If you dream of becoming a real estate investor but work at Walmart, you could well be on your way to making your dream a reality much sooner than you think. This comes with an important caveat: you would need to run a Walmart store to enjoy the financial benefits that could provide you with the cash needed to invest.
Walmart US announced last week that it would give its store managers company stock grants. The announcement comes after Walmart also made the decision to increase manager salaries and introduce a new bonus structure that will allow store managers to earn up to 200% of their salary in annual bonuses.
How much will Walmart managers earn?
The company announced that starting in its 2024 fiscal year, which begins in February, the average store manager salary will increase from $117,000 to $128,000. The new salary range will be between $90,000 and $170,000, which substantially raises the starting salary from the previous benchmark of $65,000. Additionally, Walmart will split its stock 3 for 1 at the end of February, something it hasn’t done since 1999.
Where things get truly lucrative is in the new bonus structure and the latest decision to give employees in some categories company stock grants. Under the new policy, managers can earn up to $404,000 a year in total if they receive the performance-based bonus in addition to their salary.
Stock grants of up to $20,000 will be awarded to Walmart managers, with a term of three years. The total amount of the stock award will depend on the size of the store the employee manages.
The full $20,000 will be given to Supercenter managers. Supercenters are the largest Walmart stores, about 180,000 square feet, and require managers to supervise hundreds of employees. Managers at Neighborhood Market stores and smaller Division 1 stores will receive $15,000 in stock grants. Local store leaders will receive $10,000 in stock grants.
The beauty of the stock award program is that it is essentially free stock that the company grants to an employee. It is not necessary to buy shares, although it is also an option at Walmart, and the company will match 15% of the employee’s purchase, up to $1,800 a year. In the case of stock grants, the vesting period is the period that the employee must remain with the company in order to collect the shares. Walmart managers will receive the shares in installments, one-twelfth of the total each quarter until the three-year period ends.
So how does this help budding real estate investors?
The biggest obstacle for people who want to invest in real estate is not having enough cash to invest. Currently, BiggerPockets recommends saving $60,000 before you start investing.
If you were a manager at Walmart, how long would it take you to get there? We know that in order to redeem the stock grant for cash, you would need to work at Walmart as a store manager for three years. That would give him between $10,000 and $20,000, depending on the type of store he was managing.
The bonus money is a less reliable figure. First, 200% of your salary is maximum bonus amount, and the bonus is based on performance. And the $400,000 total would only apply to managers earning at the top of the salary range.
Instead, let’s take the average new Walmart manager salary of $128,000. Imagine you received the full 200% bonus for three years in a row. That would give you a gross income of $1,152,000.
But that’s before taxes. On average, after taxes, you can expect to take home about 75% of that amount. So, in reality, you would get something like $864,000. How much of that you could set aside to invest will vary depending on where you live, but let’s say your living costs are close to the national average of $61,334 per year. Potentially, then, you could have a whopping $680,000 to play with, and that’s before stock grant money.
What if you didn’t receive the bonus? You would only have $288,000 after taxes at the end of the three years, plus the $15,000 (after taxes). That’s $303,000; After subtracting your average living costs, you’d still have a very decent $119,000 to play with. Therefore, in just three years of working as a Walmart store manager, you could have enough cash to build a real estate portfolio.
Of course, you’d probably start at the low end of Walmart’s manager salary range, at $90,000. But once he enters that average salary territory, he could have substantial amounts of money to set aside for his investments.
You may be closer to investing than you think
The conclusion of this exercise is this: if you have a normal daily job, you are not necessarily excluded from the possibilities of growing your wealth through real estate investment. In fact, the Vast majority of Walmart executives (75%) They started out as hourly wage workers.
And although college graduates work at Walmart, a degree is not necessary. Sure, it may take a while to get promoted to a management position, but it’s not out of reach and it doesn’t require you to take on huge amounts of college debt.
So if you’re looking for a lucrative career that will help you build wealth in a relatively short period of time, working at Walmart could very well be the solution. Or you can use the Walmart example to look for jobs at companies that also offer good financial incentives for staff retention, such as performance-based bonuses and stock grants.
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BiggerPockets Note: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.