A huge goal with investment income is to make it replace your employment income. This is financial freedom.

There are three things you need to start the following:

  1. Specific Knowledge–Learn before starting. Do your research so you have knowledge to apply to your understanding (which you will gain from the experience).
  2. A Knowledgeable, Caring Team–Make sure you have a group of people around you who will keep you from losing money! With their care and knowledge/understanding/wisdom, they will help you make the wisest decisions.
  3. Capital–If you’re serious about growing your investment income through real estate, you’re going to need to do some saving. I once told a student to bring me $10,000 and I’d show him where to go next. A year later he called me and I showed him. He’s well established in real estate now!

With these three things in your pocket, you can really excel at this plan.

Take $10,000 and put it down to acquire a $100,000 house. With this first house we learn how: to purchase; to successfully rent; to manage; and to show income to the bankers and establish myself with a bank.  And so much more. We use our specific knowledge to do this, and start deepening that knowledge and adding in understanding. This will eventually put us at a place where we have real wisdom in these matters.

So I’ve purchased my first property. I then take the $10,000 out through a refinance loan. Then I make my next purchase. Using the same $10,000 (or $50k or $100k) every time until we have 30 houses. (Now if you use this illustration, always make sure to gain specific knowledge with your understanding so it will succeed long term.)

Learn to Invest with  a formula. What if I could show you how to make 100,000 tax free? With the 30 single-family homes I purchased using the $10,000, I get an average positive cash flow per month (after principal interest, taxes, management fee etc.) of $300 per unit. Now my depreciation per unit is $3000 annually. Let’s start with the $300. If I’m making $300 a month in positive cash flow I multiply that by the 30 houses I own to get $9000 a month or $108,000 annually. If my depreciation is $3000 per property and I have 30 properties, then that’s $90,000 in depreciation.

What does all that mean? My tax bill is zero. Because even though I put $100,000 in my pocket, I didn’t have to pay any taxes because of the depreciation.

This is another reason why I love real estate as investment income!

Let me know your real estate questions in the comments below!

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