How Much Real Estate Do You Actually Need to Be Free?

**Henry Washington** (0:00)
All right, so today, we're going to talk about something that I genuinely believe in, because it did change the trajectory of my life.
And it's simpler than most people think it is. Now, it's not easy, but it's definitely simpler than most people think it is. And that idea is you only need eight rental properties to be completely financially free. So to be able to control your own time, having eight properties is all you need. What's going on, everybody? I'm Henry Washington, host of the Bigger Pockets Podcast. And today we're talking about how to actually generate financial freedom through owning rental properties.
I believe this is why a lot of people start looking into investing in real estate, but I haven't really seen it broken down into exactly how many properties you need for that to be a realistic reality for you and in what time frame you can reasonably expect for those properties to be producing enough income for you to truly be financially free. So by the end of this video, you're going to understand exactly what it looks like to be financially free, how the math works, and how you can actually get there. Most people never start. And so this is your first step to getting on your way to financial freedom. Now, before we jump into the details here, I want to define financial freedom or financial independence, because in all reality, financial freedom is a little different for each person. Everybody's got a different financial background. Everybody has different goals. But for the sake of this video, I want to give it a generic definition so that we can use it as a reference point as we go through the details of how to get to eight properties. So I am simply defining financial independence as when your monthly income from your assets exceeds your monthly expenses. In other words, you know what it costs you to live month in and month out. And if you don't, then you should. That's pre-records at number one. Financial independence is being able to have enough money to pay for those expenses without you having to show up at a job. So this means we are trying to replace our income that we have less control over with income that we have more control over. If you have a job, your income is based on things that are not in your control. It's based on decisions your boss makes. It's based on decisions the company you work for makes. It can be based on what's happening in the economy. It can be based on whether or not your customers for your business are purchasing your product or service.
A lot of these factors, you have absolutely no control over. So you're one bad quarter away from potentially being laid off, and it's completely out of your control.
If you replace that income with income from assets that you do control, in this case, we're talking about real estate, it gives you a lot more freedom and sense of comfort. You can control how much rent you charge. You can control what kinds of assets you buy. You can control where you buy those assets. You can control how much leverage you want to buy those assets with.
You get to control so many of the factors of that piece of property. And so the money that comes into your bank account each and every month has a lot more to do with the decisions that you're making than the impact of decisions that other people are making. One of the other control factors is not only are you controlling who lives in your property, but you're controlling how you monetize and when you monetize that property. You get to decide when you rent it. You get to decide when you sell it. You get to decide if and when you refinance it. All of these decision points that directly impact money are made by you. So having control over your income allows you to have comfort, and comfort allows you to have some freedom. So I truly believe that financial freedom, a key component of that is the control piece, because freedom comes with peace of mind. And the more control you have over an asset, the more comfortable you can be with the amount of income that it's producing.
Why real estate? Why is real estate the best vehicle for financial freedom? First and foremost, we all understand that real estate generates income while you own it, right? People think about the cash flow that an asset produces. So when you buy an asset and you rent it out, the rent hopefully covers all of your expenses and then pays you a little bit of money every month. And so it's generating income for you without you having to do a lot of work. Now, it is not a completely passive investment strategy. I'm in no way saying you're going to have to do absolutely nothing and just wait for money to show up in your mailbox. It does take some work and some effort, but it does not take a 40 hour a week work effort like a day job takes. So it is a much more passive income stream. Some of the other factors that make real estate the best option for generating financial freedom. It's a very proven business model. It has been around for decades and decades and decades, and it has been done essentially the same way the entire time. Technology has come around and made a lot of the processes involved in owning and operating real estate easier, but at its core, how to do it has not changed. You find an asset that you can buy at a discount or under its value. You add value to that asset either by renovating that asset or by repositioning that asset, and then you monetize that asset at its new higher value. And that monetization could be rent. It could be selling it. It could be Airbnb.