Welcome!

By registering with us, you'll be able to discuss, share and private message with other members of our community.

SignUp Now!

How did YOU make the transition from employee to full time RE Investor?

  • Thread starter Thread starter Guest
  • Start date Start date
G

Guest

Guest
Guest
I am currently a full time employee but want to plan my strategy as to how I can break out and become a full time real estate investor! I have purchased multiple rental properties so far but that is in large due to me having a salary to support the banks debt ratios. Does anyone continue to use a bank when they are job less? if so which one??
 
QUOTE (DWard @ Feb 6 2010, 07:10 PM)
I am currently a full time employee but want to plan my strategy as to how I can break out and become a full time real estate investor!


Love what you do.



Take calculated risks.



Have some money to start.



Go slow .. but not too slow.



Build a track record.



Know what you are doing i.e. get educated such as REIN !! .. courses / books / seminars .. and then:



TAKE ACTION.



Have a capable team: lawyer, realtor(s), accountant(s), property manager(s), handymen, assistant ..



Sell your abilities .. but don't oversell.



Delegate tasks you're not good at or don't like to do .. and on a related/growing scale: find partners that love to do what you don't and that you can work well with on a human, intellectual, social, energy and value level !



Have enough cash to live on .. and that means a JOB for many years until the portfolio is large enough. (Budget for 5-10 years minimum here .. not 2-3 years !!)



Start with a few small homes, possibly suited.



More reads here, or on my blog (see footer)



5 ways to make money http://myreinspace.com/public_forums/General_Discussion/61-3347-5_ways_to_make_money.html



How to get started http://myreinspace.com/public_forums/General_Discussion/61-4391-How_to_get_started_.html



How did I get started: http://myreinspace.com/public_forums/Real_Estate_Discussion/62-15422-Is_my_goal_of_200K_annual_income_feasible.html
 
QUOTE (DWard @ Feb 6 2010, 07:10 PM) I am currently a full time employee but want to plan my strategy as to how I can break out and become a full time real estate investor! I have purchased multiple rental properties so far but that is in large due to me having a salary to support the banks debt ratios. Does anyone continue to use a bank when they are job less? if so which one??


Very simple, ask yourself 2 to 3 questions:
[list type=decimal][*]How much do you need to live and does your current investment income cover that?[*]How much do you need to grow your current investment portfolio including real estate?Is your income, your rental income or the income of your partners sufficient to qualify for mortgage(s)?[/list type=decimal]Question 2 and 3 should be Question 2a and b, for those who wonder why I say 2 to 3 questions.

Hope this helps,
 
You can still get mortgages when you are unemployable just so much harder and a lot of paperwork if your dealing with single families or smaller multi`s.

As for what it takes to quit to become a full time investor. I probably quit my job earlier than I should have if you are calculating the numbers.

This is where taking Thomas`s and Godfried`s advice about having your safety net in place is paramount. I operated without a safety net for a long time and you will have some slips along the way. Make sure it is sustainable in any case.

TD does equity lending 75% LTV
 
I waited until I was eligible for pension and then took a healthy early retirement severance package.

I knew if I stopped being a employee I would work myself too hard........turns out and I was right.
 
QUOTE (invst4profit @ Feb 6 2010, 10:23 PM) I knew if I stopped being a employee I would work myself too hard........turns out and I was right.

Agree 100% with this! Relative to my engineering career I work 2x-3x as hard as a business owner.

Keep in mind many of the books you read are written by `made men` so to speak. Being an employee definitely sucks but being a business owner is way way more stressful. No certain cheques and many contingencies that must be planned for.

I only quit when I had a full year`s living expenses tax free in savings. If you don`t have the peace of mind that you`ll be able to pay your bills you won`t be able to think long term about the success of your business. You will quickly develop a short term mentality and that`s not the way to do it in investment real estate.
 
QUOTE (RedlineBrett @ Feb 7 2010, 01:24 PM) I only quit when I had a full year`s living expenses tax free in savings. If you don`t have the peace of mind that you`ll be able to pay your bills you won`t be able to think long term about the success of your business. You will quickly develop a short term mentality and that`s not the way to do it in investment real estate.

Thank you for sharing Brett. I have virtually no bad debt and low living expenses so can support myself for the year like you suggested but I do not know how I will continue to grow my portfolio once the job is done... how did you continue to grow?
 
QUOTE (DWard @ Feb 7 2010, 09:09 AM) Great articles Thomas... but the last link does not work...
content here on :how do you get started"

started with curiosity in Vancouver in 1988 .. had the chance to buy our condo we rented for 80K .. and I thought "outrageous .. overpriced" .. of course today that unit is 400K .. nevertheless decided to learn .. which took me 5 years to actually take a course (Raymond Aaron, Toronto) .. and read a few books .. and did decide to do s.th. .. which took another 5 years to actually do s.t. .. i.e. 10 years from "gee, let`s do s.th. to actually doing s.th." .. bought a first revenue condo for 80K in Calgary with 20K cash .. sold 4 years ago for 170K .. then a 2nd with 20K LOC ("no money down") for another 80K in Edmonton (which I still own today) .. then a 3rd in 1999 for 80K (sold at a loss in 2002 for 78K) .. but then realized that buying in bulk makes more sense than buying retail .. bought a 15 suiter in Edmonton for $570,000 in 2000 with my dad .. then a 20 suiter in 2001 with my own cash for 740K .. then a 24 suiter in 2002 for $1M after I had sold the 15 suiter (with a 100K profit) and the 20 suiter (with a 250K profit) .. and then asked others to co-invest .. initially 5-6 guys + my own money for yet another 24 suiter in 2003 (sold in 2006 for 400K profit or so ) .. then a 12 suiter, 47 suiter, 120 suiter and 21 suiter in 2004 .. all four were 50/50 JVs with about $2M raised from 25 people while running a software / consulting firm .. all real estate part-time until late 2004 .. then full time after 2005 .. some sold for big profits .. some still owned .. rest is history as they say .. then brought on a partner in 2005 to raise more money (we raised about $12M together) .. then 3 other partners in 2006, 2007 and 2009 .. to allow more delegation / controlled growth .. today the asset base is about $90-$95M with over 500 investors and $36M raised .. in 5 LPs ... 16 buildings with 1200 tenants and annual revenue exceeding $8M .. some buildings being exited / already sold .. most still going as value increase takes a while .. see our website track record page (check the early years ..)

so yes, in a decade a lot can be done .. but it always starts small, then faster .. it is hard work .. long hours .. sme calculated risk taking and of course Edmonton was "on fire" from late 90`s to 2007 or so .. and with 15% down and 60% property value growth 300-500% ROI on your money in those days was doable .. this is harder today with 20-30% down and slower value growth ..
 
I`ll third third this

Every other night my dreams are filled with a job on some assembly line. Can you imagine 9:00 to 5:00pm? Or even 7:00 to 3:00? There are certain days I`d settle for being a miner even, if it meant fixed hours.

The other half of nights there are no dreams because I`m working.


QUOTE (RedlineBrett @ Feb 7 2010, 10:54 AM) Agree 100% with this! Relative to my engineering career I work 2x-3x as hard as a business owner.

Keep in mind many of the books you read are written by `made men` so to speak. Being an employee definitely sucks but being a business owner is way way more stressful. No certain cheques and many contingencies that must be planned for.

I only quit when I had a full year`s living expenses tax free in savings. If you don`t have the peace of mind that you`ll be able to pay your bills you won`t be able to think long term about the success of your business. You will quickly develop a short term mentality and that`s not the way to do it in investment real estate.
 
Hi Thomas
Tell us about your 3rd property re 1999 for 80K and 2002 for 78K - What went wrong? What`s the take away from it?


QUOTE (ThomasBeyer @ Feb 7 2010, 05:17 PM) content here on :how do you get started"

started with curiosity in Vancouver in 1988 .. had the chance to buy our condo we rented for 80K .. and I thought "outrageous .. overpriced" .. of course today that unit is 400K .. nevertheless decided to learn .. which took me 5 years to actually take a course (Raymond Aaron, Toronto) .. and read a few books .. and did decide to do s.th. .. which took another 5 years to actually do s.t. .. i.e. 10 years from "gee, let`s do s.th. to actually doing s.th." .. bought a first revenue condo for 80K in Calgary with 20K cash .. sold 4 years ago for 170K .. then a 2nd with 20K LOC ("no money down") for another 80K in Edmonton (which I still own today) .. then a 3rd in 1999 for 80K (sold at a loss in 2002 for 78K) .. but then realized that buying in bulk makes more sense than buying retail .. bought a 15 suiter in Edmonton for $570,000 in 2000 with my dad .. then a 20 suiter in 2001 with my own cash for 740K .. then a 24 suiter in 2002 for $1M after I had sold the 15 suiter (with a 100K profit) and the 20 suiter (with a 250K profit) .. and then asked others to co-invest .. initially 5-6 guys + my own money for yet another 24 suiter in 2003 (sold in 2006 for 400K profit or so ) .. then a 12 suiter, 47 suiter, 120 suiter and 21 suiter in 2004 .. all four were 50/50 JVs with about $2M raised from 25 people while running a software / consulting firm .. all real estate part-time until late 2004 .. then full time after 2005 .. some sold for big profits .. some still owned .. rest is history as they say .. then brought on a partner in 2005 to raise more money (we raised about $12M together) .. then 3 other partners in 2006, 2007 and 2009 .. to allow more delegation / controlled growth .. today the asset base is about $90-$95M with over 500 investors and $36M raised .. in 5 LPs ... 16 buildings with 1200 tenants and annual revenue exceeding $8M .. some buildings being exited / already sold .. most still going as value increase takes a while .. see our website track record page (check the early years ..)

so yes, in a decade a lot can be done .. but it always starts small, then faster .. it is hard work .. long hours .. sme calculated risk taking and of course Edmonton was "on fire" from late 90`s to 2007 or so .. and with 15% down and 60% property value growth 300-500% ROI on your money in those days was doable .. this is harder today with 20-30% down and slower value growth ..
 
QUOTE (housingrental @ Feb 7 2010, 09:35 PM) Hi ThomasTell us about your 3rd property re 1999 for 80K and 2002 for 78K - What went wrong? What`s the take away from it?
2 take away points:

80K was the retail condo converted price .. whereas buildings with simialr rents sold for 50% of it or 40/door ! thus, I switched to whole apartment buildings !

take away I is that you should buy wholesale, not retail if you can !

2nd 80K condo was in Scottsdale, AZ .. and the market crashed after 9/11 with negative cash-flow .. bad timing .. I sold and a year later the buyer re-sold it for over 100K .. take away point II is that market timing is difficult ..
 
QUOTE (ThomasBeyer @ Feb 7 2010, 03:17 PM) content here on :how do you get started"

started with curiosity in Vancouver in 1988 .. had the chance to buy our condo we rented for 80K .. and I thought "outrageous .. overpriced" .. of course today that unit is 400K .. nevertheless decided to learn .. which took me 5 years to actually take a course (Raymond Aaron, Toronto) .. and read a few books .. and did decide to do s.th. .. which took another 5 years to actually do s.t. .. i.e. 10 years from "gee, let`s do s.th. to actually doing s.th." .. bought a first revenue condo for 80K in Calgary with 20K cash .. sold 4 years ago for 170K .. then a 2nd with 20K LOC ("no money down") for another 80K in Edmonton (which I still own today) .. then a 3rd in 1999 for 80K (sold at a loss in 2002 for 78K) .. but then realized that buying in bulk makes more sense than buying retail .. bought a 15 suiter in Edmonton for $570,000 in 2000 with my dad .. then a 20 suiter in 2001 with my own cash for 740K .. then a 24 suiter in 2002 for $1M after I had sold the 15 suiter (with a 100K profit) and the 20 suiter (with a 250K profit) .. and then asked others to co-invest .. initially 5-6 guys + my own money for yet another 24 suiter in 2003 (sold in 2006 for 400K profit or so ) .. then a 12 suiter, 47 suiter, 120 suiter and 21 suiter in 2004 .. all four were 50/50 JVs with about $2M raised from 25 people while running a software / consulting firm .. all real estate part-time until late 2004 .. then full time after 2005 .. some sold for big profits .. some still owned .. rest is history as they say .. then brought on a partner in 2005 to raise more money (we raised about $12M together) .. then 3 other partners in 2006, 2007 and 2009 .. to allow more delegation / controlled growth .. today the asset base is about $90-$95M with over 500 investors and $36M raised .. in 5 LPs ... 16 buildings with 1200 tenants and annual revenue exceeding $8M .. some buildings being exited / already sold .. most still going as value increase takes a while .. see our website track record page (check the early years ..)

so yes, in a decade a lot can be done .. but it always starts small, then faster .. it is hard work .. long hours .. sme calculated risk taking and of course Edmonton was "on fire" from late 90`s to 2007 or so .. and with 15% down and 60% property value growth 300-500% ROI on your money in those days was doable .. this is harder today with 20-30% down and slower value growth ..

Hi Thomas, an amazing story!

One comment though: knowing a little about where you buy, I thought your average annual rent to purchase price ratio is around 13%(?)
Therefore, don`t you think, as a good estimate they can be sold based on the same ratio!? In other words, using today`s annual rent provided of $8M
---> today`s value = 8M/0.13 = $61.5M, not $90M. selling them for 90M means an annual rent to price ratio of ONLY 8.9% and estimated CAP (based on a reasonable 45% of rent being expenses) of ONLY 4.9%! Do you really think you could sell your properties today for an average CAP of 4.9%!?

I know you do not buy only in Toronto and Vancouver, therefore thought CAP should be higher. in other words 90-95M based on annual rent provided seems inflated. 61.5M is still an incredible achievement! just wanted to share another perspective for evaluating properties value.

Hope this helps,
Neil
 
QUOTE (housingrental @ Feb 7 2010, 09:32 PM) I`ll third third this

Every other night my dreams are filled with a job on some assembly line. Can you imagine 9:00 to 5:00pm? Or even 7:00 to 3:00? There are certain days I`d settle for being a miner even, if it meant fixed hours.

The other half of nights there are no dreams because I`m working.
Note the questino is about becoming a RE investor, I think you answered as a FT PM whose hours are different than FT REI(?)
 
QUOTE (investmart @ Feb 7 2010, 10:21 PM) Hi Thomas, an amazing story!

... therefore thought CAP should be higher. ..
yes higher than 5% CAP ..

let me check our total rent .. as we usually do not count it as it is in 8 different "buckets" .. maybe it is higher .. BUT: rent in the beginning is usually lower than a stabilized asset in a year or 2 ..

assuming $8M in annual (net) rent from 1200 tenants .. and a GRM of 8-12 .. so a net multiplier of 10 or 11 plus cash at hand I am in the right ballpark ..

getting there of course takes a TEAM of dedicated professionals .. you cannot do it alone !

Perhaps worthy of another topic: what makes a great partnership ?
 
QUOTE (ThomasBeyer @ Feb 7 2010, 11:23 PM) assuming $8M in annual (net) rent from 1200 tenants ..


8,000,000/1200 tenants/12 months = $555 per tenant per month.

I bet your average monthly rent is more than $555 per suite, which would imply your total annual rent is also higher.

Best regards,

Michael
 
QUOTE (DWard @ Feb 7 2010, 09:13 AM) Thank you for sharing Brett. I have virtually no bad debt and low living expenses so can support myself for the year like you suggested but I do not know how I will continue to grow my portfolio once the job is done... how did you continue to grow?

I created a `job` for myself within the real estate industry. I became a realtor and my business partner became a mortgage broker. That was almost five years ago.

Now we own our own brokerage and have five employees across our five different business units. Realtor sales, mortgage financing, property management and renovations. Our fifth unit - an investment company specializing in limited partnerships for calgary income property is where it all started from. We decided to offer our expertise in real estate to the Calgary marketplace as a means to generate additional revenue from which we pay our bills and fund our investment property acquisitions. So the growth of Redline`s business is as important to me as adding more income producing assets in Calgary.

Looking back on it now the way I would advise people to do it is to ease yourself out rather than quit your day job and make the plunge. Can you contract yourself out for 5,10,20,30 hours a week? Then adjust your hours as your business grows. I have met a couple REIN members that do it this way and I think that`s the way to go.

The harsh reality is that there are absolutely no easy paycheques in this real estate market and if you have no experience or unique services to offer odds are you`ll go broke. Working a day job sucks but going bankrupt sucks more.

If you have no debt and low expenses that`s great... now apply that success to real estate WITHOUT burdening your business with your personal expenses. When your business can earn enough to support you you`ll be able to show the kinds of returns investors expect to see and you`ll be able to raise money. Until then your business won`t sell and you`ll quickly burn through your reserves.
 
You might have a point


QUOTE (investmart @ Feb 8 2010, 12:41 AM) Note the questino is about becoming a RE investor, I think you answered as a FT PM whose hours are different than FT REI(?)
 
You must log in or register to reply here.
Back
Top Bottom