Gaining Financial Freedom is Easier than You Think

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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.

Determine how many of those properties are needed to cover your expenses.

If you are earning $700/month/property, how many do you need to cover your monthly expenses?

Three. And that even leaves an extra $100/month for savings!

Determine how much money you need to buy the necessary number of properties.

These properties all happen to cost $100,000 each. So if you only have to buy three of them, you only need $300,000. Let’s even go crazy here and round it up to $350,000 just for whatever miscellaneous expenses.

My fictitious person can be financially free for the low cost of only $350,000!

Do I need to repeat that? $350,000! Yes, that is a lot of money for the average Joe but if you really think about it, isn’t that a surprisingly low number for financial freedom? Financial freedom. Revisit the definition of it above. Financial freedom is a big deal.

What if my fake person doesn’t have $350,000 as most of us probably don’t? Well good thing my person qualifies for a mortgage! Great! Let’s see what financing does…

Go through the exact same steps as above but adjust for the financing in the cash flow step and the total amount you need to have to buy the properties. Assuming 20% down and a 5% interest rate for the loan on a $100,000 house, you’re looking at about $430/month for a mortgage payment on each house. Let’s round that up to $500 for fun. Subtract that from the $700/month cash flow on an all-cash buy and you now have a cash-flow of $200/month/property. Considering that $200/property, you would need 10 properties to cover your $2000/month in expenses. I’m going to leave the numbers there and not add in extra for a buffer just so the numbers are even. I’ll address buffers later. So 10 properties with $20,000 down payments (remember that 20% down for the loan) and I’ll say an extra $5,000 per property for closing costs. Oh and my properties don’t need rehabs so the purchase numbers stay simple. $25,000 per property for 10 properties is $250,000.

My fictitious person taking out mortgages can be financially free for the low cost of only $250,000!

I must be kidding, right? Nope. Not even a little bit.

The Reality

Three or ten properties have my fictitious person financially free. Even at 10, I bet you didn’t guess a number near that low for yourself! If you live in LA (like I do) and eat only expensive vegan food (like I try to) and drive a new Rover (like I certainly don’t), 10 properties won’t cut it. But let’s say you do live large and your monthly expenses are $4,000/month versus the $2,000/month we calculated for before. That means you need either six or 20 properties that are cash-flowing in Houston. That means an investment of $500,000 or $700,000. Again, that’s a lot of money but when you think of it in terms of being all that you need to have financial freedom? Come on! Is that not insanely low?

Of course there is the reality of rental properties that they don’t always perform perfectly. It is incredibly smart to have a buffer for unexpected repairs or who knows what. So add a couple more properties to those numbers. It doesn’t change them much! Relatively, at least. Now if you are going completely out of control and want to live the total Hollywood life of LA, and buy a house in the hills, and buy the Lotus instead of the Rover, you’re on your own for all that. Do your thing and adjust accordingly. Or what if you live an average lifestyle, as does my fictitious person, but you want to travel to exotic places regularly or feed homeless children out of your own pocket? Just take any large chunks of money you want to spend in a year and divide it by 12 to make it a monthly expense and add to your calculations.

I get that all of this is easier said than done. You likely don’t have that much money sitting around, and getting 10 mortgages can be tough, and not every property will cash flow perfectly at $200/month. But the reality is that it isn’t near as hard as you thought it would be either, is it? Do you see that it likely won’t take as much as you thought it would to become financially free?

What was the quick number you came up with when I told you to? Was it anywhere close to three or 10 properties? Would you have ever guessed financial freedom could be accomplished with such a low amount of investment? I bet you didn’t.

One other way to look at becoming financially free was explained to me a couple years ago by my mentor. Granted, this was when it was easy to get properties needing no work that cash flowed $500/month after a mortgage, but bear with me. He told me to look at it like- if I bought one property, boom my groceries were covered every month. Buy another one and boom, my utilities and insurance payments each month were covered autonomously. Finish it off with two more, and boom my housing and car payments were covered every month! I’m a partier so I still need that entertainment expense covered, so one more property. Five properties, that’s it and my basic expenses every month were covered. With each property I bought, I crossed off an expense line that I no longer needed to pay on my own. I was floored at how much faster I could have my essentials taken care of.

Well, so what’s the verdict? Is it easier than you thought it could be?

Photo Credit: Mitya Ku via Compfight cc

About Author

Ali Boone

Ali Boone is a lifestyle entrepreneur, business consultant, and real estate investor. Ali left her corporate job as an Aerospace Engineer to follow her passion for being her own boss and creating true lifestyle design. She did this through real estate investing, using primarily creative financing to purchase five properties in her first 18 months of investing. Ali’s real estate portfolio started with pre-construction investments in Nicaragua and then moved towards turnkey rental properties in various markets throughout the U.S. With this success, she went on to create her company Hipster Investments, which focuses on turnkey rental properties and offers hands-on support for new investors and those going through the investing process. She’s written nearly 200 articles for BiggerPockets and has been featured in Fox Business, The Motley Fool, and Personal Real Estate Investor Magazine. She still owns her first turnkey rental properties and is a co-owner and the landlord of property local to her in Venice Beach.


  1. Nice article, Ali. I did this calculation for myself about a year ago, so no surprise number for me. (Sorry!) However, I wanted to add one more twist to your thoughts. If your fictitious person has more time than money, they can buy three properties from your original plan with a 15 year mortgage. After 15 years, the homes are free and clear so they can now live off that cash flow.

    So, really people, buy three properties and get your freedom! If you’re 50 years old, there is your retirement right there in front of you. Just seize it! And who knows, you might even collect some SS too…

    BTW, 18 (with mortgages) is my number. I want to be filthy stinkin’ rich, err free I mean. That won’t truly happen though (the rich part, not the freedom) until the homes are paid off, but I am only 40 years old so I have time to let it work.

  2. Robert Watkins on

    Great Article Ali,

    Thank you for posting it. We live in West Covina CA, I would for my 21 year daughter to meet you she’s very interested in rental property and I’ll buy lunch, dinner, Breakfast whichever works better for you.
    I know you would be a great inspiration for her.

    Thank you

    • I’m flattered Robert, thanks. Not every parent wants me around their kid… they are afraid I’ll tell them that going to school to get a good job isn’t always the best route 🙂 Feel free to message me and we can talk about it.

  3. Ali,

    This article seized the moment heroically. This gives the user a great macro understanding of how little it takes to be free (of course, within reason). Just a thought – the additional cash flow can be compounded to achieve goals much quicker.


    • Thanks Tony! I love seizing things, especially heroically 🙂 And yes, absolutely, compounding is key! And I didn’t even think to include tax benefits of the rentals in there too. We’ll call that extra “fun” or “vacation” money.

  4. Ali,

    You have succeeded in getting your point across. My verdict: It is easy to do this (with some work), no excuses. It is also easy not to do it (As Jim Rohn says, like many things in life).

    Kudos to a great post 🙂


  5. 17, 12 of which are free and clear. And while you Party Ali, we have six adult children, none who are fully on their own yet. You talk about expensive! But you give a good explanation on how to target your retirement.

  6. “Dear God, you made many, many poor people.
    I realize, of course, that it’s no shame to be poor.
    But it’s no great honor either!
    So, what would have been so terrible if I had a small fortune?”

    Lord who made the lion and the lamb,
    You decreed I should be what I am.
    Would it spoil some vast eternal plan?
    If I were a wealthy man.

  7. I don’t disagree with what the article is saying but I feel how difficult it would be to get 750,000 to a 1000000 worth of mortgages needs to be explained. To get that much lending you will have to have a solid source income. Also when you start acquiring homes and you get them occupied you can only count 1/4 quarter of that rental income as income for securing future loans. So for every 1000 you will only get to count 250. Also that debt to income ratio comes into play. You start acquiring mortgages you debt will rocket quick. Lenders don’t like to lend to you once your dept to income level is at that 40-50 percent range ( other words once half of every dollar you make is covering debt). I am at that point now. I have excellent credit and make a great cash flow from my rentals but I am close to 40 percent of my income going to debt (that’s only because I can only count 25% of my rental income). What she is saying is a good way to visualize cash flow but have a good plan and know the details. Also take advantage of a good job and tap that income for barrowing purposes before you quit.

    • All valid points Mike and I totally agree… it’s easy to spell out, it’s hard to actually get the lending. And there in lies the trick, how do you do it? If it were that easy, everyone would do it. I don’t even have all the answers, but with being able to break it down to big picture numbers, it defines the goals that must be met.

      The question is never “Can I do” something, it’s “How do I do” something.

      • Ali,

        Great response. We can get into looking & making the situation a larger hurdles than it is. If we ask the question “How do I make this happen” rather than “Can I” we start the thinking of solutions. How do you eat an elephant one bit at a time. Mike it can be done.


  8. Ali, great food for thought. Your last paragraph was exactly what I did, for every bill bought a rental and three extra for misc.. My way, being low on money, used a HELOC loan. Bought REOs (3/2/garage) for cash, rehab (about a week), rented them out and then refinance. After I was done, had a bunch of nice rentals cash flowing and the loan paid off. No money out of my pocket, sweet!

  9. Nice this is how I think about it too. One thing to think about before “retiring” on passive income is big changes in your life. When I was in my 20’s and single it wouldn’t have taken much to be financially free. The money I saved and the properties I have financed now cash flow at about $2000/month on avg. I could have happily lived off of that. Once you have kids and more responsibilities this passivie income need skyrockets. My wife and I laugh and remenisce at how little money we used to live off of. My point I guess is that if you’re like most people your passive income will be more of a supplemental income for many years and will hopefully help you retire earlier than most. We take this income and save to buy more properties and each one knocks out a little chunk of our estimated income needs.

  10. Nice way to put things into perspective, Ali!

    When things are simple, it is easier to understand. At times, folks tend to complicate the issue. Then, they become overwhelmed not being able to accomplish anything at all. Having a clear path and getting things down to the simplest level is key to being successful at anything. Beyond that, it is the passion and determination that will enable one to succeed.

    I think that is why it’s important to keep playing the cash flow game no matter what level one may be. By playing the game, I’ve learned so many things about myself as well as different strategic methods. There are so many different ways to achieve financial freedom. And, one thing I’ve learned is that it may not be the path you choose — it may be the path that chooses you. Though, the important thing is to be in the game and to keep going on no matter what. Only then, will the path to financial freedom reveal itself.

    I enjoy reading your blog topics, thanks for keeping us all in tune! 🙂

    • I love it Rachel! I totally agree about the path finding you, but staying in the game no matter what even still. Do you play the cash flow game on the board or online? I actually want to start playing it more, I just always get distracted.

      • Oh, I’ve only played the board game. Though, I hear online is also a good way to play too. Over the years, both the game and the book _The Richest Man in Babylon_ have helped me to keep things simple and in perspective. Definitely a lot of hype out there that tend to complicate things and confuse people!!

  11. Hey Ali,
    Sorry my number is 30. Health insurance is the big gorilla in my exit to financial freedom. Cost was $1500 last month and is supposed to go up more. I had a very bad travel itch when I was young, but got got married, had kids, and never got to scratch it much, would like to do that when I retire.

  12. Yes, 10 properties are a good number for a person. However, you should consider that people have families and kids. A family of 4 will easily spend 6,000.00 a month. Insurance is a big gorilla, true, then there are school fees etc. So this family would need to own 30 properties, and have the ability to come up with 750,000.00 in cash. Consider that no matter how good your credit, nobody will finance 30 properties (or even 2 properties) all at once. This means you need to pay back the first 2-3 properties before you can buy the next 2-3, etc. Sure, eventually you become financially secure and independent, but only over a span of maybe 20 years. No miracles there, just more hard work and savvy planning.


    • True Ronan, but one advantage to rental properties is there are enough write-offs (including depreciation) that should cover the tax on your income. If all is done right, rental properties should allow for tax-free income, essentially.

  13. Unfortunately, that $2k doesn’t leave any money for one-time expenses like vacations or medical issues nor does it leave any money to reinvest, which is the big problem about not working.

    • That’s true, Matt. But, I want to re-emphasize we’re talking about financial freedom here. How many of us would sit at home doing absolutely nothing if we had financial freedom? I think the answer for this website is zero. Of course, we would all still work and have an income even if we had enough passive income to pay our living expenses.

      If I had financial freedom, I would most likely have told my boss, “No I am not coming in today” yesterday (Sunday) to finish up some work he wanted done. If he fired me, well so be it. I can get another job. In the meantime, my passive income would pay my bills.

      See the difference? Even better, each month that I continue to work even though my passive income is enough to get by improves my freedom that much more.

      • Jason R, I hear you. I guess what I am saying is that $2k per month probably isn’t financial freedom for very many people, and people need to budget for one time expenses both personally and in their real estate investments, but of course, the article is about the bigger picture, which I get so I don’t want to dwell on it.

        • Right Matt, but that’s why I said in the article to add one whatever buffers make sense, including extra money for vacations or other ‘fun’ expenses. The numbers above are not concrete, and they aren’t necessarily ‘bigger picture’ only…they are a guide to know what to include. If you are tallying up what expenses you have, you should put in there whatever numbers you need for vacations and other expenses, as I said above.

      • I can’t say I would continue to work through despite having financial freedom Jason, but I hear what you are saying that few people would sit home and do nothing. I personally would travel, do fun activities, and take on learning new things and writing or something. So for me to be financially free, I have to take into account those expenses.

  14. Sharon Vornholt


    That’s an easy way to break it down so that everyone can understand that this is achievable for just about anyone. You might have to get creative since it is harder to get bank loans, but you can still do it. I always encourage people to figure out their own “how many houses to freedom” formula. Everyone has a formula. Great post.


  15. This is such a great post. Here’s my big question for all of you who already have jumped in to owning investment properties: what is the first step I should take to accomplish this with very little money?
    Thanks for the inspiring post.

    • Leo, the best way is to find a way to get more money. Start a business, take an extra job, wholesale, etc. That’s what I learned from Rich Dad and I think it’s true! OR, master creative financing (which is still a form of ‘getting more money’). I’ve bought rental properties with no money down because I used an investor partner. Things like that.

  16. Great post, Ali!

    I am not only able to see clearly how little it takes to become financially independent, (I guessed correctly at the number immediately, lucky shot, perhaps), but I can also, for the first time, see clearly what the drawbacks to this otherwise wonderful system might be.

    I know that there is nothing that humans can do that doesn’t have both a positive component and a negative component, but I think that I have a tendency to avoid examining the negative component whenever possible. It tends to feel uncomfortable, somehow.

    In this case, the system is doable, and practical, but overall, the system is also not viable.

    In order for me to be free of “having to work”, there evidently must be between 10 and 30 families that are slaves, for however long they choose to remain renters. Obviously, this system also has a limit. Not everybody in the world can be a part of the “Hey, I’ve got mine!” club. Due to the pervasive lack of prosperity across much of the country, I have to wonder whether or not some of the reason for that is because groups of people at various levels are all attempting to keep their financial freedom alive, by doing whatever it takes to keep their small army of slaves “productivly occupied” and not making enough to ever see their way out of the “JOB” or “rental situation” or similar financial constraint.

    Since I have no idea whether or not this might be true, and possibly no way even of figuring it out, I wonder whether there might be a system that promises some measure of financial freedom, but without the usual component of keeping a much larger group of people harnessed to no other noble purpose than to provide me with a relatively free and easy lifestyle.

    I am guessing that the first person to come up with such a plan will likely disrupt the entire way that business is currently being done in our society. Aren’t we ourselves looking for ways to escape such a fate? Why wouldn’t everybody jump on a better deal, once one is found? Sorry to bring an otherwise discordant note to such a useful post, and I hope that in the long run it stimulates some creative discussions along the way.

    Thanks again!

    • That it may, Barry! That is definitely a conversation (potentially a debate) that would be interesting. I can’t personally say I agree with the “slaves” part of your thoughts, but would still be an interesting debate.

  17. Awesome article! I’ve never broken it down this way to come up with an actual number. I’m also in So Cal so my initial number was 50 but what can I say, I didn’t leave my job to get into investing to make the same money, I want to make 10x my previous salary or more.

    I’m pretty new to investing and can’t even imagine having 1 rental since I’m so strapped for cash right now but I’m only 28 so I’m confident I can get to financial freedom sooner than later.

    • You totally can Matt! And I hear you on the 50 number. I live in Venice Beach and the costs here are just outrageous! So worth it though. I call the extra money I pay to live here my “annual activity fee” to have access to all the fun around 🙂

  18. Christopher Lesko on

    Great article, Ali! I’m glad to see that so many people are influenced by Rich Dad’s teachings. As long as we focus on our goals and visualize ourselves living the life of our dreams, opportunities will constantly present themselves. All we need to do is stay positive and surround ourselves with like-minded and driven people. I’m currently saving for a down payment and plan on buying my first property (2-4 unit MF) next summer. I’m confident that once the ball starts rolling I’ll be on the fast track to financial freedom :).

  19. Hey Ali,
    If your fictitious character lived in NE Ohio/Western PA, they might even have monthly liabilities of less than 1k. and I don’t live with mom and dad! That’s just rent, utilities, cell phone, car insurance, gym pass, humane society donations, and student loans. Luckily I bought a practical and reliable car with cash, so no car payment. If I factor in groceries and gas, maybe then 1100 for me. Of course there’s IRA and MMA contributions that I am not factoring in as a liability. Only drawback- with such low cost of living here, wages are not as competitive. What I make is pretty decent for the area but lower in comparison to east or west coast. Nonetheless, I am very excited to start investing! I like the simplicity of this post 🙂

    • And I like your cost of living Jen! Geez. Living in LA I forget how much less expensive other places can be. If you live for $1100 or less (INCLUDING humane society donations), that is less than just my rent payment out here! And I don’t say that bragging that I have some expensive fancy place… I instead have a studio apartment with no kitchen. And no washer and dryer. Oh and my “bathroom sink” is one in the same with my “kitchen sink”, and due to it’s size, I wash most of my dishes in the bathtub. Although out here, it’s impressive I have a bathtub, so maybe I am living it up fancy.

      • LOL that is too funny Ali! In the kind of climate LA is, I seriously think I would just rough it if I lived out there. Full time camper! I’d pitch a tent and just ride my bike everywhere because you don’t have to worry about snow 😉 All I’d have to find otherwise is a workspace with Wi-Fi and a place to shower, haha!

  20. Maryanne Torres on

    what if you don’t have the credit .. its not that easy.. but that was # was 5. This was an eye opener though, great information and hipped about getting started, Im new to this and want financial freedom and ready to leave this 3 to 4 days a week 12 hour shifts behind me and ready to live.. i have 3 boys, single mom and tired of being away from them and having to leave home everyday… tired of leaving my boys to go to work and working weekends and holidays..ready for change ready for a new life and new beginning..

    Houston, TX

    • Ali Boone

      Haha, Maryanne, I love the # use. I use hashtags more than I care to admit myself.

      If you don’t have the credit, things definitely get harder. It’s all about getting creative. The bad news about it all is– if it were that easy, everyone would do it. The good news, that I wanted to write this article to say is, it’s not AS bad or hard as people tend to think. At least in terms of how many properties are needed.

      I recommend pursuing looking at creative financing options. Partnering, private loans, transitioning into a work-at-home type of set up for work….the options are endless. Not always easy to find, but with enough determination, I know you will get there! Keep us posted.

  21. Dimitri Lopez

    It takes a touch of genius to break things down in a simple way. I love it! Finally I found a girl smart, with a touch of genius that any woman can relate to. One blog I am personally reading to my future wife. Not that she needs any extra convincing, but reinforcing our dreams and goals is never a bad idea. Thank you Ali Boone.

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