Ditch the 9-to-5: Your Path to Financial Freedom Through Real Estate
Ninety percent of all millionaires become so through owning real estate." - Andrew Carnegie
Ditch the 9-to-5: Your Path to Financial Freedom Through Real Estate
No matter how many jobs you’ve had or how far down the career path you are, facing any workplace transition brings up emotions, fears, and possibly, some sleepless nights. The bittersweet feelings of quitting a job include guilt, worry, anxiety, excitement, adrenaline, and gratefulness.
It only seems sensible that a cushion of cash in the bank might make any transition less worrisome. In this article, we’ll share three steps toward making the leap from the traditional 9-to-5 grind to financial freedom through real estate investing, allowing you to spend less time behind a desk and more time doing what you love.
Why Leave Your Job?
Unlike previous generations, it's rare nowadays for anyone to stay with a single company or industry throughout their career. There's a massive shift towards work-from-home, remote positions, freelancing, and small businesses.
Many professionals, perhaps including you, desire the freedom to leave their jobs but feel the guilt and fear of abandoning their career paths, reducing their income, and still affording a life they love. Some fears stem from the need to support a family or manage high living costs.
The simple solution to these concerns is passive income. Earning money without stepping foot in an office or working even a few hours a day sounds like a dream, but it can be your reality. Here’s how.
Step 1: Find Your Freedom Number
The first step toward confidently quitting your full-time job is finding your freedom number. This is the amount of money that more-than-covers your regular monthly expenses based on your current lifestyle.
This is the income you need to earn passively to quit working and cover all your bills worry-free. Calculate this by looking at your expenses from the past six months:
Month 1: $9,500
Month 2: $12,300
Month 3: $8,700
Month 4: $10,800
Month 5: $9,100
Month 6: $9,600
The average of these expenses is $10,000. Now, add a 10% buffer.
Your freedom number in this case is $11,000. This is how much passive income you need to confidently leave your nine-to-five.
Step 2: Build Passive Income
With your freedom number calculated, start building multiple streams of income to reach that total.
Options for generating passive income include writing a book, creating online courses, or designing products to sell online. My favorite, requiring less time and effort, is real estate investing.
Did you know more people become millionaires through real estate investing than any other path? It’s true! You don't need special skills like writing or designing websites. With some capital and research, you can invest in cash-flowing real estate and build your income streams, one deal at a time.
Passive investments in real estate syndications can earn 8-10% annual cash-on-cash returns, plus additional income upon the asset’s sale after an average of five years.
For example, investing $100,000 could earn you about $9,000 annually with minimal work.
Get a few of these investments going, and you build, brick-by-brick, toward your income goal/freedom number ($11,000 per month in the example above). Even an extra one or two thousand dollars a month can relieve financial pressure and provide more flexibility in your schedule.
No matter how you choose to build your financial cushion—through real estate, online products, or both—the goal is to create multiple streams of passive income to reach your freedom number.
Step 3: Track Your Progress
Tracking your progress can be fun as you see your passive income grow over time. Whether you're an Excel enthusiast or not, establish a system to easily monitor your monthly passive income and compare your investments' performance.
If you choose real estate syndications, for example, you might see that a $50,000 investment earns about $350 per month in passive income. By this math, consider moving $200,000 from the stock market to syndications and start generating $1,400 per month.
While $1,400 is far from $11,000, it’s a solid building block. It might cover your groceries—one less worry each month.
Each additional passive income stream you add covers another living expense and acts as one more tile in your freedom number mosaic. Soon, you’ll reach the point where you can reduce work hours or quit your job without losing income.
Recap
Drastic changes and quick transitions can stir up fear or worry, especially if you’re responsible for a family or have ambitious lifestyle/income goals. But remember, countless others have built passive income, and you can too.
The steps outlined here will help you identify your personal passive income goals, create a path to generating that income, and track your progress. No matter your reasons for wanting passive income, following these steps will help you build the financial assurance you need to quit your job with confidence.
