It’s what we all want, right? Of course, “freedom” can mean different things to different people, but I would say a general definition of financial freedom is:
Not having to work for income because you have passive income that exceeds your expenses.
Sounds exciting! But I think for most it sounds like a very big goal too. Great goal, and you shouldn’t change it, but I think most people assume it is a distant future goal versus one that can happen soon or quickly. It’s true it won’t happen overnight (unless you are already loaded), but it may not be as overwhelming of a goal as it probably seems.
Quick! Without giving it too much thought, how many rental properties (single-families or duplexes or something small) would you need to own right now to be financially free? Okay, what number did you come up with? (Seriously, I told you “quick!”. Stop thinking about it and just come up with a number.)
Remember that number.
Mapping for Financial Freedom
Figure out your expenses.
I’m going to come up with a fictitious person whose expenses are as follows:
Per Month:
Housing: $800
Car payment: $200
Groceries: $400
Entertainment: $400
Utilities and Insurance: $200
Total: $2000
NOTE: Clearly my fictitious person doesn’t live in LA (ask my bachelor studio in Venice with no kitchen). Some of the numbers may be off of course and some expenses left out, but you get the drift.
Find rental properties and know their cash flow
Let’s say you find killer properties in Houston. I love Houston, great market, not the highest on the cash flow thanks to high Texas property taxes and sometimes the insurance, but an excellent market for buy and hold properties even still.
These killer properties cash flow $700 each per month, after all expenses, on an all-cash purchase.