What Is Your Freedom Plan?


When I first started investing in real estate I had a plan. I was going to rehab and sell one house, then take those profits and use them to buy two rentals. That was my plan.  Then I was going to repeat the process again and again. On the surface it seemed like a good plan, but in reality it had one major flaw.

I was a total newbie that didn’t know anything about wholesaling properties. I didn’t realize it at the time, but I was paying too much for those initial properties. They were sure a lot less than retail, but nowhere near being what I now know is a good deal.

Lesson #1.  Understand what a good deal is before you make your first offer.

How We Got Started

I had met a Realtor that soon became a friend. She told me about this wonderful group she belonged to which turned out to be our local REIA. I went to a couple of meetings and was hooked. That was way back in 1998.

I assumed that this experienced real estate professional understood real estate investing. After all, she was the one that introduced me to it. She was kind hearted, was very good at being a Realtor, but in reality didn’t understand much about real estate investing. Most of all, she didn’t have a clue about what constituted a good deal for an investor.

It took me a little while to figure this out, but I eventually did. I managed to sell my first couple of rehabs, but I sold them for considerably less than I would have wanted to.  Looking back, it’s really a miracle that I didn’t lose money but I didn’t. The rentals that I had bought would turn out to be a real problem when the market tanked a few years ago. I had bought them at a discount, but not nearly cheap enough. Heck, one was even given to me. What could go wrong there? I will tell you. It was 100% financed. So when I wanted to sell them, I soon discovered that I was upside down in the houses.

Lesson #2. Only work with Realtors that are investors themselves. That’s my rule now. Some folks might argue that anyone that works with investors is OK, but I beg to differ. Most of them simply don’t understand what constitutes a good deal. This is deadly for a newbie.

Get a Plan

In my other business, I used to work with the managing broker of a large multi office real estate office in my area named George. He once told me about his real estate investing plan for his retirement which was roughly 20 years away at that time.

George said that his plan was to buy 4 rental houses a year. He had 20 year mortgages on all of them and at that time, he was able to buy them with no more than 10% down and get a good mortgage rate. All of the houses were bought at great prices, had 3 bedrooms and were in good solid middle class neighborhoods.

On the year that the homes “turned 5?, he sold three of them and put the proceeds toward paying off the 4th. He did this over and over. So that in 20 years when he planned to retire, he had a bunch of houses that were paid off, and a few that were close if not completely paid off. His plan then was to keep the best 10 or 15 and sell the rest. Those remaining houses were going to be his passive income for his retirement. I thought that was a good solid plan then, and it is still a good plan today.

Another Plan; 10 Free and Clear Houses to Freedom

I recently learned about a gal that has a different plan, but no less an excellent plan. She decided to make some big sacrifices in her life, save 50% of her W2 income, and use the other 50% to buy property.

In her area which is in Georgia, she is able to buy houses in good blue collar neighborhoods for about 10k each at this time. She says she has to put roughly another 10K into the houses for fix up costs. Before you even ask the question, I will tell you that she has found a contractor that is really good and really reasonable. These houses are in a rental area, will be worth 50-60K when repaired, and will rent for $650 to $750 per month in her city. She has factored in other costs such as vacancies, repairs, management costs etc. into her formula.

She is buying the houses with her own money, and is either making the repairs with her own money or private money.  Once it is a free and clear house, she starts over again. Her formula for her life is, “10  free and clear houses to freedom”.  I think it is absolutely awesome that she has a plan and has made a firm decision to see it through.

What is your freedom plan?

There are as many different plans out there as there are different people. The important thing here is that you must have a plan to get where you want to be. Some folks will keep their job while investing in real estate. Other folks have the dream of leaving the “9 to 5” in the rear view mirror.

Matei D.

About Author

Sharon Vornholt

Sharon has been investing in real estate since 1998. She owned and operated a successful home inspection company for 17 years. In January of 2008 she took the leap of closing her business to become a full time real estate investor.


  1. Robert Steele on

    My freedom plan is to have the 10 rentals I own now free and clear in 13 years. I will still be acquiring news ones though.

    The value of my rentals range from $100K to $200K with most past the half way mark. Altogether they average 75% LTV. My track record is about $3,500/month cash flow after all expenses including maintenance. I am just plowing that back into the rentals by paying off principle on the lien with the highest rate. The first lien will be paid off in a little less than 3 years. Then the freed debt service gets added to the snowball and plowed into the next which takes about 32 months to pay off. Then 28 months for the next, 24, 20, and so on. 12 years from now my last property will take only 9 months to pay off the lien and my cash flow will be around $10K/month unadjusted for inflation. Of course this doesn’t take into account any refi’s I might be able to do to get that debt service down or any increase in rents due to inflation. So I am hoping it will be closer to 10 years than 13.

    Unfortunately my day job still pays more so it will be tough to quit and give up that income but at least I have a retirement plan and I feel good about the fact that it doesn’t depend on the stock market.

    • Here’s the thing, your plan is GREAT including the part about keeping your job for now.

      Check out my blog in the upcoming weeks. I am doing a series which starts today called, “Escaping the 9 to 5; How I Did It”. Mitch Stephen an investor from San Antonio Texas is my first video interview. He has a great story. I think you are going to love what he has to say.

  2. I’m planning to live off my day job while I acquire around $250,000 in rental properties that can yield at least $2500/month (have to look for the best deals). Plowing all the rent money into the houses should pay them off in about 10 years. Then, I can borrow 75% against them to buy more SFRs to quadruple my holdings and repeat the same thing. In 20 years, I should own $1 million, free and clear, and be able to pull in $10,000/month, not adjusting for inflation. That is when I can quick my day job, or just dump the extra money into my tax free EIUL until I decide to retire. Mix in some dividend stock investments, and living in retirement should pay better than what I have now.

  3. Our plan (my wife an I), is to pay off our Portland, OR 10-plex (400K) owed in 10 years, by making extra principle payments so it is free and clear. It will generate 8-9K per mos. by then in rent, of which 5K will be net profit and have it under property managment so we won’t have to manage the day-to-day. We will also have another 20-30 plex in another market (possibly Phoenix) that will have a higher net profit (10K), after a 1031 exchange from another commericial property we are divesting of. We are 45 and 49 respectively, and hope to retire by 60 entirely (from working).
    In the end, the 15K net/mos. and keeping the multi-family is a strategy to then eventually transferring into a family trust, so the property remains providing the revenue to our children,
    and is not subject to capital gains in our lifetime.

    • Marty – That seems like a well thought out plan, and it certainly is doable. I like the component you have in there for transferring the property into a family trust for your children. Showing them how to invest is probably the greatest gift you will ever give them.

  4. Our plan started 3 years ago. but to summarize, we own 50 units now. (mix of SFH, 2-11 unit bldgs in Central Maine) — plan now is to acquire 5-12 units per year until we have 50% more cash flow on paper than our goal. let’s say we want to have 100K cash flow. We’d buy enough units to generate 150k cash flow “on paper” as a “margin of error” ala warren buffet.

    We used our own money for the 25% DP’s but also mortgaged our primary res at 15 year 3.25% to pay ourselves back some of it. We are currently financed using 3/3 ARMS for the 1-4 units and 5/1 ARMS for the over fives. The 3/3’s are currently 5.35% and will adjust to 4.375 within the year for the next 3 years. We are attempting to Refi 2 four units via FNMA so that our debt is a little more “divserified.” —

    We will let the market tell us whether we hold forever or sell or cash out refi.

    We also have an ample investment portfolio.

    Starting last year, the money for our building purchase down payments were all from cash flow for the first time!

    We are looking for someone to groom as a “guy friday” manager so that we can travel in 8 years and have someone we trust looking over things while we’re away.

    Finally, once cash flow permits us to buy 5-12 units per year PLUS put more down on the buildings, we will do that, and “domino” all the mortages. (3 buildings are free and clear now out of 12)

  5. Wow Ken, that is a very impressive, agressive plan.

    I am curious about one thing. Is there a reason you haven’t converted those ARM’s to fixed rates, since the interest rate will surely go up at some point? Wouldn’t now be a good time to do that?

    • Thank you Sharon,
      This may only be because I’m new, but frankly, we haven’t been able to obtain financing like this. We grew so quickly that we had “most heinous hideous” tax returns for a year which made our DTI’s (debt to income) not quite FNMA friendly. We are still working on it though. Our tax returns are fairly complex (108 pages / 3 businesses) that not every banker comes up with the same answers. We were just tentatively approved at a local bank to refi our home with a FNMA 3.25% 15 year, so I’m going to test the waters with this bank on the multis.

      Also, our “over 5’s” are secured with 5/1’s and have 5-4-3-2-1 pre payment penalties so we would be better off waiting.

      One more caveat, becasue of the number of properties we have, many banks won’t allow us in their 1-4 program even if we’re buying 1-4 unit building. Many banks do this, it seems. Once you own x number of blds/units, you’re a “commercial” borrower subject to the terms of their commercial program whether it’s a single family home or a 100 unit multiplex.

      I’d be happy with getting our 4-units and one 2 unit refi’d. That would leave us a little exposed, but our plan allows for early amortization so if rates rise, we can pull some out of investment funds and pay off a “building or two.”

      What i didn’t mention is that our current plan generates approx. 75k per year budgeted. If NO vacancy it climbs to 105k per year.

        • Hi Sharon!
          I have been in the lawn care business for 20 plus years and also have a small web design / hosting company (a little weird combo, I know!) We are not quite full-time. I basically manage all 3 businesses and do just enough physical work to keep my muscle tone (some of it anyway)

          Basically we got into RE 3 years ago after watching our portfolio dip 6 figures in 6 months. We held on, but I decided “dammit! I’ve always wanted to do this and I’m going to control at least PART of my portfolio!” hence an investor was born ….. We started very slow, one single family house, then another . We then ventured into a 2 then a 4 unit. Finally a 7 unit. then we said, “well heck, what are we doing with SFH’s” now that we’ve taken the plunge with multis. Now we’re divesting of our singles via trad sales and lease options and reinvesting in more multis.

          At this point, now that we’ve been “kicking” for 3 years we’re watching our cash flow statement to ascertain that our budget / plan was on target. we grew so fast that we really had no cash flow, we either dumped it into renovations, paid “stupid tax” or saved it for the next purchase. Now that we’ve “evened out” and are committing to buy only 1-2 bldgs (5-12 units) per year, we can really step back and see how close the plan matches reality. Believing is everything. And we need to see it work to beleive it, then we’ll be there. We’ll be stronger in our resolve, etc.

          Great thread. It’s nice to see such a variety of plans. I like the simple ones the best, though mine tend to be a little more complex.

  6. Sharon, great thread!

    I am glad to see what others are planning because it gives me something to check my plan against and see it if makes sense.

    I love to buy, fix and resell houses but also understand that the creation on an income sources through rental properties is a needed part of an freedom plan. However I believe that being mortgaged to the hilt in the process of getting there is not the best way to go. I want to flip houses now to create a pile of cash that I can use to then buy rental properties cash and/or at least put down sizable down payments.

    I want to focus on obtaining 3-4 houses with good cashflow (2 down, 2-3 more to go) and then focus on paying them down ASAP with the cashflow and cash generated from flipping. I know I cannot escape the 9-5 with houses that cashflow $300/month. That is what flipping is for, to put food on the table now and amass cash.

  7. That sounds like a good plan for you that will meet YOUR goals. That’s all that counts. It needs to work for you! Be sure to follow my blog. The first two interviews are up on “Escaping the 9 to 5; How I Did It”. It’s great to hear how other successful real estate investors left that 9 to 5 behind.

    • Jason – I really believe that they have a better understanding of investing if they are investors themselves. It’s not that they mean to give you bad advice, but few non-investor Realtors understand the formula’s we use because of the commission structure they have.

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