Financial independence through real estate

October 1, 2013 by Abiodun Doherty (abiodundoherty@yahoo.com) 

   

Abiodun Doherty
| credits: File

Financial independence has been defined in various ways but simply put, it means having enough to cover your regular expenses without having to work. For many, this is not a goal. Most people are content with survival and dreaming about sudden breakthroughs without any clear goal or plan that could lead them towards financial freedom. Many individuals have a job that is solely for survival or like someone called it, ‘J.O.B,’ which means ‘Just Over Broke.’ This needs not be your lot. With knowledge, patience and diligence you can attain financial independence through real estate.

Real estate is a relatively reliable means of wealth creation but cannot be classified as a get-rich-quick method of wealth creation. It is also not the path for the ignorant and lazy person, except you were born into stupendous wealth and you have a lot of money to pay for others to do all the work. But then, you may not need this article. However, if you are prepared to learn, work hard on your goals and persevere patiently until you attain it, welcome on board!

Everything worthwhile starts with a goal and a plan. Each individual needs to define what financial freedom means to them. We are all distinct persons and there can be no one size that fits all, yet we can picture the future we are most comfortable with. You need to start asking yourself some critical questions if you have not started doing so. Some of those questions include when you intend to retire from active work and what amount you believe would suffice to meet your monthly expenses and still leave you a little or significant sum over. You need to determine where you stand in the financial spectrum and when you desire to exit what is popularly referred to as ‘the rat race.’ You’ll need to do this at the start of your journey to financial independence. With all this in place, you should be able to picture clearly the kind of lifestyle you’ll be most comfortable with at the set time.

The next building block in your financial freedom plan is savings and freedom from debts. This should be a combined strategy. An important aspect of wealth creation is savings and you can start small. One very good aspect of real estate investment is the fact that it caters for all levels of investors, from the low to the very high. There is room for all levels. And there is room to move up the value chain at any time. Meaning that, you can start from the lower level and move up to as high a level as your vision and resources can carry you.

In addition, you need to make learning an important part of your strategy. Although many find this difficult to understand, learning comes before earning. You cannot rise beyond the amount of information at your disposal. You need to learn as much as you can about real estate investment. Fortunately, there are many articles, audio materials and books on real estate that a serious person desperate for knowledge can lay hands upon. The more you know the better prepared you are to take advantage of opportunities that come your way.

Another important ingredient in your financial freedom plan is the need to focus on the mastery of a particular real estate market. Because there is very little access to accurate data in our environment, it will dissipate your time and resources if you attempt to master more than one real estate market at once when you’re just starting. You need to focus on a particular area or locality that is accessible to you. It should be an area with growth potential and which is easy for you to visit regularly. And you may need to focus on vacant land when you’re just starting because of the additional cost of investing in built-up land.

An understanding of what to look for in a growing area will help you in making an informed choice. It is also wise to have a list of a few areas that you can compare before making your final choice. However, when you observe areas that are about 15 minutes to 30 minutes’ drive to already built-up areas, you’ll begin to see a trend in demography and population growth. When you notice improved infrastructure and physical developments by individuals and government converging in an area, that is definitely an area to watch.

Although this is not foolproof, when you observe the direction of investment made by property owners, investors and companies, you’ll also see a pattern that can help you to locate a potential growth area. This trend will lead to rapid appreciation and if you are able to join the flow of investment in good time, your investment will appreciate and you are well on your way to financial freedom.

The direct consequence of identifying and investing in a growth line is that if you are able to develop your vacant land and generate cash flow from such a development, then you are actually preparing for financial freedom. Cash flow is important; it is the actual money that your investment puts into your pocket on a regular basis. Depending on your accurate evaluation of an area and what you buy or build in the area, you can earn passive income from your property that can gradually position you for financial freedom. And the good news is that the first step is the hardest, once you gain a momentum, nothing can stop you from multiplying your success and your income if you persist.