Real estate has some tremendous superpowers—not the least of which is its ability to help you find financial freedom and leave your terrible day job. Do you want to travel the world? Dedicate more time to volunteer efforts? Focus on raising your kids? A thriving real estate business providing you with passive income can be the key.

But there’s a catch: To achieve true financial independence, you have to really love real estate. Just because you’re ditching the nine to five paycheck doesn’t mean real estate investors don’t work. In many ways, it’s still a full-time job. You’ll just have more freedom to arrange their lives in the way that best suits them.

Start with the basic elements of financial freedom

Before digging into how you should build your net worth, let’s start with the basics: Getting your finances in order. After all, financial freedom won’t feel that free if you’re still trapped by debt and bad financial habits. Here’s what to look at before you start pursuing real estate.

Credit cards

Credit cards aren’t inherently bad—in fact, utilizing credit card rewards and the purchase protections offered by said cards can be a smart financial strategy! However, many Americans can’t use a credit card without overspending. If you have credit card debt, pay it down as quickly as you can. If you’re prone to impulse buying, consider either getting rid of your cards or pursuing financial counseling. Over time, you can change your mindset toward credit, and eventually can use these cards as intended: As excellent sources of rewards.

Emergency funds

Do you have money set aside in case of an emergency? What would happen if you lost your job—before fully executing your wealth-building strategies, of course—or you have a significant unexpected expense, like a medical bill? Start with a small emergency fund (many experts say $1,000 is a good starting point), then build it over time. Ultimately, you should be able to cover six months of living expenses without your primary income. Consider creating a bank account explicitly for your emergency fund. Keep that money in your savings account until you need it.

Other debt

Do you have student loans or a car loan? A large mortgage? You don’t necessarily need to pay these off before beginning your real estate investment career, but it is important to understand exactly how much debt you have. This will be important for lenders, too: Before lending, they’ll calculate your debt-to-income ratio. Many consider 36% the highest allowable ratio, including a new mortgage, if you need to take one out. Wrangle your debt before investing to ensure your best chances of landing a loan.

Should you quit your job to pursue real estate?

Before we dive into the nitty-gritty of financial freedom through real estate, let’s discuss whether quitting your job is truly the best solution for you.

Ideally, you should find what you love to do in life more than anything else and do that for a career. If that means teaching high school math, teach high school math. If that means traveling the world, then find a job that travels the world.

And if that means investing in real estate for a career… then invest in real estate for a career. Because full-time real estate investors still work—in fact, the job often feels more like a lifestyle. While there are some truly passive investments, such as REITs (or real estate investment trusts), full-time investing usually involves work. You’ll need to:

• Talk with troubled homeowners
• Send out massive amounts of direct mail
• Network with established real estate investors.

Does that sound like something you’d hate? Everyone can, and should, create a real estate portfolio as part of their strategy for retirement and wealth building—and many current millionaires have followed that exact path. But full-time real estate is a full-time commitment.

Ready to dive into real estate investing as a full-time career? Here’s your path to financial freedom.

Educate yourself

If you’re unfamiliar with real estate investing, brush up on your basics. Do this before you even consider dipping a toe in the full-time waters.

Start by deciding which strategy will be your focus. There are a number of different types of real estate, and each type has unique pros and cons.

Wholesaling

This process is where you locate amazing deals, put them under contract, and sell that contract to an investor or house flipper—and make a sizable profit doing so. Wholesalers master the most valuable skill for a real estate investor to possess: how to buy right.

Wholesaling works. However, while wholesaling might be fairly “simple”—it’s not easy or quick. It takes hard work, skill, motivation, and certain personality traits (like the ability to negotiate). Consistently finding deals that are worth pursuing can be a time-consuming job.

House flipping

This can be an exciting and profitable way to earn income. You’ve probably seen flipping TV shows where investors turn a dump into a mansion in three weeks and profit hundreds of thousands of dollars. While this is possible, don’t enter real estate expecting this to happen to you. Make sure you understand both construction and the market before starting a fix and flip business.

Flipping houses is a lot of fun, and fantastic profits can be made. However, there are some important considerations to make before jumping in head-first to your career as a full-time investor:

• How will you fund your flipping business if you don’t have a job?
• How will you make your monthly payments if you don’t have a job?
• Is your location conducive to flipping?

Buy and hold cash flow investing

Buy and hold cash flow investing produces a stable of cash-flowing properties. That can add up quickly to provide significant income. This can be a great option for long-term investing, but keep in mind that you’ll need significant monetary reserves when things go wrong.

Educating yourself goes way beyond simply picking your favorite real estate strategy.

Learn about your local market, too. Are jobs growing? Incomes? What does the population look like? Network with local investors and real estate agents—and make sure to visit homes for sale in your area before you start bidding. Knowing what your market offers in different price ranges is essential knowledge for all real estate investors, regardless of your strategy.

CTTO Article Source: www.biggerpockets.com