Should You Do Real Estate Full-Time?

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 InvestorEntering 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 InvestorThe 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 BusinessPeople 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.

Work ON Your Real Estate Business, Not Just IN It

The real estate business is notorious for its highs and lows. Realtors are either too busy to think, or in a slump.Working on your business instead of just in it is a way to smooth out the peaks and valleys and have steady business all year round. That means planning and marketing. Or planning your marketing.Most Realtors wait to market until a slump begins, and that’s how the problem is created. It’s understandable – when things are hopping you’re doing well to keep up with all the appointments and are lucky to write a hurried ad for a new listing.This year, why not put your planning and marketing at the top of your list? Then you won’t feel obligated to take every single listing and every buyer that comes along. You’ll have steady work, which means steady income, and you won’t be under the kind of pressure that makes you work seven 12-hour days for several weeks each year.Start with choosing your target area, or your target buyers, or both. Then market toward those people.Think how much easier your life would be if your listings were all in the same geographical area. Do you really like it when a seller 20 miles from the office calls to tell you the flyer box is empty and you’re negligent for letting it get that way?But more than that, wouldn’t it make work simpler if you were able to really know every listing in your area, so that when you got a new one you’d know exactly which comps to choose for your market analysis – and know if they really did compare well because you’d seen their interiors?Knowing the entire real estate inventory also helps you with buyers. If they have 6 kids and need over-sized bedrooms to fit them all in, you’d know which houses to show.Then, the actual real estate marketing. Decide on a schedule. Once a month is good, but if your finances won’t allow that, mail every other month.You can alternate what you send. One month it could be a postcard, the next month your newsletter, the next month a letter in an envelope, then back to the newsletter, etc. If you plan ahead, you can prepare your mailings far in advance and have them ready to go when the time is right.Yes, your newsletter will need something timely, so you can leave one article to write at the last minute.Rather than do all your real estate marketing “when you have time,” set aside a few hours every week to work on it. If you don’t have a mailing to go that week, use the time to re-vamp each flyer you put together in a hurry the day the listing came in.Go back to your MLS listings and make them more appealing. Take an hour to write attention getting ads for each of your listings and give them to the person in your office who places your ads in newspapers or Homes magazines. (Maybe that’s you?)If you put this planning and marketing time in your day planner as an appointment with yourself, you won’t be tempted to let it slide.I know – there are times when a buyer comes from out of town and you can’t choose your own day for showing. When that happens, you have two choices. First, think what you would do if you had already set an appointment with another customer for that time. Then treat the appointment with yourself with similar importance. OR immediately re-schedule the appointment with yourself and write it in your day planner.Consistent marketing will give you a consistent supply of clients and customers – isn’t that worth taking a little time to work ON your business?