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What is Financial Freedom?: Achieve it With Real Estate (Multi-Family Crowdfunding Investing)

Financial freedom is one of the most sought-after goals in the world. But what is financial freedom, exactly? And how can you achieve it? 

Financial freedom is an elusive concept for many people. It’s a goal shared by many people, but most of them never actually achieve it! Why is that? It’s because there is a lot of misinformation out there about how to achieve it.

It can be hard to sift through all the information to find the right path and even harder to fulfill. That’s why we’re going to give you practical tips on ways to achieve financial freedom.

One of the best ways to escape the rat race is to invest in real estate. You can build or buy a home that will appreciate over time and could someday be worth thousands or even millions of dollars. But most people cannot afford to purchase a house and manage it independently. That’s where multifamily crowdfunding investments come in.

Financial freedom is one of those things that we all want. You can’t put a price on it, but you still want it and want it now. We know that real estate is an excellent way to get there. So we’re diving into the world of multifamily investing to show you how it can help you become financially free.

What Financial Freedom Means

Taking charge of your personal finance is the first step toward financial freedom. A consistent cash flow enables you to lead the life you desire. You don’t stress about how you’ll cover unforeseen expenses or debts, and you don’t have a mountain of debt.

However, it’s okay to say financial freedom means different things depending on who you ask. According to some, being wealthy enough never to have to worry about money is the key to achieving financial freedom. However, numerous variables, such as your objectives, way of life, region, and age, will define what financial freedom means to you.

But, having financial freedom means you have options. It means you can take a trip to that place you love, take care of all your needs and desires, or pursue your passion and create a profitable business. 

Recession Proof Your Future
- Invest in a passive income strategy!

Download the Real Estate Syndication Handbook to learn how to invest in real estate and secure your financial future!

Financial Freedom vs. Financial Independence: What’s The Difference?

Although “financial freedom” and “financial independence” are frequently used interchangeably, they have different meanings. Understanding the difference is crucial to work toward true financial freedom. 

The core concept of “independence”—the capacity to take care of your financial requirements without depending on anybody else—makes financial independence possible. 

When you have a steady cash flow, you can pay all of your debts, handle all your expenses, and still have some money set aside for savings. You can even begin your investment journey. But while you’ve achieved financial independence, that doesn’t necessarily mean you have financial freedom.

Financial freedom involves a healthy work-life balance, numerous possibilities, and enough income to work only when you choose to. And while there are several ways to build passive income, one of the great ways to gain financial freedom is by investing in real estate. This option is a tried and tested method that has been used for decades. It has stood the test of time.

Actions That Can Help You Gain Financial Freedom

Small House for investment

Financial freedom is not something that can be attained overnight or by just anyone. You’ll need to put in a lot of effort if you want to have any chance of quitting your day job. Starting with a strong foundation will allow you to gain the momentum necessary to reach financial freedom. Additionally, you can take the following actions to tip the odds in your favor:

Learn Financial Control 

One of the essential steps to financial freedom is taking charge of your finances. To do this, you must start spending less than you make. Although it seems easy enough, many people get buried under debt.

You must take charge of your finances and manage your costs effectively before considering being financially independent. You need to create a budget and then follow it religiously!

Eliminate Excessive Spending

You can track your spending by using a 50/30/20 budgeting formula, which allocates 50% to necessities, 30% to “wants,” and 20% to savings. After that, you need to cut any unnecessary spending. You must examine your budget and identify ways to reduce expenditure because no one generates money by spending excessive amounts.

Establish an Emergency Fund

Creating a savings account or emergency fund is one of the smartest financial moves anyone can make. On your journey to financial freedom, you never know what life will throw at you. Before making any capital market investments or significant financial decisions, ensure that you build a savings account with enough money to cover costs for six months.

An emergency fund should be kept in high-yield savings accounts. If something unforeseen occurs, having this fund can keep you from being in the lurch. No matter your financial plans or moves, establish an emergency fund first to prepare for crises.

Boost Your Productivity and Earnings

You can only avoid extra costs until they become unavoidable. Therefore, the next obvious step is to enhance your revenue and productivity after you have cut out any superfluous spending. Eventually, finding strategies to make your money work for you is best. 

While there are many powerful tools that can assist your journey to financial freedom, you must find various strategies to boost your net worth. 

True financial freedom appears to be an unrealistic goal for many. The state of the economy is erratic, it can be daunting to invest, and most people today work longer hours and earn less money. But the only way out is to accept responsibility and implement a few adjustments. And real estate still provides a reliable way out. 

So let’s take a look at exactly what financial freedom is, and how real estate investing can get you there. 

How Can You Achieve Financial Freedom Through Real Estate Investing 

Although there are many strategies to become financially free, many investors have found one wealth-building strategy superior to all of the others. Real estate is one of the most acceptable methods to achieve financial freedom. 

You won’t need to depend on a 9-to-5 if you can build adequate passive income from a portfolio of real estate investments. Various real estate investment options are available, including multifamily buildings, single-family rentals, and duplexes. 

Another choice is to put money into commercial real estate or REITs, which enables investors to adopt a hands-off approach while diversifying their investment portfolio.

Recession Proof Your Future
- Invest in a passive income strategy!

Download the Real Estate Syndication Handbook to learn how to invest in real estate and secure your financial future!

Multifamily Crowdfunding Investing

The term “real estate crowdfunding” describes combining funds for a syndicated investment. Therefore, multifamily crowdfunding refers to numerous investors pooling their resources to purchase multifamily properties jointly.

Multifamily crowdfunding provides a unique chance to invest in apartment buildings you can’t purchase alone. An experienced investor will locate passive investors, perform due diligence on the property, and assess it before purchasing.

Think of multifamily crowdfunding as a partnership or a real estate syndication project. A multifamily crowdfunding deal consists of:

  • General Partners or professional investors 
  • Passive Investors or partners 

Each party has distinct roles and tasks. The professional investor is responsible for overseeing the entire transaction. Following the close of a transaction, the professional investor will find and oversee the exchange.

Pooling the funds required to purchase a property is the responsibility of the partners and passive investors. In exchange for shares of the multifamily property, passive investors contribute a portion of the required cash upfront.

Investors can utilize an agreement for a variety of property categories. However, because of its minimal risk and potential for passive income generation, multifamily investing is a favorite among investors.

General partners may be companies or individuals who find deals, attract investors, and make effective decisions. As professionals, they have a wealth of real estate experience and are skilled at performing due research on prospective sales. 

If you’re looking for a way into the world of passive multifamily investing, Holdfolio offers all the advantages real estate investing offers without you having to worry about managing your money. That way, you can concentrate on the things that matter while your money grows. Schedule a call to get started. 

What A Multifamily Deal Looks Like

Investors in multifamily properties make money from the rental income generated by the rental revenue of the property as well as from any potential upside benefit from a future sale of the property.

Usually, passive investors receive payments of 6% to 9% of rental income ahead of the general partner.

Additionally, many crowdfunding platforms require you to invest minimum amounts of $50,000. With Holdfolio, investors can access highly profitable multifamily deals for as little as $20,000. 

You can use small amounts of capital to increase your investment power and provide passive income. Long-term, compounding provides a fantastic opportunity to earn significant returns on your investment.

Income from Multifamily Real Estate Investments

Real estate crowdfunding and passive investors primarily in the following ways:

  • Property value appreciation
  • Rental income

Investors receive multiple streams of rental income from the property’s tenants. Usually, this distribution takes place monthly or quarterly. Passive investors benefit financially when a property’s value rises over time, as well as with scheduled rental increases, and any property development plans that take place over the life of the investment. Investors usually pay some fees for property acquisition and operations. 

Advantages of A Multifamily Crowdfunding 

Handshake Photo

Finding multiple investors to contribute to a deal’s financing is essential to multifamily crowdfunding. We’ll highlight just a few of the many advantages of a multifamily crowdfunding deal.

Occupancy

The less space a residence has, the less financial impact vacancy will have. Large multifamily complexes are profitable even with several vacant units because of their size and low vacancy rate.

Decreased Risk

You’re investing passively because you and other investors pool money. Therefore, if you take part in crowdfunding, the risk is dispersed across all investors and the company operating the deal. 

Time

Multifamily crowdfunding deals require less time investment than other real estate ventures. The professionals often handle loan paperwork, transaction research, and property management to give you more time to pursue other interests while reaping the benefits of your investment.

Real Estate Crowdfunding Requirements 

Participating in real estate crowdfunding deals is pretty straightforward. But you must meet specific basic requirements to be a part of a deal. These requirements often differ depending on whether you’re investing in a crowdfunding platform, or a private syndicated project of similar caliber. Here are those basic requirements to consider:

Basic Knowledge of Real Estate Investing

Even though real estate crowdfunding is similar to a syndication deal, there is a significant difference between them. Each investor interested in real estate syndication should have a solid understanding of real estate investing and its ramifications, risks, and anticipated returns. 

For crowdfunding, the benefit is that you don’t need knowledge of real estate investing. Experienced investors manage your investment for you and ensure the best possible returns.

Partnership

To invest in multifamily syndication, an investor must partner with a general partner or syndication company. If you’re entering into a private partnership with investors from a group or society, it’s important to do your due diligence and ensure they have the competency, knowledge, and trustworthiness to manage the deal effectively. 

With crowdfunding, it also pays to ensure the company you invest with is reliable and experienced. Though usually it’s much easier to determine whether you have found the real deal or not. For example, you can check their success rate, transaction volume, and average returns on their website, or speak to current partners. 

Accredited Investor vs. Non-Accredited Investor

While allowing crowdfunded real estate investing, the law controls several parts of the operations. The federal government, for instance, continues to distinguish between accredited and non-accredited investors.

Most investors must be accredited investors to take part in multifamily syndication. A person or couple must earn more than $250K annually to qualify as an accredited investor. Alternatively, they must own assets worth at least $1 million in addition to their main house.

Accredited investors satisfy the predetermined yearly income or net worth requirement. 

Accredited investors can participate in syndicated projects with higher-risk, and higher potential gain, since the accredited investors are considered to have the financial muscle to shoulder potential losses. 

Non-accredited investors who don’t meet the SEC’s annual income or net worth requirements can participate in some real estate syndication deals. However, the sponsor may have to cope with additional paperwork.

Other Real Estate Options

Investing in Real estate is an excellent way to build wealth towards achieving financial freedom, but it can be difficult for beginners. Here are some other opportunities you might consider.

Rental Property 

Your long-term investment plan could include owning rental property. In addition to immediate income flow, a rental home provides long-term gains as the asset’s value (hopefully) rises. Additionally, as you or your tenants pay off the mortgage, you can see your equity rise.

It’s possible to get a good return on your investment by owning a conventional rental in some regions. The downside is that you’ll also be responsible for managing tenants, as well as property repairs and maintenance. 

Commercial Real Estate

Retail structures, industrial facilities, and office buildings are examples of commercial real estate. With this kind of investment, there might be good financial returns, but there is a lot of risk. 

During a recession, this kind of property is frequently affected particularly hard. Due to the higher responsibility associated with these assets, you should make sure that you have a strong insurance plan in place for them.

Real Estate Investment Trusts (REITs)

Businesses that manage properties that generate income are known as real estate investment trusts. These are excellent alternatives for confident investors because they need less capital outlay than traditional real estate, making it simple to diversify your real estate holdings.

Vacation Rentals 

While short-term rentals like Airbnb can be profitable investments, they also come with many risks. As we saw during the pandemic, stay-at-home orders may be fatal to the travel sector. And situations like these are generally terrible, especially for short-term vacation rentals. 

Due to the seasonal nature of these assets, you should ensure that you have accounted for more excellent vacancy rates. Additionally, various laws govern these rentals that differ by state and city, so ensure you keep up with them.

Pro Tip

Investment Illustration

Ensure you are in charge of your financial situation before investing in real estate. Your chances of being approved for loans increase with solid credit and little debt. Many people do not know the significance of credit. Avoid relying solely on your own money unless you have a lot of money in your bank account and can pay in cash.

A strong credit score will enable you to access better financing alternatives that demand little to none of your cash. Most individuals just getting started in real estate do not have the cash to finance an investment alone, so consider improving your credit score.

The Bottom Line

Real estate is one of the best wealth-creation options and is often the best way to secure a stable, long-term financial future. A simple investment can move you away from wondering “what is financial freedom?” to seeing how it feels for yourself!  

If you are proactive, the path to financial freedom will get easier. A good start is understanding what it will take to reduce your reliance on a typical job. But if you’re serious about discovering how to be financially free, you should consider Investing in real estate that generates passive income.

If you’ve ever considered purchasing a property but are unsure if you’re ready, you might wonder what your options are. There are many different real estate investment options, and it can be hard to decide which is the right fit. But with professional guidance, you’ll be on your way to greater financial freedom. 

You can profit from multifamily real estate without the stress of managing properties. Join thousands of investors on Holdfolio’s investment platform to invest in real estate with excellent profits without the hassle of maintaining tenants or properties. Contact Us Today!

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TJ Lokboj

TJ Lokboj is an entrepreneur with a passion for adding value to the real estate investing industry through adopting digital transformation. Some of TJs companies have been featured in Yahoo Finance, Morningstar, Benzinga, and many other publications.

TJ is the managing partner of Holdfolio, a real estate investment firm that leverages a premier crowdfunding platform.

He is also a member of the Forbes real estate council and co-founded SyndicationPro, which is the #1 syndication management SaaS solution in the market today.

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