by Steve Davis, CEO of Total Wealth Academy
When young people first set out to achieve financial independence, they think the key is a good job. After all, this is what many young entrepreneurs are told their whole life. It’s likely what their parents were told, their parent’s parents, and so on, going back several generations.
However, this is far from the truth. The most important thing one can do to achieve financial success is to develop a secondary stream of income, such as real estate, that will allow them to thrive in their pursuit of financial freedom.
Building the right mindset
The right mindset to approach real estate investing — and life in general — is to never have a plan B. You must be fully committed to a particular path in order to achieve your goals. Not only will this ensure that you are positioning yourself for success in the best way possible, but you will also be preserving your happiness. If you settle for less than you want or deserve, you will be miserable for the rest of your life. Real estate investing can ensure that you won’t ever have to settle.
The first step to ensure you retain this mindset is to surround yourself with other like-minded, goal-oriented people. If you’re trying to learn a trade, you surround yourself with other craftspeople who can support you in your learning journey. Why wouldn’t you do the same thing with investing? Join or form a real estate investing club, read books, listen to podcasts, and learn as much as you can from as many people as possible.
It is also critical that you don’t ever get too comfortable. When you start with your first rental property and get that first pivotal rent check in the mail, you’ll get excited. You might even think that it’s enough — it’s not. Continue to push yourself higher and harder until you fulfill your maximum potential.
When and how to invest in real estate
Young people should invest in real estate as soon as possible, optimally in their early twenties. Forming a secondary stream of income early on will allow you to sustain yourself well into the future, even if your primary source of income falters. People like to think of their salary from their job as a secure source of income, but it’s not. You could get fired, or your salary might not keep up with inflation. There’s a slew of other factors that could cause your primary income to fall short. Your secondary income is a passive safety net that, if done correctly, could even exceed your primary income.
The ideal way for a young investor to start is with about $25,000 in seed money and good credit. For people in their twenties, that may seem like a challenge. However, that is only because they have been taught the wrong way. They have been taught that only people who are already wealthy can be landlords, but the truth is that many landlords are people just like them who know the proper principles of how to invest in real estate.
One of the biggest myths about real estate investing is that money is hard to find. In reality, money is much easier to get than you might expect. There’s a ton of money just sitting around, and the banks want that money to get to work to make more money. At a certain point, you will reach a level where the banks come to you and literally ask to lend you money because they want to put it to use.
The best part is that it doesn’t take perfect credit to do this, either. If your credit score is above 680, you’re basically a god to the banks. If you’re at 700 or above, banks will be virtually begging you to borrow money from them. The days when a borrower would have to have established, near-perfect credit scores to obtain a bank loan are long gone. I’ve seen young people with essentially no seed funds and new or no credit become successful real estate investors. It can happen to you, too.
Navigating real estate investing can be tricky if you haven’t been taught what you’re doing, but with the right resources, it can become easy. Read books like “Rich Dad Poor Dad” by Robert Kiyosaki or take real estate investing courses to learn the skills and principles you need to thrive. Leverage the network you have built for advice and support when you need guidance. All these things will help you develop and grow this all-important secondary stream of income.