I love this quote, when you want to start a plan and create a goal; always start with the end in mind and work backwards. And this strategy actually works surprisingly.
So in this video, I’ll teach you how to achieve financial freedom with real estate, i did it with stocks, and now my goal to do it with real estate.
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1. Start with the end in Mind
• my end is simple to get enough properties that are fully paid off to make me $2,000 dollars in cash flow earning me at least 6% annually
• I’d like to achieve this goal within the next 10 years or so
• And if properties appreciate by 5% annually, that means property prices will double every 15 years or so
• How do i get to that goal then?
2. Let’s Run the Numbers
Income Goal is $2,000 per month at a 6% cash-on-cash return
• $24k annually/6%= $400k
• If i get 400k worth of property
• I can make that 24k in cashflow per month
First way: Now how long on average would take a person to get that much money in real estate
• Well if you buy a property that cost 200k and put down 20% that’s 40k down
• If that property earns you a return on investment of 6% that’s 2400 a year of profit
• So if you wanted to keep buying until you got 24k this way, you would need about 1.5M in real estate with 20% down that’s 400k
Another way is:
• you buy one property for 200k and put down 40k ( same 20% )
• You use the 3200 you earn annually to pay the mortgage
• If you have a 30 years mortgage your payments are 1300 per month
• If you that extra 3200 each year you finish your mortgage, you’ll finish in 17 years
• And if during that time you bought 2 more properties, all in all you may accomplish your goal after
• Plus don’t forget rents are going to go up each year, and in 17 years your properties would have doubled in value
My way is this:
• i know i need 400k worth of properties and i have 10 years to do it
• I’ll buy my first in cash for about 60k at a minimum of a 10% discount
• I’ll use the rents, plus savings, plus stocks withdrawal of 5% to buy my next properties and dumb all the profits from that property, my first property and my savings to paying it off faster
• If done correctly, i can get to my goal in 10 years with some luck
• With my current budget I’ll run out of cash by year 3 and will only be able to put down 47% down
3. Rules that will help a lot
• buy houses for below retail price (10% minimum )
• Pay off one house before getting the next one
• Hold forever or until forever no longer make sense (for example neighborhood i is going down hill or something crazy like that )
4. Location
• I’ve made a lot of mistakes in stocks and real estate
• But this one i will not be making
• My goal is to buy a property that i can easily drive to within 30 minutes, the closer the better
Why?
• out of state real estate sounds cool but you not being able to manage it
• The property being far away
• Can actually work against you, and a lot of season investors say the same thing, better to buy property in your area
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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.
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