{"id":2903,"date":"2022-06-26T05:05:30","date_gmt":"2022-06-26T05:05:30","guid":{"rendered":"https:\/\/royabhishek.in\/urbanbuyer\/heres-why-property-investors-develop-financial-freedom\/"},"modified":"2022-06-26T05:05:30","modified_gmt":"2022-06-26T05:05:30","slug":"heres-why-property-investors-develop-financial-freedom","status":"publish","type":"post","link":"https:\/\/royabhishek.in\/urbanbuyer\/heres-why-property-investors-develop-financial-freedom\/","title":{"rendered":"Here’s why property investors develop financial freedom"},"content":{"rendered":"

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We dream of it, we work for it, and sometimes we even plan for it – but can the average Australian really develop financial independence?<\/p>\n

The simple answer is YES \u2013 because if others have achieved it so can you.<\/p>\n

I\u2019ll let you in on a little secret… wealthy people don\u2019t do different things; they just do things in a different way – from the way they think to the actions they take.<\/p>\n

\"Investment<\/p>\n

This means you can also become wealthy by doing what they do and thinking about how they think.\n<\/p>\n

For example\u2026 not everybody has to work hard for their money.<\/p>\n

That\u2019s because the rich earn recurring<\/strong> passive income<\/strong>.<\/p>\n

Being a property investor or a business owner is like owning the proverbial money tree \u2013 you control something that makes money for you, without the need to even be there.<\/p>\n

Being a property investor or a business owner is like owning the proverbial money tree \u2013 you control something that makes money for you, without the need to even be there.<\/p>\n

In his Rich Dad, Poor Dad<\/i> series of books, Robert Kiyosaki explains how the rich differ from the poor.<\/p>\n

It\u2019s not just because they have more money.<\/p>\n

The main difference is how they think about and interact with their money and when it comes to how people make money, we can all be placed in one of four categories.<\/p>\n

1. The employed \u2013 have a job<\/span><\/h2>\n

Employees trade hours for dollars; however, what they really get are leftovers \u2013 after the government takes its share in taxes.<\/p>\n

\u201cSo what? They do that to everyone!\u201d<\/i> you may be thinking.<\/p>\n

Well no, they don\u2019t.<\/p>\n

\"Working<\/p>\n

Business owners and investors only pay tax on what\u2019s left over after their bills are paid.<\/p>\n

Wouldn\u2019t it be nice to only have to pay tax on what you don\u2019t spend?<\/p>\n

2. The self-employed \u2013 own a job<\/span><\/h2>\n

Self-employed people and professionals usually want to be their own boss.<\/p>\n

They\u2019re prepared to work hard, but often what they\u2019ve done is swap one boss for hundreds of bosses \u2013 customers or clients.<\/p>\n

\"Rich<\/p>\n

In reality, self-employed people aren\u2019t business owners \u2013 they still work for their money, but they\u2019re somewhat better off than employed people because they\u2019re able to take advantage of tax deductions that allow them to pay their business expenses before being taxed on what\u2019s left over.<\/p>\n

3. The business owner \u2013 owns a system and people work for them<\/span><\/h2>\n

The true business owner not only doesn\u2019t have to<\/i> work, but he also doesn\u2019t have to be<\/i> at work every day, because he has a system and people to do it all for him, and possibly even supervisors to manage his workers.<\/p>\n

The true business owner asks, \u201cWhy do it yourself when you can employ someone to do it for you?\u201d<\/p>\n

\"Businessman<\/p>\n

After initially investing in a business idea, and a business system, they let the money they have invested \u2013 which is now in the form of a business \u2013 work for them.<\/p>\n

4. The investor \u2013 money works for them<\/span><\/h2>\n

Investors don\u2019t have to work either, because their money works for them.<\/p>\n

If you hope to become rich at some point, you have to belong to this group; because investors convert money into wealth.<\/p>\n

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Obviously, you\u2019re not going to jump from being an employee to a full-time investor overnight.\u00a0\u00a0<\/strong><\/p>\n

But you can start taking the steps to move from being an employee or self-employed, by building your own property portfolio.<\/p>\n

Done correctly, income-earning residential real estate can be your vehicle for getting out of the rat race!<\/p>\n

There are also many legal tax advantages available to investors.<\/p>\n

One of the reasons the rich get richer is that in some cases, they make millions and legally pay very little tax.<\/strong><\/p>\n

That\u2019s because they build their assets, not their income and make their money as investors, not workers.<\/p>\n

Imagine you own investment properties worth $1 million that increase in value by 8% each year.<\/p>\n

In twelve months your asset base will have increased by $80,000, yet no tax is payable on this.<\/p>\n

Wealthy property investors can borrow against the increased value of their assets and use the money to reinvest or live off.<\/p>\n

Where do you stand?<\/span><\/span><\/h2>\n

\"Family<\/p>\n

Which category do you fit in?<\/p>\n

Are you an employee, self-employed, a business owner or an investor?<\/p>\n

In the past, there has been a slow but steady transfer of wealth from employees and self-employed to business owners and investors.<\/strong><\/p>\n

They\u2019re all playing the same game, but each group is playing with a different set of rules and their mindsets are poles apart. \u00a0<\/strong><\/p>\n

Employees and self-employed work harder and harder, trying to build cash flow, yet many dig themselves deeper into a hole of consumer debt.<\/p>\n

In the meantime, business owners and investors slowly build up their assets.<\/p>\n

The employed and self-employed pay the most tax, while business owners and investors take advantage of legal tax loopholes.<\/p>\n

Logically, if you want to become wealthy you are going to have to become either a business owner or an investor. It\u2019s just too hard to become rich as an employee or self-employed worker.<\/p>\n

Does that mean you should give up your day job?<\/span><\/span><\/h2>\n

Not necessarily.<\/p>\n

Many employees have become very successful investors \u2013 in particular property investors.<\/p>\n

So rather than relinquish your job, I suggest you start educating yourself with the aim of becoming a property investor \u2013 initially in your spare time and then maybe, if you choose, on a full-time basis.<\/p>\n

Should you become a business owner?<\/span><\/span><\/h2>\n

Most small businesses fail in the first 5 years.<\/p>\n

In general, I think the opportunity to become rich through successful property investment is much easier for the average Australian.<\/p>\n

That\u2019s why I recommend you seriously consider making your fortune as an educated, financially fluent real estate investor who treats their property as a business.<\/p>\n

What does all this mean for you?\u00a0<\/span><\/span><\/h2>\n

Of course\u2026if you want to grow your property portfolio in the more difficult environment we’re experiencing this year you\u2019ll need to buy the right type of property.<\/p>\n

One that has a level of scarcity, meaning they will be in continuous strong demand by owner-occupiers (to keep pushing up the value) and tenants (to help subsidise your mortgage); in the right location (one that has outperformed the long-term averages), at the right time in the property cycle (that would be now in many states) and for the right price.<\/p>\n