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

Episode Date: December 10, 2025

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 ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[e-mail]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

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 W2 is maybe the secret to building a portfolio as fast as possible. Hey, what's up, everyone? I'm Dave Meyer. I'm the host of this podcast, plus the head of real estate investing at Bigger Pockets.

That's my day job. I've been working here at bigger pockets 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 9 to 5 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 Schauboigan, Wisconsin, 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 Bigger Pockets podcast. Thanks for being here again. Yeah, super excited to be on. 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. 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 is 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 bigger pockets. 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.

And what does your portfolio look like today? 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. 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? 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. And what are your goals? 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 of paying off some of that debt to increase the cash flow. You have decided, from what I understand, to 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. 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 W2, 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. 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.

I want to reiterate and stress what Paul just said that to, 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, you're making a couple hundred bucks every month off of a rental property. It could take years between acquisitions, which is why for pretty much every person in their

first, I don't know, five or 10 years of investing, you got to 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. Has it ever appealed to you to get your active income from a real estate type job? So let's say hypothetically that our household income from our W-2s is 200,000 a year, using a hypothetical number. If I jumped in and became a real estate agent, right,

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. Yeah, that makes sense to me. I mean, you've put in, you said 20 years into this career, you know, even if you're good at it, going into a new career, you're going to take a pay cut in almost every single instance. And there's a learning curve, too. I would imagine where you're going to 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 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 can probably use that mental energy to invest into your real estate portfolio because you're not trying to learn a new scale of being a real estate agent.

Yeah, I agree with that 100%. 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. 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. 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. Because 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. 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 are facing a similar question? 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 because 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 end point? I think if you know what that is, it's easier to kind of make that decision. 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. All right, guys, we've got to take a quick break, but Paul and I will be back right after this break. You just realized your business needed to hire someone yesterday. How can you find

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slash NAR and explore the homes available right now. Welcome back to the Bigger Pock's podcast. I'm back with investor Paul Novak talking about the benefits and tradeoffs of working a W-2 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 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 underwrite deals, your deal flow, you're going to be able to network in a way that most W-2 employees can't do it. Those are real benefits. But I think the benefits of staying in a W-2 job are less known or less talked about. So can we talk about some of those things? 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 Bigger Pockets 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 my money looks good, my situation,

a lot of it's just deferred through taxes 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, I think people, if you're going to 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. That's a great point. I haven't really thought of it that way because 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 are constantly learning and performing and challenging yourself. 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 Bigger Pockets is more like a traditional corporate job. But the stuff you learn in a

corporate job is actually applicable to real estate. 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, 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 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 going to feel that. And if you don't have a job, you are really going to 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 going to 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

rates so high from everything in the W2 that if anything happens, we can cover it. It's more of a inconvenience than this is going to break us and we have to sell. 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 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. now. My best cash-fowing 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 month that it's going to eat all of that cash flow for a year. So I have $20,000 in reserves on that property. I'm facing costs of

$50,000, but this is an 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. It's not really impacting me on a day-to-day basis. And I just only get that because I have a W-2 job and live within the means of that W-2 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 that'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 $4,500, you know, maybe more in vacancy costs. But that's worth it to me because I can do the math and plot that out. 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. Yeah, and I don't know how to quantify this, but 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. 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'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. 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 and 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 it's 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 on that 10-year time horizon.

I'm not like, oh, am I going to get 200 bucks this month? 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 just allows you to sort of take a different mindset. Yeah, like 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. Wow. Right. 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, you know, a cell phone with the TV screen. Yeah. 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 write that word spreads and we've got openings.

It makes it a lot easier for us to fill. It's so funny. I've done that in the past, not with a fridge. But yeah, people are like, oh, the blinds are broken, 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 get a sense of ownership of it. 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. Sure. But W-2 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 States, it is way easier to get a loan when you have a W-2 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 W-2 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 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 could be really beneficial too. But of course, there are tradeoffs like everything.

I'm not saying everyone should be a W-2 employee. There are definitely some downsides to it, and we're going to cover that right after this quick break. If you own a large or complex rental property, congrats, and I'm also sorry. One day you're building a portfolio. The next, you're reconciling six accounts, five states, four LLCs, three partners,

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and your place is in good hands. You travel, your house works. Everyone wins. If you're ready to host but could use some help, find a co-host at Airbnb.com slash host. The Cashflow Roadshow is back. Bigger Pockets 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 slash Texas. Hope to see you there. Welcome back to the Bigger Pockets podcast. I'm here with investor Paul Novak talking about why he's decided to stay with a W2 job. Before the break, we talked about all the fun stuff, all the good benefits of staying with a W2 job. But Paul, do you ever get jealous of people working full time in real estate or what do you see the

tradeoffs being as staying in a W-2 job? 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 have been exciting. As far as tradeoffs 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 a 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. And we made offers 5%, 10% over asked early on and still lost out on them. Yeah. 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 W2. are just going to let you leave midday to go do showings at houses or bank appointments or, you know, talk to contractors. That's such a good point. What about deal flow? Do you feel like, you 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? Yeah, I definitely do, especially like I think our real estate agent is awesome. We've had them for this primary residency. he 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. Yeah, exactly. That is definitely a tradeoff. I think about that a lot. You just network so many times. Like, I talk to my friends or 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 tradeoff. Can I mention what I think is the biggest tradeoff, the thing I get jealous of? about. Dole form. 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 W-2 employee. You probably know about depreciation, right? If you own a rental property and you make some money and cash 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. So even though in a given year, let's just say all of my rental properties, 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. I'm not saying I actually lost that, but, you know, after the depreciation, I've lost 30, 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 has a huge, huge benefit that W2 employees just don't get to take advantage of. 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 lender, 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 tradeoffs to it. I think there are benefits to both.

as we've talked about benefits of being a W to employee, having that predictable cadence, the lendability, the staying power, being able to borrow against your 401K, all that can be super beneficial. But, you know, it means you aren't as flexible. You don't get access to the same amount of deals. The network is a little bit harder. And you don't get that real estate professional tax status that is so coveted. But it 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. 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. 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. Yeah, thanks for having me on the show. And thank you all for listening to this episode of the Bigger Pockets podcast. I'm Dave Meyer. We'll see you next time. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K, copywriting is by Calicoke content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.

The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. BiggerPockets LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.