There are five steps someone can take to improve their financial position, but there is one wealth-building vehicle that is perhaps better than them all: real estate. Today’s greatest investors know it, and it’s about time you did, too: real estate is one of the best ways to achieve financial independence. The passive income one can generate from a properly assembled portfolio of rental properties alone is enough to eliminate one’s dependence on the steady income generated from a job. That said, if you hope to achieve financial freedom through the use of real estate, there are five steps you can take to get started:
Educate Yourself
Calculate Your Financial Independence Number
Plan Your Finances
Building An Investment Business
Grow Your Portfolio
Educate Yourself
There is nothing more important to building a profitable rental portfolio than a sound education. It is the knowledge one gains that will guide them through each and every step of the real estate investing process.
Calculate Your Financial Independence Number
Regardless of what you have heard in the past, there isn’t a universal number each and every person hoping to achieve financial freedom needs to reach. There is no finish line that, when crossed, will automatically rid you of your dependance on the income generated from a job. That said, how much money you need to make to realise financial independence will depend entirely on the lifestyle you hope to live—including spending habits. Remember, how much money you make is just as important as your spending habits.
Plan Your Finances
Once you have a solid real estate education and your financial independence goals are set, it’s time to start taking action. The best place to get started is by researching financing options so you can begin looking for your first deal. Most new investors won’t have the money it takes to require an entire portfolio of rental properties, let alone a single asset. That said, there’s no need to invest with your own money. Fortunately, there are several ways aspiring investors can gain access to funding, it's best to speak to a financial planner to find the right one for you.
Building An Investment Business
Investing in a single property is a great first step, and a necessary one at that. If for nothing else, you can’t possibly realise financial freedom with one deal, let alone your first one. Therefore, your goal shouldn’t be to compete a single deal, or even two or three, but rather to do enough deals until you are financially stable to build a rental portfolio.
Grow Your Rental Portfolio
Growing a portfolio of rental properties will depend entirely on how much you need to make to realise financial freedom. For many, the more properties, the better. However, to get a more specific idea of what your own goals should be, try to first match your current earnings.
Summary
The path to financial independence is a lot more manageable for those who are prepared for what will be expected of them. Understanding what it may take to rid yourself of the dependency a traditional job is a great starting point, but those who are serious about learning how to achieve financial freedom should strongly consider the prospects of a cash flowing rental property portfolio. The passive nature of buy and hold assets should be able to supplement one’s income now, and well into retirement.
Key Takeaways
There isn’t a single person who isn’t at least intrigued by the concept of financial independence.
Financial independence is an economic indicator suggesting someone is no longer dependent on income generated from any type of job or activity that would have them trade their own time for money.
With the right plan in place, a mind for due diligence, and a cash-flowing real estate portfolio, financial independence may only be a few rental property acquisitions away.
Investors Choice Group: The Property Choice, Finance Strategy & Capital Growth Specialists - Speak to a consultant today.
