What are the pros and cons of going full-time in commercial real estate? Most investors want the financial and vocational freedom of being full-time in commercial real estate but are nervous to make the leap. Discover how 5 of my proteges successfully transitioned to full time commercial real estate, what motivated them, and the unique challenges they faced:
Know Your “Why”
The journey to full-time commercial investing begins with knowing your “why”. Our protege students had powerful “whys” that motivated them to pursue full-time commercial investing.
Takashi and Rae: This couple are immigrants from Japan and in their culture you work until you die. They didn't want that lifestyle, so they came to the United States and began investing in commercial real estate. They built up their portfolio and now they are full-time investors. Learn more about Takashi and Rae and their deals:
Bruce and Renee: They had purchased eight single family homes and it was taking too long for them to achieve enough cash flow and net worth to accomplish their goal of becoming full-time investors. Does that resonate with any single-family home investors? Many people invest in single family rentals hoping it will lead to financial freedom. Unfortunately, they will probably never reach their goal with that investment strategy. Bruce and Renee knew the increase in cashflow, equity, and the scalability of commercial investing was the answer. You can see how they transitioned from single-family investing to apartment investing here: Why Invest in Apartments Over Single Family Rentals
Dean: Dean has a powerful why many of you can relate to: corporate burnout and the desire to build his own wealth. Dean worked tirelessly in the corporate world, and it took a toll on him, his health, and his family. He spent his work life building other people's businesses. Now it's his turn. As a full-time investor he has an opportunity to live differently. Find out how Dean seized the opportunity and took a leap of faith transitioning full time into commercial real estate: Building a Self Storage Business in Today's Market
Allyson: Allyson was an exemplary employee who worked on large corporate real estate deals. She saw all these companies and people making money and she said, "Why not me?”. She has always wanted to create spaces where people could build their lives and realize their dreams. And guess what? She’s doing it today. Discover what strategies she used to go from 0 to 314 units in one year:
Chris: Chris is an older student who had money for his retirement but he feared it would dry up, leaving nothing for his kids. He had money in a 401k but realized he could make more money and have a better retirement investing in commercial real estate. So, he decided to jump into commercial real estate full-time and now he's crushing it. Chris shares how he is actively building his commercial real estate portfolio in these three videos:
Road Map to Full-time Commercial Real Estate
Start Small: Four out of five of the students started small, which is perfectly fine. I even recommend it because it's easier, safer, and it gets you in the game. Some of you may want to go big first time out and that’s okay too. However, if 80% of them started out small, then maybe it's a strategy you can learn from.
Choose Properties Appropriate for Beginners: Our five protege students started out investing in apartments and storage. These two niches are great options for beginner investors because the market can be easier to break into, there is plenty of inventory, they cash flow well, and they're understandable.
Day of Decision: All five student investors had to make the life determining decision to leave their jobs. In order to successfully make the transition, there are two things that are non-negotiable: commitment and focus. And all the students had those two things nailed down in them. You must be committed and focused to be successful.
Be Flexible: None of them set a hard date on when to leave their job. Instead, they focused on acquiring commercial real estate until their jobs got in the way. Then at that point they had to decide which one they were more passionate about. Of course, all of them choose commercial real estate and they jumped in with commitment and focus.
Pros of Full-time Commercial Real Estate Investing
1.Vocational Freedom: You are no longer dependent on someone else to provide for you. Instead of relying on an employer, you alone are responsible and in control.
2. Time Freedom: Full-time investing allows you more time to do the things that matter in life. Time for family, time for self-care, or to focus on helping in your community. It also gives you flexibility in your schedule.
3. You Can Leave a Legacy for Your Family: What better inheritance could you give future generations than cash flowing, income producing, debt-free commercial real estate? There's nothing better than that.
4. Financial Freedom: You are free to pursue your passions without financial concerns. As a successful full-time commercial estate investor, you'll have more money to pursue the things you are passionate about.
5. You Get More of What You Focus On: You need to focus on building your commercial real estate business, increasing the cashflow, and building relationships. Wherever your focus and energy are directed, that is what will grow.
Cons of Full-time Commercial Investing
1. Full-time Investing Requires Self-discipline: You need to be disciplined when managing your time, budget, and health. People are depending on you now so it's important to maintain a healthy lifestyle and get your rest. Adopting a winning routine is another lifestyle strategy that is important. My routine is to wake up, do my devotions, exercise, have a healthy smoothie, and get to work. You need a winning routine that gets you set to take on the day.
2. You Can't Play the Blame Game: You alone are responsible for your results. You can't blame your boss, your spouse, or the economy. It's up to you to be successful, so if you would like to go into commercial real estate full-time, apply to Commercial Property Advisors Protege Program and we will help you make the transition.
3. It’s a Long Road: Commercial real estate is a long but prosperous endeavor. Building a successful commercial real estate business will take time and be challenging, but it's well worth the time and energy.
4. The Need for Health Insurance: Since you no longer have health insurance provided by an employer, you'll need to get your own private insurance. This can be costly and is a practical concern, especially for families. To solve this issue, when I first started out I purchased a seven-unit property. The cash flow from this property was dedicated to paying our health insurance and home insurance. This is a real concern and if you go full-time you will need to budget for it.
5. You Can Be a Part-time Investor: Although not necessarily a con, you don’t have to go full-time to be a successful commercial investor. You may just want to invest in commercial real estate to supplement your income or your retirement. Many of our protege students take that route as well.
3 Tips to Going Full-time in Commercial Investing
- Copy Successful People: You need to learn from someone who is experienced and is successfully investing in commercial real estate full-time.
- Pick a Property Type that Interests You and Study It: Become an expert in that area. As I've said before, I don't know anyone who's an expert in apartments and in shopping centers. They've built their fortune on one or the other.
- Start Small: There's a saying, “You don't need to be great to get started, but to become great you need to get started”. Starting off with a small deal is fine to get your foot in the door. Not only will you learn from it, but you can build up from there.