By Greg Herlean
A lot of people get into flipping and/or real estate funding because they want financial freedom. The idea of being financially free (or, as some call it, independently wealthy) is really enticing, and real estate investing is a great way to get there… But where is “there”? What does it mean to be financially free?
Honestly, the definition can vary a great deal, depending on your personal financial goals. You might not need to own an island to be financially free, but you do need to be able to spend your money as you see fit without worrying about where your next paycheck is coming from or how you’ll pay your mortgage next month. In my professional opinion, being financially free means answering “No” to three questions.
Are You Concerned About Paying Off Your Debts?
For some people, financial freedom is simply being debt-free. However, you can have debts and still be financially free. You may have student loans, a mortgage (or two), credit card debts, or any other kind of debt; your freedom is based in large part on how you feel about those debts and how you work to pay them off.
Now, when I talk about how you feel about your debts, I’m not talking about feel-good, hippie woo-woo. I’m talking about your plans for paying them off and what you need to do to become debt-free. Are you waiting on one of your investments to pay off so that you can pay down your debts? Do you have enough residual income to make monthly payments? Or are you dependent on income from your job to pay your loans down slowly over time?
Do You Have to Go to Work Tomorrow?
A lot of independently wealthy people go to work every day, but they do it because they love owning and running a company or because they’ve taken on a job that they love doing. Financial freedom means you don’t have to depend on a paycheck to survive. You can start and run a company, work part time at a job you love, or do anything you want, but the key word here is “want.” If you were to quit tomorrow, you wouldn’t be in financial crisis.
All that said, financial freedom doesn’t necessarily mean that you’ve made all of the wealth you want or need to make in your life. In other words, you don’t have to work your fingers to the bone and pinch every single penny in your early career years to save up enough to live off of for the rest of your life.
While you don’t depend on a paycheck to get by and pay for the things you want, you might be making significant residual money on real estate investing or funding projects, flipping houses, and/or other investments.
Are Your Finances Limiting the Things You Want to Do?
Finally, we come to the real key question. Being financially free means that you can say “Yes!” to the things you want to do. This varies a great deal from one person to another. For one person it might be taking off on a spur-of-the-moment vacation. For another it might be an unplanned, unbudgeted shopping spree. Your definition of financial freedom will depend almost entirely on what you want to do now that you don’t have to work all the time.
If you want to achieve your definition of financial freedom, flipping houses and/or real estate funding might be your ticket to success. Whether you’re fixing and selling foreclosures, short sales, and REOs, or you invest as a landlord, real estate investing is a fantastic way to make residual income and become financially free.