Quitting Your 9-5 to Self-Manage Your Rental Properties Full Time

Where it is not every rental property investors dream to quit their traditional 9-5 job and work at self-managing their units, it is a consideration for many landlords we know.

Some desire FIRE (Financial Independence from Real Estate) where they don’t have many management tasks to take on, some are willing to swap their full-time gig for working to manage their rentals instead.

The desire is freedom.  Freedom from reporting to someone else, somewhere else, for a defined time of at least 40 hours during the week.

Freedom to get up in the morning and go to the gym, travel, spend more time with family, and the freedom to develop, scale, and grow their real estate investments so that they and their family can enjoy a comfortable life financially.

But how easy is this to obtain?  What are the things that need to be considered before making a life changing move like this?

This is what we are discussing this week so tune on in if you think this is a subject you want to learn more about.

LINKS

👉 Episode 45: Basic Tax Strategies for Rental Property Owners

👉 Episode 46: Advanced Tax Strategies for Rental Property Owners

👉 QuickBooks Accounting Software. 30% OFF your first 6 months.

Connect with Us:

🌎 Visit our website

📧 Subscribe to our newsletter.

👆Click HERE for our FREE Landlord Forms and Doc’s

🤳Text Us: 650-489-4447. We love questions and love letters!

📩Email us at: Stacie@YourLandlordResource.com, Kevin@YourLandlordResource.com

✔️Course Waitlist: From Marketing to Move In, Place Your Ideal Tenant

📱 Follow us on Instagram, Facebook, & join our private Facebook group

🎧 Listen & Subscribe on Apple Podcasts, Spotify, or your favorite podcast app

Transcript

Stacie: 0:00

So everyone thinks that because you work for yourself, that you have all this freedom. And you do have freedom to do things whenever you want, but you still have to get the work done. However, you don't have to sit in rush hour traffic because you now work from home. You don't have to be at work between certain hours in the day because you can do work related tasks whenever you feel like it. You don't have to deal with coworkers. You don't have to go to those dreadful work holiday parties. And you don't have to report to anyone about what you're doing or turn in work by a deadline because you have all the decision making power on your shoulders.

0:43

Welcome to your Landlord Resource Podcast. Many moons ago, when I started as a landlord, I was as green as it gets. I may have had my real estate license, but I lacked confidence and the hands on experience needed when it came to dealing with tenants, leases, maintenance, and bookkeeping. After many failed attempts, fast forward to today, Kevin and I have doubled our doors and created an organized, professionally operated rental property business. Want to go from overwhelmed to confident? If you're an ambitious landlord or maybe one in the making, join us as we provide strategies and teach actionable steps to help you reach your goals and the lifestyle you desire. All while building a streamlined and profitable rental property business. This is your Landlord Resource Podcast.

Stacie: 1:32

Well, hello there, landlords. This is Stacie and I'm here with Kevin, and today we are discussing all the things you need to know before working from home full time as a rental property owner. So let me clarify that last statement. This is for those of you who may be working a nine to five or just working for someone else and receiving income from that job. But either now or at some point in the near future, you plan to or have a desire to quit that job and work for yourself. That is if you have enough income from your rental properties to live off of.

Kevin: 2:09

And we are doing this episode because we ourselves have worked towards this goal and each of our kids are striving to get to this point as well. Now something to know about Stacie and I is that it's been years since we've worked a traditional nine to five job. For the most part, we work either for family members or close friends, at their businesses, or for ourselves. The jobs we each held prior to 2021 were real estate forward, as realtors, property managers, etc. Up until 2012, I was a transaction coordinator, and I'd guess you'd say a personal assistant to my close friend and college buddy, while he was a realtor as well as a property manager for his family's multiple rental properties in San Francisco. In 2012, I joined Stacie at her family's business, pretty much doing the same thing. But, for both of us, we have always had the opportunity for a lot of flexibility. We have been fortunate to be able to plan work around our personal lives and have had the opportunity to be present for the boys, whether that was for sports, carpools, college visits, and the countless times they've moved. This time, if you will, allowed us to get to know the boys on many different levels. And I think we can say now that we're just as much friends with them as we are in a parental role. They, along with our parents are our why. We have mentioned it before, but we're building our portfolio and working towards our retirement goal, so we can have the freedom to be there for our grandchildren once we enter that phase of our lives Our parents were very active in the boys lives and now have wonderful relationships with them. That is what we want to be able to do as well. So Stacie and I are in that sandwich generation, you know where we are taking care of our kids, and having to start taking care of our parents. And when I say kids, I mean not in a daily activity kind of way. One guy lives at home right now, and the other two are out and pretty much on their own, but we have to help them out a little bit here and there. Time seems to be the one thing we are still giving a lot of them. We talk to them pretty much daily, and visit as often as our schedule allows.

Stacie: 4:30

Yep, and it can be a lot but we are lucky though, with three of our parents in their 80s and Kevin's dad in his 90s, they are still healthy and quite independent. I think the thing that is most overwhelming for them is technology and how so much of the world is operated that way now. Like they need help with things like connecting with doctors, signing documents online, sending forms into the lawyers and the CPAs without having to actually get in the car and drive there and drop them off physically. So, Kevin and I find ourselves spending a little more of our time assisting our parents with things like that.

Kevin: 5:10

And obviously not an issue at all, Stacie is just trying to give a perspective on time and where it goes. This can vary sometimes depending on your age and your own family circumstances.

Stacie: 5:22

Exactly. And I think that both of us are givers. We've talked about this before, but if someone needs us, we're there. No questions asked. So a few weeks ago, Kevin and I stole a couple of nights away to decompress from our insane holiday schedule and to go over our 2024 goals. A big component of this goal setting was discussing time and how to manage it better, which is one of the subjects we're going to be discussing today. This episode is dedicated to talking about all the things you need to consider when you decide you're going to, or maybe right now, just want to exit the nine to five grind and work for yourself from home. Assuming this work would be managing your rental property portfolio. One of the main reasons and factors we personally deal with and hear about from other self employed people is about time management or lack thereof. Some people struggle with staying productive with this new sense of freedom.

Kevin: 6:25

Yeah, that's right. And as we've openly admitted before, we struggle with having enough time. Now, for clarification, if we did not host a podcast, write blogs, push out a weekly newsletter, and post daily on social media for Your Landlord Resource, time really wouldn't be an issue. This portion of our home based business takes up about 20 hours a week for each of us.

Stacie: 6:51

Yeah, so basically it's a full time job for one person, but we split the duties.

Kevin: 6:56

Yeah, and I'm not going to lie, it's a lot. But it's something we're dedicated to right now. I want to get something straight though. This is not a huge money maker for us and that's getting to be kind of an issue. We love all of you and love helping self-managing landlords, but at some point we need to start earning some money to make this venture worthwhile. But getting back to time management, we self-manage seven of our doors right now, and Stacie manages another 8 to 10 for others. And we have a property manager for our 4 other units out of state. So, what's that up to, like 20 doors? And I will say we have created systems to where these properties barely take much time to manage. We do have a couple projects that are going on right now and that's a bit more time consuming. Like prepping one single family home to sell, and remodeling another unit to convert to a midterm rental.

Stacie: 7:52

But let me jump in here real quick. So everyone thinks that because you work for yourself, that you have all this freedom. And you do have freedom to do things whenever you want, but you still have to get the work done. However, you don't have to sit in rush hour traffic because you now work from home. You don't have to be at work between certain hours in the day because you can do work related tasks whenever you feel like it. You don't have to deal with coworkers. You don't have to go to those dreadful work holiday parties. And you don't have to report to anyone about what you're doing or turn in work by a deadline because you have all the decision making power on your shoulders.

Kevin: 8:33

Well, if you're working with your spouse on your rentals, you likely have to discuss things with them though.

Stacie: 8:39

It's true. Um, but we'll touch on that more in a minute. What I'm trying to say is time can be an issue because you don't have to do anything by anyone else's schedule, but your own for some, they're able to handle this amazingly. For others, time management is tough and procrastination is real. Trying to find a balance between work related tasks and home and family commitments is challenging. Yes, you have a flexible schedule and now can stay home with a sick child or care for an aging parent. And I know that sometimes I can lose time when I should be working because I'll walk by the sink and there's dishes to be done, or it's time to prep dinner. Laundry has to be washed, dried, folded, and put away, and then I'll open that linen closet to put the towels away and it's a mess. So I'm going to take time to organize it. And I'll take time to walk the dog and go to the gym. So, the point is, if you're someone who really needs a schedule to abide by, you'll need to consider this when you're working for yourself from home.

Kevin: 9:44

Yeah, some ways that Stacie and I are attempting to combat this is to work on time blocking our tasks. We get together every weekend and we discuss what our commitments, tasks, and goals are for the upcoming week. And, where there are usually way too many items to complete, having this system in place allows us to support each other as best we can. We then are trying to work those commitments and tasks into specific blocks of time so we can focus only on them and not get distracted by other things.

Stacie: 10:17

Yeah, well, I'll say it's not going so well. One issue that we have with this lovely freedom is that we love to travel. And when the opportunity comes up for us to be able to head out, we will. So what happens with this travel is we now have to add more tasks onto our already heavy schedule so we can work ahead and complete things before we go and that makes for some really long days. Do we have to travel? No. Do we know what traveling does to our schedule leading up to the departure? We sure do, but we just put our heads down and power through it. We get done all we know we have to complete and push the rest until we return. So the thing about working for yourself is knowing that there is a possibility that you will not have the open days and freedom that you think you're going to have. Let's say you have a property management company running your rentals for you. And in order to make the income that you need so you can quit that full time job and financially be okay, you drop that property management company and their hefty monthly fee. So now you're in charge of all the inspections, tenant move outs, filling vacancies, routine maintenance, and fielding calls from tenants about issues. And if you've got 10 rental properties, you should be okay. Seriously, it's really not that hard. But if you're getting up into 15 or 20 units or more, you're going to need some help. You can certainly negotiate with your property manager to have them still handle tenant calls, and you do the inspections, preventative maintenance, and hopefully not very often have to deal with vacancies.

Kevin: 11:53

I want to switch gears here a little bit and talk about finances. In order to leave your 9 to 5, you'll need to know your rental properties make enough money not only to cover your current salary, but also all the benefits you get in addition to that predictable income. Things like medical insurance, retirement funds like a 401k or maybe even profit sharing. Maybe you have access to a gym at the office that you like to use. The employment taxes that are covered on your behalf, like Social Security and Medicare, and the income taxes that are paid out of your payroll each period that you may now have to reserve yourself. Just because you make$1000 a month in your 9 to 5 and all of your rentals earn$1000 a month doesn't mean you're good to go. You have other financial obligations to pay out before you can pay yourself. Have a plan. Create a business plan on how you are going to make being self employed work. Include a financial analysis and goals to add income by improving property so you can charge more rent or fees. Or maybe how to scale and increase the number of rentals you have. Education you will need and focus on in order to reach your goals. Duties and who is in charge of what. So, who will handle the finances, bookkeeping, tenant relations, maintenance, legal, etc. If you're doing all that yourself, you're going to have your hands full.

Stacie: 13:21

And I think you should also include a plan B. What happens if you have no income? What are your cash reserves looking like? There are a number of things that can stifle income like a pandemic or a unit fire or a flood Can you sustain with one less rental income or do you depend on that income to make ends meet? What happens if you get injured or if you fall seriously ill? Who's gonna take over for you? See in a nine to five you just leave and collect disability. Your boss finds someone to replace your duties. Not if you're self employed. Can you afford to bring a property manager back on for a prolonged period of time? One thing to consider is the level of health insurance you likely can afford on your own. Will you have exorbitant medical bills if you get in an accident? How are you going to pay for all of those what if moments? Maybe you'll need to look into disability insurance like Affleck. Sorry, I couldn't resist. Okay. A few other expenses that you may not consider are increased utilities and home and car insurance. When you're working from home all day, you might find that you're using more utilities than before. On hot days, the AC is going to run all day and the same with the heater during the winter months. If you're operating a business out of your home, you'll need to add that to your current insurance, so anything you store at your home is covered in case of fire or flood. It also covers libel, slander, data breaches of your tenant's personal information, etc. Some business insurance policies will also cover if you are sued for discrimination or sexual harassment. Same goes with your car insurance. If you're using your car for going from property to property and you're keeping tools and materials in there, you'll need a little better coverage than before just in case of theft. One thing we highly recommend is to save as much as you can before going off on your own. At minimum, we recommend six months of your crucial expenses saved for housing, utilities, food, and all of your insurances. This cushion should allow you some breathing room and peace of mind in case something goes wrong.

Kevin: 15:35

Now, we've mentioned taxes earlier, but there's a little more information you should know. Income taxes are a pay as you go system. When you're an employee, your employer collects these taxes and pays them for you. When self employed, it now falls on you to pay them and it's best to be proactive with this. Work with your CPA to determine if you will need to make quarterly tax payments and how much that will be. A general estimate is to say, oh, about 30 percent of your gross income. Of course you now will have expenses to offset that income like health insurance, business insurance, and maybe even a portion of your car insurance. I really recommend you go back and listen to our previous two episodes where we took a deep dive into tax strategies and give them a listen. We'll link them in the show notes. One thing you will want make certain of is that you have a designated place in your home to be able to focus on work. A dedicated room or area of a room where you can keep and organize your receipts and documents. This area is a tax deduction, so the more room you can spare the better. Organizing your paperwork is of utmost importance. You cannot have a tenant's personal information laying out there where guests or others can view it. The more organized you are, the more successful you will become during tax time. Those receipts to prove the expenses of deductions are crucial to have. Now Stacie and I use QuickBooks for our accounting and bookkeeping. We invoice our tenants and they pay that invoice electronically with the rent being deposited right into our bank account each month. Ours and most CPAs are proficient in QuickBooks. If you have the online version, you are allowed to add your CPA access so they can log on and review your finances or pull the information they need to process your tax returns. I mean, it's a huge time saver come tax time. We'll link them in the show notes. And I believe they're offering 30 percent off for your first six months when you sign up through our link.

Stacie: 17:42

Yeah, we have used them for years and years. They're super great for understanding your numbers because you can actually set it up to do income and expenses by property and even down to each unit. And it's pretty cool if you nerd out on analysis stuff like that because I do. All right, let's switch gears and talk about working from home and being self employed when you have a family. This goes back to earlier when I was talking about getting distracted and managing household duties instead of focusing on work related ones. Parents are chauffeurs, short-order cooks, house cleaners, personal shoppers, waste management specialists, and the list goes on and on. And where this work is all very fulfilling, you need to know how to separate your time for home and your time for work. You're still working a job, just for yourself, not for someone else. Trying to manage all that can be overwhelming. You may want to hang on the couch and watch TV with your little ones on a rainy day. And guess what? You should. But then you'll need to pull the time to get your work done from another place. Maybe you're a night owl and can do your bookkeeping and record keeping at night before bed. Or maybe you're an early riser and can do it then. The joy of managing your properties yourself is that you have the freedom to do that.

Kevin: 19:01

So let's now talk about spouses and where they land in all of this. Do they still work? Can you add yourself to their medical insurance policy at their job? If they're not working, do they want to be part of this new venture? Or are you impeding on time and space that they had to themselves before and it's going to be a big adjustment for them to now have you around the house all the time. The decision to go from part time rental property investor to a full time one is something your spouse must be on board for and support. If they are on board and want to share the duties with you, take some time to determine each of your strengths and weaknesses so you can figure out who can best handle certain responsibilities. Where you may have worked well as a team in your personal responsibilities, you may not be able to run a business together. You must always be checking in with each other and making sure you're both on the same page and still have the same goals and desires. Starting out is hard and will definitely be a challenge. The key to working with your spouse is communication. Stacie and I have meetings nearly every morning to discuss what may have changed from the day before and you know what, we aren't perfect. Sometimes we forget to tell the other person information that makes a big difference in their tasks for the day. All right, here's a case in point. Our contractor Jim is working on the remodel of the midterm unit as well as doing repairs to the single family home to get ready to sell. Both Stacie and I have text going back and forth with him about when he will do what. What materials he needs decisions on, paying his invoices, etc. One day Stacie told Jim we'd be on the property that week and then failed to tell me. And then I made plans to do something else and when I told her about it, she got mad because we had to be in Sacramento. Kind of hard for me to know something she doesn't tell me all about. I mean, I know I'm a know it all, but I can't know it all.

Stacie: 21:07

Yes, I will admit I did do that. And now we have both learned to put our stuff on our joint calendar so he can see that there is already something planned for that day. So working with a spouse definitely has its challenges, but being that we can pretty much pick up and go get our work done from anywhere is a perfect example of give and take. Okay, we are almost ready to wrap it up, but I have a few more points or tips to make. If you are relatively new to operating rental properties by yourself, find a mentor. Most big cities will have some level of rental association or real estate investor club. You'll be able to ask questions, especially specific to your rental area. And many of these clubs and associations offer educational opportunities as well. And as far as I'm concerned, you cannot over educate yourself when it comes to owning and operating rental properties. When you surround yourself with like minded people, you're going to find success. And speaking of education, It is important to learn about tenant relations from communication, move ins, move outs to tenant screening and vetting them. You need to know how to do this properly and legally correct. When you have a vacancy, you'll need to understand your market and how much you can charge for rent for your property and its amenities.

Kevin: 22:31

Well, it's a good thing we're working on a course just like that. Huh?

Stacie: 22:35

Yes. Yes. Touche Kev. All right. So Kev and I are in the beginning stages of developing a course to give you guys a step by step process of placing your ideal tenant. And I think we're going to call it From Marketing to Move-in. And it will have several sections or modules where we not only recommend what to do, but we actually are going to tell you how to get it all done but that's neither here nor there. We can discuss all of that later on. One other thing to consider when you go full time on your own is becoming a real estate professional and that was something we talked pretty extensively in the previous episode. I believe it was the one on advanced tax strategies. Um, that is something that if you are working on your properties full time, you likely are going to be able to qualify for and receive extreme tax deductions. So that is a huge plus if you are able to go out on your own and run your rental properties pretty much by yourself. Okay, so, while quitting your day job to pursue full time entrepreneurship seems like#TheDream, it's not nearly as glam once you take the leap. You see influencers on Instagram snapping photos of their decadent lunches before cruising on a sailboat to the next island. You see startup founders taking ski trips with potential investors and bloggers traveling around the country in an RV van to meet up with readers. Not many influencers post how hard or scary it is. And I'm not saying this to discourage you, not in the least bit. All we are trying to do is make you think, to understand the challenges and parts that few talk about. And the bottom line, if you're someone who is driven, focused, organized, and can compartmentalize responsibilities, you're going to do fine. All we ask is that you take the time needed to prepare properly. This is not something that you jump into all willy nilly. So that is our show for today. Thank you so much for tuning in and taking the time to listen to what we have to say. We are very grateful for each and every one of you. If you like what you hear, would you do a couple things for us? Please follow or subscribe on your favorite podcast platform. If you really like what we have to say, would you take it one step further and leave us a kind review? We really need other rental property owners out there to find us so we can help them too. And lastly, we have a free newsletter that goes out each Tuesday. And each week we take a deep dive into a tip, almost like a mini blog post. We have several landlord focused articles that are written by other industry pros. Our favorite products are shared on there and links to this weekly podcast. You can subscribe at yourlandlordresource.com/subscribe and if you find it's not for you, you can unsubscribe at any time. Thanks again for listening, and until next time, you've got this landlords.