How many units needed before you hit financial freedom, and why?
New to Real Estate · Savannah, GA · Member since 2021 · 15 posts · 26 votes
How many units needed before you hit financial freedom, and why?
Most Popular Reply
Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesSomewhere between 1 and 100...or more. There is no way anyone can answer this question. Only you can.
It's all based on:
1 - The end financial goals as you stated (actual numbers with $$$$ in front). Your numbers, not someone else's.
2 - The market or markets you will be investing in (this changes with time)
3 - The strategies (not strategy) you will using in each of the different markets you will be investing in.
58 Replies
- Real Estate Agent · Cincinnati, OH · Member since 2015 · 474 posts · 580 votes5y
@Lauren Akins I began investing about 5 years ago. My first goal was $4000/mo in net cash flow to replace my W-2 income. I also target a net cash flow of $200/mo per door on properties I buy. So simple math was 20 units or so. However, I have hit road bumps along the way. One of which was getting divorced, I had to give away half of my equity and cash flow to my ex from the portfolio I had purchased while married. I also JV'd another deal since then. Right now I am sitting at 37 units, some of which are under renovation. After they are finished and rented I will surpass my initial goal. During that time I also built and grew a successful real estate agent and construction business that both feed my investments, and replaced my W-2 salary as well. My next goal will be $10,000/mo in net cash flow which will give me a more comfortable financial freedom number, allow me to travel more, and not live bare bones if I choose not to work at some point. I am sure my goals will continue to change as I grow my portfolio, income, and lifestyle. Hopefully that helps give you some ideas, best of luck on your FIRE journey!
- Developer · Bucks County PA · Member since 2015 · 1 post · 3 votes5y
Good to set a plan! Just start looking for the first deal that makes sense for your situation and pull the trigger. Things will build from there! Obtain fixed rate financing to benefit from rental price increases moving forward. BRRR method is good way to start to conserve capital reserves. Best of luck!
- 5yJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
@Lauren Akins
It took me 6 years to make 6k/month after all my expenses in RE. This isn’t much, but enough to retire my wife now from her nursing job. She’s finally half way on board with RE now. lol. We’ve had a lot of stress in our marriage over me buying these things. In 5-7 years, most of these will be paid off so we’ll be bringing in 13k/month net. Not nearly enough for most people on here, but for us it’ll help with a lot of our living expenses. We have 12 SFRs. I’m more of a buy n hold “base hits” kind of investor. But this slow n steady method works for me.
- Rental Property Investor · Crestview, FL · Member since 2019 · 56 posts · 21 votes5y
Everyone is different. For example, to me financial freedom would be making enough cash flow or overturns on my properties that it would double my current w-2 job monthly income. Start thinking what things you want to have or expenses you want paid for on a monthly basis. Once you know that number, then calculate how many properties you will need to achieve sufficient cash flow to cover all those expenses. Be sure to know your numbers really well, like vacancy and cap ex for unexpected repairs.
I would suggest to also have a side hustle like flipping houses or wholesaling to fall back on for cash to help pay for down payments for more income producing properties. - Investor · Bradley, IL · Member since 2015 · 11 posts · 10 votes5y
@Lauren Akins. I'm 49. My gauge is thinking of a worst case scenario of a possible future. By the time I'm 70 what will the economy be like? What will my health be like? How will my loved ones be doing financially?
My mind's eye says $20k of net income. The equity in the property to be able to generate that should be plenty to pass on to my 2 daughters and my grandchildren to give them "a leg up" on their journeys to the end.
Good question! Allowed me to think of a way to POSSIBLY say "enough is enough, I'm done". 🙂
We started out buying single family homes in 2010. Back then i couldn’t even dream of replacing my w2 incomes with RE investment. I just wanted to have a better quality of life, to send my kids to extra curriculum activities.
Back then there were a lot of foreclosures and we bought many of them from banks: Hud, Fannie, Freddie, etc. we worked hard: i rehabbed houses nights and weekends while my wife manages them.
Today we have enough income to retire but i still works since the job is interesting and pays well. However, the feeling that i could retire if i choose to is great. I think i would be less happy if i have to have a job to feed my family.
In your case, i would think just start and keep investing. Your mindset and knowledge will change with more properties, more time on this forum, more conversations with experienced people.
Happy investing!
- Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes5y
@Lauren Akins You seem to be in a unique position to evaluate this for yourself. You have a modest income from a W2 and it sounds like you are living below your means and financially literate and responsible. Kudos... A lot better then I was.
@Joe Splitrock and @Joe Villeneuve hit on some wonderful insights. Personally, I would look for that one unit which may be out there that is "really" going to cash flow and replicate as you move forward.
My views have changed a few times in the mere 6 years I have had been in the game. And owning cash generating units has also changed the way I spend money. My wife and I used to wonder why on God's earth people would pay for private school when we pay so much in property taxes... Now that is one of the most rewarding expenses I have. I used to think that I would pass the units on to my kids- now I foresee cashing out before I am 60 and dumping the proceeds into a mutual fund. You are young and you are going to want to experience all the beauty and adventure the world can offer someone who is financially secure. Kids, travel, success and failure... It is a moving target. We still have our W2's with units that bring in a healthy income.
As an aside- I would have hated to have foregone the adventures of my younger self to set the table for my older self... Sadly, he may not even show up to dinner.
Get a unit and repeat and also find a W2 that you want to do, until you don't. Best Luck
well.... to put it in perspective - if you want to replace your 60k/year salary you will need to invest $$ 1 million in say a multi fam property that has a 6% cap rate. (this is just an example with easy math)
I always think of this as how much my money will earn.... So what does it look like to grow your "nest egg" to acquire the funds to truly make a difference in your financial life. Flipping is possible BUT you have to rely on subs and I can tell you from first hand experience that is iffy at best until you find someone rock solid to work with... you are also dependent on materials pricing..... Short term rentals are a good investment that may not take a lot of your time..... Investing out of state is not something I would recommend as to me keeping tabs on your assets is a prime responsibility of an investor.
Basically start saving every penny and while you are saving keep learning and researching!- Investor / Mentor / Contractor · Arcadia, CA Buying Out of State · Member since 2015 · 655 posts · 622 votes5y
@Lauren Akins The problem in answering this for people who are “Driven” is that we are constantly moving the bar. I once said to myself if I could own 50 doors I’d be set. But I always want more, so at over 300 now, I’m still not content. Not sure if it’s a blessing or a curse - lol. I do love the constant challenges. I’ll never stop working or retire…
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Joe Villeneuve:
Somewhere between 1 and 100...or more. There is no way anyone can answer this question. Only you can.
It's all based on:
1 - The end financial goals as you stated (actual numbers with $$$$ in front). Your numbers, not someone else's.
2 - The market or markets you will be investing in (this changes with time)
3 - The strategies (not strategy) you will using in each of the different markets you will be investing in.
financial freedom is achieved when you have enough double tax free Muni bonds in your portfolio that generate enough return to
live the lifestyle you desire.. thats true financial freedom rentals while nice are still work and still have a fair amount of risk depending on where you purchase.. so you do need to stay very engaged in the rental bizz . buying high quality assets does mitigate that.
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Tim Ryan:
@Lauren Akins The problem in answering this for people who are “Driven” is that we are constantly moving the bar. I once said to myself if I could own 50 doors I’d be set. But I always want more, so at over 300 now, I’m still not content. Not sure if it’s a blessing or a curse - lol. I do love the constant challenges. I’ll never stop working or retire…
I owned 350 doors at one time.. when i exited and had a liquidity event that was the Happiest day of my life ( business life LOL)
Here in the Pittsburgh area, and I think I can safely assume throughout the urban cores of most of the Rust Belt, quite a few mom and pop outfits like ours think that it's possible to achieve rental-based financial freedom to the end of their lives in low-cost, high-cash-flowing single-family rentals. These people overwhelmingly live by the belief that the eye-popping on-paper cap rates and cash-on-cash returns they acquire most of their properties through are the tickets to generational wealth they are passing on to their children.
This turns out to be an illusion. I've met no one who's managed this, and I feel safe in my certainty that I never will. The closest you get is retirees in their seventies who own 10-12 units in SFR and small multifamily (2-4 units) and have passed almost all of their property management chores to their largely-inept offspring. The retirees cling to the mistaken belief that their kids are going to keep the wheels on the bus after they die, even as their own health care costs rise and their bumbling kids screw up their inherited fiefs more and more, driving down profitability. The scales never fall from their eyes, and the retirees go on to glory and leave behind an ailing portfolio that their multiple children then carve up into smaller portfolios and ultimately sell off.
Don't let it happen to you.
- Real Estate Agent · Phoenix, AZ · Member since 2019 · 158 posts · 140 votes5y
@Lauren Akins
So how my wife and I did it was I quit my
Job first while she kept working snd we started a flipping business. This is active income which paid our current lifestyle and the extra went into rentals. We now start acquiring rentals and are about 1/3 of the way to financial freedom. We focus on higher quality deals that will bring in more profit rather than doing a bunch of low income deals. Nothing wrong with
Either way it just the way we choose to do our investments. Right now we have 4 units which have a pure cash flow number of just over $2,000. Honestly even after we reach $7,000/month cash flow we’re just going to keep going. The only beauty of that is that we don’t have to our our active income towards bills anymore. Our goal is to cash flow over 1 million $ per year. That’s the long term goals. We started somewhere tho snd have been making our plan work. Right now we are under contract for a deal to build 8 new units which after that would put us financially free for our current life. We would have to budget snd be smart which is another reason why we won’t stop goin. So we should be free with 12 units roughly about $500/door. All long term investments. Air b&b seems to have greater cash flow but that’s not our specialty. Pick your niche and just start towards a goal for next 3 years then adjust. Hope this helps!!!
- United States · Member since 2021 · 151 posts · 49 votes5y
Originally posted by @Lauren Akins:
Hey everyone! I am currently trying to get all my ducks in a row and have a long-term plan outlined. I know real estate investing will be the way I achieve my financial freedom. My vision of financial freedom is, of course, having my assets pay for my livelihood but also allow me to buy more assets to grow. What I'm trying to wrap my head around is a realistic number of units I need to achieve this goal. At my W-2 job, I am making around 60K a year. This amount is fine because I am keeping my expenses low. But I also know that this amount of money won't sustain me year-over-year for the rest of my life. I haven't put an exact number on what my end goal is yet, but it's more than 55K a year lol.
I'm aware that this COMPLETLY depends on the deal. What's most important to me right now is the cash flow of the deal. Appreciation and tax benefits are just icing on the cake.
I would love to hear everyone's stories as to how many deals/doors it took for you to achieve your financial freedom and, ideally, a breakdown of what those numbers look like. Now is the time to brag! lol
Well if each unit provides $100-$200 of positive cashflow then the average person would probably need around 10-20. Remember that the lower you can get your monthly expenses by removing all of your liabilities, subscriptions and payment plans the easier it will be to hit your goal.
- Whitestone, NY · Member since 2017 · 22 posts · 18 votes5y
I am approaching 11 units and have yet to take any money out yet for personal use. Everything has been reinvested and just when I thought I would stop another unit would pop up.
@Joe Splitrock - I have similar feelings to you. I consider myself in the growth and acquisition phase currently, using heavy leverage to acquire units and then letting them marinate until I can figure out the next move after SFRs (open to ideas!!)
- 5yWale LawalBusiness MemberReal Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
NETWORTH BUILDERS5236 Reviews - Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes5y
Originally posted by @Jay Hinrichs:
Originally posted by @Joe Villeneuve:
Somewhere between 1 and 100...or more. There is no way anyone can answer this question. Only you can.
It's all based on:
1 - The end financial goals as you stated (actual numbers with $$$$ in front). Your numbers, not someone else's.
2 - The market or markets you will be investing in (this changes with time)
3 - The strategies (not strategy) you will using in each of the different markets you will be investing in.
financial freedom is achieved when you have enough double tax free Muni bonds in your portfolio that generate enough return to
live the lifestyle you desire.. thats true financial freedom rentals while nice are still work and still have a fair amount of risk depending on where you purchase.. so you do need to stay very engaged in the rental bizz . buying high quality assets does mitigate that.
Could you do that?
I have thought of the double tax free Muni bonds route but then I think, wow I would be giving up so much potential profit. LolI just don’t know of I could ever do that. A little over 10 years ago I did retire
It was great for about a year. But then I was bored almost to death.
Had to start ‘working’ again and am happier than I ever have been in my life
Originally posted by @Tim Ryan:
@Lauren Akins The problem in answering this for people who are “Driven” is that we are constantly moving the bar. I once said to myself if I could own 50 doors I’d be set. But I always want more, so at over 300 now, I’m still not content. Not sure if it’s a blessing or a curse - lol. I do love the constant challenges. I’ll never stop working or retire…
300 is a whole Lotta units congratulations. Just for clarification you personally own 300 units not you and your team???
Originally posted by @Jim K.:
Here in the Pittsburgh area, and I think I can safely assume throughout the urban cores of most of the Rust Belt, quite a few mom and pop outfits like ours think that it's possible to achieve rental-based financial freedom to the end of their lives in low-cost, high-cash-flowing single-family rentals. These people overwhelmingly live by the belief that the eye-popping on-paper cap rates and cash-on-cash returns they acquire most of their properties through are the tickets to generational wealth they are passing on to their children.
This turns out to be an illusion. I've met no one who's managed this, and I feel safe in my certainty that I never will. The closest you get is retirees in their seventies who own 10-12 units in SFR and small multifamily (2-4 units) and have passed almost all of their property management chores to their largely-inept offspring. The retirees cling to the mistaken belief that their kids are going to keep the wheels on the bus after they die, even as their own health care costs rise and their bumbling kids screw up their inherited fiefs more and more, driving down profitability. The scales never fall from their eyes, and the retirees go on to glory and leave behind an ailing portfolio that their multiple children then carve up into smaller portfolios and ultimately sell off.
Don't let it happen to you.
What’s your advice for not allowing this to happen do you?
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Michael Plante:
Originally posted by @Jay Hinrichs:
Originally posted by @Joe Villeneuve:
Somewhere between 1 and 100...or more. There is no way anyone can answer this question. Only you can.
It's all based on:
1 - The end financial goals as you stated (actual numbers with $$$$ in front). Your numbers, not someone else's.
2 - The market or markets you will be investing in (this changes with time)
3 - The strategies (not strategy) you will using in each of the different markets you will be investing in.
financial freedom is achieved when you have enough double tax free Muni bonds in your portfolio that generate enough return to
live the lifestyle you desire.. thats true financial freedom rentals while nice are still work and still have a fair amount of risk depending on where you purchase.. so you do need to stay very engaged in the rental bizz . buying high quality assets does mitigate that.
Could you do that?
I have thought of the double tax free Muni bonds route but then I think, wow I would be giving up so much potential profit. LolI just don’t know of I could ever do that. A little over 10 years ago I did retire
It was great for about a year. But then I was bored almost to death.
Had to start ‘working’ again and am happier than I ever have been in my life
Depends on how many of them u have :)
Originally posted by @Joe S.:
Originally posted by @Jim K.:
Here in the Pittsburgh area, and I think I can safely assume throughout the urban cores of most of the Rust Belt, quite a few mom and pop outfits like ours think that it's possible to achieve rental-based financial freedom to the end of their lives in low-cost, high-cash-flowing single-family rentals. These people overwhelmingly live by the belief that the eye-popping on-paper cap rates and cash-on-cash returns they acquire most of their properties through are the tickets to generational wealth they are passing on to their children.
This turns out to be an illusion. I've met no one who's managed this, and I feel safe in my certainty that I never will. The closest you get is retirees in their seventies who own 10-12 units in SFR and small multifamily (2-4 units) and have passed almost all of their property management chores to their largely-inept offspring. The retirees cling to the mistaken belief that their kids are going to keep the wheels on the bus after they die, even as their own health care costs rise and their bumbling kids screw up their inherited fiefs more and more, driving down profitability. The scales never fall from their eyes, and the retirees go on to glory and leave behind an ailing portfolio that their multiple children then carve up into smaller portfolios and ultimately sell off.
Don't let it happen to you.
What’s your advice for not allowing this to happen do you?
Plan to sell up in your lifetime to assets that are sturdier and cashflow less, and move on.
Originally posted by @Jim K.:
Originally posted by @Joe S.:
Originally posted by @Jim K.:
Here in the Pittsburgh area, and I think I can safely assume throughout the urban cores of most of the Rust Belt, quite a few mom and pop outfits like ours think that it's possible to achieve rental-based financial freedom to the end of their lives in low-cost, high-cash-flowing single-family rentals. These people overwhelmingly live by the belief that the eye-popping on-paper cap rates and cash-on-cash returns they acquire most of their properties through are the tickets to generational wealth they are passing on to their children.
This turns out to be an illusion. I've met no one who's managed this, and I feel safe in my certainty that I never will. The closest you get is retirees in their seventies who own 10-12 units in SFR and small multifamily (2-4 units) and have passed almost all of their property management chores to their largely-inept offspring. The retirees cling to the mistaken belief that their kids are going to keep the wheels on the bus after they die, even as their own health care costs rise and their bumbling kids screw up their inherited fiefs more and more, driving down profitability. The scales never fall from their eyes, and the retirees go on to glory and leave behind an ailing portfolio that their multiple children then carve up into smaller portfolios and ultimately sell off.
Don't let it happen to you.
What’s your advice for not allowing this to happen do you?
Plan to sell up in your lifetime to assets that are sturdier and cashflow less, and move on.
Any assets that you recommend or plan to use at that stage in life?
Originally posted by @Joe S.:
Originally posted by @Jim K.:
Originally posted by @Joe S.:
Originally posted by @Jim K.:
Here in the Pittsburgh area, and I think I can safely assume throughout the urban cores of most of the Rust Belt, quite a few mom and pop outfits like ours think that it's possible to achieve rental-based financial freedom to the end of their lives in low-cost, high-cash-flowing single-family rentals. These people overwhelmingly live by the belief that the eye-popping on-paper cap rates and cash-on-cash returns they acquire most of their properties through are the tickets to generational wealth they are passing on to their children.
This turns out to be an illusion. I've met no one who's managed this, and I feel safe in my certainty that I never will. The closest you get is retirees in their seventies who own 10-12 units in SFR and small multifamily (2-4 units) and have passed almost all of their property management chores to their largely-inept offspring. The retirees cling to the mistaken belief that their kids are going to keep the wheels on the bus after they die, even as their own health care costs rise and their bumbling kids screw up their inherited fiefs more and more, driving down profitability. The scales never fall from their eyes, and the retirees go on to glory and leave behind an ailing portfolio that their multiple children then carve up into smaller portfolios and ultimately sell off.
Don't let it happen to you.
What’s your advice for not allowing this to happen do you?
Plan to sell up in your lifetime to assets that are sturdier and cashflow less, and move on.
Any assets that you recommend or plan to use at that stage in life?
Something managed by professionals, with long-term viability. Apartment complexes, for instance.
- Durham, NC · Member since 2014 · 104 posts · 68 votes5y
Mine is simple. I wan to make $1,000/day cashflow, or $30,000/month or $365,000/year. I’ve calculated I can achieve this based on what I already have in my portfolio (32 properties with 42 total doors). Right now there are 27 of these properties with mortgages on them and 5 owned free and clear. All 27 should be paid off within the next 12 years. I will be 53 then and both my kids would just be wrapping up college by then.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.