Financial Freedom with Real Estate
How to replace your 9-5 paycheck with rentals.
“If you don't find a way to make money while you sleep, you will work until you die.”
― Warren Buffett
You know what scared the hell out of me in my 20s?
I was building my first business to 7 figures, and burning out.
All of my time, energy, and money went into it.
The bigger we grew, the more I realized the danger of trading time for money.
Missing time with my kids
Burning out from overworking
Waiting until 60 to enjoy my life
In 2017, I discovered real estate.
Not long after buying our first office building, I started to understand the hype…
Real Estate = Lifestyle Design Tool
✅ You can buy with low $ down
✅ You can use other people’s money
✅ You get massive yearly tax benefits
✅ You can turn rents into a paycheck
Now I understood.
Today I’m sharing my formula with you.
The Path to Financial Freedom with Real Estate
First, let’s define freedom.
It’s not $3 million in a 401(k).
It’s when cash flow from real estate covers your monthly living expenses.
“To obtain financial freedom, one must be either a business owner, an investor, or both, generating passive income, particularly on a monthly basis.”
― Robert Kiyosaki
Step 1: Maximize Your W2
Your 9-5 paycheck is a tool.
Yes, it’s trading your time for money.
But let’s be honest…
Most people need a paycheck to pay their:
Bills
Groceries
Rent or mortgage
Here’s where most people get trapped.
They don’t keep any of it.
If you want financial freedom, you need to keep a portion of your paycheck to buy assets.
If you can, save at least 20% from each paycheck.
Don’t blindly stuff it into a 401(k) where it can’t be touched for 40 years.
Instead, put it in a high-yield savings account.
I’m a fan of Ally Bank.
Step 2: Save for a Down Payment
While your money is collecting interest and building up, set a goal to save for your first cash-flowing property.
The more you save, the faster you buy.
And you don’t need 20% for a down payment!
With creative financing strategies, you can put down as little as 3.5%.
Sometimes less if you opt for seller financing.
Let’s say you’re saving for a $10,000 down payment to buy a $200,000 duplex (5% down).
$10,000 =
$2,000 saved/month for 5 months
$1,000 saved/month for 10 months
$500 saved/month for 20 months
$250 saved/month for 40 months
Use bonuses, commissions, and windfalls to accelerate things.
Step 3: Buy Your First Property
While you save, start researching your local market.
The best place to buy your first property is usually your own backyard.
Here’s a checklist for preparing to buy.
Research the market in the area where you plan to buy the rental property. Consider factors like property values, rental rates, vacancy rates, and potential for future growth.
Set a budget to determine how much you can afford to spend on the property, including any necessary repairs or renovations.
Get pre-approved for a mortgage before you start house-hunting. This will give you an idea of how much you can borrow and help you set your budget.
Assess your financial situation. Be realistic about whether you can afford to take on the additional expenses associated with owning a rental property, such as property taxes, insurance, maintenance, and repairs.
Choose the property type. Decide on the type of property that suits your needs and goals. For example, you may want to consider a single-family home, a duplex, or a multi-unit building.
Evaluate potential properties based on your research, budget, and goals. Consider the location, condition of the property, potential rental income, and expenses.
Get a professional inspection. Hire a professional inspector to thoroughly evaluate the property's condition before making an offer.
Have a plan that outlines your goals for the property, including projected rental income, expenses, and cash flow. This plan can help you make informed decisions about the property and guide your future investment decisions.
Hire a property manager to handle day-to-day operations, such as finding tenants, collecting rent, and handling maintenance issues.
Step 4: Refinance & Repeat
One rental property won’t give your financial freedom.
But 4-5 cash-flowing rentals are a great start.
After you’ve purchased your first rental, use your…
Monthly rents
Salary increases
Cash windfalls
to buy another property.
Then another after that.
Then another after that until your monthly rents match your monthly W2 paycheck.
This is the path to financial freedom.
You can also consider refinancing your rental property after a few years, especially if rates have dropped, to pull equity out and buy another.
Recap for Memory
Maximize active income
Save for a down payment
Buy your first rental
Refi and Repeat
Follow this framework, and you’re on your way to financial freedom over 10 years.
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