So what does financial freedom mean?
I consider financial freedom when you have reached a point where your passive income meets or exceeds your financial obligations and when you no longer depend on your active or earned income to live your lifestyle.
This is possible through Real Estate and especially syndications. As opposed to the stock market where returns are subject to the volatility of the market – you can actually achieve very predictable ROI’s with Real Estate.
I like to think that the stock market moves like a fighter jet and Real Estate moves like a cruise ship.
So how do you calculate this formula?
Easy! When you are looking to invest in a syndication you must look into their offerings and see what kind of yield (cash flow) percentage they are projecting.
I look for assets that yield a 7% preferred return minimum. Be careful because sometimes even though they may offer a preferred return does not mean that it will cash flow the preferred return. Especially in this market with compressed cap rates. Be assured that if the asset is unable to cash flow the preferred return monthly or quarterly, this will accrue and be paid out to the investors before anything or anyone else when the cash flow is enough.
But let’s say you are investing in a syndication that offers 7% and it can actually cash flow 7% a year.
Let’s assume your yearly expenses are $70,000 to cover your lifestyle. That’s ranging from feeding your family, paying your mortgage, and going on your vacations.
Then in this case you must have $1,000,000 invested in a syndication. (Maybe two or three different syndications to risk-adjust even further).
Having $1,000,000 invested in a syndication at 7% will yield $70,000 a year and should cover your lifestyle.
This is how you achieve financial freedom!
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