Your Idea of Financial Freedom is Very Different Than Mine—And That’s Okay
Ask 10 BiggerPockets members what their high-level real estate investment goals are, and you may get similar responses. We all want financial freedom, right?
That question isn’t as easy to answer as you’d think. Because when you dive a little deeper, you’ll get a myriad of answers about what exactly financial freedom is. My definition of financial freedom differs from other investors in the REI community, and many will probably say I’m crazy—including some of my BiggerPockets colleagues, whom I respect and admire. But that doesn’t mean I’m wrong.
Just hear me out—even if you disagree with my logic (and I expect that many of you will).
Financial Freedom Doesn’t Mean I Need to Retire Early
Let’s get this out of the way now: I have no interest in retiring early. I plan to work until I’m 65 and then live off my 401(k) and stock options, with supplemental income from a rental property.
I know several people my age or younger living the FIRE lifestyle and many more with that goal in mind. That’s great for them, and I will always offer encouragement along the way. But that’s not for me. I will never be a Brandon Turner or Josh Dorkin or even someone with a portfolio that’s a fraction of their size.
Don’t get me wrong: There are definitely times I wish I lived in a tropical paradise with no care in the world other than if the Eagles are going to win this weekend. But for every frustrating day at work, there are twice as many days when I feel empowered and passionate about what I do. I enjoy my W-2 job, and I have no plans to give it up, at least anytime soon.
This means I’m not actively looking for my next deal or opportunity to expand. I could always point to high interest rates or housing prices as my reason for standing pat, although smart investors know the market is cyclical and wealth will continue to grow with time. Plus, there are always good deals if you know where to look.
For me, though, I’m not scaling because I really don’t need to right now to have my version of financial freedom.
My View of Financial Freedom Is More Low Key
My idea of financial freedom is simple: Since I have no plans to give up my full-time job, I don’t need to replace that income. I just want to earn enough extra money to pay for one incredible vacation each year for my family.
Spending time with my family and enjoying experiences together are very important things to me. I’m in a fortunate situation where I really don’t worry about money on a day-to-day basis, thanks to a well-paying job and careful budgeting.
The only time I feel financially stressed is when I try to plan a trip to a unique destination. I aim to use my rental income to cover this expense, freeing me from that financial burden. In other words, it’s providing me with financial freedom.
Dave Meyer has a new book being released next year called Start with Strategy: Craft Your Personal Real Estate Portfolio for Lasting Financial Freedom that further validates my thinking. I recently had the honor of reading an early draft, and it’s truly fantastic.
One of the key tenets in his book focuses on discovering your values and building an investment strategy around what’s important to you. And that’s exactly what I’m doing to reach my goal.
Am I Ignoring Common Sense?
You’ve probably been screaming at me the whole time you’ve been reading this. I can hear you saying things like how my money can grow exponentially with additional investments and how I can still have my vacation fund while at the same time building my wealth for the future. And you’re not wrong.
The property I plan to rent is my fiancee’s primary residence, at least for another month or two. It has a low remaining mortgage balance (and interest rate) and has incredible equity. It’s also in one of the most in-demand neighborhoods in Atlanta, so finding qualified tenants will likely not be an issue.
I will admit this is all speculative since we’re still prepping the property to rent. However, without sharing the details, we’ve crunched the numbers a few different ways and are confident we can fund our goal with just this one property.
If we wanted, we could absolutely use some of the equity to fund another deal and scale. Even with the additional mortgage obligations, we’d still generate cash flow on the original investment while earning an additional return on the second property over time.
But this doesn’t align with my current goals, so I’m not going to do it. Yet.
The Bottom Line
So who’s right here? I’m right. And you’re right.
Since there’s no one-size-fits-all approach to real estate investing, it’s up to each individual to determine what financial freedom is and how to get there. Just because my strategy doesn’t align with yours doesn’t make either of us wrong. It just makes it different.
I’ll be the first to point out that my strategy is based on my current goal. And I know my goal will likely change a few times in the next 25 years before I retire. That’s a bridge I can cross later.
But for now, this is my plan, and I’m sticking with it.
What do you think? Sound off in the comments below.
Early financial freedom is possible.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.