Landlord Blog: Jump to Landlord Full-Time
Any tips on going from full time job to being full time landlord? Have 45 sfh anout. 44 years old. Wife is stay at home mom of our 9 an 10 year old, so she has no work insurance.. Insurance part scares xxx out of me.
-You don’t have to quit cold turkey. You use your rental income to take risk and find a job that allows work from home and only have to spend 10hours on 40hours of work a week
-How much do you normally spend on medical expenses each year?
-It’s easier to get loans when you have a salary on top of rental income.
-I had a friend who was going to retire and in another year so was his younger wife. So I begged them to do a reverse exchange while they still had a huge income. He made 1/4 mil and she makes around 150K, a total of $400,000. I wanted them to buy a commercial warehouse with units, getting $31,000 a year in depreciation to offset the rental income.
-Instead of studying the deal he quit his job. Then he noticed that the commercial warehouse was located in the Studio District and Television and Film Makers are looking for building to turn into sound and production stages. They pay rent a year in advance, and you keep it a special account and only pay taxes when applied to the rent due.
He could not get loans with one income and vacancies. So instead of fixing and renting out his vacancies, he sold units and paid capital gains.
Everything he did was because he was lazy and wouldn’t sacrifice his time for money or income.
-On the money as always. Having w2 income makes life soo much easier.
-Found trying to work along with run rental properties a bad combination. The focus is the rental properties. First of all less work is done by contractors where you do more yourself. Next have more time to shop at the Habitat for Humanity restores for building supplies, tiles, power tools, used appliances, plumbing supplies where can buy a lot more then the big box stores. Once more work is done in house along focusing on cutting expenses then difference between having a full time job and being a full time landlord become smaller. A change in life style where look at personal spending then see if can cut down on personal spending. Maybe keeping vehicles longer, reducing utilities on house by insulating along with installing more efficient HVAC equipment. You will find when start the day to plan what needs to be done. Maybe painting a interior of house with paint sprayer as better tools will accomplish a lot. View videos on You Tube about do things like installing ceramic or porcelain tiles and so on where as require more skills then more is kept with you. As equity is built up then will be able to earn more. Not only the skills you learn can be applied to rentals but also personal house.
-I went full time with only ten rentals… all paid for, debt free including my house.
I made pretty good W2 money, but in the space of one year my income went up, and has gone up every year since.
Medical can be scary… how many rentals would it take to pay for your medical? Sounds like you could do it now unless you are financed to the hilt.
-One more issue here. If you are a “professional” working 750 hours a year in your properties and own at least 10% interest in each, the the special $25,000 Allowance Limitation does not apply. You can write off your real estate losses against your salary.
-Did the same thing at 41, am now 49. At the time had 24 with no debt. Now have 36 with no debt. As long as your debt is non existent or low you will be fine financially. My biggest issue was how to fill your time. Takes about a year to figure out what your daily routine is.
-Only if you can afford to pay $2,000/month in health insurance. Self-employed people tend to pay the highest amounts for health insurance. I have been self-employed most of my adult life and health insurance has always been the biggest nut to crack each month.
-Ideally, if one is married, one spouse works a w2 job and the other does not, but both (plus kids) are covered thru the one insurance from work. They can even alternative who works every few years.
-Thanks for all advice. I have about 500k in total debt. Real estate is worth over 5 million. Have a line of credit set up for 300k. You think 2000 a month is pretty safe bet for monthly insurance? Thais my next step getting insurance quotes. Right now doing rentals does not feel like work, did that change when it is your primary income? I keep everyone current or there gone.. Right now if someone does not pay it does not affect my day to day life i have money to cover
LL Fulltime (by Allym [NJ] ) Posted on: Aug 10, 2021 9:27 AM
So how much work on the units does she do from home taking calls etc? The govt insurance is not affordable and you do need insurance. She might be able to get a work at home job that she could get insurance through. If not then maybe you need to put more of the work on her and keep your job with insurance. With a 9 and 10 year old she has more freedom to be away from the house once they return to school. My mother did not want a job outside of the house and did everything she could to not be forced into getting one by my dad, including make me sick. What she finally did was sell antiques for a local antique store by placing ads and having people come to the house. Now there is Ebay and Etsy. You need insurance so protect that. –108.24.xx.xx
LL Fulltime (by Roy [AL] ) Posted on: Aug 10, 2021 10:22 AM
You need to poll every full time LL here and ask their age and what they pay a month for health insurance,…assuming they are not on Medicare or have a spouse that has a W-2 job with insurance benefits. You may be shocked to read what full time self-employed LL’s are paying out monthly.
Based on what you have said already, I think you could afford the cost of being a full time LL. You will get to experience what total freedom is! –68.63.xxx.xxx
LL Fulltime (by Ray-N-Pa [PA] ) Posted on: Aug 10, 2021 12:00 PM
Our local chamber had some insider deals on insurance that catered to business owners.
That is where I would be starting to shop for insurance –24.101.xxx.xxx
LL Fulltime (by Barb [MO] ) Posted on: Aug 10, 2021 12:18 PM
I keep looking at it. The insurance is what keeps me working.
Right now, my premium at my W2 job is $60/month the rest is covered by the employer. I enjoy my job, in general. I have a $1750 deductible, then a $3500 OOPMax.
I hit my deductible in January, and the OOPMax in April.
My insurance dashboard says that they have paid out over $15K so far this year. I’m expensive to keep running.
I can become a dependent on my husband’s insurance, which will make his (exactly the same) insurance go from $60/month to about $150/month premium, the deductible jump to $3500 and the OOPMax to I think $7000. He never even hits the deductible himself. So, our budget would take a SERIOUS hit if I leave my W2 job and go on his insurance.
Plus, as I said, I like my job. If I can make it, I’ll stay on the job until May 2030, at which time I can keep that insurance all through retirement.
-I am 58, Mrs is 57 our 2021 premiums cost us $1129.44 for both. $10k annual deductible. No co pay. Old policy grandfathered non ACA compliant.
I have been buying a health policy for 30 of the past 35 years- those 5, I provided group policy as employee benefit in a company I owned.
During these 35 years, we have been blessed with good health and have not had any medical expenses 33 years. The 2 years that we did have med expenses, totals well under $10k, so, I have yet to get any financial benefit from the premiums paid.
My advice is to evaluate what part of health insurance you need most. I have not been burdened by paying my bills when the need arose, but I don’t have chronic symptoms with a corresponding prescription to take for the rest of my life, nor am I likely to have such conditions in the future- but it certainly COULD happen. I am insured against the event or combination of events that would force the sale of assets to pay bills, that is all I want.
My observations are that the standard American diet as it now stands, makes people fatter and sicker than ever before. The side effects of many prescriptions cause more problems than they solve, modern medicine is great for trauma bad for chronic conditions. We are far better off to educate ourselves and make informed health care choices. The worst possible choice is to follow the herd.
-My insurance through the loopy NYS exchange is 1k month. I qualify for subsidy but I don’t use it because they might claw it back. My deductible is 2500 and I have copays after that. Gotta figure inflation will kick in. Many don’t remember the 90s when rates went way up over 20%a year. By the time I left my job my insurance went from free to 75/mth.
Id say the biggest issue is cash flow. In the early days I had those issues and a hiccup would stop progress. I’d have to wait for rents to clear and then I could pay things off. I was revitalizing a few units a year, or focus areas like porches and roofs. Now that things are in better shape its less work and I actually have money on hand. But in the beginning full time, rents paid all my expenses but didn’t leave much left over besides the oops fund.
I was getting to the point of doing less but now it’s hard to find good handy help w free time. I don’t like service calls but turnovers are ok.
My dental is through AARP delta dental. It’s OK. The 1st year is lousy. Decent basic coverage if your teeth are ok.
-Health insurance is the biggest challenge. Two ways to handle it:
1) If you form an LLC with two employees (yourself and your wife), you may be able to qualify for “group rates” for your business. My siblings own their own business and this is the approach they use.
2) A Christian healthcare co-op (if you meet their criteria). This is by far the most affordable. It acts the way health insurance should, which means it covers “events” (broken arm, kidney stones) but not predictable expenses that you can budget for (physicals, maintenance medication). Ours runs $450/mo for the 3 family members that are on it. It has been great for the kidney stones, broken finger, back injury that we’ve submitted claims for. The drawback is that now that I’m in my 50s, the doctor wants me to do all kinds of $$$ tests every year. I’m healthy, so I’m not doing them. So I may not find out about that colon cancer until it’s stage 3.
With that many properties, I hope you have a good CPA that can advise you about setting up a self-funded HSA. That should also help.
-” So I may not find out about that colon cancer until it’s stage 3.” I think that’s why your doctor wants to spend $$$ doing tests every year ….
-The first step is always the hardest. To quote Nike: “Just do it”. Just like buying properties, don’t get caught up in analysis paralysis. I’ve been away from a 9-5 for over a year now and I don’t have near the doors that you have. However, my debt is near zero. I’ve been living off of rental income and my savings still continues to grow.
Truth be told, after a year I’m starting to get bored and am thinking of getting a new 9-5.
-Having rental income gives you incredible leverage when looking for a 9-5 :
– notice you can negotiate for 9-5 and not 8-5!
– refuse to work evenings or weekends
– negotiate for work from home
– negotiate for flexible hours
– walk away from a job if it becomes distasteful and still get the benefits of a 8-5, er, 9-5
– 401k contributions
– w2 income for loans
– health care
-45 SF houses are more than most people need to give themselves financial freedom. If none are F&C you might consider selling off some of your worst properties and paying off debt on some others to increase cash flow. Right now you can get long term capital gain treatment. You might not be able to do that in the future based upon Biden’s plan. Just think – if you work full time in the real estate business you will find plenty of opportunity to acquire more properties in the future. Also, this is the best year to have more reportable income. Taxes will be higher next year. This year has also been a great year to get rid of problem properties.
-I am self employed (own a small General contracting business) along with my rental business approx (29) properties. Wife is a stay at home mom. Our family insurance for (4) is approx $1450 a mo. There is a wide range of plans to fit your needs that are not too bad. Hardest thing is every year we shop around and sometimes change plans which can be a pain, but once you do it and get used to it its like any other bill. Remember you still paid for insurance with your career job maybe not out of pocket but with your time and energy which is worth how much too you???
Life is too short to be fulfilling your boss’s dream.
Get FREE!!! and spend time with your family.
I was the only Dad who could have lunch at school with my kids and their friends when they were little.
I was usually the only Dad at school plays and awards presentations during the school day.
My youngest did not know a Dad who left for work.
-Regarding health insurance, as a licensed insurance agent legend and full time landlord, you will do yourself a favor to check into the affordable care act health insurance. Judging from some of the responses, a lot of landlords will get huge breaks and it will consider is considerably reduced premiums. As an example my adjusted gross income, affords me premiums for my family of 3 to a $100 per month.. I’ve learned to play I the game.. I would suggest other landlords do the same!
-Just be careful with the ACA plans. IF you fall off the financial cliff by even ONE dollar you pay full boat. It is not a graduated thing, like taxes! It’s either you make X and and pay X, or you make Y and pay $$$$$$$$$$$$$$$$$$.