Why Real Estate Investors Develop Financial Freedom
Let’s be honest, we all want to be rich and many of us are fascinated by those who already are. How they did it? How can we do it too? The truth is that rich people don’t do things differently; they just do things differently, from the way they think to the actions they take.
I’ll let you in on a little secret… not everyone has to work hard for their money. People who own businesses have employees who are willing to work for money, while the business owner usually has his money working for him. The same is true for investors, their money works for them.
It’s called passive income. Being a real estate investor or business owner is like owning the proverbial money tree: you control something that makes money for you, without needing to be there.
In its Rich Dad Poor Dad series of books, Robert Kiyosaki explains how the rich differ from the poor. It’s not just because they have more money. The main difference is how they think about and interact with their money and that when it comes to how people make money, we can all fall into one of four categories.
1. The employee – have a job
Employees exchange hours for dollars; however, what they actually get is leftovers, after the government takes its share of the taxes.
“So what? They do that to everyone!” you may be thinking. Well no, they don’t. Business owners and investors only pay taxes on what is left over after paying their bills. Wouldn’t it be nice to only have to pay taxes on what you don’t spend?
two. The self-employed – have a job
Freelancers and professionals often want to be their own boss. They are prepared to work hard, but often what they have done is exchange one boss for hundreds of bosses: customers or clients. In reality, self-employed people are not business owners; They still work for their money, but they are somewhat better off than employed people because they can take advantage of tax deductions that allow them to pay for their business expenses. before paying taxes on what is left over.
3. The business owner: owns a system and people work for them.
The true owner of a business not only I have to work, he doesn’t have to be at work every day, because he has a system and people to do it all for him, and possibly even supervisors to manage his workers. The true business owner asks, “Why do it yourself when you can hire someone to do it for you?” After initially investing in a business idea and business system, they let the money they have invested, which is now in the form of a business, work for them.
Four. The Investor – the money works for them
Investors don’t have to work either, because their money works for them. If you hope to get rich at some point, you have to belong to this group; because investors turn money into wealth.
Obviously, you’re not going to go from being an employee to a full-time investor overnight. But you can start taking the steps to go from being an employee or self-employed, building your own portfolio of properties. If done correctly, income-generating residential real estate can be your vehicle out of the rat race!
There are also many statutory tax advantages available to investors. One of the reasons the rich get richer is that, in some cases, they make millions and legally pay very little in taxes. That’s because they build their assets, not their income, and they earn their money as investors, not workers.
Imagine you own a $1 million investment property that increases in value by 10% each year. In twelve months, your asset base will have increased by $100,000, but no taxes will be paid on this. Wealthy real estate investors can borrow against the rising value of their assets and use the money to reinvest or live on.
What is your position?
What category do you fit into? Are you an employee, freelancer, business owner or an investor?
In the past there has been a slow but steady transfer of wealth from employees and freelancers to entrepreneurs and investors. They are all playing the same game, but each group is playing by a different set of rules and their mindsets are polar opposites.
Employees and freelancers are working harder and harder, trying to generate cash flow, but many are sinking deeper and deeper into the hole of consumer debt. Meanwhile, business owners and investors are slowly building up their assets. Employed and self-employed workers pay the bulk of taxes, while entrepreneurs and investors take advantage of legal tax loopholes.
Logically, if you want to get rich, you will have to become a business owner or an investor. It is too difficult to get rich as an employee or as a self-employed person.
Does that mean you should quit your day job? Not necessarily. Many employees have become highly successful investors, particularly real estate investors. So instead of quitting your job, I suggest you start educating yourself with the goal of becoming a real estate investor, initially in your spare time and later, if you wish, full time.
Should you become a business owner? Most small businesses fail in the first 5 years. In general, I believe that the opportunity to get rich through successful property investment is much easier for the average Australian. That is why I recommend that you seriously consider making your fortune as an educated and financially fluent real estate investor.
