If you’re still pursuing college, you might start to realize that you need money for a lot of things. You want to hang out with your friends, you start to board, then realize you need to pay for food, utilities, and a lot more. Money means a lot to the world at this stage of life. You just want something, but the lack of money just prevents you from having what you want. Because of this, you might be wondering how to achieve financial independence with real estate.
? What does it mean to have financial independence with real estate?
Financial independence is the ability to afford things that a human wants or needs.
Having financial independence usually almost equates to full independence. You can live without depending on a lot of people in a way like how sons and daughters depend on their parents. You have the cash, you have the will, and you will most likely meet contentment.
Being financially independent means that you can get money to sustain your life without being hooked to jobs that need “hard work.”
You are able to earn money passively, no hard labor, no backbreaking efforts of work. There are a lot of ways to achieve this, like being successful in music, being an employer in a business, or maybe being a streamer – where having fun and doing your passion gets you money.
? How do you start to become financial independent?
However, there are ways where you could have more room for growth and efficiency. One of these ways is primarily, learning how to invest in something.
Now it’s not just investing in general, but investing for real estate. The income is easily sustained, the work is extremely passive. You put in the cash, with correct use you get more out of it. It’s almost like buying money with cheaper money.
?️ Road to Financial Independence with Real Estate
There are steps as to where you can do real estate with flying colors, if done correctly. If you’re careful where you tread and analyze your past mistakes, you’re most likely good to go. Other people have fallen prey to a lot of devices, and they’ve trodden on minefields of sudden downfalls and failures.
From proper financial management to knowing how investing works as a whole, these steps will guide you through your adventures in conquering the world of real estate.
1. Know the basics, then the advanced.
In real estate, and investments in general, one just doesn’t put money on things that have become trendy in recent days. People should carefully analyze how these products and services work. Put your stakes on a wrong one, and it is most likely the lack of knowledge to blame, in the case of beginners at least.
To save you from embarrassing moments where your loaned money is staked on the wrong part of the market, it is important to learn about real estate in detail.
Remember, when you lose something, you will have to invest more to grow it back.
Even though the market normally goes up and down for everyone, it is not normal when you consistently lose your stakes. Having a lot of knowledge about something helps a lot with consistency and having gains overall.
2. Know the state of your finance.
Everyone is different, and that is the case even for real estate. You can’t just base your journey on other people and call it a day. You will have factors different from everyone else, thus you should compensate for your own weaknesses and take advantage of your strengths.
How much budget do you have? Do you have debts and other liabilities? Are there any other sorts of problems that are holding you back? You should have them sorted as soon as possible before you embark on your journey.
These factors might affect your growth as an investor and you might even end up losing more than where you’ve started from. Once everything is sorted and accounted for, move on to step three.
3. Give credit to your credit score
If you’re low on budget, keeping a good credit score will extremely help you. Loaning is a good way of getting money to use as a stake for your investments. However, you have to remember that this is money that you borrowed so you don’t technically own it.
Having a bad credit score won’t only get you into a harder position when it comes to loaning and borrowing, bur also will give you trouble in acquiring property.
A lot of property businesses look at credit card debt, financial status, current accounts open, and other liabilities and bankruptcies. If these things are present on your records, you will have difficulty in acquiring property.
4. Meticulous is fabulous.
Before attempting to take your first steps in the world of financial independence with real estate, you will need to plan.
However, just like what Former President and General Dwight D. Eisenhower said, “Plans are useless, but planning is indispensable.”
The world is constantly changing, and every move the Universe makes will certainly change the current events of what we see today. But this shouldn’t let you be discouraged of thinking of how to go with your endeavor in a methodical way.
The world around you may change, but anticipating what changes in advance, or even barely guessing the possibilities, will certainly prepare you for sudden events. If it does not help you physically, it might help psychologically.
Don’t let your plans constrict your movements, though. Plans are there to keep you in shape, and planning is not there to strangle you by limiting your options. It is only your guide in whatever you wish to do, as being well-rounded with what you want to do in the future is always better than going for it without thinking about it.
Be flexible, as your plans might become incompatible with certain changes that happen throughout your life. Simply put, adapt and overcome.
Failing to plan is planning to fail.
You’re extremely limited cognitively and psychologically if you face everything in ignorance.
5. You grow, bro! (and sis)
There is nothing more satisfying than seeing your investments grow as you delve in for a longer time. Once it all stabilizes and you know how it all works, you just need time. This is why being early gives you an unprecedented advantage in the investment game. You start early, you have more time.
Be prepared for a few busts and declines, however, as investing is not a one-way slope.
It can be bumpy sometimes, but the bumpiness depends on what type of business you’re investing in. Real estate is a bit more smooth and reliable than other aspects of the investing game. However, please know that this isn’t always the case. You still depend on factors like luck and good psychology in order to plan, adapt and conquer the market smoothly.
? The Bottom Line
In short, real estate is one of the ways to passively get income to the point where financial independence can be achieved within years.
With proper education about investments, real estate, and finance; a good financial plan; the resolving of liabilities and debts; time to grow; and lastly knowing what your strengths and weaknesses are, you should be completely able to tackle your way into the investing game.
❓ You Might Ask
1. Why would I want to achieve FI or financial independence with real estate?
To be honest, working hard for your money may be rewarding, but the adult life of the previous era is just too mundane and boring. Why accept the fate of working 8-to-5 shifts when you can make money by just being financially independent?
Follow your passion and lessen your stress. This will help your well-being too, and you’ll have plenty of time to manage your own life and health. In the long run, it absolutely benefits in countless aspects, not just monetarily.
2. How do you figure out what your financial freedom number is?
Simply put, know your yearly expenses as a household. If you do not know what your annual household costs are, calculate your monthly household costs and multiply it by 12. Afterwards, multiply it again by the years you have left before retirement.
For example, you’re 22 and your monthly expenses are $1200 per month. Per year, that would be a total of $14400, which would then be multiplied again to the years left that you have before retirement.
Assuming you want to retire by 60, then that would be 60 – 22 = 38. Multiply $14400 by 38, your Financial Freedom Number is therefore $547200.
3. How much real estate will I need to achieve my freedom number?
This is a very broad question that deserves a very broad answer as well in knowing how to achieve financial independence with real estate. Knowing it in the end will give you an idea of how much real estate you need to achieve your freedom number.
So this depends on a lot of factors, first of all, the factors of your FFN itself: annual spending, and your years left for working before retirement.
After that you need to take into account a lot more things: taxes from your income, the income itself, the ups and downs you experience in real estate, and lastly the fees you give to help with your endeavor (for example, advisors).
After considering all of these, you will know roughly how much real estate you need to work on before achieving your beloved freedom number.