I believe everyone should be able to live life by their own design.
What that design looks like is different for everyone, but my hope is that more people will set out to create a life that they love. For some, it may be to teach high school students about world history. If that is what makes you feel alive, then do it! Teach high school students about world history until that passion fades. If you want nothing more than to be a veterinarian, do that. You can do whatever it is that provides you the most joy, if you set a defined goal, create a realistic game plan to accomplish that goal, and take consistent action to progress through your plan. Now that plan will most likely change…a lot. And that is okay as long as you are properly evaluating your current situation as well as your trajectory and modifying as necessary to better align with your ultimate goals. And please, dream big. In the words of Bill Gates, “Most people overestimate what they can do in one year and underestimate what they can do in ten years.”
For those of you that are in a career that truly brings you joy stay on that path until it doesn’t. But remember, as you grow older your goals and desires may change, so why not set yourself up for success whether you decide to stay in your career until you can’t physically do it anymore or whether you shift and decide you would like to try something else? Financial freedom can give you this ability and more.
For a lot of people, their job is just a necessary evil that provides income to cover their expenses. Many of them go through life working a job that does not provide them joy. The plan is to work their job until they have amassed enough wealth to cover their expenses for the rest of their life. They might make a respectable salary and put ten percent of it into their company retirement program, hoping that the investments inside that program will grow enough to retire at a reasonable age. This requires many to work until they are 65 or 70 years old and even then, might have to live a very modest lifestyle to ensure that they do not run out of money. And don’t get me wrong, there is nothing wrong with living a modest lifestyle, but you should do it because you choose to, not because you must.
So how can you amass enough wealth to live the life of your dreams and do so as soon as possible?
I wish I could tell you I had a quick and easy way to do it. A way that requires little planning or sacrifice and has a high probability of success. If Doc Brown really invented that flux capacitor that enabled you to time travel as Marty McFly does in the movie ‘Back to the Future,’ you might have a real shot. If not, you may need to plan carefully, set aside money to invest consistently, and make wise investment choices for years until you can gain financial freedom. For many, your company 401k will not generate returns that you need to live the life that you want. But luckily, there are many ways to make higher returns than your typical 5-7% that people make with their portfolio of stocks and mutual funds. Here are three options for you to consider.
- Play the Stock Market – You could invest in individual stocks. Stock shares can provide large gains in a very short amount of time. The problem is that they can also provide large losses in a short amount of time. I do not think it’s a bad idea to have money invested in the stock market. Do your research and spread a portion of your investment portfolio over a variety of stocks that you find likely to increase in value. Just make sure you continue to monitor and adjust accordingly. However, it may not be a wise idea to invest your entire portfolio in a few hot stocks. The upside can be enticing, but the downside can be devastating.
- Become an Angel Investor – Angel investors provide capital to startup businesses, usually very early in the life of the business, typically in exchange for equity in the company. Many high net-worth individuals achieve significant returns using this strategy, but it can be very risky. Many times, these investors are providing capital to unproven businesses with unproven leaders. It can be a very rewarding way to invest, but make sure you do your research and understand the risk.
- Enter Real Estate – Andrew Carnegie once said, “Ninety percent of all millionaires become so through owning real estate”. That quote was from over 100 years ago, but still has a lot of truth to it. There are risks in any investment, including real estate, but when done right, real estate can be a rewarding yet stable way to accelerate and maintain wealth. Many people have made a significant amount of money investing in real estate, and many people have lost a significant amount of money investing in real estate. Make sure you do your homework on any investment opportunity to limit your downside, but there are a few reasons why I like real estate investing better than any other strategy if you are looking to generate long-term wealth.
Let’s start by discussing a few different strategies that people use to grow wealth through real estate.
Flipping – Buy a poorly maintained house, renovate it and sell it for a profit. Flipping is enticing because you can generate large sums of money in a short time frame. You can pay a lot of taxes on your gains, but your investment is turned around very quickly, allowing you to reinvest.
Buy and Hold Single-family homes – Buy a house, renovate it if necessary, and lease it. This can be a great way to grow wealth long term. You can focus on strong cashflow markets, where you get consistent returns every month or strong appreciation markets where you might have limited cashflow, but the houses in these markets are predicted to increase in value, making your house worth a lot more when you sell it. This is a slower, more long-term strategy than flipping, but can lead to greater wealth down the road.
Purchase Mortgage Notes – Purchase mortgage notes from banks, brokers or other lenders and collect the monthly mortgage payment for income. When done correctly, note investing can be a great way to generate passive income.
Apartment syndications – A group of both active and passive investors that pool capital together to buy apartment communities. Apartment syndications provide a lot of benefits including regular cashflow, tax benefits and the economies of scale. Many apartment syndications include a value-add component, so you can enjoy cashflow throughout the investment but also participate in the upside of the forced appreciation. The structure of an apartment syndication is intriguing because it allows for both active and passive investors. The active investors (General Partners or GP) are the investors that find the deal and operate it, while the passive investors (Limited Partners or LP) provide capital to close the deal and execute the business plan. Both GP and LP can receive regular cashflow distributions, tax benefits and a large payback at the sale or refinance of the property. This strategy can provide a tremendous vehicle for wealth generation, but the business plan usually takes 3-7 years, so this might not be the strategy for you if you need your principal back immediately. It’s also very important to know and trust the General Partnership team. Afterall, you will be partnered with them in this investment for the life of the business plan. There are plenty of resources to guide you through vetting a syndication sponsor, so a quick internet search or a visit to a real estate investing forum can provide a few tips.
These are only four of the many strategies that investors use to grow wealth through real estate. They all have their own advantages, so do your research and determine what strategy is right for you and your long-term goals.
Now that you are intrigued by the power of real estate, how do you get started?
Education and networking are the two foundational pieces for every successful real estate investor. There is a plethora of real estate books, podcasts, internet forums and blog articles that you can get you started on the right path. I have also found attending real estate meetups to be very helpful. This will allow you to meet other investors and learn from both their achievements and failures. You may even meet a mentor or partner that can help you on the journey.
If you have found this helpful, visit https://goldribboninvestments.com/ to learn more about how we help busy parents and professionals invest in real estate without taking on the headaches associated with becoming a landlord.
We genuinely hope you start your journey for financial freedom today. You and your family deserve to live a life that provides unlimited amounts of joy, and real estate investing can help you get there if you take strategic action. Please do not let yourself grow old working a job that limits your true potential. Your dreams can be your reality. Do not let the opportunity pass you by.
Adam Lacey
Managing Member at Gold Ribbon Investments
248-303-6033
