In this blog, we are discussing property investment. How great would it be to retire early? I don’t mean a few years before your state pension kicks in, we’re talking about the prospect that you could retire by 40!
We’ll be looking at how much you’re likely to get from your pension, and what you need to do now if you want to retire on a good amount, or if you want to bring your retirement age forward.
We all know how retirement works, in general: you work a 9-5 job until you’re 65, then you retire and receive your average pension, (workplace pension), and perhaps, a private one… if you’ve set it up!
You might even have set yourself a goal to be mortgage-free by the time you reach retirement age, or just after. You wouldn’t be alone in that, thanks to what we learn from society the average person decides that paying off their mortgage and having a steady pension income will be enough.
What doesn’t get considered is keeping up with the desired standard of living after inflation. Plus the fact that the average life expectancy is already going up to 95 years – that’s a long time period to cover financially.
If you sat down after paying off your mortgage, and looked at what money you have left plus what your pension income will be… would it provide you with enough financial stability to live the lifestyle you want?
When I did this for myself, I realised the sum would be far too small – just £1200 + cost of inflation. I didn’t want to give up holidays, treating myself to clothes, dinners out, supporting my children, and paying for care if my parents needed it.
I needed a new plan.
How to retire early & gain financial freedom through property investing
Many years ago I read an article in the paper about two young men in their 30s, they were retired AND financially free. I mean clearly, my jaw dropped to the floor – how on earth did they manage it?
One word – investing.
Now the more I thought about it, the more I got hooked on the idea of ‘work to live, don’t live to work’. So, after speaking to a couple of property investors, who happened to be multimillionaires, I felt the aspiration to push myself into property investing too.
Has it worked out for me? That’s a resounding yes. I’m building passive income on top of my employment income, which is enabling me to live an awesome life now and will set me up for early and comfortable retirement by the time I’m 40!
Now, when I turned 35, it got me thinking about my goal of early retirement. I had 5 years left to make it happen. So I decided it was time to do some calculations, which I’m going to walk you through.
Working out your Financial Freedom Figure
Being financially free means you’ve got enough money coming in without working, and that income pays for everything you need and want to do.
- Paying off your mortgage or other loans
- Going abroad on three holidays a year
- Paying for your child’s education and recreational activities
- Treating yourself and your family to clothes and toys etc.
- Paying for bills, groceries, and dinners out
- Buying cars, bicycles, and other ‘luxury’ items
- Affording care for your relatives
What does your ideal lifestyle cost you per month?
Going into property investment, for this example, I’m basing the calculations of the average UK salary – £2500 PCM.
The average Buy to Let income is £350 PCM. Rent to Rent (renting from a landlord and putting on AirBnB for example) is in the region of £1250 PCM. You can also rent out Commercial Property, the average of which brings in £1000 PCM.
So if I needed to make up that £2500 a month for the next 5 years to be financially free, I would need either:
- 7 Buy to Let properties
- 2 Rent to Rent properties
- 2.5 Commercial properties
Anyone can become a property investor, I’m a mum of two and I do it part-time alongside my full-time employment. It’s not rocket science, it can be pretty straightforward, but you do need to know what you’re doing and ensure that you are always legally compliant.
If you’re thinking about getting into property investing and wondering “how can I afford it”, I’d always suggest reaching out to the experts. We can show you how to buy in property or do Rent to Rent without using all of your money.
Getting started with property investing & the benefits
Firstly, you should sit down and work out your Financial Freedom Figure, then research what inflation is meant to look like to get a better idea of that final number.
Speak to an expert, or someone with good experience and understanding of property investing. The actual process is simple, but we all tend to put barriers up with our minds which then makes it too big a challenge.
Anything you are learning for the first time can be hard, but if you put the effort into it you can achieve a high level of passive income. This will set you up for financial freedom and a better quality of retirement.
The best thing about having the extra income is less financial stress – I know that has become one of the biggest benefits to me. You won’t have to worry about being in debt, constantly in your overdraft, or going from credit card to credit card.
Since taking the plunge into property investment, I buy what I want when I want, I never panic about birthdays or bills. What’s more, if I wanted to quit my day job tomorrow, I could. If I decided I never wanted to work again, I now don’t have to thanks to property investing.
Why? Because I have built up my property investment portfolio and I’ve done it in less than 3 years! And you could do it too.