How to Achieve Financial Freedom in 5 Years Through Real Estate?

In my 20s, I was drawn to real estate investing with the aim of achieving financial independence—generating enough passive income to cover my living expenses. Unlike the traditional approach of working for decades before retirement, I aspired to reach financial independence by age 30.

However, that goal wasn’t realized as planned. Today, at 43, I still work, but my career looks vastly different from two decades ago.

Achieving a form of financial freedom within a few years is possible, but it demands a change in both mindset and actions.

For those seeking an extraordinary lifestyle, this plan outlines how to attain financial freedom in just five years.

Redefining Financial Freedom

To achieve full financial independence within five years—where passive income covers all your expenses—is extremely difficult. Fortunately, it’s not essential.

After interviewing numerous people who reached financial independence through real estate, a common theme emerged: many return to work. The allure of endless leisure soon fades, and many seek new purpose after the initial thrill of early retirement.

Ultimately, most people return to work in some capacity. The difference lies in the nature of that work: rather than returning to a high-pressure career, you can engage in work on your own terms—whether it’s launching a business, joining a nonprofit, or pursuing creative endeavors.

The key is ensuring your "dream work" covers your basic living expenses. If your dream work provides enough income to sustain you, there’s no need to keep pursuing passive income aggressively. If not, the gap between your income and desired lifestyle will need to be supplemented with passive income.

The Five Freedoms of Financial Independence

When pursuing financial independence, many are actually seeking five freedoms: freedom from financial stress, freedom to set your own work hours, freedom to work from any location, the liberty to pursue meaningful work, and eventual full financial independence.

You don’t need to reach complete financial independence to experience fulfillment. By earning enough passive income to support your dream work, you can already enjoy most of these freedoms.

Setting a Financial Target

If your dream work doesn’t cover your living expenses, you’ll need to supplement it with passive income. For example, if you need $6,000 per month but only earn $5,000 from active work, you would need $1,000 per month in passive income to bridge the gap.

To determine how much to invest, calculate the returns required. For instance, if you anticipate earning a 12% annual return, you would need to invest $100,000 to generate $1,000 per month.

While retirees typically withdraw just 4% from their portfolios to manage risk, real estate offers a higher potential return—making it a strong option for those aiming for early financial independence.

Taking Calculated Risks in Real Estate

Pursuing financial freedom at a younger age allows for riskier, higher-return investments. In the worst-case scenario, you can always return to work. Real estate, in particular, provides opportunities to earn returns that often exceed 20%, though these opportunities are typically pursued by experienced investors.

For those willing to take on calculated risks, real estate offers a path to financial freedom that far exceeds traditional investment returns.

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