Are you a financially free real estate investor?

Are you able to live from the income of your personal resources, namely real estate? Have you escaped the proverbial rat race?

If not, is financial freedom from real estate your ultimate goal, or is this a part-time thing for you? Or do you plan to use your real estate profits to invest in another business enterprise?

If you’re not financially free and you intend to be, what is your plan to get there? For years I aimlessly pursued real estate investing with absolutely no plan whatsoever, and subsequently didn’t get anywhere (because I didn’t know where I was going or how to get there). It wasn’t until I developed a clear, written plan with a mission, goals, and objectives that things started happening for me. I just put the plan on paper 3 weeks ago and already I see massive progress. I’m on track to be financially free by June 09.

Here’s a rough overview of my real estate financial freedom plan.

[i]Mission: To become financially free using real estate investing as the vehicle.

Goal number 1 – By February 2009, close to 2-3 “cooperative assignment” deals per month, with a minimum profit range of $3-$5000 per deal, utilizing a variety of creative marketing and prospecting techniques to obtain one new deal per week.

Goal number 2 – Retail a luxury home option deal with a minimum $100,000 equity profit by March 2009, using the round robin auction technique as the exit strategy.

Goal number 3 – purchase or develop a self storage facility with a minimum $5,000 month in positive cash flow by June 2009 without investing more than $50,000 down out of my own pocket.[/i]

Luckily, I don’t have terribly high expenses, and no kids. Although $5,000 a month won’t make me rich, in terms of passive income it would more than cover my personal expenses, and actually provide a pretty decent lifestyle for me. My immediate goal is strictly getting out of the rat race, which means quitting my job as soon as possible.

Your third goal may become a job if you decide to manage it yourself, but at least it has the potential for making you financially independent. I am guessing that the investment capital comes from the first two goals, or do you need other intermediate goals to get $50K cash on hand?

To answer your question – yes, I am financially independent (I like to call it self-UNemployed) and have been for nine + years. I did it as a part time investor and with a portfolio of rental dwelling properties. BTW, I doubled the size of my rental portfolio after I hung up my holsters and left the corporate world.

I definitely don’t want to manage the facility myself. I’ll have a manager without question. And you’re precisely right, I need to obtain the capital from the first two goals (the 2nd one to be exact).

Self-UNemployed…I like that! It’s amazing how much more you can accomplish without a job holding you back. Like Robert Kiyosaki says, “a job gets in the way of you getting rich.”

The job did not hold me back. Quite the contrary. The job gave me the investment capital to acquire the rental portfolio which eventually replaced my W-2 income. During my working years, my investment goal was to acquire a few properties and own them free and clear by the time I wanted to “retire”. I had about half my portfolio owned free and clear a couple years prior to my projected "retirement’ date, when I changed my investment focus from wealth accumulation and cash flow generation to income tax efficiency.

The problem I was encountering is that after 15+ years of property accumulation, my depreciation expense was going away on quite a few properties that I acquired in the early 80s and my rental income was making my income tax bill considerably larger each year.

I decided one way to reduce my ncome tax bill was to acquire more property. Each new property increased my before tax cash flow, but also reduced my income tax liability due to the depreciation expense and the net passive loss allowance.

By the time I finished “managing” my income tax bill, my rental portfolio had doubled in size. It just was not good enough for me to just live on my passive income – I did not want to pay income taxes on it either.

Today my effective income tax rate is just over 5%, and I can live with that.

That is the beautiful part about continually buying rental property.

I haven’t paid in any taxes in six years. All Legally due to depreciation mind you.

I am not looking forward to the tax bill when I sell and will probably opt to sell on a land contract just to take the income over time, If I do sell.

There is always that 1031 route…