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.
Are these promises a reality or just a sales pitch? Especially in today’s market? Can anyone really make money in real estate today?Well, the answer to those questions is…it depends. If you buy the product and like 80% of the purchasers never open it, and never put it to use, then I have bad news for you – it won’t take you any closer to riches or retirement. Sorry, but that’s the reality. However, if you buy it, study it and here is the important one – implement it, then yes, you can absolutely increase your cash flow and wealth.The implement it part is the hard one for most. There are many things that hold people back from taking that next step and putting things into action – fear, lack of funds, time restraints, natural tendency to make excuses and procrastinate, lack of confidence, and the list goes on and on. If you wait long enough you can come up with hundreds of reasons to not move forward to achieving your dreams. However, if you REALLY want to take action and start working towards achieving your dreams there are a few things you can do to help ensure success along the way.1) Have a business plan. It doesn’t have to be long and complicated but make some decisions on how you’re going to make money in your business. Are you going to wholesale properties to other investors; are you going to rehab? What is the average price range you’ll work in? What markets will you go after – REO’s, pre-foreclosures, etc.? Define some of the basics so you have a starting action plan.In our coaching program the first thing we do with people is help them define their business model. This takes a little knowledge of your market and what is and is not working right now. If you’re planning on holding properties do you have cash to cover the inevitable vacancies?2) Define Your Dreams. Despite what you see on t.v. this isn’t easy money. They are good times and bad, just like any business. There will be days when you will need to fall back on why in the world you’re doing this. Know your reasons. Have them clearly defined, written, and maybe even pictures. I have a “vision board” on my wall right in front of me. I look at it every day. It reminds me of the important things in my life and why I do what I do. Studies have proven that written goals are 80% more likely to be achieved than non written goals – write them down!3) Plan for success but prepare for hard times. What I mean by this is that I believe in positive thinking and living your life “as if” you already have the things you want and are achieving the things you desire. However, it’s also important to prepare for the “what if’s.” Although you can buy real estate all day long with no money down, it doesn’t mean it doesn’t take any money. Even if someone gives you a house today, there is fix up and holding costs, marketing costs, and many other little things that sneak up. Be prepared for the what-if’s, but don’t let them keep you from moving forward.4) Know Where The Money Is. Unless your sole business model is wholesaling you’re going to need some money. Start lining up private lenders and money partners as soon as you can talk half way intelligently about the business. This is an ongoing process and something you’ll be doing from now on, but start early.5) Educate Yourself but avoid analysis paralysis. It’s important to be educated and have general overall knowledge of the business. But, the reality is that if you wait until you know everything you will NEVER do anything. Get the basics down and then learn the rest as you go. I’ve been in this business 20 years and I’m still learning new things. Just imagine if I had waited until I knew everything – I would still be waiting. Don’t fall into that trap. Learn then put it to use!6) Find a mentor. Look around. There are probably a lot of successful investors in your area. Find someone to help mentor you. Call them up and ask them if you can shadow them for a day. Ask to take them to lunch and find out how they got started, what they would do differently, what they are having success with. Heck, in today’s social media world you don’t even have to leave your living room to find someone to talk to, but do choose your mentors carefully. Use your gut instincts and wisdom.7) Be realistic. I met a woman about a year ago at a bootcamp event who had never bought a house and just started learning the business. When she was asked what her goal was her response was, “to make a billion dollars in 2009.” Granted, I’m all for defining your goals and being positive, but a touch of realism is in order too. If you have no money for marketing, you work a full time job, your credit is shot, and you’re just starting out then it’s realistic that you could do 2-3 deals this year and make an extra $20-40,000. Or, that you could buy and rent out 2-3 houses this year and increase your monthly income by $600/month while increasing your net worth.8) Don’t Give Up. Like all good things – this too takes time. Don’t jump on every bandwagon and continually change your focus. I see this every day. Make a plan, then work your plan and don’t stop until you’ve achieved your goals. Don’t let anyone tell you it can’t be done and don’t let anything get you off track. It can be done and YOU CAN DO IT!