Post Tuesday What is the “target return” on the way to the economic freedom number destination? In previous posts we saw…

Post Tuesday

What is a “target yield” on the way to the economic freedom target?

In previous posts we have seen why real estate is an ideal tool to gain capital and to achieve financial freedom. We have seen how to build a work plan, and today I want to emphasize the return we are looking for in real estate deals that we make on the way to the destination.

Let's say we start our program with a million shekels (some are equity and some are cheap financing that I'll talk about later today).
And our target is NIS 7.5 million. I set a goal for financial freedom after 12 years.
In calculating the required yield, this is a yield target of 18% per year.

In other words, if I start my way to the goal with a sum of one million shekels, in order to reach 7.5 a million after 12 years, I have to achieve at least one 18 return every year to get there. (The calculation can be made in any financial account).

Once I realized the "target return", I stopped looking at deals that yielded less than 15% per year. Why 15% and not 18% because among the deals I examine there are also deals with higher returns and I'm looking for an average of 18% per year.

In every transaction I examine (and tomorrow we will talk about how to look at what a risky deal is and what "must" be in a deal to make sure it is reliable) I look at the expected annual return, of course in relation to risk.

Such returns are mainly in entrepreneurship, betterment and the like, rather than in a cash flow transaction, and these are the deals I am looking for all the time.

At the beginning of the post I mentioned cheap capital.
Cheap capital can come from existing sources that you have not even thought about.
Supplementary funds, pension funds and provident funds.
All of these assets are yours, and are "imprisoned" until retirement age. but!
Most people do not know that we do not need to open our advanced education fund, and we can get loans at the expense of these assets, with no repayment of principal (only interest, so-called Grace) at very low interest rates (and in some companies also P-0.5%).
Cheap financing can be the basis for our first investments.
It is important for me to note that all of the above are examples and shown from my experience, and every person needs professional advice before applying to these entities for loans…

In the next post - how to look at what a risky deal is and what “must” be in a deal to make sure it is reliable

Link to the original post in the United States Real Estate Forum on Facebook - Works on a desktop computer (To view the post must be members approved for the forum):
https://www.facebook.com/1885945295012997/posts/2239465956327594

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