Whats The Easiest Route to Financial Freedom for Me?

Hi guys,

I'm a 35 yr old guy living at home, single, who is working towards the dream of financial freedom/passive income. I work in corporate and really over it.
Looking for some experience you guys may have who have achieved what I've set out to do…

My target:
$100k/yr net

My position:
Own 2 properties, 1 bedroom unit in Sydney (around $550k) and a 3 bedroom town house in Gold Coast (around $570k)
I owe the banks $600k

Therefore my net worth around $500k

Currently unemployed and thinking about my next move

My thoughts:

  1. Go into business

    • buy a childcare business mainly because I've found it to be quite profitable and I have a good support network around me (close mates) who are in the industry
    • buy a cafe. Some cafe's ROI are over 50%, I find this really attractive, however, no experience in this industry nor do I have a close friend who I can draw experience from.

  2. Buy business property, been influenced recently by this Helen Tarrant character who swears by it, it makes sense, obviously there are pitfalls but there is some money to be made here as well. What's attractive to me here is the net yield. Something I've always thought of even before watching Helen.

I understand going into business is not easy and I will need to work hard, and that's fine more than happy to do that when there is light at the end of the tunnel whereas working for someone you can work hard but you'll still be there forever.

I also understand what I've set out to do is not 'easy'. I'm asking what's the easiest ie least risk + highest return

Thanks

Comments

  • +38

    My goal would be to move out of my parents

    • lol i agree but leaving home costs $500+/wk

      • +8

        And living with your parents costs them how much?

        • +1

          Some cultures don't throw their kids out at 18…

          and the kids dont throw their parents into Jail… old folks home where they get bashed… so they can steal from their parents…

        • @Baghern: Your comment seems to be off-topic. OP mentions how much they are 'saving' by (still) living with their parents. As it would appear that rent / board is not being paid, the costs of an additional person in the household is an additional cost.

          It is not about not caring for parents or for offspring. It is about having mutual respect and sharing costs where equitable.

      • +8

        Once you find the path you're happy with, give back to your 'rents. They've obviously supported you/your life style.

        Maybe spend a few $k and send them on a cruise? ;)

      • $500 a week would get quite a nice place. I don't spend anywhere near that much.

        • +11

          He's probably thinking about other costs, washing, food, clothes etc. Ah I might just move back in with my mum cause it is expensive being an adult.

        • +3

          @onetwothree: this is life

    • +2

      I’d move out from my kids if he/she was at home at 35

  • +1

    Subscribe to https://www.reddit.com/r/financialindependence/

    Read the Millionaire Next Door

    $100k/year net seems excessive - you should be able to live comfortably on much less than that

    • that thread is pretty cool, subscribed but its not aussie :( still good though thanks!

      • +1

        Reed the sidebar, and you can find the Australia specific one here

  • +1

    My thoughts:
    1. Go into business

    It's the way most get wealthy, a lot more try than are successful though.

    buy a childcare business mainly because I've found it to be quite profitable and I have a good support network around me (close mates) who are in the industry

    Not sure where you are from but from what I have heard there are forecasts for a pretty significant oversupply of spaces in the near future, anecdotally it seems Chinese people have been told these are a good investment and are building a lot of new centre's, by the time they all come online I suspect they won't be enough kid's to make them all profitable.

    buy a cafe. Some cafe's ROI are over 50%, I find this really attractive, however, no experience in this industry nor do I have a close friend who I can draw experience from.

    Don't know a lot about cafes, It seems most owners I know of it is pretty much they are just self-employed, I don't know that it is an industry that lends itself to building passive income.

    I don't have an answer to what business would be good though, generally, if people have a good idea they pursue it themselves.

    What skills/abilities do you have that differentiate you from others?

    • yes the childcare oversupply has already started hence why i havent gone head first into it.

      and yes, i feel cafe ownership cannot be as streamlined as one would like.

      Im in IT, and ppl have told me to start an IT business, but even if i run a successful IT business and make loads of money, i'm still neck deep involved in it 24/7, and that is not my target. i want to have my own time back.

      my skills, i've been told im a smart guy lol. im also lazy, so i find that in anything i do, i find the easiest most efficient way to get it done so i want to apply that to maybe streamlining a business i own etc

      • Maybe look at something like a "goods" business as opposed to a services business that has been built by non-tech savvy people, you could then perhaps value add by streamlining ineffective manual practices, automate it as much as possible, build an online presence, etc.

        I work for a lot of wealthy people, most have built businesses and then sold them to make their money but not be tied down.

      • +3

        Lazy and cafe or childcare don’t seem compatible.

        • +1

          Lazy and any business ownership doesn't go well together

  • +2

    I'm in a very similar position to you and have also been pondering this question for months. I do not currently have any assets but have $600k cash in the bank, which is never advisable. Currently employed at $150,000 a year but considering a complete change. The only real thing I can think of currently is getting into the food industry and opening a restaurant business or food truck or something of the like. Been to a few franchise shows in the UK but haven't had my Eureka! moment yet… Would be keen to see other responses/suggestions.

    • "Been to a few franchise shows in the UK but haven't had my Eureka! moment yet… Would be keen to see other responses/suggestions."

      I'm in talks about opening a food franchise business at the moment. Would be keen to talk further.

      • +1

        Happy to listen and consider. I have zero food industry experience currently (apart from a consumer). Based in Sydney will be a necessity as expect to be actively involved.

        • I have 26 years experience in the food industry. PM me if you like. We can throw some ideas around.

    • +1

      the feeling is cafe/restaurant can be profitable but also time consuming forever

      • Indeed, but it gives you a sense a purpose and achievement. Sitting at home is not an option for me regardless of whether the cash flows in itself. Personally, need to feel I am actually actively accomplishing something.

    • +1

      Eh you could split it between banks to take advantage of the 250k guarantee? Some free safety at least.

      Edit: Someone covered this already >.<

      • Yes, indeed. FSCS in UK covers up to £85,000 per person, per authorised bank or building society. Thanks.

        The issue is money in the banking is losing value over time due to inflation rather than gaining. Interest doesn't offset it enough.

    • the concept of franchises scare the hell out of me… its structures so the parent company has guaranteed profits, but the franchises takes all the risk

  • +1

    Maybe find something you love doing, something that you would do for little or no money. Is it childcare or opening a cafe? The problem with businesses that set out to make money is that usually the owners are too focused on making money rather than making their products/services great, and they usually quit before the business starts making any money.

    I myself had done that, I probably would have kept the business going if I was passionate about it, but I wasn't so I sold the business at a loss and moved on.

  • Where on earth did you read that kind of return from cafes?? I mean i know there's a lot of cafes nowadays but that seems…unlikely

    • i saw one advertised on facebook by the agent. it was selling for 300k and they claimed it made 5.5k/wk net profit ie 250k/yr

      thats over 75% ROI, im thinking this is too good to be true

      • +13

        A selling agent wouldn’t talk it up at all would they?

    • Here's an example: https://uk.businessesforsale.com/uk/inner-west-cash-cow-busi...

      Asking Price: $480,000 (AUD)
      Turnover: $780,000 (AUD)
      Net Profit: $250K - $500K (AUD)

      Taken with grain of salt of course.

      • +9

        Those figures would be with the owner and their wife/kids supplying most of the labor to the business for free.

    • I knew a restaurant owner pretty well, not directly comparable because it was a high-end joint. But he told me he was making about 10-15% profit. I don't remember exactly how much i worked that out to be, but if you consider that to make $100k he'd need to be pulling in $1m in revenue……..

    • high risk

      is your bankroll rising consistently by trading?

      • +1

        It is now. The risk is reduced by paper trading for a year or so while you are learning. You can get a free account that is identical to a live account. It's not for everyone of course, just throwing it out there as you asked for options. :)

  • +2

    Who the hell can afford to own 2 properties? geez i must be poor….

    • +19

      He's servicing a 600k mortgage while being unemployed so I assume he's had some help

      • Oh I wish I had generous parents. I tell you !!

  • +23

    Whats The Easiest Route to Financial Freedom for Me?

    I'm a 35 yr old guy living at home, single

    I think you are on track, keep it this way and you'll be fine

  • -3

    Maybe find a gf/wife and have kids first?

    • +3

      Not everyone wants kids, or a wife.

  • +13

    Cafe is the express lane to financial ruin. Only a small percentage do very well, the rest tread water

    • +2

      I know someone who used a cafe to start their road to bankruptcy. For some reason, cafes seem to attract investors that have never worked in hospitality?

      If I wanted to realise a dream like that, maybe it's better to play in SE Asia or Latin America where the rents and wages are much lower?

  • +5

    I know how you feel. I'm basically in the same position. If you subtract the assets and career. And future prospects.

  • +9

    Cafes/restaurants (hell anything in the good industry) requires experience. Requires the owner to be a chef, or pastry cook, or barista, or something. It also requires blood, sweat and tears. It requires you to be there for 7 days/week in the early years.

    If you're just sitting there wondering what you can do to make the most money, then how about becoming employed and moving out? God I'd hate to have my kid living at my house at that age, especially knowing they 'owned' a perfectly good house they could be living in.

    I hope you're paying board/meals and looking after your folks financially.

  • +1

    Live with your parents till your 65, pay no rent, eat for free. Don’t even need to work.

  • Lol… Childcare for passive income?

    Taking care of one child is hard enough. I can't imagine how anyone can describe taking care of 20 toddlers as "passive" in any way :P

    Seriously though, owning your business can make you a lot of money… but you're going to be working harder than you ever did when you were on someone else's pay roll.

  • I work in the childcare industry. No money in kidergartens. There is money to be made in long day care but youll pay about $8 million to buy or build. Compliance requirements are high. You can make $300k per year depending on location and other factors.

  • +3

    buy a cafe.

    Not unless you want to work 80 hours a week for 40k.

    The margins in hospitality are at record lows and.not working it nd no experience is a sure way to lose your money in 6-12 months.

  • Property/on-site management?

  • People, I'm not limited to my thoughts, I'm open to suggestions

  • For $100k/year your target is $2.5M in net worth using a safe withdrawl rate of 4%.

    You're single. Have you really thought about how much income you'd really need in retirement? If you can live on less your goal becomes much lower and easier to attain. For example, if you can live on $40k/year, your goal becomes just $1M in net worth.

    • I expect one to be married with kids at some point, and if I dont, at least I'll be very financially comfortable

  • +1

    Are you dating? What's your purpose in life in general?

  • +1

    Seriously, single, unemployed and living at home? Perhaps you should start thinking about getting a life instead of trying to achieve financial security.

  • +1

    I highly doubt anyone that knows how to easily generate $100K passive income would be willing to share their secret.

    • That's what I'm concluding lol

  • My thought:
    1. Go into business:

    1.1 Childcare - I have heard that there is a pretty significant oversupply of spaces in the near future, so I don't see any clear competitive advantage on this market segment for you.

    1.2 Cafe - Cafes are also the same, this can be more challenging to achieve a healthy ROI as the market is pretty huge.

    What I do recommend is that instead of focusing on your financial goal, focus on a business that makes you happy. The reason is, think you bought a childcare business just because you've found it profitable, but in reality businesses never get you profits all the time. So when your business running below your profit margins you are more likely to shut it down soon, because the primary reason for this business was you found it profitable in the market.

    So, don't focus on your financial goal, focus on the business you would love to do and it's market, eventually you'll achieve your financial goal with a healthy business. When you are thinking which business type is best for you, think about your skill set and try to match them with your business idea.

    Cheers!

  • Not enough information or goals too vague.

    But anyway..
    Neither option is good if your "lazy".
    And sounds like you aren't managing risk well if you are considering either.

    Your a little late to the passive game. But you can still play. Ive been playing for a while :)
    You need to read more about FIRE
    1 of many links to start with.
    https://www.reddit.com/r/fiaustralia

    Keep working.
    Read about FIRE.
    Set goals.
    Manage risk.
    Aim for them.
    Win? :)

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