People often get their feet wet in real estate by investing in one or two single-family rental properties. Many of them soon discover that real estate investing is what they want to do full-time. So, they immediately start asking questions like: How can I quit my job and become a full-time landlord? Great question…glad you asked!
The Benefits of Being a Full-Time Landlord
Being a full-time real estate investor and landlord isn’t for everyone. However, most people find it attractive because of benefits like:
- Monthly cash flow. When you go into full-time landlording, you’re able to spend more time focused on the business. This makes it easier to maximize cash flow from each property (and add new properties to your portfolio with greater frequency). The result is higher monthly cash flow.
- Lifestyle flexibility. It’s not all about money. While the money is great in real estate, it’s the lifestyle flexibility that’s most attractive. When you work a 9-to-5 for an employer, you’re basically at the mercy of your boss. What they say, you do. If you’re required to be in the office 40 or 50 hours per week, you can’t leave (even if you get your work done). If you only get two weeks of vacation per year, good luck taking a month off and traveling Europe. But when you’re a full-time landlord, the world is your playground. You can grab a two-hour lunch with a friend on a Wednesday afternoon. You can spend six weeks traveling the world. You can pick your child up early from school and grab ice cream. Full-time landlords are in charge of their time.
- Tax advantages. Let’s not forget about the tax advantages that come from investing in real-estate full-time. In addition to all of the property-related deductions and depreciation, you can also enjoy a number of self-employment perks. This includes taking a home office deduction.
While you can certainly enjoy some of these benefits while being a part-time landlord, they get intensified and maximized when you do it full-time. If you’ve been thinking about making the transition, consider this a sign that you need to get started sooner rather than later.
5 Tips for a Smoother Transition
Let’s not make light of the situation – contemplating quitting your job and opting to become a full-time landlord is a little intimidating. But it’s also rewarding. It all comes down to how you manage the transition. Here are a few helpful tips:
1. Stockpile Some Cash
If you’re even remotely thinking about quitting your full-time job and going into full-time landlording at any point in the next 18 to 24 months, you should start stockpiling as much cash as possible.
Generally, the rule of thumb most personal finance experts have for the average person is to keep three to six months of basic living expenses on hand. But if you’re planning on cutting off your full-time income and going out on your own, it’s better to have nine to 12 months of expenses on hand. This gives you a longer runway. (More margin for error, if you will.)
To figure out how much cash you need, calculate your expected cost of living. Toss out discretionary purchases and entertainment. Only focus on what you need to live: food, shelter, transportation, healthcare, etc. Now multiply this number by (at least) nine. This is how much you’ll need to make a comfortable shift.
2. Build a Portfolio First
Don’t make the plunge into full-time landlording if you don’t already have at least two or three rental properties to your name. Not only do you not have enough cash flow, but you don’t really know if you like landlording yet.
Once you have multiple properties, you’ll have a much better feel for whether or not it’s a viable opportunity.
3. Surround Yourself With Mentors
It’s difficult to thrive in real estate in isolation. As the saying goes, your net worth is your network. You become the average of the people you share life with, so surround yourself with people who are smarter and more experienced than you.
Mentors will help you walk through challenges, solve problems creatively, and even give you access to deals and opportunities that you otherwise wouldn’t be able to find on your own.
4. Don’t Burn any Bridges on the Way Out
If you really hate your job, you might be tempted to (literally or figuratively) flip them the bird on the way out. Please resist this temptation. It’s imperative that you do not burn any bridges on the way out.
Burning bridges is a bad practice to begin with. But it’s especially bad when you’re transitioning into unknown territory. While you might not ever have any interest in returning to work for that company in the future, you never know when you’ll need a connection or reference. Keep it professional and be the bigger person.
Leave on good terms and be honest. Let them know that you’re going into real estate. It’s possible that there are people who will support this idea by giving you leads on deals, providing capital investments, or connecting you with other folks in the industry.
5. Focus on Adding Properties
When you get into full-time landlording, make the executive decision to hire a property management company to oversee your units. This prevents you from getting bogged down in the small, time-consuming details of owning rentals. Instead, you can focus your time and energy on acquiring more properties (which is how you grow the business and scale your income).
As a general rule of thumb, try to add one property per fiscal quarter (if your resources allow). This will give you at least 12 properties within three years. That’s usually enough to earn a reasonable income.
Partner With Green Residential
At Green Residential, we’re more than just a real estate company. We specialize in helping Houston real estate investors and landlords maximize cash flow, reduce stress, and become more successful.
We do this by offering comprehensive property management services that help you with everything from property marketing and tenant screening to rent collection and maintenance coordination.
If you’d like to learn more about how we can help you streamline your approach to owning rental properties, please don’t hesitate to contact us today!