By Rich Danby
At some point in your journey as a real estate investor, you may develop the desire to quit your current job to pursue real estate investing full-time. It sounds exciting, right? It is, but you’ll need to have a solid plan to replace your income before jumping ship! When I quit my job, my plan was to continue flipping properties in Hamilton, Ontario. I felt confident because a month prior to quitting my job, I earned my entire salary on just one flip. What I didn’t factor in was how rapidly changing market conditions would impact my plan moving forward. The Hamilton market was starting to heat up, which meant I quickly went from having the only offer on a property to being one of many. It’s very difficult to compete against buyers who plan to live in a property. Many of them are willing to overpay because they’re making their decision based on emotion, not profit. This is simply not an option for anybody flipping properties. We need to make our profits now! There were still deals to be found, but I realized through this experience that I should have been thinking about multiple ways to generate income before quitting my job.
Here are 5 ways you can generate income as a full-time real estate investor!
1. Flipping Properties
Flipping (buying, renovating, and selling) properties is the most common strategy investors use to generate income quickly, but there are many things that can go wrong. The most common issues are overpaying, underestimating the cost of the renovations, overestimating the after repair value, and hiring the wrong people. If you’re going to attempt this strategy, it’s best to consult with an expert in advance. Learn from their mistakes and successes so you can save yourself thousands of dollars and avoid sleepless nights.
2. Assigning Deals
You certainly don’t have to wait until you’re investing in real estate full-time to take advantage of the income that can be generated from assigning deals, also known as wholesaling. The best way to take advantage of this strategy is find out what people want first and then go and find it for them. There’s usually more room to negotiate if the property is not listed on MLS. If it’s a good deal and you can prove it with comparables, there’s a good chance you’ll be able to find somebody to sell it to. This is why it’s so important to network with other investors and only focus on properties and locations that would be attractive to them.
3. Become A Real Estate Professional
Investors often spend a lot of time visiting properties, which is exactly what a Realtor® does. Becoming a Realtor® is a great way to earn money when you buy, and save money when you sell! It’s also a great way to generate extra income buying and selling properties for your friends and family. Alternatively, you could also consider becoming a Building Inspector, Property Manager, Home Stager, Design Consultant… The possibilities are endless! Before you jump into any of these options, be sure to consult with other investors who have walked this path before you! Find out if they’re happy with their decision, and if they would have done anything differently in retrospect!
Full-time real estate investors typically have a lot of real estate knowledge. Why not use this knowledge to help others? Prior to quitting my job, I was approached many times by people asking me to coach them in real estate. At first I was reluctant because I was focused on flipping properties and working with JV partners, but once I tried it I loved it! It really feels amazing, especially after realizing all the time, money and effort I put into my own education was now benefiting others. This, combined with my practical experience, made it very easy to attract coaching clients, even without marketing myself as a coach initially. Since then my coaching business has significantly increased and many of my clients have had phenomenal success!
5. Get Creative
Once you become an entrepreneur, the way you view the world will definitely change! You’ll realize opportunities are everywhere! The only problem is how do you monetize them? The best way to figure this out is to surround yourself with other entrepreneurs, particularly ones who are always focused on turning their ideas into profit! Big-picture thinkers are a great source of inspiration and you can learn a lot from watching them in action. Each week, set aside some time to think about new income-generating ideas. Then think about who you know who may be able to help you turn your idea into a reality, either as a partner, a service provider or a referral to others.
You’ll likely have to own many properties before you’ll generate enough cash flow to replace your income. Unfortunately, you can’t pay your bills with equity, which is why it’s so important to consider different options when it comes to generating multiple revenue streams as a full-time real estate investor.
Rich Danby is a full-time real estate investor, an accomplished public speaker, a real estate coach and the owner of Rich Ottawa Investments Inc. In 2015, REIN awarded him “Joint Venture Partner of the Year” and a “Top Player Award”. Rich is also an REIA. You can reach him at [email protected]