STEP 2: Setting Your Real Estate Goals

Passive income is the suggested method of growing wealth. What is passive income? You’re using other people’s money. It’s exactly how it sounds: passive. It’s using someone else’s time and energy to help build your wealth.

Your W2 is not a passive income stream. After reviewing your financial statement ( see step 1), you should focus on the passive income you want to build. What amount of passive income do you want to aim for each month to start realistically? $500.00? $1,000? Your goals depend on what you are willing to do to make this passive income a reality.

Now, pick a specific goal and save for it! You can read here to learn how much money you need for a down payment.

Example: When we sold our primary home in 2015, I knew I wanted to take the money we made on that sale, put it in a high-yield savings account to build interest, and buy a short-term rental. It wasn’t until 2019 that we purchased our first short-term rental. But without that planning, we would not have met our goal.

When purchasing your rental property, you’ll need to know your passive income goal and strategy. Do you want to invest in long-term, short-term, vacation, mid-term rentals, or commercial real estate? Each type of investment requires a different buyer box.

Now that you’ve picked your goal and your investment strategy. You will need to select your passive income goals.

When buying our rental property, I wanted it to cash flow $1,000 monthly. Because this number was so high, I knew a vacation rental was a realistic investment strategy to meet that goal. If you'd like to learn more about the different types of investment real estate, you can read my blog post HERE.