Should I Quit My Day Job?
By Bill Guerra (Bill in Vegas)

This is a question that many new investors ask themselves and I have asked myself this many times also. This of course must be answered individually; however there, are some things to consider prior to taking that much desired step as an investor.

My first year in investing , I used my job earnings to put money back in building my business. Prudent investors do not open a business without a cash flow coming in regularly, or at least 3 to 6 months of financial reserves.

How do we know what a prudent reserve is? Since you have not run this type of business before, your costs are unknown! Some of these expenses are car signs, gasoline, business cards, newspaper and Nifty Nickel ads, more gas, tires, lunches networking with investors, earnest monies, computers, printers, (did I mention gas), desks, paper, ink, lock boxes, small tools, more ads, high speed cable, stamps, investor club fees, course fees, boot camp fees, copies and bandit signs. Keeping the full time job helps pay for these unseen and unknown expenses for awhile.

That is only the first year of business! Starting the second year, new expenses rear their ugly heads. Added expenses include CPA and attorney fees, bigger printers and the second computer so you can take your laptop to with you and comp properties on the spot (and if one crashes you are still functional). Now, the long-term investor will purchase computer programs, Microsoft Small Business package with Outlook Express, Excel, and Word. Virus protection is a must, and there’s another fifty bucks. These will make your business efficient, thus saving your most precious commodity—your time. Better equipment and programs will help free you up to do what you do best. No one can do what you do as good as you—and that is to find the deals.

You say, “Wait a minute, I’m no computer guru!” Neither was I and that’s why I contract one! Once you have computers, you have computer problems, yet another unseen but real expense. This is long-term thinking. Hiring out services in the second year is a must for time management, but you can do it in your second year because now you are making money investing and have a job to pay for expenses. This exponentially increases your business success. It may help cut one day out a week from your job about every 4 months.

After the second year, you might be thinking, “I am making good money now, so maybe it’s time tell the boss to take that job and shove it!” Maybe, or maybe not. February and March can be very slow months for real estate investors, but the bills continue to come in like clockwork. You can’t forget about the expenses you incur simply because you are new and you don’t know any better. It might be buying stuff you don’t need or find out you can get it cheaper elsewhere. Yes, that was the voice of experience talking! Health insurance is an expense that is a must, as no one expects a hospital visit but it can ruin your finances, so the long-term investor will calculate that into the monthly expenses.

Credit is always an excellent investment in our business. To keep good credit, monthly bills must be paid on time. This won’t occur if you are still waiting for a deal to close that you did not expect to have liens on it, or a lien put on it even after you checked title! Any other hidden problems that you are not aware of can slow down your “payday.” Why? Because again you are a new investor. A year or two in the business will uncover a lot of these hidden expenses.

Hopefully this has given you some ideas to help you determine if it’s time to go full time or not. I have gotten conservative over the years, and I have felt the pain of poor decision making. It’s not fun. So now if I must err, I will err on the side of safety.

I have seen guys blow in and out of this business because they tried to go full time too quickly. It’s okay to still work until it is ridiculous to continue. Oh, in case you’re wondering, I still work two days a week as of March 2004.

Bill Guerra
www.willbuyanyhouse.com