Achieving Financial Independence Through Real Estate: Part II

October 26th, 2007 | Stacey | Debt Management, Financial Freedom, Financial Independence

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Achieving financial independence can seem almost impossible until you gain the knowledge, power and confidence to pursue your goals. Desire to pursue your goals will follow your ability to accomplish them.

Investing in real estate is a great way to become financially free in the future and to drastically increase your net worth with just a few solid decisions. Before you begin your adventures in real estate investment for financial independence, make sure you you have done credit card debt elimination so you have clear, free credit for your endeavors. Next, consider the meaning of the following key terms:

• capital gain is the increased value of your real property over the course of time and the bottom line is the difference between your purchase price and the amount you can sell the property for;

• cash flow is your income after you pay necessary expenses;

• cash on cash return is the return on your real property investment expressed in percentage point – also referred to as CCR;

• down payment is the money you have to take out of your pocket to put down on the property to buy it, which can be up to 20 percent plus the closing costs;

• expenses are bills paid to maintain the property such as mortgages, taxes and maintenance;

• gross operating income is money earned from the investment such as rents, parking and the like, often called GOI;

• net operating income is the GOI minus your expenses;

• PITI is the short term for principle, interest, taxes and insurance;

• proforma analysis is an an education guess about the potential of a real estate investment property; and

• vacancy rate is the month of time the property will not be occupied.

Our next blog entry about achieving financial independence through real estate will discuss types of investments and investors and their goals. Consider real estate as your key to financial freedom in the future.