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by Attorney William
Bronchick (legalwiz.com).
For more information go to
legalwiz.com .
Many self–acclaimed real estate gurus state that everyone should quit
their jobs and immediately jump into full time real estate investing.
They often claim incredible results from students with little
experience. We would like to caution that life–changing decisions are
not usually simple and that full time investing is not for everyone.
Let’s discuss some pros and cons of full–time versus
part–time investing.
The Full–Time Investor
Entering into the real estate profession on a full–time basis offers
several advantages over a part–time commitment. Being successful
requires you to develop knowledge in many aspects of real estate, and
more time focused on real estate leads to greater knowledge. The more
your learn, the more you earn, since you do not need to rely on as many
professional services or partners for help. You also learn to recognize
a deal (or a dud) faster, which gives you more time to do more business
or spend with your family.
As a full–time investor, you work your own hours. When we say “full–time,”
that may mean as little as twenty hours per week if you are good at
finding deals. The rest of your time can be spent pursuing other
vocations or hobbies. Or, if you are so inspired, you can work forty or
more hours and use the extra cash flow to buy rental properties or
diversify your holdings in the stock market. The point is that you need
to satisfy your cash flow needs before you can start “investing”
your money.
One final point you should consider is whether you want to be
“self–employed.” If you have always worked for someone else, being your
own boss sounds very attractive. In some, respects, this isn’t quite the
truth. Being your own boss means being an accountant, bookkeeper, stock
clerk, receptionist and office manager all–in–one. You have to do deal
with tax returns, payroll, office supplies, customer service, bills and
all the other hassles that come with a business. You don’t have friends
to chat with at the water cooler. You don’t have paid health insurance,
a company car and a 401(k). You take your problems home with you every
night. Sound like fun? It is, once you learn how to master your time and
run your business. Being the master of your own life and career is well
worth the other hassles of dealing with your own business.
The Part–Time Investor
The part–time investor holds a “regular job.” This may be by choice
or for the time being until his real estate ventures are bringing in
enough cash to quit his job. If it is the latter reason, don’t quit
your job because the real estate “guru” told you so. Quit your job
when it is not worth the income that it brings you. In other words, if
you are making more money per hour flipping properties on the side, you
are at the point that where your regular job is costing you money. Only
then, is it time to quit!
One of the advantages of starting out part–time is that you can
maintain cash flow while learning the business. It may take weeks or
possibly months to find your first deal. That same deal may take several
months to turn around, especially if you decide to fix it and sell it
retail. Think twice before telling your boss you’re leaving; you will
have plenty of time to make the career switch once you have real estate
experience. You may, on the other hand, like your occupation. If so,
continue to work at it, and invest in real estate on the side.
The best case scenario, if you are married, is to have one
spouse work a regular job. The other spouse work the real estate
business for creating wealth, retirement income and a nice college fund
for the children. Of course, in today’s market, you could be laid off
due to unforeseen circumstances. If you earn additional income flipping
houses and invest the proceeds into rental properties, you will be
covered if your main income is lost. This is especially the case for
married women that often forego a career and raise a family, only to
find themselves divorced with no means of making a living. We don’t want
to sound cynical about marriage, but with a fifty–percent divorce rate
in America, it never hurts to have a system for making money.
Someone with a full time job tends to have little free time to
focus on real estate. A part–timer should learn most of the same skills
as a full timer. Thus, the key disadvantage to flipping properties on a
part–time basis is that it takes sacrifice to learn the business.
Something has to give; television, lazy weekends, meaningless hobbies
and even some family activities must be compromised. As with any
education, time spent learning about real estate will bring its own
rewards, especially if the people in your life understand your goals and
your plan to achieve those goals. If you are married, make sure your
spouse reads this material with you and participates in the fun process
of making money.
Treat Real Estate as a Business
People are lured to real estate because of the quick buck that it
promises. Don’t hold your breath, you won’t get rich quick. An
“overnight sensation” usually takes about five years. More than ninety
percent of the people who take a real estate seminar quit after three
months. Real estate investing should be treated with the seriousness of
a career. It takes months, even years for a business to cultivate
customers and have a life of its own. You need to treat it like any
other business.
by Attorney William
Bronchick (legalwiz.com).
For more information go to
legalwiz.com .
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