?
I’d really appreciate hearing real-world experiences — both successes and warnings.
Thanks in advance.
At what net worth / portfolio size did you quit your W2 job to go full-time in real estate?
byu/Rough_Masterpiece_42 inrealestateinvesting
Posted by Rough_Masterpiece_42
4 Comments
Don’t forget health insurance. Unless you can get that from a spouse.
I’ll say this first, I am not in this position and no where near nor will I probably ever be in the position.
With that out of the way, the first thing that came to my mind when I read your post was that if I were in your shoes, I would need to have the ability to have all the properties paid in full to feel secure. Or at the least the cash to do this if the loans were called. If 2008 happens again and all the loans are called, I would want to make sure that I am not at risk of losing everything.
Just my 2 cents
I’m going to try and guess. What you will get in response.
NW is not a good indicator since real estate is included but not immediately spendable.
Cash flow is king. Reserves are necessary. Cashflow / investment income need to make up more then 100% of your W2 income. I say more than because capital expenses. Even with reserves can hurt a bunch if they turn out all at once in A emergency or some other non predicted type of event.
Almost always going to hear didn’t jump soon enough
Regrets are so subjective. But I think the popular one will be. Regret not doing it sooner.
Or possible regret that one property that was an impulse vs calculated.
For me. 7 properties, 18 doors and still cranking the W2.
From a bandwidth perspective I reached a tipping point at about 40 units where I either needed to hire a property manager or make the leap and go full time with it. In hindsight my tipping point was probably sooner as I was doing a shit job at managing the properties, shit job at my W-2, and was never at home.
From a cash flow perspective I was basically break even with our family’s monthly needs at the beginning, maybe a little negative, but had a large cash reserve to cover fluctuations in both personal life and the business. I knew that there was so much potential with our portfolio as far as getting rents to market but that would take time and additional capex. I gave myself 2 years to get the business to a reasonably steady state and to hit certain financial goals.
Along the way I did a cash out refi on some properties to both reinvest and provide more cash, and also refinanced our primary home to a much better rate (did this before I quit the W-2).
ACA was a blessing for healthcare; if you fall in the income sweet spot you are eligible for some good subsidies. Good thing with real estate you have a lot of levers to pull to hit your target AGI.
This was 3+ years ago and everything is where I want it. I do look back and I’m like what was I thinking, I’m glad I did X,Y,Z or this could have gone differently. Just have a roadmap and plan for the most reasonable worst case and have contingencies in place is my advice.