Editor’s Note: Dennis Fassett is a former corporate finance executive turned real estate investing “Cash Flow Mercenary.” Dennis specializes in single-family and multi-family cash flow properties and thoroughly enjoys assisting his fellow investors with their own strategies, including how to buy your first apartment building.
As an ongoing contributor to Mogul’s “Market News Updates,” Mr. Fassett provides us with his own unique, lively and thought-provoking commentary on the timely industry news and events of today that are impacting our industry. And be sure to check out his other super-helpful Market News Updates. For now, enjoy...
From Dennis Fassett, Cash Flow Mercenary...
One of my favorite topics is getting started with real estate investing when you have a day job.
See, I have one now, and I’ve had one for over 25 years. And I’ve been real estate investing “part time” for 13 of those years.
If you’ve read my prior stuff on Mogul, you know that I’m not a big fan of “burning your ships” and quitting your day job to pursue REI. Especially if you’ve been working a while and make a good salary.
Yeah yeah, I get all the stuff about the “golden handcuffs” a job represents. And a lot of that is true if you’ve been working for years. But when you double dip and do both, you get to take advantage of paid vacations and big bonuses AND the cash your real estate investing generates.
Plus, in my opinion, there’s a big risk right now in burning your ships.
With the market on fire like it is, I like to say that a blind dog with a note in his mouth can make money in real estate. It’s obviously not that simple, but I think you get the picture.
The risk is that things will change. Which they will.
And so, what will a real estate investor who specializes in wholesaling do to support their family if the market collapses and wholesaling disappears like it did for a couple of years during the last recession?
Not a pretty picture.
I saw a piece by a local guy here recently who wrote about what it took to succeed with real estate investing when you have a day job.
He suggested that there are 4 keys to being successful. While his 4 were overly general, they still made sense. But I think he left out the most important success factor.
Before I share that, let’s talk about his 4 factors first. They are:
1. Dedication
This is kind of a meaningless term, especially since his second factor is “perseverance.” I take them to mean the same thing. He didn’t have a great explanation for it. But he did mention that it involved time management.
So, if we take dedication to mean “aggressive time management,” then I agree that it’s critical to success.
2. Perseverance
I use perseverance and persistence interchangeably when it comes to doing REI with a day job.
We have less time, so that means we’ll move slower up the learning curve, and that usually means that it will take longer to be successful.
I’m the poster child for this. It took me a little over 11 months to get my first deal back in 2004 when I got started.
3. Organization
I think it goes without saying that you need to be organized to be a successful real estate investor, whether you have a day job or not.
He focuses on time management again, and recommends something that I teach to new people as well. Which is time blocking.
I think it’s important for new people to assess their available time with their significant other if they have one, and then block out their “REI Time” on their calendar like they would a meeting at work and then stick to it.
4. Hire Out
This is where I disagree with him…
He recommends hiring out as much as possible, including hiring a VA to do your marketing and to negotiate your deals.
I think hiring out for both of those is a terrible idea. Your marketing is the lifeblood of your business, and I can’t think of anything more important to control, personally, than the way you contact sellers.
And I have never met a VA who I would trust to negotiate my deals. That’s insane.
#1 Critical Success Factor
I mentioned that he left something out...
I think he left out the #1 Critical Success Factor for being successful with REI when you have a day job.
And that’s: FOCUS.
In my opinion, it’s critical to focus on one strategy. And keep focusing on it until you get great at it and the cash starts rolling in. Like I did mailing my letters for 11 months.
But I finally bagged my first deal. And then a second one about four months later. Then the third, and so on and so on.
Listen – I get that we all have “shiny object syndrome.” And that there’s always a new strategy or different approach out there…
The danger, especially when you’re just getting started with REI, is to get distracted and keep jumping from strategy to strategy, approach to approach, before you get any traction with one of them.
All you’ll do is spin your wheels and spend all your marketing money before you get a deal. And that leads to the end of your real estate business.
So yes, dedication, perseverance and organization, are important. But nothing is more important than focus when you have a day job.
Agree?
Share your thoughts about this list in the comments section below.