Wealth building is a marathon, and it takes much time and preparation to be in shape to compete. Many people do not consider the steps that are necessary to take in order to achieve their wealth building goals. Below are three very simple steps to prepare your finances for passive investing in real estate.
Eliminate Useless Debt
Having debt in the form of car notes, student loans, medical bills and so on is a hamper to your ability to grow wealth. Not only does it hold you back from physical wealth, it is a psychological burden. When one has student loans with no solid plan for how to pay them off, it has the ability to stunt your mindset and inhibits larger thinking about wealth creation. If you have useless debt, form a plan to pay if off and make that part of your life forever past.
Increase Savings Rate
Without the ability to save, you do not have the additional funds needed to invest in the wealth creation opportunities that real estate offers. If you are paycheck to paycheck, you can still correct. Look for ways to optimize your savings by lowering expenses and raising your income. The average American has plenty of margin to optimize his or her savings. Form a realistic plan to saving more cash and have the discipline to stick to it, through a combination of budgeting and “paying yourself first.”
Start Self-Directed IRA
See the article on Self-Directed IRA’s to understand their benefits. Since most people are tempted to spend the cash they have accumulated in savings, investing out of your self-directed retirement plan is likely to keep you focused on using those funds for investment purposes, but allows for the flexibility to invest in other investment asset classes, such as real estate. Since it takes time to research the benefits and plans, find a provider who services your needs, transition existing IRA funds to the self-directed and build a sizable nest egg for passive investing, now is the time to consider the self-directed IRA. It takes time to coordinate these activities, so consider getting started today.
Prepare
Remember, luck is where preparation meets opportunity. Without having first prepared your finances, when the opportunities for great investments come, you will not be the lucky one. If you act today by following these three simple steps, you will be primed and in position to take advantage of the right passive investment opportunity when that time comes.
Passive Investor Startup Guide
To find out more about what it looks like to invest as a passive investor in multifamily real estate, download our free Passive Investor Startup Guide here!
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Rodney Robinson II
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