Thinking through my money strategy as I meditated.

The older gentleman I golfed with at City Park Nine told me you’ll need more than $3,000 per month to retire on. I agree with him. I personally brought up that $3,000 mark as that’s my financial freedom number. I’m not going to be living a luxurious life in a downtown city with my own penthouse. Yet, according to nomadlist.com, I can live well anywhere in the world across 90% of the existing cities.

Perhaps $6,000 per month would be enough when I’m an old man. It’s difficult to guess accurately because traditional retirement is 35 years away. Alas, I had a good strategy think while meditating this morning.

My real estate business will most likely be making more monthly cash flow than $3,000 per month when I’m 65 years old. Even if I don’t buy any more properties, almost all of them are going to be owned free and clear. That’s $11,000 per month ($130K annually) in free cash flow across five paid off properties. That amount should provide a comfortable retirement.

Ken Mcelroy is predicting an affordability problem in real estate over the next 10-15 years. The market is foundationally fine, nothing like 2008, but home prices and rents are on the rise without any signs of slowing down. This is good for real estate investors and bad for renters.

I’ve turned off my personal bank account automated contributions. They funds have a decent amount of money sitting in there, plus, I should be using my extra money to invest in equities. Build that CoastFI portfolio sir. For real estate, I have 6 months PITI already saved for 3 different properties in Colorado (so it’s a rather large chunk of money). In order to eliminate the need to to save another $25,000 for property number 4, I’m executing my first BRRRR deal to finance my future deals.

I’ll be in debt up to my eye balls but it’s 30 years fixed rate debt my tenants are paying for with their inflating dollars. This is a very good wealth building strategy. Plus when the property’s rent cash flows above the monthly debt service and repairs, it’s a good deal for an investor.

If I can force appreciate this BRRRR property by $30,000 over the next 12 – 18 months, I’ll have enough capital when I cash out refinance the existing loan to buy another similar deal. I will have to cover the renovation costs out of my own pocket. Over time I know private investors would be interested in giving me their money if I have a track record of buying below market deals, fixing them up, renting them out for positive cash flow, and recycling that investment into another positive cash flow deal. This is what David Greene calls a Black Belt Real Estate Investor. One whos able to perform the whole BRRRR strategy with other people’s money.

This first BRRRR is going to cost me $22-30K in renovations. I will perform sweat equity for the carpet rip out and LVP flooring install, along with new paint. If I screw this up, I can always hire a contractor to fix my error. The kitchenette in my opinion is the area that is going to increase the value of this space the most. Depending on how this space in renovated, I believe the kitchen will out earn the flooring, walls, egress windows, and electric panel combined. I may get this wrong as I have no renovation experience. This whole process is going to be very good for my business. Exposing myself to the real estate construction business. Managing contractors. Planning renovations. Doing your own renovation work. It’s going to be a big project I’m excited to dive into.

Plus I’ll be living for free in this place so that is a huge cash flow win for my finances.

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