Personally, I want to enjoy the reward of having financial freedom…
To be able to do what I want, when I want.
But what do we want? That’s important to figure out.
First, I want financial freedom to cover my monthly expenses and monthly savings.
This isn’t millions of dollars either, for me that number is 60,000$ a year or 5,000$ a month.
That’s what I’m shooting for and from my research, Real estate is a great wealth building asset class.
But just because it’s a great wealth building asset class doesn’t mean it’s easy
It takes work, and lots of it.
But it only takes work because it’s a slow game.
Here’s my real estate plan to achieve financial freedom.
- Acquire doors.
Acquiring doors is the fundamental principle of wealth building in real estate. A rule of thumb is the more doors, the more cash flow.
In this phase, I’ll acquire the specific number of doors I need to hit $5,000 a month in passive cash flow. For me, I like to round things and keep numbers easy. I’ll need about 6 doors rented out at $1,000 a month to make $5,000 in cash flow.
And we can acquire doors with cash, loans, private money, and a million other ways
For me, I’ll be using cash saved up (and from an inheritance), loans, and private money to acquire the 6 doors I need.
- Pay them off
The whole point of achieving financial freedom is to have peace of mind. A way to ensure peace of mind is to have a few properties paid off. If the properties are paid off, yeah we may not be getting the best return, but paid off properties make us bullet proof when something goes wrong as it is very hard to take the property away from us, ever.
There’s two strategies we’ll be using to pay these 5 properties off:
- Two mortgage payments a month
- C3X
The two mortgage payments a month is a little sneaky trick that we’ll be pulling. It may look like two payments a month, but it’s really 2 payments every 28 days. That gives us an extra two weeks of principal payment per calendar year and on an amortization schedule – this is huge. I can talk more about this if you want, just ask.
C3X: this makes me feel funny inside. This is taking all the extra cash flow from each property, say 100$ per property per month. That’s 500$ a month in cash flow that we’re making. Instead of keeping that cash, instead of paying down all the mortgages faster, we’re going to take all that extra cash flow and put it towards the property with the lowest loan amount. Once that property is paid off, we’ll take all that extra cash flow and put it towards the next new lowest amount. We will repeat this process until all the properties are paid off, and with each new property paid off, we’re boosting our cash flow an additional 900$ per month. That would put us at 500$, $1,400, $2,300 per month on the first three properties.
This phase may take some time to complete. In the meantime, we’re growing our business, maxing out retirement accounts, and saving cash.
- Acquire more doors
After the houses are paid off, we’ll begin to leverage and acquire more doors to grow our cash flow while still keeping our bulletproof fort intact.
And that’s it.
Granted it’s an outline, time and thousands of other steps need to be executed until this plan is completed.
And It sounds simple, because it is simple
It’s not easy though, and most people can’t follow a plan till completion.
Here’s my plan, let’s see how fast we can get this done.
Joe DiAndrea 