Real Estate Investing Basics

3 Steps to Financial Freedom in 10 Years or Less

Expertise: Personal Finance, Personal Development, Real Estate Investing Basics, Landlording & Rental Properties
58 Articles Written
close up view of upper level windows and roofs on four row homes

I have a few questions: Do you love real estate? Or do you love what real estate can do for you? Do you like dealing with contractors, screening tenants, and handling maintenance calls? Or do you like the passive income and wealth real estate generates?

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I would be willing to bet that most people here on BiggerPockets like the latter. We are here to build financial independence so that we can pursue the life of our dreams. We want to travel, spend time with family, volunteer, start our own business ventures, the works! Additionally, we think that real estate is the best vehicle to achieve that level of independence in the fastest way possible. 

If this is you (it sure is me), let’s dive into how you can achieve financial independence in 10 years or less in a few easy steps. 

3 Simple Steps to Achieve Financial Freedom Within 10 Years

Step 1: Determine Your Freedom Number

Your freedom number is the amount of passive income you need to satisfy your basic living expenses. You don’t need a 20,000-square-foot mansion or a private jet plane (yet!). What are your total monthly expenses and how much passive income will you need to satisfy them?

You can figure this number out by using a service like Mint or Personal Capital. Upload your credit card and bank accounts, such that all transactions are flowing through the platform. Then, download your transactions for the past 90 days and see on average, how much you spend each month. That is your freedom number. 

businesswoman doing paperwork at office desk, working through finances, using calculator and making notes in her notebook with pen

When I did this exercise my number was less than $1,000. Now, I realize that is incredibly small because I do not have a housing expense (I house hack), I have small transportation expenses (I bike to work), and I am very good about eating in versus eating out. However, I don’t want to live this way forever, so let’s say my number is actually $3,000. 

Related: How to Start Your Journey to Financial Freedom

How do you determine how many properties it will take to satisfy that number? In order to do that, you need to determine, on average, how much cash flow could you generate from each property? That is cash flow AFTER all expenses. If you can cash flow $100 per unit, you will need $3,000/$100 = 30 units. 

Does that seem like a crazy high number? What if you received $200 per unit? That’s only 15. On all of the deals I have purchased, I receive $1,000 or more in cash flow. You know what that means? After just three deals, I have reached the most basic level of financial independence.

If I can do it, so can you! Now that you know what you need to do, let’s move on to the second step. 

Step 2: Grow Exponentially, Not Linearly

Do you remember the first time you drove a car? You were probably a bit nervous—white knuckled, both hands on the wheel (10 and 2), mirrors perfectly aligned, etc. What happens after a few years of driving experience? Rarely do you adjust your mirrors; instead you’re playing with the radio, texting at red lights.

You build up confidence! Buying real estate deals works the same way. 

Once you purchase your first property, you will have much more confidence to buy your second and third and fourth and so on. It probably took you a couple of years to purchase that first property. You likely had to save enough for the down payment, educate yourself, and build the confidence to take action. After you purchase that first property, if it’s a house hack, you are going to be saving on your living expenses, cash flowing a property, and actually gaining firsthand real estate experience. This will enable you to have the capital and confidence to purchase your second property in the next 365 days. 

Once you purchase your second property, you’ll have even more capital and experience. Then, you can go ahead and purchase your third, fourth, fifth, etc. The point here is, just because it took you a couple of years to buy property number one, that does not mean it will take you the same amount of time for property number two. In fact, the time between purchases will decrease after each one you do. And eventually, you will have the confidence to start investing with other people’s money and providing returns for them, as well, all while you continue to increase your portfolio. 

row of several small wooden house models all are white but one blurred trees in background

Step 3: Master the Art of Finding Deals

At this point, you have completed a few deals and are now comfortable taking other people’s money. If you continue on this route for three to five years, you will likely achieve the most basic form of financial independence—$2,000 to $3,000 of passive monthly income to satisfy life’s basic needs.

Now, it’s time to TRULY scale.

The three problems real estate investors have are: not enough money, not enough time, and not enough deals. But if you are financially independent, you have all sorts of time. You are now confident enough to ask other people for money.

Related: Which Real Estate Investments Provide True Passive Income & Financial Freedom?

There are trillions of dollars out there that are just waiting to be invested in real estate. The problem now is that you do not have enough deals. So if you can become an expert at finding deals in your area, you will have conquered the three largest problems. You’ll be an unstoppable force! You can continue to purchase property until your dream number is satisfied.

How much is that dream number? Is it $1,000 a month, $10,000 a month, $100,000 a month? You can decide. The whole point here, though, is that it all starts with the first investment. The longer you wait for the first one, the longer it will take to get to your chosen level of financial independence.

Do you have questions for me about any of the above information? Where are you on your journey toward financial independence? 

Let’s talk in the comment section below. 

Craig Curelop, aka thefiguy, is the author of The House Hacking Strategy and a driven pursuer of financial independence. Sta...
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    Wenda Kennedy JD from Nikiski, Alaska
    Replied 10 months ago
    Don't forget to factor in paying your taxes and you must pay for all those things that go wrong. You really, really need an emergency fund. And you need to set up "sinking funds" for all short-lived items -- like the dishwasher, the water heater, the roof, the carpeting, etc. A sinking fund is where you figure that a short-lived item is going to last for an estimated number of years. You then estimate the cost of the item when you figure that you must replace it. The calculation is the project cost, divided by the number of years, divided by 12 months. That tells you how much you need to save in your "sinking fund" for that item. Take all those monthly numbers and add them up. Then, every month, put that money away for the moment where you must make the repairs or replace that item. One unfortunate incident can sink you if you don't plan. You must do this same type of planning for large expenses like the yearly bill for your insurance. Financial planning and self-discipline will allow you to make a viable business, and therefore, a living in the world of real estate.
    Kyle McKiernan Real Estate Investor from Chico, California
    Replied 9 months ago
    You are correct. I've never heard of a "sinking fund" before. But as you described it, it's the same as a "Maintenance & Repair" account. Generally people take 8-10% of the gross rent a month and keep that aside for things you described. (Roof, appliances, carpet, water heater, etc). Don't be a slum lord and then that roof bid finally comes around years down the road and you need to scramble for $12k (at least in my market) and dont have the money to cover the expense.
    Terry Lowe
    Replied 10 months ago
    Wenda, I so much agree with you! I just can’t imagine netting only $100 on a rental. Too many things can go wrong, but saving for those repairs means you will be able to stay on track, and eventually change that $100 to $500 or $1000.
    Craig Curelop Real Estate Agent from Denver, CO
    Replied 10 months ago
    Wenda and Terry, I 100% agree with you. Things go wrong. That $100 is AFTER you set aside enough for your reserves. Those reserves include capital expenditures, vacancy, maintenance, property management, etc. I also agree that an emergency fund on top of that would be best.
    Dan Sheeks Rental Property Investor from Denver, CO
    Replied 10 months ago
    Hey Craig! Great stuff! I hope everyone reads your article and takes action.
    Craig Curelop Real Estate Agent from Denver, CO
    Replied 9 months ago
    Thanks Dan!
    Randall Prosise Rental Property Investor from Scottsdale, AZ
    Replied 9 months ago
    Good stuff
    Craig Curelop Real Estate Agent from Denver, CO
    Replied 9 months ago
    Thank you Randall!
    Lola Omishore Investor from Brooklyn, NY
    Replied 9 months ago
    This was very solid advice! Especially the encouragement that after the first deal, things really get rolling for subsequent deals. I own my condo currently. I live in NYC, and I’m worried about the high cost of living being a barrier to purchase additional property. Do you suggest that I look into deals in the tri-State area or upstate New York/Westchester/Rockland County? Thank you in advance!
    Craig Curelop Real Estate Agent from Denver, CO
    Replied 9 months ago
    Thank you Lola! I would recommend looking just outside of NY like you mentioned. Just as long as you don't mind living there if you plan to house hack!
    Geeta Vodopia
    Replied 9 months ago
    This is good info for the less informed person like myself who bought into a condo in MD. HOA is a ridiculous sets of fees. It's not like we own the land that's around us. I think something needs to be done about these stupid over price fees.
    Dave Rav from Summerville, SC
    Replied 9 months ago
    For this reason, I am not a fan of condos. Do you live there or is it an investment? If investment, regime fees are a killer. Plus, if you were responsible for those items covered, 99% of the time you could get those things covered cheaper. #ripoff
    Dave Rav from Summerville, SC
    Replied 9 months ago
    Expenses <$1k per mo? I would surmise you don't have children or a family? And what about healthcare? Also, in line with others $100/mo CF isn't worth the hassle. My min is $300. Just last week, I stabilized a property netting $625/mo. Just saying..
    Jeremy Babin from Colorado Springs, CO
    Replied 9 months ago
    thanks Craig! good read as usual!
    Matt Baker from Australia
    Replied 6 months ago
    Is there any reason to use other people's money? What if I make $160,000 per year from my day job at 26 and my monthly expenses are about $1000? Would I really need to use other people's money with a salary like this?