For many investors, real estate represents a hard asset with plenty of room for growth. Either through building passive income through rental properties or reselling houses purchased through auction, real estate investing with a full-time job can be both personally and financially fulfilling.

On the opposite side, real estate investing can also be incredibly time intensive. You may ask yourself, is doing real estate part-time worth it? More importantly, should new investors get into the market if they are splitting their time between real estate and their full-time work? Before purchasing any property as a portfolio piece, it’s important to understand the difference between passive and active real estate investments, and how to manage your time effectively.

Passive vs. Active Real Estate Investment

Before jumping into real estate investing with a full-time job, you should first determine if you want to get involved with passive or active real estate investing. Deciding on which path to take will ultimately help you determine how much time to invest in your investment property.

Passive real estate investing typically refers to those who want to use a property as a secondary income stream. In this situation, interested investors usually find discounted properties through foreclosure auctions or other listings, with the goal of renting the homes. Those who want to start real estate investing with a full-time job often start as passive investors, as they can begin building their portfolio with minimal time invested.

On the contrary, active real estate investing means owners are participating in all the day-to-day activities of managing all of their properties. This includes managing listings and real estate auctions, approving new renters and processing those moving out, and keeping up with property maintenance.

Active investors will also purchase discounted properties, rehabilitate, and upgrade properties to meet the neighborhood standard, and ultimately resell them for profit. Because of its time-intensive nature, active management is not recommended for those who want to jump into real estate investing with a full-time job.

Reasons to Keep Your Job in the Early Stages of Investing

Doing real estate part-time can be worth it, especially if you are new to the world of property investment. Becoming a real estate mini-mogul isn’t as simple as finding a discounted bank-owned home, changing the carpets, and listing it as a rental. Instead, would-be landlords must be able to balance acquisitions with their finances.

When starting in real estate investing, holding a full-time job can be incredibly beneficial. To start, employees with a W-2 get a steady paycheck and their taxes withheld by their company. To potentially offset taxes earned from a rental property, employees could adjust how much of their taxes are being withheld by their employer to ultimately gain a net benefit at the end of the year.

Before making any changes, be sure to consult your accountant or tax professional to ensure you are maximizing your benefits correctly.

Real estate investing with a full-time job can also make financing a new property simpler. Lenders look favorably on those who have steady employment with a regular and predictable income because they present a lower risk of foreclosure. As a result, investors with a regular day job can get access to lower rates and favorable terms over time.

Maximize Your Time and Efficiency

Although there are a lot of upsides to real estate investing with a full-time job, the greatest challenge is time management. If you spend too little time on your properties, it can fall into disrepair, or renters can create damages that come with high repair costs. If you spend too much time on your investments, your work performance could suffer. Is it possible to create balance between the two?

For those new to the scene, there are several strategies buyers can implement to maximize their financial benefits. First, new investors can hire a property management company to handle day-to-day tasks, like collecting rent and handling repair requests. Property managers can also handle rental applications, run credit checks, and ensure your tenants are qualified to move in.

Another approach to real estate investing with a full-time job is joining an investor group to purchase a larger property. Becoming a qualified investor in a buyer group or real estate investment trust allows new investors to collect profits from properties without being directly involved in the management.

Tips on How to Grow Your Real Estate Business

If your goal is to go beyond real estate investing with a full-time job, making smart investments over time can help you make the jump to making your properties your day job. It starts with setting achievable goals, creating property benchmarks, and surrounding yourself with the right people.

If you’re trying to figure out how to grow your real estate business, start by setting goals. Do you want to manage multiple rental properties, or are you more interested in trading real estate? What is your annual income goal from investment properties? At what point does it make sense to abandon the security of a full-time job to become a professional landlord? By answering these questions upfront, you can create a plan to grow your own real estate business from one to several properties.

Next, think about how to grow your real estate business based on property benchmarks. Your investments should meet certain guidelines to ensure they will yield a profit over time. Some of the evaluation conditions you should consider are geography, the cap rate, and cash-on-cash returns, and projected future value.

As you devise a plan, you will also need to surround yourself with the right partners. This can range from repair staff to keep your homes in top condition, to office managers to handle renters and requests. It may also be wise to work with other investors to join bigger projects with a higher yield.

Conclusion

Is doing real estate with a full-time job worth it? With an organized plan, smart financing, and an achievable goal set, real estate investing with a full-time job can be a fulfilling endeavor both personally and financially. With some research and help finding the right opportunities at the right price, investors of all shapes and sizes can expand their portfolios with hard assets that could stand the test of time.

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