Wealth is not without its advantages and the case to the contrary, although it has often been made, has never proved widely persuasive.
John Kenneth Galbraith Before I outline real estate's power to help you achieve your dreams, it is important that you understand how I define wealth. I don't define wealth as an adjective to quantify someone in terms of their net value (millionaire or billionaire). Wealth is simply when passive income exceeds your expenses. In other words, someone is wealthy when their assets or investments generate enough income to cover all of their living expenses. For example, the interest that is credited to your bank account each month isn't a result of any work (in the traditional sense) by the account holder. No matter how small the interest payment may be, every month it gets put into your account. You didn't "work" for it, but it is your money. This is what is meant by letting your money work for you. If your monthly living expenses were $2,000 and the interest you earned from your savings account was also $2,000 per month, then you would have achieved wealth. By not having to rely on a job to pay your expenses, you have become financially free. Most people do not have enough money saved to earn the interest necessary to cover their living expenses. So how do you create a passive income large enough to allow you this financial freedom? You must buy assets that produce enough income to exceed your living expenses. An asset is anything you own that produces cash; a liability, on the other hand, is anything you own that takes cash out of your pocket. For example, a shiny new car with a shiny new monthly payment would be a liability because it takes money out of your pocket each month to own it. A property that you rent for more than its mortgage payment and expenses is an asset. Instead of it costing you money to own, it actually creates income. This is just one example of the many ways in which real estate can create wealth for you. Wealth is really another word for control. You are wealthy if you can wake up and do nothing all day, every day, while your assets produce enough money to cover your expenses. You are wealthy when you control your own life, when you decide what you do day after day soaking up sun and sand in exotic locations, staying home to raise your children or having time to pursue your own interests and hobbies. Wealth is having the time and money to do whatever you want whenever you want to do it. |
