Why Keeping Your Job Makes You Richer (Quicker) in Real Estate

We know you’ve been thinking about it. Dreaming about it. Talking to your spouse, friends, and family about it. Take our advice: don’t do it…yet. Obviously, we’re talking about the one thing every real estate investor is after: quitting your job. It’s the goal of every rental property owner to have enough real estate cash flow to pay for your life, tell your boss it’s over, and walk out the door, fading away into the sunset. But quitting your job for rentals could add years to your financial freedom timeline, limit your ability to scale your real estate portfolio, and force you back into the job market when things get tough. Today, we brought on someone who’s proof that keeping your job makes you richer (quicker) in real estate. Paul Novak has worked full-time for 20 years. At record speed, he acquired eight rentals in just five years. And guess what? In five more years, he could be financially independent and retire early, IF he keeps his job and invests. The best part? Paul has unlocked secret, low-interest loans that W-2 workers have easy access to but rarely know about, helping him supercharge his rental portfolio. If you really want to quit, do it. But if you actually want to get wealthy with real estate, listen to this episode. In This Episode We Cover How Paul scaled to eight rental units while working a full-time schedule The secret loan to fund your real estate deals that W-2 workers have easy access to Why you’ll retire much sooner if you keep your W-2 job vs. quitting Should you work in the real estate industry if you don’t like your job? The benefits of going full-time into real estate (only quit if these are worth it) And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.biggerpockets.com/blog/real-estate-1211 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[email protected]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Dave Meyer?

  True or false, you need to quit your day job to scale a real estate portfolio. A lot of people will tell you that you have to quit your job and go all in on real estate if you want to reach financial freedom. But I'm telling you, that's wrong. I believe it's not just possible to invest in real estate with a day job, but keeping your W-2 is maybe the secret to building a portfolio as fast as possible.

• 0:27Dave Meyer?

  Hey, what's up everyone? I'm Dave Meyer. I'm the host of this podcast, plus the head of real estate investing at BiggerPockets. That's my day job. I've been working here at BiggerPockets for almost 10 years, even though I've been investing in real estate for even longer. And I've kept my job even as I've grown a real estate portfolio because I believe that's the best path to building wealth. This can be a contrarian opinion in the real estate space. So today, I'm going to break down why I think having a nine to five can make you a better investor over the long term. And to help me do that on the show today is Paul Novak. Paul is an investor with a full-time job from Sheboygan, Wisconsin.

• 1:07Dave Meyer?

  And you can hear his full story from his previous appearance on the show, episode 1123, from May 19th. Paul and I are going to talk about the hidden benefits of keeping a W-2 job while investing, some of the under-discussed downsides of quote unquote "going all in" on real estate, and even share a few tricks like 401k loans that are only available to people with full-time jobs. Let's bring on Paul. Paul, welcome back to the BiggerPockets Podcast. Thanks for being here again.

• 1:37Speaker 01

  Yeah, super excited to be on.

• 1:39Dave Meyer?

  You have been on before. We talked a lot about your investing journey. Today, we're going to talk more about the decision you've made to stay as a W-2 employee because I think this is a huge decision for most people. But before we get into that, maybe for people who didn't catch your first episode, just give us a quick background, who you are, how you're involved in the real estate investing world.

• 2:00Speaker 01

  Yeah, my name's Paul Novak, live in Sheboygan, Wisconsin. Kind of how I got started is got introduced to FIRE, really started off by paying off a lot of debt. Once the debt got paid off, it was like, okay, we were kind of in that habit of all of our money's going to debt. There's no debt left, time to start investing. Pivoted into like stocks and started doing that and really just wasn't seeing the returns on the dividends that I was hoping in the beginning. And during COVID, I got introduced to real estate through reading books, watching BiggerPockets. And when I was looking at the returns that we were getting in cash flow from the money that we had invested in real estate, it was kind of a no brainer. So we jumped in then around COVID and really we haven't stopped. We've just continued with real estate.

• 2:45Dave Meyer?

  And what does your portfolio look like today?

• 2:47Speaker 01

  Yeah, so today we're up to six properties, eight doors. We've got two multifamily, small multifamily duplexes and the rest are single family homes.

• 2:57Dave Meyer?

  So you've been doing this for a couple of years, you got six properties. Could you retire if you wanted to, if you wanted to leave your W2 job? Is that an option for you at this point?

• 3:06Speaker 01

  Yeah, I don't think it's an option yet. I mean, maybe if we lived like a very minimalistic lifestyle, but we've got to keep going in order to kind of hit our goals and get to where we want to be.

• 3:17Dave Meyer?

  And what are your goals?

• 3:18Speaker 01

  Yeah, so I think for us, we want to get to about 11,000 a month in cash flow coming off the rentals. And you know, if I look at what we have with the six properties, we could get to that goal. I think with just regular rent increases over the next couple of years, if we paid off the portfolio. So we're kind of pivoting right now in our strategy from just acquisition mode into kind of paying off some of that debt to increase the cash flow.

• 3:44Dave Meyer?

  You have decided, from what I understand, to like keep working at your W2. And I'm curious, first maybe just tell us a little about what you do for work and why you're taking that approach instead of going all in, full-time real estate investor.

• 4:00Speaker 01

  So what I do, I've been at my employer for 20 years, customer satisfaction manager for a local manufacturing company. And honestly, you know, my wife too has been at- Her career now for seven years before she worked where I did for 13. It just, it provides us a lot of stability. And the other thing is like, I don't think there's any way around it. If you want to be in this real estate game, you have to have money coming in. Right? So like what that would do if we didn't work our W2s, it would significantly like stunt our abilities to grow, our abilities to pay off these properties. So I think it really lowers the stress level for where we're going. And our game plan isn't to live off the cash flow now anyways.

• 4:44Speaker 01

  So, you know, whether we're buying new properties or paying properties off, I still look at we're in the growth phase and having that additional income. I mean, that makes a big difference for us scaling.

• 4:56Dave Meyer?

  I want to reiterate and stress what Paul just said, that in order to grow a portfolio, you need cash coming in. This is just the reality. Real estate is a capital intensive business. You can't just go out and start with a couple of bucks. And even if you start with a decent amount of money, after you acquire a couple of properties, you're going to run out. And although some people dream of taking the cash flow from their first couple of rentals and using that to reinvest into new rentals, it takes a long time. Like the math of that is not the best. If you're making a couple of hundred bucks every month off of rental property, it could take years between acquisitions, which is why for pretty much every person

• 5:38Dave Meyer?

  in their first, I don't know, five or 10 years of investing, you gotta focus on how to bring in income. Now there are different ways to do that, Paul, right? Like curious, did you ever consider bringing in money through real estate? Because a common option that people in the BP community pursue is maybe they become a flipper, because that's a way that you can generate income. Or you become a real estate agent, or you become a property manager. Like, has it ever appealed to you to get your active income from a real estate type job?

• 6:12Speaker 01

  So let's say hypothetically that our household income from our W2s is 200,000 a year, using a hypothetical number. If I jumped in and became a real estate agent, right? I'm, I'm not going to start off with the same level of income I'm at today. And I do think that, you know, I've got the personality, I've got the mentality with us being in real estate and liking it. I think I could get back to that. But I don't know if I want to take those two or three years to catch back up to where I'm already at.

• 6:43Dave Meyer?

  Yeah, that, that makes sense to me. I mean, you've put in, you said 20 years into this career. You know, and even if you're good at it, going into a new career, you're gonna take a pay cut in almost every single instance. And there's a learning curve too, I would imagine where you're gonna have to spend a lot of time getting good at that, where I don't know the details of your existing job. I'm sure you work hard, but you know, you, you know what you're doing. You understand that industry. You're probably very good at it already. And so you don't have to invest that extra mental energy and you could probably use that mental energy to invest into your real estate portfolio because you're not trying to learn a new skill of being a real estate agent.

• 7:22Speaker 01

  Yeah, I agree with that a hundred percent. And with us doing, we do everything ourselves, right? And I like that. We do our own bookkeeping because we've only got eight doors. We manage all of our own properties. So there is time, I mean, just the other week, small thing, but we had a slow leaking faucet that we had to go replace at one of the rentals, right? So my wife and I go over there. It took us maybe two hours to rip the old one out, put the new one in, but all of those things, right? That cuts into time. So if you're trying to learn a new skill in a new industry and then also layer on those things, it just adds complications with two small kids at home that, you know, we haven't wanted to take on right now, making that pivot.

• 8:02Dave Meyer?

  People ask this question a lot. I think it's a really good question for real estate investors to ask themselves. Should I stay in the job that I like? Or should I consider making active income through real estate? Because as Paul said, you have to have that active income to be able to get passive income in the long run. You need to have money coming in. And the way I think about it, Paul, I'm curious to your opinion. The way I've thought about in the past is like, you have to look at two different dimensions. One is, do you like it? Because certain people, maybe they don't even earn that much, but they just love their job. There are people who are super passionate about it. They're purpose driven. They're just very connected to their work. And if you're in that, honestly, that's a gift.

• 8:47Dave Meyer?

  Not a lot of people have that. And so if you do that, like, I would stay with that job. The other thing, though, I think is where it gets a little bit trickier is where people who don't like their jobs are thinking like, should I just grind it out in my existing career? Or do I make the switch? Because not only could I potentially make the same amount or maybe even more money, but then I get more personal fulfillment out of that. Cause I think that's what a lot of people are attracted to is they just find real estate fun. I do, I think it sounds like you do too.

• 9:18Speaker 01

  Yeah.

• 9:19Dave Meyer?

  And so I'm curious if like, if you think about that in a similar way, or how you would counsel our audience if they're facing a similar question.

• 9:27Speaker 01

  You know, the other thing that I'd look at is how old are you and where are you in life? If I would have learned all this, being honest with you, at a very young age, when I started at my company, even though I liked my company and everything about it, the risk wasn't as high to pivot into something else. Cause my income wasn't as high, the benefits weren't there, right? I didn't have the kids and other people relying on us. So I think, you know, two other things that I just add to what you said is understanding what your goals are. And I think they'll change over time, but trying to find a way to define what is enough. Like where is my endpoint? I think if you know what that is, it's easier to kind of make that decision.

• 10:09Speaker 01

  And like I said, I know that's going to change as you get into it and learn more about the business. Those goals will change with time. But I think that's a big one. And then just where you are in life and how much risk you're willing to take on from a employment standpoint.

• 10:24Dave Meyer?

  All right, guys, we got to take a quick break, but Paul and I will be back right after this break. Summer bookings sound great until someone slips by the pool, gets hurt on your dock, or damages your property during a long holiday weekend. A lot of short-term rental investors don't realize their standard policy may leave gaps when it comes to short-term rental activity. That's why investors use Steadily. They offer landlord insurance built for real estate investors, including short-term rentals. And if you're a BiggerPockets Pro member, you'll also get 5% off your landlord insurance premiums. Visit biggerpockets.com/landlordinsurance to learn more.

• 11:01Henry Washington?

  Here's a strategy that most W2 employees have never heard of. Normally, if you want to write off a rental property against your regular income, you need real estate professional status. That means tracking hundreds of hours a year. Rent to Retirement just launched a program that skips all of that. It's called the STR loophole tenant placement program. Here's how it works. You buy one of Rent to Retirement's Class A new construction investment properties. You set up an Airbnb listing and self-manage it for the remainder of the year. Rent to Retirement then rents the home as a short-term rental to establish it as an STR for the year. No furnishing required, making this the easy button to save five or six figures in taxes this year.

• 11:43Henry Washington?

  And because you're the sole manager, there's no hourly minimum to meet. That lets you use a cost segregation study to accelerate the depreciation and potentially write off over $100,000 against your income, even on your first rental. Add in cash back up to 13% of the home price, which exceeds $60,000 on some properties. With this massive cash back incentives, investors are seeing total returns up to 126%. New construction, A-class properties, and inventory is limited. Learn more at biggerpockets.com/retirement or text REI to 33777. Again, text REI to 33777. Quick word about a new pro perk you'll want to know about.

• 12:27Henry Washington?

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• 13:10Henry Washington?

  Enough to cover your entire annual pro membership. Head over to aven.com/biggerpockets to see if you qualify. Aven Financial, Inc., MLS #2042345. Cards issued per 202 license from Visa USA Inc. by Coastal Community Bank. MLS #462289, member FDIC. Equal housing lender, subject to approval, terms apply. Visit aven.com for details.

• 13:28Speaker 03

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• 13:54Dave Meyer?

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• 14:38Dave Meyer?

  Welcome back to the BiggerPockets Podcast. I'm back with investor Paul Novak talking about the benefits and trade offs of working a W2 job. I think the benefits to going into real estate investing full time are pretty apparent to people. You have some level of independence. Most of these jobs are sort of independent. Like if you're an agent, yeah, you work a lot, but you have a little bit of control over your schedule. You can, you know, hopefully master that skill, make a lot of money, same things. If you become a loan officer or whatever. And I think the benefit that a lot of real estate investors look at and say, I can learn the industry super well, you know, and that's true. If you become an agent, you are going to accelerate your learning, your ability to

• 15:20Dave Meyer?

  underwrite deals, your deal flow, you're going to be able to network in a way that most W2 employees can't do it. Those are real benefits. But I think the benefits of staying in a W2 job are less known or less talked about. So can we talk about some of those things?

• 15:38Speaker 01

  Yeah. So I guess, you know, some of the stuff that I look at is from a positive standpoint, is you have that reliable income. And one thing that I've learned in doing this is when you're going to the bank, trying to get mortgages to continue to scale, they like reliable income. So, you know, I've even reached out to some people and talking about paying off my portfolio on the BiggerPockets forums. And some people have said, hey, the cash flow is great. All the tax advantages on my cash flow with depreciation and all that stuff are great. But now on paper, my income is so low that I'm really struggling to continue to scale to buy my next property because I'm not as lendable to the bank. So even though, you know, my money looks good, my situation, a lot of it's just deferred through taxes

• 16:23Speaker 01

  and I'm not showing that I'm making that much money. So I think that's something that people need to keep in the back of their mind. It's not just having the money. Most people, when they scale, aren't going to buy all these properties in cash, right? You're trying to use leverage when you're scaling. So the reliable income part is a big, I think, win. And I also think for me, you know, another big benefit through working, how I'm able to manage all these properties and run a real estate business, given it's small, all those skills I built up through work, understanding KPIs, drafting work instructions, having tough conversations with people, project management, like

• 17:04Speaker 01

  I think people, if you're gonna do this business right, it's not just buying a house and I collect a rent check, right? You want to make sure that you're upkeeping the properties and, you know, taking care of the tenants and handling things in a professional manner. I couldn't have done that at 18 years old. And I think maybe I could have learned some of that from the real estate business too. But I feel like specifically like supervision and leadership and manufacturing has really set me up to be able to do a lot of those things.

• 17:34Dave Meyer?

  That's a great point. I haven't really thought of it that way. Cause when I started and I bought my first property, I was 22 and I was terrible at running my business. It was just so bad. And I've gotten so much better and I've often credited that to just being a real estate investor longer. But I think you're right that at least half, maybe even more of me being a better real estate investor is that I've worked in a career, I've worked in an office, I've had employees that I manage. I've had different bosses who manage me and you learn to deal with different personalities. You learn new software, you learn new skills, like you, you are constantly learning and performing and challenging yourself.

• 18:19Dave Meyer?

  And those are really valuable skills as a real estate investor, even though it doesn't seem so obvious. Like what I do day to day, outside of hosting this podcast at BiggerPockets, is more like a traditional corporate job. But the stuff you learn in a corporate job is actually applicable to real estate.

• 18:34Speaker 01

  You know, another thing that just kind of popped into my head is having the cash flow. So I think a lot of people, you know, they think about like, oh, I run the numbers on a deal. And while you're running the numbers, everything is linear, right? Like even if you factor in capital expenditures and all those things, you're assuming a certain percentage each month, which means you're going to get this cash flow and make money every single month. It doesn't work that way. When the hot water heater goes out and it's 1,500 bucks, it's not, well, here's one 12th of what the hot water heater is going to cost. And the rest of it, you'll pay over time. Like no, these expenses hit you when they hit you. And I think now that We've scaled up to having the eight doors. All that really happens is instead of your cash

• 19:19Speaker 01

  flow being 5,000 a month, maybe it's 2,000 a month. And it's like, well, I wish it was higher, but it's kind of an inconvenience. If you have one property and something breaks, like you're gonna feel that. And if you don't have a job, you are really gonna feel that. And, you know, I'm only talking about stuff breaking. You'll have vacancy in there. Well, if you only have a single family home and you don't have a multifamily, it's one door, and that's your only property. I'm still telling you get in like it's a good thing to do, but you're gonna feel that if you don't have the job. And I think having cash reserves is good. I'm probably not the best person to speak of there because I don't have a lot of cash reserves for the rentals. But that's because our savings rate is so high from everything in

• 20:03Speaker 01

  the W2 that if anything happens, we can cover it. It's more of a inconvenience than this is gonna break us and we have to sell.

• 20:11Dave Meyer?

  That's a very good way of thinking of it. And it makes a lot of sense. I feel as someone who also works a W2 job, a lot of calm. Like, it's honestly just like a mental thing that I I want cash flow. I'll take it all day, but I don't need it. I don't live off of it. I live off of my income from bigger pockets and then some. Like, I don't spend all of that either. And so this is an amazing benefit as a real estate investor. And I'll just give you two examples that I'm going through right now. My best cash flowing property, it throws off 2,500, $3,000 in cash flow a month. It's amazing. And I've had repairs so bad over the last one

• 20:56Dave Meyer?

  month that it's going to eat all of that cash flow for a year. So I have 20 grand in reserves on that property. I'm facing costs of 50, $60,000. But this is amazing property. I want to hold on to it. I'm going to keep it forever. I actually had to come out of pocket and spend about five grand on that property, just because this was more than even my cash reserves, which was 20 grand, which was a lot. And honestly, it's frustrating. It's annoying. But like you said, it's not breaking me because this isn't. The income I need every month. And then I could just sort of mentally categorize this not as like, oh, my investment's not doing well, or I am upset about this cash. I'm like, oh, business expense. You know, this is a business expense. I'm reinvesting into my property.

• 21:40Dave Meyer?

  It's not really impacting me on a day to day basis. And I just only get that because I have a W two job and live within the means of that W two job. Another example is I have another property that tenants just moved out and like, I want to do a renovation. And it's going to take two or three months and I'm not going to have the income from the property for two or three months. And it's fine. You know, like, it's another just example. I'm able to invest in my property. I'm able to make the upgrades that the property needs that will generate me more rent in the long run. Because I don't need, you know, it's going to be probably forty, five hundred bucks, you know, maybe more in vacancy costs. But that's worth it to me because I can do the math and plot that out.

• 22:22Dave Meyer?

  But if you're relying on that income too early in your investing career, that's where you can really get in trouble. So I think what Paul's saying about sort of this, this consistency in income actually gives you a tremendous amount of flexibility and peace of mind as a real estate investor that I personally find very valuable.

• 22:43Speaker 01

  Yeah, and I don't know how to quantify this, but you know, I've got some other friends that are in the game too, doing real estate. And they are very hungry for cash flow. They're more reliant upon the money. And honestly, some of the repairs and upgrades that they do, they're just lower in quality, right? Because hey, why buy the better faucet when I could get one that works for cheaper, right? You start nickel and diming some of those things just because you don't have the cash or you're, you know, focused on that. And I will tell you, and I think they would tell you too, the quality of tenants that I have and the amount of people that stay in my properties versus they turn over is night and day different.

• 23:25Speaker 01

  Now, how to put an exact dollar figure on that, I don't know. But again, it's like you said, right? Like if you, if you're not relying on that money. Right? You can stick better things in because you're not just focused on that cash flow. And I do think like, one of the biggest things in this is having good tenants, having somebody that's going to partner up, that's going to take care of your property, that's going to pay every month. And when you can get that, that makes this whole thing so much easier to do.

• 23:53Dave Meyer?

  I've actually talked about this with my property manager, too, because he said to me, you know, at first, he was emailing me, I hired a new property manager in the Midwest. He's emailing me, he's like, Oh, do you want to put in this faucet or this faucet? Or like, we're going to redo the floors. Like, should we do this one? It's like the cheapest one, the next one. I'm like, dude, you don't need to ask me these $200 questions. It's like, buy something that's going to be really good quality and is going to last forever. And he was like, most people don't think like that. They want to maximize, they beat them up, the property manager about spending $400 in repairs. For me, because I have a job that I plan to keep working in for another decade, you know, I think about my investments

• 24:36Dave Meyer?

  on that 10 year time horizon. I'm not like, oh, am I going to get 200 bucks this month? It doesn't, it doesn't matter to me. I'm like, how do I make this house rock solid so that when I stop working, I'm not going to be hit with a bunch of repairs because I put in the right flooring, I bought the right appliances, I did the rewiring of the electrical the right way, I did the replumbing the right way. And so that this is going to last me to 20 years, 30 years, instead of just until the next thing breaks. And then I just slap some cheap thing on it again. I think it's just allows you to sort of take a different mindset.

• 25:10Speaker 01

  Yeah, like, we, we want to be known in the community. I mean, because I want to get, I'm not going to say that we have the highest rents, but I want to be able to get decent rents and pass along rent increases. And I think being known as a landlord in the area that like goes above and beyond helps. Like, one very quick example, I've got a set of tenants. Now, we haven't owned it for that long, but they've lived in this unit for 17 years.

• 25:34Dave Meyer?

  Wow.

• 25:34Speaker 01

  Right?

• 25:35Dave Meyer?

  Oh, my God.

• 25:35Speaker 01

  Their fridge went out. I told them, because they don't plan to leave, I don't want them to leave. But we also passed along rent increases. I said, go to Home Depot. Pick whatever fridge you want within reason, right? I'm not buying.

• 25:48Dave Meyer?

  Yeah.

• 25:48Speaker 01

  You know.

• 25:49Dave Meyer?

  Not the one with the TV screen. Yeah, that's.

• 25:51Speaker 01

  Yeah, just go pick whatever you want and then we'll go buy it. And they're like, oh, you know, if we could get curtains, these are kind of dated. Okay, go to the store. Don't even look at the price tag. Pick whatever curtains you want from Menards and then we'll come over and put that stuff up. So like doing little things like that, like higher end things. And to be honest with you, what they're picking, it's not like it's super high end. But then they talk to other people and right? That word spreads and we've got openings. It makes it a lot easier for us to fill.

• 26:22Dave Meyer?

  It's so funny. I've done that in the past, not with a fridge, but yes, people are like, oh, the, you know, the blinds are broken or whatever. I'm like, pick what you want, like not because I'm asking them to do the work, but it allows people to feel like it's their home, like they, they get a sense of ownership of it. Uh, and again, might it cost $50 more? Yes, it probably will, but that's going to prevent a vacancy, which is going to save you way more than 50 bucks, you know? Like it's that kind of mindset. And I don't mean to say, by the way, that people who work full time in real estate can't do this also.

• 26:53Speaker 01

  Sure.

• 26:53Dave Meyer?

  But W two jobs are inherently, I think, a little bit more predictable than even being a real estate agent, even if you're experienced agent. I have many friends who are very, very successful agents. Some months they sell four houses, some months they sell no houses, you know? And so there is some element of predictability that personally I like. I do want to go back to something you said earlier though, Paul, about lending, because I think that is something that a lot of folks might not know, but being a real estate agent or sometimes a loan officer, I think it depends, you're often a 1099 contractor. And for whatever, frankly, I think dumb reasons, the rules exist in lending in the United

• 27:32Dave Meyer?

  States, it is way easier to get a loan when you have a W two job than when you are a contractor. Again, I think that's pretty dumb. I don't really understand why that is, but it does matter a lot. And if you are trying to scale a portfolio, conventional mortgages are the cheapest way to do it and it's way easier to get conventional mortgages if you have. A W2 income. Just to recap here, some of the benefits that Paul and I have talked about for having and maintaining a W2 job is just having cash flow on a predictable basis that allows you to take more risks. It allows you to weather unexpected repairs or vacancies. We talked about

• 28:13Dave Meyer?

  lendability and being able to get loans a little bit easier from a W2 job. And also just allowing yourself sort of the mindset to think long term when you don't need the cash flow immediately. That can be really beneficial too. But of course, there are trade offs, like everything. I'm not saying everyone should be a W2 employee. There are definitely some downsides to it, and we're going to cover that right after this quick break. For my wife's birthday, I wanted to make her a new website for her landscape design business. So I researched a lot of different options. I tried out a couple, but honestly, it was really overwhelming. It was pretty time consuming and still, the site wasn't coming out the way I

• 28:53Dave Meyer?

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• 29:37Dave Meyer?

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• 30:19Dave Meyer?

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• 32:02Dave Meyer?

  The Cash Flow Roadshow is back. BiggerPockets is coming to Texas, January 13th to 17th, 2026. Me, Henry Washington, and Garrett Brown will be hosting real estate investor meetups in Houston, in Austin, and Dallas, along with a couple other special guests. And we're also going to have a live, small-group workshop to answer your exact investing questions and help you plan your 2026 roadmap. Me, Henry, and Garrett are going to be there, giving you input directly on your strategy for 2026. It's going to be great. Get all the details and reserve your tickets now at biggerpockets.com/texas. Hope to see you there.

• 32:47Dave Meyer?

  Welcome back to the BiggerPockets Podcast. I'm here with investor Paul Novak, talking about why he's decided to stay with a W-2 job. Before the break, we talked about all the fun stuff, all the good benefits of staying with a W-2 job. But Paul, do you ever get jealous of people working full-time in real estate? Or what do you see the trade-offs being as staying in a W-2 job?

• 33:09Speaker 01

  Well, I'll say yes, right? Just because I'm so into real estate. I think if I could have got into that earlier on, that would have been exciting. As far as trade-offs go, like, my wife and I are lucky, but you need to have jobs with a lot of flexibility. So now I look at, when we got started was like 2021, right? And the first, I'd say, couple houses we bought, we bought them on the MLS. We weren't doing off-market deals for the most part. When that house hit the MLS, you better be ready to get into it that day and have an offer ready to go that day, or you're probably losing out on the deal. So, I mean, and we even did that on some,

• 33:50Speaker 01

  and we made offers 5%, 10% over ask early on, and still lost out on them. So I just remember, like, hey, having to go to these in-between meetings at work and having to run through this stuff. And that's difficult, because not a lot of W-2 jobs are just going to let you leave midday to go do showings at houses or bank appointments. Or, you know, talk to contractors.

• 34:14Dave Meyer?

  That's such a good point. What about deal flow? Do you feel like, you know, I know, I hear a lot of people like, I want to be an agent because I can get into properties myself and without an agent. Or you get access to off-market deals or pocket listings. Do you think about that at all?

• 34:28Speaker 01

  Yeah, I definitely do, especially like, I think our real estate agent is awesome. We've had him for this primary residency. Is like the head of his brokerage. So like the relationship's been good and we have gotten deals. But I think a lot of people that are probably following bigger pockets. They don't have hundreds and thousands of properties where for these agents, they're the top person that's getting called. Right? So if I'm somebody that has six properties, I've never had an issue reaching out or contacting my agent. But probably the best multifamily deals are probably at least being offered up first to, you know, bigger investors than what we would get. And I think if we were agents, we'd get to see more of that stuff on the front end.

• 35:13Dave Meyer?

  Yeah, exactly. That is definitely a trade-off. I think about that a lot. You just network so many times. Like I talk to my friends who are agents, you know, and they're just friends with the title company. They're friends with the lender. They just hear about stuff that I don't hear about as much. And so that's definitely a significant trade-off. Can I mention what I think is the biggest trade-off? The thing I get jealous about?

• 35:35Speaker 01

  Go for it.

• 35:36Dave Meyer?

  I want to be a real estate professional in a tax status. Real estate professional tax status is incredible and you cannot get it as a W2 employee. You probably know about depreciation, right? If you own a rental property and you make some money in cash flow on it. A lot of times the income that you get is offset by depreciation. Or at least it's deferred because of depreciation, meaning that you get to enjoy a lot of that cash flow tax-free. What you cannot do though, is take the depreciation or the loss that you're taking on a rental property and apply it to your active income.

• 36:15Dave Meyer?

  So even though in a given year, let's just say all of my rental properties after, you know, get all my income. I depreciate all of them. Let's just say I've lost. $30,000 in the eyes of the IRS. Not saying I actually lost that, but you know, after the depreciation, I've lost $30,000. I can't take that $30,000 and apply it to my W2 income. But if you are a real estate professional, you can do that. And so if you own rental properties and say you're a real estate agent, a lot of times you can offset all or most of your active income as well. So you wind up having a very, very low income tax liability, which is incredible and like

• 36:57Dave Meyer?

  has a huge, huge benefit that W2 employees just don't get to take advantage of. So that's mine. One day I'll probably do it. Whenever I decide to quote unquote retire, because I'll never really retire, I'll probably become an agent or a lender or property manager or something, then I will get to enjoy the sweet, sweet benefits of real estate tax professional status. All right, well, Paul, thanks for being here. This was a lot of fun. As we've discussed, there are always trade offs to it. I think there are benefits to both. As we've talked about benefits of being a W2 employee, having that predictable cadence, the lendability, the staying power, being able to borrow against your 401k, all of that can be super beneficial, but you know, it means you aren't as flexible, you don't

• 37:39Dave Meyer?

  get access to the same amount of deals, the network seems a little bit harder and you don't get that real estate professional tax status that is so coveted. But it's really comes down to each person's individual goals, whether you like your job, how much income you make, whether you can make more money as a real estate professional. The decision is up to you, but thank you, Paul, for sharing your insights about the benefits of a W2 job, because I think it will be really helpful for our audience in making that decision for themselves.

• 38:06Speaker 01

  Yeah, so I think, you know, at least with my journey, I just wouldn't rush so quickly to get out of the W2 job. And I think if you want to become involved in real estate, but you've got a good W2 gig, keep investing, right? Let that portfolio grow to where you have that stable base and then make the pivot. There's nothing that says you can't do it further down the line.

• 38:26Dave Meyer?

  Yeah, exactly. I think that's exactly right. Just keep thinking about it and make decisions as they come and optimize for what your goals are, your life circumstances and the best opportunities that are there for you. So thanks again, Paul. We really appreciate you being here.

• 38:42Speaker 01

  Yeah, thanks for having me on the show.

• 38:44Dave Meyer?

  And thank you all for listening to this episode of the BiggerPockets Podcast. I'm Dave Meyer. We'll see you next time.

• 38:49Speaker 06

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