How to Use Lifestyle Design to Create an Ideal Retirement Driven by Passive Income

How to Use Lifestyle Design to Create an Ideal Retirement Driven by Passive Income

5 min read
Nathan Brooks

Nathan Brooks is the co-founder and CEO of Bridge Turnkey Investments, a Kansas City-based company renovating and selling more than 100 turnkey properties per year.

Experience
With more than a decade of experience in real estate investing, Nathan is a seasoned investor with a large personal portfolio and a growing business portfolio. Just last year, through Bridge Turnkey Investments, he helped investors add over $12 million in value to their real estate portfolios and has goals to crush that number in the coming years.

Nathan regularly produces educational content to fuel his passion for helping other people learn about and find success in real estate investing. He has been featured regularly on industry podcasts, such as the Bigger Pockets Podcast (#87, #159, #232, and #319), Active Duty Passive Income podcast, Freedom Real Estate Investing podcast, Fearless Pursuit of Freedom Podcast, Titanium Vault, InvestFourMore Real Estate Podcast, the Best Real Estate Investing Advice Ever show, the Good Success Podcast, FlipNerd, Wholesaling Inc., the Real Estate Investing Profits Master Series, Flipping Junkie Podcast, Flip Empire podcast, Think Realty Radio, and more. He is a sought-after speaker and writer, featured regularly on the BiggerPockets Blog and found on stage regularly at events across the country.

He is also part of multiple leadership groups for top executives, including Collective Genius, an invite-only group known as the Elite Investor’s Board of Directors.

In an effort to help investors further, Nathan started Bridge Real Estate Investing Meetup (BREIM) in 2018. The group’s tremendous growth earned it the title of “Largest Meetup in Kansas City” after only three months running, and it continues to grow daily.

Nathan is a passionate leader, well-respected investor, and friend to everyone he meets. He currently lives in Kansas City on his 11-acre property with his wife and two beautiful children. He loves to enjoy the outdoors, train MMA, and come up with new business ideas to crush.

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For a couple years now, I’ve been pretty obsessed with getting to a certain passive income dollar amounts, first equal to a car payment, then a house payment, and eventually covering the entire monthly cost of running our household. This obsession has come out of wanting to have financial freedom — and the ability to really dive into the idea of lifestyle design now, not necessarily in my “retirement” years.

The thought of financial freedom seems like such a distant thing or unattainable dream. Media and television sources make it appear that folks with that kind of freedom are all jet-setting on their private jets to rare islands, imbibing on never ending champagne, driving fast European race cars through the winding cities and most renowned street tracks, and, of course, enjoying five-course dinners sitting on the veranda of the world’s most spectacular beach homes.

I mean, it doesn’t sound bad. Especially the fast cars. And the food. And the house. OK, fine, all of it sounds awesome. But my guess is to most people, this may not sound practical, possible, or maybe even close to what you want.

In my opinion, most people are interested in the freedom that comes with having the time and money to do what you want.

That opportunity and time become available because they have set up their lifestyle around income they receive without having to trade time for dollars. Some people might work owning a company that runs with or without them. Maybe they have set up an e-business, have written books that sell, own real estate, or have other passive income (notes, rentals, apartments, commercial buildings, etc.).

retirement-goals

As a turnkey provider, we spend a massive amount of our time with clients who are looking to expand their income for their retirement years, as either a major strategy, entire strategy, or just a small part of their overall income. I recently had the special privilege of selling a property to my parents. Gulp.

Of course I want them to have the best experience in the world. I want them to enjoy their retirement years. And so part of our job as the turnkey provider was understanding how we could best help them in their decision to buy their first investment property, how that fit in with the rest of their portfolio, and how we could best maximize their resources and get them the most passive income for their years together after working.

Related: Why the Buy & Hold Forever Strategy May NOT Be Best for Retirement

This kind of thing gets me so fired up — helping people get to do what they WANT to do.

Finding Passive Income for Travel in Retirement

Let’s think for a second. What is it that you really want when you think of the jets, cars, or whatever? Let’s say it’s spending a month in Europe once a year. It might not involve traveling on a private jet, but a flight to Europe for two costs you maybe $3k. You might spend another $2k if you rent a place to stay instead of a fancy hotel, maybe through AirBNB or VRBO (to learn more about how to rent your place and list for free on VRBO, click here) — nice but not crazy or fancy.

You’ll likely eat out some, and you might stay at a place you can cook and drink wine at home — so the food budget for the month could add another $3k. And then, of course, you have a home base in, say, London for the month, but you want to travel to several other countries over a few weekends, and you have another $2k allotted for travel-related expenses for maybe France, Italy, Germany, and Switzerland.

Your total month in Europe costs you roughly $10k. Sounds like a lot of money, right?

(Mom and Dad, I’m speaking directly to you here!)

You start with your first rental property, and for the first year, you are averaging (after putting aside your vacancy, capex, and maintenance costs) $200 a month — that is $2,400 a year. It might take you a few years to build up your portfolio before retirement, but what would you need to make this a reality?

That $10k a year is just over 4 properties.

$200 a month after expenses in cash flow x 12 months = $2,400

x 4 properties = $9,600

Finding Passive Income to Cover Monthly Expenses

There are a few things to think about here. First, as you are nearing your retirement years, start thinking of ways you can keep the monthly cost to operate your household down. I’m not suggesting you don’t have a nice place to live or a fancy car — if you can do it, go get it. What I am suggesting is, make sure you are thinking through HOW you are going to pay for that retirement Maserati convertible, if that’s the goal.

I’ll take the midnight blue one, please. 🙂

If you simply take the amount of money you need to operate your household and then look at a ballpark $200 a month cash flow for each property that is leveraged, you would need $5k a month to operate your household.

  • $1,000 mortgage
  • $1,000 for Maserati/insurance/gas
  • $1,000 for groceries
  • $500 for fun/eating out
  • $1000 for travel fund
  • $500 for stuff

$5k monthly/$200 a door = 25 properties

Um. Can you imagine the next night out, sharing you have all your expenses covered on a monthly basis, you travel to Europe every year for a month, and you just picked up your new car? Yes — on $5k a month, you don’t have to trade time for dollars.

This is what lifestyle design is about.

retirement-income

Final Thoughts

Twenty-five properties might sound like a lot, and if you are already in retirement, it might not be an option. Or if you live in an expensive place, you might not be able to live the lifestyle on $5k a month. That’s fine, but start planning now.

Related: Why Your “Realistic” Retirement Goals May End Up Woefully Inadequate

As far as where the funds come from to buy properties, you could consider reviewing your current investment strategy and diversify some dollars from current IRA/401K kinds of vehicles and put those dollars into self-directed IRAs. Or if you have cash sitting on the sidelines or in stocks, you could also use after-tax dollars and diversify that way. If you have 20 years before the time you want to “retire,” you can begin knocking off that passive income and not taking the dollars and spending them, but rather using them to help compound the time it takes you to get to the income you desire.

One thing is clear — you need to create an income and lifestyle plan that will fit with what you want retirement to look like. You need a budget and a plan.

I really encourage you, no matter if you’re 22 or 68 and retired, to write this out on a piece of paper, over your favorite beverage, and think about how much fun it would be to take that Europe trip or go buy that sports car you have dreamt of. Your lifestyle is just one, or two — or 25 — rental properties and passive income dollars away from being reality.

Do you have passive income figured into your retirement strategy? What does your ideal retirement look like?

Let me know with a comment!

A trip to Europe each year? Fancy restaurants? Or just the freedom to see your grandchildren? Whatever your ideal retirement, this article will help.