How To Retire by Early Investing in Property

In this chapter I show you can become your own boss and financially independent through investing in property. This is something that I am doing right now and something I can attest is the best way, at least for me. First I want to tell you how I came to investing in property.

My Story

When I graduated from University, I didn’t have a clue about what I wanted to do with my life, but I knew I needed money, though. I got a job, I took the very first job I could get, deep in the recession of 1993. Within a few months of working in this job, I knew jobs weren’t for me. I needed to be my own boss. Jobs and employees, I thought were stupid. One problem, though, I didn’t know how to be my own boss (this was eons before Google) and I didn’t know anyone who was there own boss. I did the next best thing in my eyes and that was hunt for another job that paid more money. Wrong.

Deja Vous All Over Again

Once I secured a new job with more money, I repeated the process again and again. Finally ten years later, the penny dropped and I realised that I needed to be my own boss. To own my own company. By this time I was selling for a living and devouring self help books. I came across a book about Life Coaching which really resonated with me. This was it, my path to freedom. I was going to be a Life Coach. So without any experience, never mind any clients lined up, I handed in my notice and set up shop as a Life Coach. What happened next? Well suffice to say it was disaster. One that would take me years to recover from financially and emotionally. I didn’t get one single client. I used up all my savings and got into debt.

Rich Dad Poor Dad

Eventually I found my way back into the security of a well paid Job. Like a swimmer who gets back to shore gasping for breath, having gone out of his depth.
There were several positives to come out of this episode, one of which was that I read a book – Rich Dad, Poor Dad by Robert Kiyosaki. My only regret is that I didn’t find this book earlier. If you haven’t read this book and are striving for financial freedom, you must buy it now. I changed my life and I haven’t looked back. Property is the bedrock of my financial freedom machine. Yes I have pensions and savings, but property is the engine. In this post I share with you what I have learned through my experience and that of my mentors.

Dreams

Have you achieved everything you want to this year? Then why not? Find your reason why and do something now. Don’t let the year slip into next year and another missed opportunity. What is your WHY? What is your reason for doing this?

Financial Freedom

Let’s just recap and define financial freedom again. This is where your passive income exceeds your expenses. Put another way it is when you don’t have to work for money, because the income from your investments and businesses covers all you requirements. Once this is in place, you can define yourself as financially free.
The common model to get financially free is to get a good job, max. out your pension and then draw on this when you’re older. This isn’t for me I want my freedom now.

Your Action Plan

The next thing you need to get clear on is your action plan for financial independence. You need to come up with a figure for what your basic outgoings are and also what you need per month to be comfortable. This is your first freedom number; the amount of passive income you need per month to be financially independent.
Next you need to give this a deadline. When are you going to achieve this – ten years, five years, two?
Once you have your plan written down keep this somewhere where you will see it through the day. This is your motivation to succeed.

Assets and Liabilities

So you want to gain financial freedom and you do this by buying assets and minimizing liabilities. Another thing we need to get straight in our heads is exactly what assets and liabilities are. Basically you want to use the money you earn in your job to buy assets, which pay the passive income, whilst minimizing or even avoiding liabilities. Liabilities suck money from you.
Examples of assets are: property you let out, stocks and shares, businesses you work on (not in) and commodities. I will argue in this that property is the best asset class.
Liabilities are anything that takes money out of your account. These are things like credit card debt, car payments. Some would argue that your house is a liability because it costs you money in repairs, but doesn’t actually pay you anything, unless you rent out rooms.

Property as an Investment

There are many reasons to invest in property:

1. Low volatility: the price of property does go up and down but the pace at which this happens is extremely slow, compared to say the Stock Market. This means you can invest your money and know it won’t be lost over-night. It is also easier to time the market ie buy low sell high.
2. Long term Capital Gains: over the long term the cost of housing will increase as a result of inflation and higher demand.
3. Rental Income: By buying property to then let it out (Buy to Let) you can earn monthly profits.
4. Bank Leverage: The exciting thing about investing in property is that the Banks will lend you money in the form of a Buy to Let mortgage, to buy a property and then let it out for monthly profit (even in a recession – I know – I did it)
5. Flipping: short term capital gains. I did say above that the price of property has low volatility but that is not to say that you couldn’t buy a property and sell it quickly for immediate profits. This process is called flipping and can be lucrative. You buy property that is either distressed (in need of modernising) or from motivated sellers (banks from repossessions) at a low market price. Quickly do the necessary repairs and modernisation at a low cost and then put the property straight on the market to sell for a profit.

Goal

The goal is to get to own ten properties or more as quickly as possible. The tipping point will come at around 7-9 properties, where there is safety in numbers. If some properties are empty, the rents form the others will more than cover the costs.
Write out your five year plan. What is Monday morning like in five years time.?And what is your dream of freedom? What does it look like? What will you be doing?
Then what will it cost in today’s money per month to fund this life?
Then how many properties will you need to fund your dream lifestyle?

The three keys to success

The opportunity – IE the house? Property.
Your knowledge – your know how.
Action – doing something with what you know, when the opportunity arises.