Creating Passive Income to Achieve Financial Freedom

Most people seek to achieve financial freedom in their lives. They aspire to have sufficient savings, investments, and cash for living expenses. They want to enjoy life doing things they want to do, afford their chosen lifestyle, or pursue life passions – without being tied to a day job or committing significant time and effort to generate income. Many believe that retirement from W2 jobs will afford them financial freedom, and while being free to retire when you want is important, should you wait until you’re 65 to do it?

In my recent conversation with real estate investor and financial freedom and lifestyle coach Maurice Philogene, we talked about his financial freedom goal and the path he took to reach it. He spoke about how he used real estate investment and professional careers to generate a passive income stream, build a family legacy, and live life leveraging the principles of financial, time, and location freedom. In this blog, I’ll share some of the freedom principles we talked about and a few tips from Maurice on how he worked to achieve his goals. If you want to listen to our full podcast, click here.

Passive Income as a Path to Financial Freedom

“People want to live life in different ways and many want to get out of the rat race but don’t know how. They don’t realize that passive income is one of the most powerful tools in the world because passive income creates time. Time wealth is the most valuable asset that exists in this world.  No one can create time but passive income frees it for you so you can go do other things,” tells Maurice.

One way to generate passive income is by investing in real estate that offers multiple ways to create passive income streams. Many people prefer real estate investing because of the tangible quality of the asset that they would own compared to stocks and mutual funds. In addition, without much work on the investor’s part, real estate properties increase in value over time – from which the investor will profit upon the sale of the property. Further, an investor may receive a more consistent passive income by collecting rent from tenants of properties that are rented out. While not everyone is cut out to be a landlord, there are opportunities to own and invest in real estate through syndication. Investors who do not have the time, knowledge, or large sums to invest individually have the option to become passive investors in commercial real estate syndication and secure a regular cash flow.

“My real estate asset was condos. I bought 35 of them in 12 years with an average salary of $80,000. Sold some and eventually, in 2014 I had 18 paid-off condo units generating $100,000+ a year,” shares Maurice, highlighting that his passive income exceeded his corporate salary and was more than what he needed for living expenses. “I’ve been ‘free’ since 2014,” he adds.  

Passive income doesn’t just benefit you, but extends to your children and their children as well, creating generational wealth.

Creating Passive Income

Here are some guidelines to get you on the path to financial freedom through income from passive investing. 

  1. Understand and set your goals

Be specific with what financial freedom means for you. Envision and write down your goals: the kind of lifestyle you want to live, how much savings you want in your bank account, the amount of your investment portfolio, being completely debt-free. Then, evaluate your current financial standing and spending habits. Ask yourself – with your current standing, what do you need to do to reach your goals? Draw out a plan specifying the steps to get to your goals.

 “Remember, financial freedom isn’t about being super-rich, powerful or famous. It’s about living the life that you want without solely relying on a job,” advises Maurice.

“When I said I’m ‘free’ since 2014, it doesn’t mean I retired. It means no one can control me because my passive income far exceeds my expenses and I make conscious decisions to ‘live like a millionaire’ – meaning I do a lot of interesting things at home and abroad instead of wasting money on commercial stuff,” he adds.

As you work toward your goal, create the mindset to be happy in your current job and personal life, as this can help you stay motivated to stick with the plan. 

  1. Replace Limiting Beliefs with Empowering Ones

Many people are paralyzed by financial fear that holds them back from attaining their financial goals. Most people dread failure while others believe that they can’t have wealth because their family never had it. Still, others think that they are not talented enough or experienced enough to earn the right to be financially free. 

As a newcomer in the real estate industry, Maurice’s limiting belief was, “Success is not supposed to happen to Maurice, an immigrant’s kid from inner-city Boston who thought sports was going to be his way out.”

But now, Maurice confidently declares, “I am not scared of anything. I am not scared to fail. I am not scared to try something new. I am not scared to go out and get an $8 million loan. That story I mentioned about me going to the library when I was 23, that’s who I am when I find some sort of new challenge. I will study-study-study then I will go find an expert to help me,” emphasizing the importance of self-education, expert advice, and self-determination to overcome challenges.

Identify your own limiting beliefs and replace them with empowering thoughts and ideas. Telling yourself “I am worthy of an abundant life”, “I am ready for a life of joy and meaning” will give you motivation and a positive mindset to achieve your financial freedom goal.

“That’s been one of the hardest things but your mental switch has to flip over for you to get there,” encourages Maurice.

  1. Get a Mentor

“The reason it took me 14 years to become financially independent on single-family investing is because I did it myself, I had no mentor. The reason it has taken me three years to execute on 50 to 150-unit-buildings in the multifamily space is that I had a mentor. That mentor showed me what to do, what not to do, the day-to-day details of transactions. That mentor helped me break down limiting beliefs from the beginning,” declares Maurice, stressing the value of having a mentor in your journey toward financial freedom. 

Mentors give encouragement and guidance – especially when things get challenging. They are our sounding boards who we can bounce ideas off of, and count on to tell us their honest opinions. Keeping a mentor by your side as you work toward your goal eases your worries by knowing that there is someone you can trust who has your best interests in mind.

  1. Network and Build Your Team

“Business is a team sport but life, even more, is a team sport,” quips Maurice. “Everything is about networking. I have done a really decent job networking and connecting with the right people. I want to be part of groups where I have similar values so I seek like-minded people. That’s how my connections and these teams have come up,” he adds.

Building partnerships with people who share your values and passion, and complement your strengths and weaknesses is essential in attaining your financial freedom goals. Your combined abilities will be beneficial for all members of the team as you stand to benefit from each other’s expertise and experiences, and help each other reach your goals.

“We just can’t do this life on our own, and to be honest, it ain’t fun. I would rather have a business transaction, a trip, time with my kids together with people than doing it on my own. The more I met like-minded people, the happier my life has become,” asserts Maurice.

  1. Strengthen Your Ability to Store Money

“Here’s how I did it through 2014. Work your job. Store money, pay yourself first before expenses. When you’ve stored enough, buy an asset that pays you. Use the cash flow plus your salary and store enough again. Buy another asset. Press repeat. Then, repeat again.” reveals Maurice.

“The notion that you need millions of dollars to be free is false. You don’t need millions. A modest paycheck is enough. What you need is a plan that will help make that 9 to 5 easier to go to while you set aside money. While at it, stop buying unneeded stuff that’s forcing you to work,” he further advises.

Learning to prioritize between the things you need and the things you want, and making small adjustments to your lifestyle and spending habits will help you reach your goal faster. Developing the mindset of living life to the fullest with less while nurturing an outlook of gratitude with what you do have will help change your perspective about wealth.

Final Thoughts

There are pitfalls, ups and downs, and issues that even a seasoned contractor can’t predict in value-add multifamily renovations. But with thorough market research and due diligence, and a solid value-add plan, you’ll be ready to take on the challenges. Just remember, open and constant communication, and teamwork with your contractor gives you an edge for success.

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Interested to learn more about investing? If you are looking for good investment opportunities for your portfolio, we encourage you to talk with one of our experts today. Email us at info@lifebridgecapital.com or call to see if LifeBridge Capital’s investments are a fit for you.

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