Achieving Financial Freedom by “Chunking” Passive Income from Real Estate Investments

12.03.2010 | Author: guest | Posted in Real Estate

“Chunking” in real estate investing is a technique that allows you to earn cash flow from real estate investments, creating passive income streams and working toward financial freedom.

Wealth is defined by “Rich Dad, Poor Dad’s” Robert Kiyosaki and other wealth experts not as how much money you have in a bank account, and not necessarily the money you earn- but rather the passive streams of income you’ve established that make you money whether you’re sleeping, eating, sick, or on vacation. A good way to think about it is this- if you quit your job today, how long could you live off your passive income (like interest from bank accounts, stock dividends, or cash flow from investment property)? Your answer to this question determines how wealthy you are. Financial freedom has been attained when you reach a point where your passive income meets and exceeds all your bills. Odds are you don’t have the principle or time to achieve this through interest, nor do you want to “gamble” your money away with stock market speculation- this leaves real estate investing as the best vehicle for financial freedom.

Meeting and exceeding all your bills with real estate investing might seem an impossible task at first, especially when you consider that a single rent property earns you only about $200 a month in positive cash flow, and the average Americans monthly expenses are in excess of $3,000. But if break this method apart you’ll realize that the cash flow you receive on just one rental property is doing more to retire you than a lifetime of paycheck deductions for your 401K. You can easily buy 15 rent houses in five years, using less than $25,000 of your own money. In the mean time, think of each house as increasing your net income indefinitely. As long as that property is maintained it will be earning you money no matter where you are or what you are doing.

If it helps, break up your monthly expenses into chunks. Think of the monthly cash flow you get from your first property as paying for your car payment. Keep adding investment properties to pay for “chunks” of your monthly expenditures until you are financially independent.

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