Fiology thanks Drew of Guy on Fire, a FI community residential real estate expert, for shaping this lesson.
Real estate can provide a rapid route to Financial Independence. I am 28 years old, own seven rental units, and plan to be FI in under two years.
Cash flow, appreciation, depreciation, and the ability to build equity are just a few of the benefits of investing in real estate. Generally speaking, real estate also receives favorable tax treatment when compared to other assets or types of income. In addition, investing in positive cash flowing rental properties provides a hedge against inflation as rents usually increase over time.
In my opinion, and proven by many others, the ability to use leverage makes real estate the fastest way to build wealth and reach Financial Independence. A dollar invested in quality cash flowing real estate will typically earn more than a dollar invested in a low-cost index fund.
The concept of house hacking should also considered as it provides two great benefits for those looking to achieve Financial Independence. First, house hacking provides a low-risk way to explore real estate investing since the property will serve as both a primary residence and an investment, with rent payments cover most or all expenses. Second, housing is typically the largest monthly expense in any budget as the average American spends roughly a third of their income on a place to live. House hacking will either reduce or eliminate entirely the cost of housing. Being able to save and invest more will abbreviate the time to achieve Financial Independence.
Focus on investing for cash flow. Appreciation should be viewed as the cherry on top of a great rental property. Do not invest for appreciation. Appreciation is speculation and appreciation is not guaranteed.
Listen: BiggerPockets Money Podcast 09: Financial Independence at Age 30 (by House Hacking + Side Hustles) with Drew from Guy On Fire by Drew of guyonfire.us
Read: STOCKS VS. REAL ESTATE? A CASE FOR REAL ESTATE by David of thesouthernstache.com
Read: How to Win in Real Estate No Matter the Market—Up, Flat, or Down by Scott Trench of biggerpockets.com
Read: How to Run the Numbers For Rental Properties – Back-of-the-Envelope Analysis by Chad Carson of coachcarson.com
Explore: BiggerPockets.com This is the best online community regarding real estate of all types. If you are interested in Real Estate, consider making BiggerPockets.com a favorite in your browser.
Listen: What Makes a Good Rental Property – Episode 027 by Matt of pournotpoor.com
Read: Buy One Property a Year and Retire Early? by Peter of passiveincomemd.com
Take Action: Educate yourself on the basics of investing in cash flow real estate or house hacking. Attend local real estate investing meetups to meet other investors. Find a mentor and don’t be afraid to take action.
Read: What is House Hacking? by Drew of guyonfire.us
Read: Five I.D.E.A.L. Benefits of Real Estate Investing by Chad Carson of coachcarson.com
Quote: “Now, one thing I tell everyone is learn about real estate. Repeat after me: real estate provides the highest returns, the greatest values, and the least risks.” – Armstrong Williams