Financial independence is the name of the game. Personal finance, budgeting, investing, and retirement are the puzzle pieces. As a mom, I'm also heavily focused on building generational wealth for my family. I believe that real estate is an essential piece of a well diversified investment portfolio.
Lindsay defines Financial Independence as: work optional! That means accumulating enough wealth so that your passive income, cashflow, and/or drawdown cover the cost of your annual expenses.
This is going to take some effort. And remember, personal finance is personal! But this should get you started:
1) Calculate your annual expenses. Keep in mind some of today's expenses may not exist by the time you reach work optional status, (i.e. mortgage, students loans, etc.). You'll likely need a budget or retroactive record keeping to determine your annual expenses.
2) Divide your annual expenses number by 4%.
Example: Let's say you want $100k of annual income when you reach work optional status.
Type this into your calculator: 100,000 ÷ .04 = 2,500,000
So a $100,000 passive income requires $2.5M invested.
Most people cannot save their way to financial independence. Investing in a necessary way to ensure that your assets are growing, beating inflation, and stabilizing your net worth. Set a goal, make a plan, and follow through until you reach work optional status!
There are many philosophies when it comes to investing in general, as well as the ways in which it applies to real estate. Lindsay relies on a well-balanced investment portfolio to mitigate risk in any one asset class or sector. Consider your risk tolerance, time-horizon, and investment philosophy when making investment decisions.
Lower your taxable burden by writing off your business expenses.
Someone else is paying down your debt (depending on your investment type.)
Equity gained as a property's value increases naturally due to market forces.
Excess income after all of your expenses are covered.
Utilize borrowed capital or debt in order to increase the potential return on an investment.
Real estate may offer more flexibility and control of your assets than other investment options.
Lower your taxable basis by considering the useful life of a property and its contents.
Feel like a badass. Own a tangible asset that you can use. Diversify your investment portfolio.
Utilizing primary residence financing to get into a property used for investment. Boost this strategy by renting out rooms/units while you live there.
Long term, medium term, and short term. A tenant/guest stays in your property in exchange for rent/payment. You become a landlord.
A short-term strategy involving purchasing a property under market value and forcing appreciation by renovating the home to its highest and best use.
A short-term strategy where an investor purchases a property and quickly find another party to take over their interest in that property.
Properties with anywhere from 2 units to large commercial deals with hundreds of units. This strategy employs economies of scale.
You contribute money to a pool, and in turn, have an equity ownership stake in the property/project.
Real Estate Investment Trusts. You own a share of the company that owns the property. Can be sold at any time on the stock exchange.
Raw or vacant land can be purchased, held, sold, and/or improved upon.
Phoenix, Arizona, United States
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