Financial Freedom: Embracing Passive Income Investing
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By Dr. Chandra Mishra
Financial freedom is crucial at any age. The genre of intelligent millenniums knows how to create variable income sources to gain financial freedom as soon as possible.
Passive income is the top contender for financial freedom which means no more worries about your ongoing bill payments or making rent. Once your basic needs are met you are left with enough to fulfill your desires; paying off debts, going on a long vacation, or indulging in luxurious recreation facilities.
Today we are clearing the dubious air about financial freedom as people have a misconception about investment fundamentals.
If you think working tirelessly and continuously is making you rich and financially free, you are mistaken. As being rich need not necessarily mean your financial freedom. Also you are losing time which you can’t buy.
Financial freedom comes when you build yourself multiple sources or streams of passive income that can pay for your expenses and leave you to live your life on your terms with minimal need to indulge in strenuous work.
Ways of Creating Passive Income
You are generating passive income when money keeps flowing in irrespective of your active working status.
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It may sound strange, but it does make a lot of sense as passive income can be made in two primary manners:-
1) Your Investment Works On Your Behalf
You invest strategically in projects that create monthly income with a fixed or standard rate of return.
The option here could be investing in instruments like bank and government bonds, corporate bonds, rental property income, multifamily/apartment investing that can quickly help you get out of the rat race.
2) Your Business Working On Your Behalf
Under this method of generating passive income, you indulge in a passive business income-making strategy. As a smart business person, you create a business that has the potential to run without your active participation. You hire and create processes to run the business. Following this strategy will offer continuous cash flow, whether you are parting hardship to your business venture or not.
Both investment and business work in synchronization for passive income generation for an entrepreneur.
Multifamily investing for busy professionals is one noticeable option that can create a consistent income without too many risk factors involved.
For busy professionals who cannot spare time consistently to keep track of their diversified investment portfolio, their entire investment portfolio can be constituted around multifamily real estate investments. It is a great foundation with very low volatility and opportunity to capitalize on passive income.
Why Multifamily Real Estate Investment Is A Sound Decision For Passive Income?
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Multifamily real estate can act as a catalyst for your investment career. And, this is not without the reasons:-
1) Easier Availability of Finance
If you think the enormous size of multifamily properties will call for difficulty in arranging finances, don’t let their size befool you. Multifamily properties are more accessible to finance than single-family homes. The price of multifamily properties is not the deterrent in fetching easy financing options. These properties are more likely to be approved by financial institutions like banks for a loan because these are more likely to generate cash flow month after month. This guarantees timely loan repayment.
2) A More Fabulous Kick Start
Acquisition of multifamily real estate is a better investment with low volatility which could be your fantastic end-games strategy too. You will retire with multiple streams of income. If you want to start small, A small multifamily property acquired, you can live in one of the units and pay down the mortgage you receive from the tenants residing in other units. Besides rent, you will earn appreciation on your investment capital.
3) Light Years Ahead Of Stock Market Return
Multifamily syndication returns have significantly gone down in the last two years. Yet you can lay hands on a 12-13% average annual return which is significantly higher than stock market returns.
Additionally, you are not even paying taxes (decreased taxes are the most extraordinary relief anytime) which means you are light years ahead of stock market returns.
4) Enjoy Cost Segregation Benefits
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Under the cost segregation, multifamily real estate investors enjoy reduced current tax liabilities which imply upfront cash flow. Without cost segregation, multifamily rentals are depreciated straight line for 27.5 years.
However, with cost segregation, the depreciation on specific real estate rentals’ components is faster (like in five, seven, or 15 years). The faster depreciation means you can save/make more money with depreciation and cost segregation applicable in multifamily investment projects.
Additionally, the government taxes income from multifamily investment properties at a passive income rate. This means no employment taxes.
Conclusion
Hope our little effort will help you embrace passive income investing for attaining financial freedom the soonest. Time is to start today, you can easily partner with someone or invest passively completely. What steps will you take in the coming weeks to create passive income?
For more information, contact your financial/legal advisor or financial counseling firm before investing.
