Here is a simple question. Would your life be better if you could generate full-time income, but work only part-time?
Can you really work part-time and generate a full-time income? Yes. I will illustrate by showing you an example from the real world. The fact is that, in real estate investing, there are many more part-time investors than full-time investors.
Before we get into the details, ask yourself if the following part-time investing performance would be as good or better than your performance in your current full-time job. For some of you, the answer may be “no,” but for many of you, the answer will be “yes.”
Two part-time investor projects were executed during the entire year of 2016
The first project took 2 months of work (100% performed by others) and generated $45,000 of pre-tax profit
The second project took 6 weeks of work (100% performed by others) and generated $35,000 of pre-tax profit
Summary: Total amount of project work time for these two projects during 2016 was 3.5 months and total pre-tax profit was $80,000
Is this attractive to you?
According to the US Census Bureau, the median household income in 2016 in Camden County, New Jersey (the county in which these two projects were performed), was $62,185. Based on 2013 data, an income of $80,000 exceeds the household income of approximately 85% of Camden County households.
Even if you made more than $80,000 in 2016 (which some of you do), were you able to generate that income with only 3.5 months of “work” in that calendar year?
If you could live off $80,000 of pre-tax income in a year and only worked 3.5 months in that year, what would you do with the other 8.5 months? Would you go fishing? Would you invest more quality time with your kids? Would you volunteer for community service? Would you work another 3.5 months and make $160,000 in that year and then only have 5 months off without working?
If all this seems like unreasonable hype but is still intriguing, you need to read the rest of this article and then watch the 1 hour 17 minute training video about the case history of these two projects that I actually executed last year (in my entity) as a part-time investor. This lecture is part of the new home study course we just launched a week ago (8/24/2017) called “The Smarter Investing” lecture series.
First, I want to emphasize several real world characteristics of this case history.
I am a part-time investor. I am not a full-time investor. My primary occupation is in chemistry. My primary occupation is NOT in real estate. The two projects were real estate projects. That means that you don’t have to be a full-time real estate investor to achieve this performance.
I do not have any magical real estate or construction skills. In fact, I did none of the work myself on either of these projects other than “find ‘em and fund ‘em.” Contractors did 100% of the work on the projects. I even traveled overseas for two weeks on a chemical industry job while the first project was being sold.
Last year, I bought only two single family homes. When I say “I”, I mean my entity. These were the two projects described in this article and in the training video. In the training video, you will see which entity I used for these two projects and why but that is not relevant for this article. The profit cited in this article is only from these two projects and does not include the profit generated from the modest rental real estate portfolio I built slowly over time without driving myself crazy, also as a part-time investor.
These were not magical homes. Both homes were in working class neighborhoods. One was worth $140,000 and the other was worth $170,000. These were not McMansions and they were not in hot markets. They were not even in great school districts. These were homes that you would find in typical subdivisions that are common all around the United States, in reasonably priced real estate markets. These two homes were in southern New Jersey which is a suburb of Philadelphia. Again, these were not magical homes.
So, these were not magical homes, not in magical markets, executed without magical skills and I am a part-time real estate investor with my primary occupation totally unrelated to real estate. I emphasize all this to pre-emptively answer your objections, excuses and mental roadblocks some of you may have already been formulating in your minds, so that you can be free thinking and open minded to the concept that you can make a full-time income with part-time investing.
Now, let’s examine the details in summary. The full details are shown in the training video.
The first project was a flip of a 3-bedroom 1.5 bath 1,364 sqft twin built in 1989 in a working class subdivision in Atco, NJ, a semi-rural suburb that is about 20 miles from Philadelphia. The property was an REO (bank owned) bought for $50k and rehabbed with new roof, new kitchen, new flooring, new HVAC and other renovations for $28k. Buying costs, holding costs and selling costs, based on construction loan financing (loan: 70% of purchase price plus 100% of repairs) would have been $17k. The purchase and rehab was actually funded by cash and the buying costs, holding costs and selling costs were $12,500. The sales price was $140,000.
Thus, if funded by a typical part-time investor with construction loan financing, the pre-tax profit would have been $45k. In reality, the Atco flip was funded by cash and the actual profit was $48k.
The Atco property was bought on January 14, 2016 and put on the market after rehab for sale on March 10, 2016. The reason for the “long” 2-month renovation time for a $28k rehab is that as a part-time investor, I do not have a full-time construction crew and timing depends on contractor availability, especially since I do zero work myself on the renovation. I’m OK with that since the profit level supports the approach that other people do 100% of the work, even if I have to wait for the contractors to be available.
A successful part-time investor like me, who values personal time as much as profit, has no problem being disciplined in buying only the right properties at the right price and then outsourcing all the work to contractors who do renovations for a living. Plus, my entity dictates that I do no work myself other than find ‘em and fund ‘em.
If you want to be a full-time investor and do many more projects per year than I do to enjoy a cumulative higher profit (though typically lower profit per project), have at it! You can certainly do that and make hundreds of thousands of dollars every year. This article is about part-time investing by people like me who don't want to work that many months every year to generate the full-time income above that of a typical middle class worker.
In any case, the Atco flip was put on the market on March 10, 2016, and the second offer was accepted within 2 days at full price of $145k minus $5k seller assist, though it appraised at $140k and sold at $140k with $2.5k seller assist. The sale closed on April 29, 2016, 3.5 months after purchase and 6 weeks after rehab was complete. In other words, the project rehab time during which contractors managed and worked on the project was 2 months and the total elapsed time from purchase to sale was 3.5 months. As the part-time investor, I followed the progress of the project, but I did no work myself.
I then had no new real estate projects from April 29, 2016 to October 31, 2016. If I didn’t have a primary occupation or rental real estate, I could have been fishing for 6 months. But I did do chemical technology development work during those 6 months, which I greatly enjoy and I did manage my modest rental portfolio that generates passive income.
On October 31, 2017, I (my entity) purchased a home from an estate that was listed on MLS. It was a 4-bedroom 2 bath 1886 sqft ranch built in 1971 in a working class subdivision in Sicklerville, New Jersey which is less than 10 minutes from the Atco property. The purchase price was $80k, the renovations were $42k and the buying costs, holding costs and selling costs based on construction loan financing would have been $13k. The after repair value was $170k. The pre-tax profit would have been $35k.
The reality was that the project was funded with cash (buying costs and holding costs were only $2,600) and the property was kept as a rental (no selling costs).
The Sicklerville property was ready for rent after 6 weeks of renovation time and the tenant moved in on December 14, 2016 paying $1,795 per month.
Again, I did no work on the property other than find it on MLS and fund it. Paid contractors of various types did all the work. Even the rent is paid by automatic deduction from the tenant’s bank account by an independent third party company and deposited directly into my entity’s account without me touching any checks, cash or money orders. The most successful part-time investors outsource almost everything and just have to make sure that all the contractors and service providers of various types are doing what they are supposed to do and get paid.
The summary of the two projects is as follows:
Total renovation time was 3.5 months = 2 months for the Atco project and 1.5 months for the Sicklerville project. This is the time that contractors had to be managed since I did none of the actual work. This time does not include the hours invested looking at MLS (or realtor.com) sitting in my La Z Boy looking for deals until I found the ones I wanted to buy. It also does not include the time invested at the settlement tables to buy and sell the houses.
Total pre-tax profit of both were flips, assuming financing by construction loans would have been $80,000 = $45k for the Atco property and $35k for the Sicklerville property.
Since both properties were funded by cash in a self-directed Roth 401k and the Sicklerville property was kept as a rental in the Roth, the 2-deal final numbers were 113% tax-free equity-on-cash return, more than $1,000/month of tax-free passive income with one single family home rental which is 15.5% tax-free cash-on-cash return over the two deals!
These are impressive numbers and this is my reality. Do you now want this to be your reality?
Remember, I don’t do the work.
Remember, I am not a full-time investor.
Remember, I don’t work full time in the real estate industry.
I am a part-time investor and I generate a full-time income between my part-time flips and rentals for which I do no work other than find ‘em and fund ‘em.
By the way, I started part-time real estate investing at age 50 with zero experience, in case you’re looking at age for an excuse for you to avoid taking action.
What is YOUR current situation? Do you want to become a successful part-time investor? If so, now watch the video in the Smarter Investing home study course entitled “Achieve Financial Freedom Through Part-Time Real Estate Investing”
If so, take action to learn from a successful part-time investor how to be a successful part-time investor. Now purchase the “Smarter Investing” home study course.
Do you perceive that you have to overcome barriers to get started? If so, now watch the video in the “Smarter Investing” home study course entitled “Overcome Barriers to Buying Your First or Next Investment Property.”
If you’re not sure which real estate investment strategy to choose, now watch the video in the “Smarter Investing” home study course entitled “Should I Flip? Rent? Wholesale? or Lease-Option?”
The only question that remains is how soon do you want to enjoy the life-changing benefits of part-time investing that you now want! Now contact Marc Halpern of Part Time Investors LLC for coaching and purchase the “Smarter Investing” home study course to now get started right away.