5 Questions To Ask Before Quitting Your Full-Time Job

Investing in real estate is unique from almost any other business out there. For starters, there is no dedicated license or degree needed to start making offers. There is no internship or apprenticeship you have to complete to begin investing. Someone with no properties in their portfolio has the same chance of getting an offer accepted as a seasoned veteran. This allows almost anybody at any time to enter the world of real estate. Most investors only have a small handful of properties in their portfolio. They invest in one or two deals a year and retain their full-time employment. It is when the begin to turn deals away or miss out on opportunities that they start to consider investing in real estate full time. As abundant as the upside with full time investing may be, you need to make sure you are financially, and emotionally, ready to do so. Here are five questions to ask before quitting your full-time job and diving into real estate.

• Do you have income/assets in place to sustain loss? There is a delicate balance in any business between doubling down on marketing that is working and letting it ride its course. Even if you have a handful of deals currently in the pipeline it doesn’t mean you should bank on them. As any experienced investor will tell you deals are never closed until they are actually closed. Things happen in the 11th hour all the time that causes deals to change, or even fall out. You need to make sure you are in a comfortable place financially that you can withstand the loss of your primary income. A deal you have today may not close for six months. Without income to run your household or your business, you may look for ways to cut corners that could come back to haunt you. Even if it means waiting a little longer, you should hold off on committing to real estate full time until you have a six-month cushion of income and assets.
• Are you turning away or losing business? You never know when a marketing strategy or a networking contact will produce an explosion of results. If, and when, it does it can feel that you have struck gold and the stream of leads will never end. However, you need to be careful and evaluate if the sudden spike is sustainable or just a short term bump. If you overreact and leave your job because you have ten new leads in a week you may end up regretting it. On the flip side if you truly found a partner who can help generate real leads you need to make a decision. If your finances are in place focusing on real estate all day can help you close more deals and ultimately greatly surpass your current income. Figuring out what is a mirage and what is real can be difficult but don't let short term results impact your long term future.
• Do you have a team and business in place? Whether you close a deal a year or once a month it is essential to run your real estate career like a business. You can't leave your job and then start to put a team in place. You need to hit the ground running and already have your team assembled. Everyone from your real estate agent to your contractor should know exactly what you are looking to do and how you plan on doing it. You should have an LLC in place and already have an accountant on your side. Now is not the time to reach out to attorneys or start looking for financing. Every day without a team in place is a day you are not generating income. If you don’t have a team you are better off waiting until you find people that you are comfortable with and are a good fit. Hitting the ground running when investing full time is absolutely essential.
• Are you ready to handle the emotional roller coaster? What many part-time investors fail to grasp are the emotional swings full-time investors go through. One day you think you have secured three new deals and by days end two of them fell through and the third is on thin ice. You may be confident in a list price only to have a property sit on the market for weeks without so much as a showing. There are several things that need to happen for a real estate transaction to succeed. In addition to buyers and sellers working together, you have potential snags with the contract, the title, the insurance, the appraisal and buyer financing. All it takes is just one of these areas to have an issue to put the deal in thin ice. You need to accept that not every day or every deal will go the way you planned. In fact, rejection is more of the norm than the exception in real estate. Before diving into the business full time you need to understand this and have the right frame of mind.
• Do you have multiple revenue streams? Every real estate investor has a go-to niche. However, the best ones never put all their eggs in one basket. You may love everything about rehabbing and flipping but it doesn’t mean you should make it your exclusive niche. Even if you do, you should diversify where you invest and even the types of properties you buy. If the market turns you never want your real estate house of cards to fold. Before deciding to go full time you should have a few different revenue streams to keep you afloat. With your full-time income gone, you may consider a rental property or something inside of real estate where you can generate additional income. The more revenue streams you have the easier it is to make the transition.

There is never a perfect time to take a leap of faith and start investing full time. Some investors dive in blindly and vow to make it work. Others have all their ducks in a row and wait until everything is perfect. All things equal you should hold off until you are financially stable and have your team in place. However, you know yourself and your business better than anyone.