Here’s my money philosophy as I’m about to turn 31. My personal finances are well capitalized in case anything bad were to happen in my career. This gives me peace of mind. Now, more than ever, I’m focused on cash flow financial independence through my real estate. This is the “quickest” path to my goal. In quick I mean 8 years of work and investing.
I could be more aggressive buying a property literally every 12 months but I’ve noticed my personal prescribed pressure has decreased. I do enjoy my day to day life and do not feel a need to escape my reality. This reality is a good one for a young, strapping, athletic, smart bachelor.
Deal 3 rent ready renovations are $11,000
This rent ready investment will give me a free place to stay each month. That’s $2,200 in savings each month. Once the place is rented, I can focus on saving money for future renovations. I might try my hand at LVP installation in one bedroom to see if I can put sweat equity into the deal, saving me money. If I can’t figure out how to do the work, at least I tried and I know I need to hire a professional. Paint and flooring in the large living areas might save me $5,000 in budget.
I won’t start the big renovation any time soon. I need to save $40,000 for this. Don’t look at this investment as a sunk cost. You’re forcing appreciation in the property to later cash out refinance this loan, taking the equity you’ve built and putting it into a similar deal. You’re front loading the savings by putting the money to work through real estate. I’ll use the equity in my portfolio to expand the portfolio’s cash flow. Rather than saving liquid money in a money market account, I’ll be using my business as a means of funding future deals. This is a new skill set I’m excited to master. This knowledge will serve me well through my entire career.
I am 20% of my way toward my $3,000 per month cash flow goal.
I will need to move 2 more times to get ~$2,600 per month in net cash flow. An important idea here is I’ll be living for free while enjoying $2,600 per month in free cash flow. At this point in my journey, I will be financially independent. I won’t have an SUV payment or student loan payment or a housing payment (covered by tenants). Thus I will have $2,600 per month for food, gas, my portion of utilities, gym, sports, drugs, concerts, social activities. That’s enough money to cover all those items. Sure I won’t be living a jet setting life, but the more important idea is I’m financially free WITH a coastFI paper portfolio AND a cash flowing rental portfolio in a great market. Sir – well done.
Potential problems? Bad tenants and vacancy. I think vacancy won’t be an issue for me. My markets have net positive migration, job growth, low crime, and desirable places to live. Thus having bad tenants means I needed to do a better job at tenant screening.
Based on this plan, that’s 5 cash flowing properties for level 1 financial independence. Again, I’m not living an IG envy life style, but this can come later in my life. To be fair, how many 30 somethings can snowboard 30+ times a year, golf once a week, and live in a beautiful state like Colorado?
Maybe .5% of the population. Maybe less.