Tailwind Talks
Tailwind Talks is a podcast for high-performing professionals who want to build serious real estate portfolios without leaving their careers. Hosted by an airline and military pilot turned investor, it dives into actionable strategies for scaling your real estate portfolio while balancing the demands of a full-time job.
Tailwind Talks
Why Quitting Too Early Will Kill Your Real Estate Dreams
The dream of quitting your 9-to-5 to pursue real estate full-time tempts many new investors. But is rushing to leave your job actually sabotaging your long-term success? Drawing from a decade of experience balancing property investing with careers as both an airline pilot and military instructor, this candid discussion reveals why your day job might be your most valuable asset when building a sustainable real estate portfolio.
Banks and lenders scrutinize your employment status closely when you're starting out. Without established W-2 income, securing loans becomes significantly more challenging, especially for new investors without extensive credit history. Your stable employment serves as security, demonstrating you can cover property expenses even during vacancies or unexpected costs. After establishing a track record of successful properties over several years, lenders may eventually consider your rental income sufficient, but patience is essential.
The math rarely supports the "retire young" narrative popular on social media. Despite what influencers claim, the cash flow from 10-20 duplexes typically can't replace a solid professional salary, particularly after accounting for property management costs. The real wealth-building happens gradually through mortgage paydown, appreciation, and reinvestment of profits. By maintaining your day job while growing your portfolio, you can direct all rental income back into acquiring more properties rather than withdrawing it for living expenses – creating exponential growth that wouldn't be possible otherwise.
Consider what truly matters before making drastic career changes. Are you quitting your job to impress strangers online, or are you making strategic decisions for long-term financial independence? The most successful investors understand that real estate involves inevitable mistakes and learning experiences. Your employment income provides the runway needed to recover from these missteps without derailing your entire financial future. Start small, determine if property ownership truly aligns with your goals, and gradually scale your portfolio while maintaining the security your career provides.
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What's up everybody. My name is Cole. I'm a part-time real estate investor, a full-time legacy airline pilot and a part-time military instructor pilot. Today I'm talking about why it might actually be advantageous to delay quitting your day job so you can continue to pursue the real estate stuff. And the reason I say that is because if you quit your job, it's gonna be really hard for you starting out to get loans. And you might think, okay, what's your credit score? And when you're starting out, especially if you're younger, you may not have a huge established credit. You may not have had a car loan or rented somewhere or a utility bill or anything that's going to grow your credit. You may not have that backing. So having a job to offset some of that is huge. You can say I don't have a massive credit score, I don't have a massive credit history, but I do have this job that's paying me and it's enough that if nobody pays rent, I can still cover the monthly expenses for the property which is principal, interest, taxes, insurance et cetera. So having that income even though it's not sexy, you can't put on Instagram. I quit my job when I was 21 and I'm retired now. That may not be feasible, but what you can do is show this to the bank and use that as leverage to start out with your first couple of deals. And then you get a couple of deals under your belt and the bank's going to be less concerned about your ability to pay it back and more concerned about your history with them or, in general, they may say your income is the same, but you've demonstrated that you can repay loans, that you know how to manage properties, you're not running massive vacancies, you're not running massive losses. So we're willing to take a bet on you, even if you did quit your job and you could have this conversation with the bank. You could reach out to them and say would you guys still give me a loan even if I didn't have a job? I'm considering retiring, I'm considering changing paces with my job. Would you actually consider giving me a loan? And they might tell you yeah, absolutely, you don't need your job at all.
Speaker 0:We're looking at the property strictly now because you've showed us that you can repay loans, that you're a trustworthy buyer and that you buy good deals. That's all kind of wrapped into it. So it's not as simple as just. This property makes money on paper. I'm going to go get a loan, they're going to approve the loan. There. There's a lot more to it and there's a lot more that has to do with the individual investor. The way I look at it is kind of like if you went to a venture capitalist and you said hey, I have this startup idea, I want money, and you're trying to sell yourself a little bit, because it's not just the business idea, it's also, it's not just the horse, it's the jockey, it's a little bit of both. So when I'm looking at this, until you have some properties under your belt, until maybe you've replaced your normal job's income with the income from the properties Because at least in my experience with running a property manager and having other outside help to run these properties, one duplex is not gonna be enough.
Speaker 0:To retire off of Two duplexes is not enough. 10 duplexes is not enough. It sounds like it should be enough and people are gonna sell you on the internet that, oh yeah, if you can just buy 10 rental homes before you turn 30, there's that guy out there. There's going to be people like that that are selling you the idea that you only need a couple duplexes and you're going to be good to go. You're going to be financially free If you have 10 duplexes that all make $2,000 a month. They just make up random numbers. No one's making $20,000 a month at least in my market you is.
Speaker 0:10 duplexes is probably not going to be enough, probably not even 20. Long term it might work out because you're paying down the debt. They're appreciating over time. Inflation is working to your advantage. But as far as the monthly expenses and cash flow goes, unless you're managing it yourself, it's probably not going to be enough.
Speaker 0:You really have to kind of balance that with what is the quality of life that you want. Do you want a really high, expensive quality life? Are you going to live in an expensive place? You're going to have expensive cars and you're going to go on vacations and all these things, or are you just going to lay low and not really have a really high quality life? That stuff is totally dependent on what you want. I'm not going to be here to dictate, to tell you what you should or shouldn't want, but you have to be reasonable about what you expect to spend every month. And just because you're spending $2,000 a month to survive right now doesn't mean that's going to be the same five years down the road when you have a wife, kids, husband, whatever the case may be. So you have to look at what you're doing now and project that into the future to really be able to make a decision as far as quitting your job or not.
Speaker 0:And I think a lot of people want to quit their job because they want to be able to tell people that they're retired or that they quit their job even though they might be in their 20s and that's their sign of I made it is I retired. But I would counter that with saying if you quit your job or you retired in your early 20s but you can't afford anything and you have to live in your mom's basement I don't really know if that is the goal that most people think. It might be Like you might be selling them something that might not actually be true, no-transcript, and they don't actually need to do that. If they just stuck with their job for another four years, they could build out whatever it is that they want. In this case, we're talking specifically real estate. I don't really care about anything else, I'm talking real estate specific.
Speaker 0:If you want to build a portfolio, I think in a lot of ways your best bet is to keep your day job. If your day job doesn't pay a lot, then it might be easier to leave. If you're getting paid a lot to do your day job, then you're probably gonna be sticking with it for a while until you can really build up a portfolio and prove to yourself and others that you're an effective manager, either of the business of buying and selling, whatever part of the role that you have in that business. If you can show people that you're effective at doing that, then you're going to. You're going to be better off down the road. But it's going to take a while to establish that and it's going to take a while to to divest out of your normal W-2 income.
Speaker 0:If you're making $100,000 or $200,000, $300,000 a year, to replace that with just strictly rental income, just monthly cash flow, it's going to take a while. You're going to have to find a lot of good deals. You're going to have to make a lot of good decisions and reduce the amount of bad decisions, and that stuff takes time because you're human. You're going to make mistakes. You're going to buy bad deals. It's going to happen really quickly, but sometimes it doesn't.
Speaker 0:Sometimes it takes time and in my case, like I've been doing this for 10 years now, maybe a little bit more than 10 years. It's about exactly 10 years since I bought my first house, basically, and I'm still I'm on call with the airline right now. If that puts it into any perspective. I'm literally working right now. I'm on call, waiting for them to call me to go fly. I'm still doing my day day job. Tomorrow I fly for the military.
Speaker 0:Like I still have a lot of stuff going on, and I'm doing this on the side because I know that I can't replace my quality of life and the income level that I'm at with the rentals that I have. If I sold everything, sure, I would probably make some good money and I could go do something else, but that's not really what I'm trying to build something for the long haul and something that maybe my kids and their kids' kids will be able to grow from trying to help out our own family. But I don't think that's going to happen. If I just sell everything now and try to take that money and run, I think it's actually going to hurt me in the long term. Every time I've tried to make money fast, I've gotten burned, so I've just learned to just stop giving a shit about making money fast, because it just doesn't work for me, and that's a me problem, not a you problem.
Speaker 0:But when you're looking at that stuff, that's, I think, how you have to frame in your mind is this is going to take probably a lot longer and it's going to be a lot more expensive than what I think, and so maybe it's best to delay leaving the job until I really get a sense of what I'm doing here, what it's like to run a property. Do I even like running properties? Maybe you buy your first duplex and you realize I hate this, I don't want anything to do with this, and then you've already left your career and now you're backpedaling and you have to sell the property, or you get out of the property and you have to go back to your job and you're starting over, and I think that people cause a lot of pain on themselves by trying to do too much too fast and maybe just take it one step at a time and figure out if this is even something that you really like before you decide to quit your job. That's my advice. If you do eventually become self-employed, then the bank's going to look at your self-employment income, aka maybe your rental properties as viable income, to prove the business's worth. So that way they'll give you loans. But it generally takes a couple of years of proven track record for them to use that. So don't think just because you bought a duplex last month you're going to be able to use that income this month to try to justify getting another loan from a bank just with that.
Speaker 0:By itself, there's different loan programs to look at the person that's getting lended to versus the property, and sometimes they separate the two. There's a lot of different ways to look at all this, but I would say if you're going to try to use your self-employed income, at least have a couple of years under your belt. Two years, probably minimum, seems like the guidelines that I've seen, because otherwise you're going to go in there with six months history and they're going to be like yeah, that's awesome, we see what you're doing, but it doesn't matter, we're not gonna be able to use it. And this is like a regulatory issue, not so much a bank, like the bank doesn't like you, it's just that they legally can't do it, and so think about that before you make a jump to maybe run your side business for two years while you're still be looking for down the road. That's one avenue that I would look at if I was in that situation, and I think scalability, too, is something to think about. I already touched on it, but if you want to scale this business quickly or more quickly, and try to build something bigger, better, faster, you kind of have a couple options. Getting partners is one that really helps, I think and I'll talk about that in the future but also, like your job is probably one of the biggest things that's going to help you because, like in my case, I'm still working. My partners are still working full time, so nobody touches any of the money from the business.
Speaker 0:Very rarely do we take a draw and when we do, it's like after a sale or something that's bigger. It's not the month to month stuff. The month to month income is all just rolled right back into the business, whether it's getting new loans, hard money, refinancing stuff. Whatever the case may be, that money is all just feeding more purchases within the business. It's not our full-time income. Nobody's using the money, and that's really crucial, because if you're using the money from the business to feed your own lifestyle, you're slowing your progress, you're slowing down.
Speaker 0:That's just the math. It's really as simple as just math. There's no fancy formula, there's no secret that I could sell you. It's literally just math. And so when you look at that math and you say, okay, I'm reinvesting every dollar back in this business, sometimes I'm making good deals, sometimes I'm making bad deals, but either way, the money's getting put back into the business. That really is a freeing feeling, because my income is not dependent on the performance of the properties. I'm going to try to buy the best performing properties I possibly can, but it's not always going to work out. Sometimes I'm going to make mistakes, sometimes I'm going to buy properties that are bad, and I'm not going to be like stressing every month oh my God, what is the man? What's going on with management? This month, will I be able to pay my rent or keep the lights on in this place, or whatever the case may be? I don't care about any of that. All I care about is being able to pay the bills and then reinvest all the money back into the business.
Speaker 0:So huge benefit go quit your job and start your own business. But I don't think that works for most people. I think most people are going to fail and then, six months, end up back in their own, their old job, once they run out of money. Basically, people save up six months of savings, start their own business Off. I go Six months later they're back to the business and say, yeah, it didn't really work out because they were failed from the start. They never gave themselves a real opportunity to succeed. And there's, of course, there's one-off cases, there's the 0.00001% of people that do it. But if you subtract out those people and you look at the vast majority of other people, a lot of it goes that way. So be very careful with that. If you're going to quit your job, make it a one-time decision, aka give yourself enough runway, either with cash or with however you set up your lifestyle, so that way you can take some hits and have some early failures and still survive. Otherwise, you're gonna be right back in the same spot and maybe even worse off than you were when you started.
Speaker 0:And I would close out with this I would say don't quit your day job just to try to impress people, strangers, mostly on the internet. It's not really something that's gonna. You might get a bunch of likes, you might get a bunch of views, but it's not gonna actually equate to any movement in your business. Generally, some people will have that success. There is a small percentage of people where that does work, but I would say for the vast majority it just doesn't work. And so you're trying to impress people you don't even know and you're wasting your time.
Speaker 0:I've tried to do that before. I've thankfully learned over time not to worry about that and I'm trying to just focus on growing the business, and I think this is the most logical way to do it. Especially in this environment with high inflation, high taxes, high interest rates. This is a very tough time to build a business and it's even more tough if you don't have a guaranteed income, aka a job. So I would think about that. I wouldn't get too rash in your decision making just to try to impress strangers and I would just stay the course, start small, figure out if you really like this business and once you realize that you do, then just start to double down on the things that are working and I'll continue to try to make more videos to try to guide some people that are starting out, and we'll go from there.
Speaker 0:So if you've watched this all the way through, I really appreciate it. If you comment, subscribe, whatever the case may be, I really appreciate that. I'm not going to tell you to do anything. You guys know what to do if you want to see more of this or less of this. So anyways, I really appreciate it. It means a ton to me. I've had a couple comments now. I've gotten to interact with people, so that's really been cool and we'll continue to build this and see.