How a W2 Job Can Make You a Better Commercial Real Estate Investor

Are you interested in starting a residential or commercial real estate investing firm? And, if you are, does it make sense to get a W2 job before you launch your company?

Some businesspeople would say that all the time you spend working for wages is a waste. That’s because it’s time away from building your own business, time away from active real estate investing. Not to mention, making money for someone else can be frustrating and demoralizing for an entrepreneur.

Indeed, this line of thought goes, you simply cannot be an effective investor while you’re working for someone else. Your W2 job will sap you of your energy and focus. Plus, you won’t have enough spare time to study the market.

After a while, your own business goals and appetite for risk may fade into the horizon. You could become comfortable at your W2 job, and you might stay there until you retire.

In reality, though, a W2 position could teach you lessons that will prove valuable for the rest of your career. Instead of being wasted time, that experience could become the foundation of your entrepreneurial successes.

 

W2 Jobs: A Brief Intro

First of all, let’s define our terms. A W2 job is one in which your employer gives you a W-2 form so that you can do your income taxes. It’s a document that states your wages for the year along with how much money has already been taken out for tax purposes.

A W2 job typically involves certain parameters. After hiring W2 employees, companies give them their work schedules and provide them with salaries, benefits, the necessary supplies to do their jobs, and — unless they work remotely — workstations.

In addition, businesses automatically deduct from W2 employees’ wages their payroll, Medicare, and Social Security tax payments.

With that in mind, let’s take a closer look at some of the benefits you could derive from such a position. After reading about them, you might want to start applying for a W2 job as soon as you can.

 

1. An Introduction to Systems

Of course, when you work at a company, you’re exposed to its various operations. You’ll know how the business conducts market research and uses the resulting data to set its financial goals and expectations. You can also find out how its staff creates a business plan, what that plan’s specific terms are, and how the plan gets shared with all stakeholders.

At a real estate investment firm, you’ll see how the team members scour the market for promising leads, how they evaluate a given property, and how they ultimately decide to invest in it or not.

Furthermore, you can study how this firm goes about recruiting and hiring staff members. What criteria do they set for job candidates? Why do they ultimately select one person and pass on another?

Just having lunch with various colleagues can be rewarding. It’s an opportunity to ask questions in a relaxed setting and receive honest feedback.

Absorbing these lessons in the real world can be extremely revealing. It’s like attending a business school where, instead of paying tuition, the school pays you. Even when your employer makes mistakes, you can learn from those errors by figuring out the choices you would have made instead.

Not least, you might go through advanced trainings for free. Many employers offer continuing education classes to their team members, and these courses can supply concrete management lessons on everything from how to scale a business to how to structure a human resources department.

 

2. Learning How to Empower a Team and How to Delegate

One lesson you could learn from your W2 work, one that deserves special attention here, is how to bring out the best in your employees. How do you set up a winning work culture?

After all, giving yourself or a few of your colleagues too much work is a recipe for burnout and failure. You must spread tasks out evenly, entrusting people with the assignments they’re equipped to complete. When you know how to scale a business properly, you can set realistic expectations according to your resources and staff size.

At the same time, you should continually challenge your staff members to learn, grow, and exceed what they believe is possible. When everyone feels fulfilled and challenged by their jobs — and when all employees know that they’re making important contributions — your workplace will be a happy one. And your firm should be successful.

Creating that kind of culture is complex, and it takes a while. You must be in regular communication with your whole workforce, and you must provide each employee with clear instructions, goals, and due dates along with an overall company vision and mission statement. Checking up on progress and respectfully correcting mistakes are essential tasks as well.

Nevertheless, you should always listen to others’ ideas and opinions. When you’re open to constructive criticism, you can course correct before real problems emerge.

Moreover, it helps to step back as much as you can, giving people the autonomy to complete their work and manage their time as they see fit. Finding a happy medium between micromanaging and neglect is tricky but well worth it.

Additionally, it’s wise to provide employees with ongoing professional training so that they can build their skills.

The ideal is an environment that’s both nurturing and demanding, with an emphasis on accountability. By scrutinizing the company that employs you as a W2 wage earner, you can find out what works and what doesn’t. Then you can apply those insights to your own real estate investing firm.

Not least, a W2 job might give you extra empathy. As a business leader, you’ll have a clear understanding of how your decisions affect your W2 employees and their families. Since you were once such a worker yourself, you’ll know what you wanted and needed from your workplace back then.

 

3. The Income

If you live frugally while you’re a W2 employee, you can save or invest a lot of the money you make. Before you know it, those funds will add up nicely. Thus, you’ll have some seed money for your real estate management firm.

Even better, with that cash, it will be easier to convince lending institutions to provide you with business loans and other forms of financing. As a very rough rule of thumb, the more money you have on hand, the more favorable your financing terms could be.

W2 Employment: An Experience Like No Other

On top of everything else, your W2 position could give you even more motivation to succeed at residential or commercial real estate investing.

If you enjoyed your time as a W2 employee, you may be encouraged to create great W2 jobs for other people. On the other hand, if you found this job to be unsatisfying or frustrating, it might make you work even harder at active real estate investing. That way, you’ll never have to take such a job again.

In either case, the time you spend as a W2 worker could become a lasting source of knowledge and inspiration. And, for the rest of your life, you might be telling your friends, family members, and employees stories about those days.

Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.

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Joe Fairless