Honest Advice to Someone Who Wants Financial Freedom

Dave:Monetary freedom is a journey, not only a vacation spot, and that’s a superb factor. Perhaps you need to substitute your earnings and stop your job sometime, and actual property can completely make it easier to get there. However perhaps what you actually need is monetary flexibility. The flexibility to purchase dinner or go on trip with out having to emphasize in regards to the prices and the flexibility to offer that flexibility is considerably distinctive to actual property. At present we’re speaking about how your targets can change over time, however there’s at all times an investing technique to satisfy you the place you might be. Hey everybody. I’m Dave Meyer, head of Actual Property Investing right here at BiggerPockets, and I’m joined as soon as once more by my good friend Henry Washington.

Henry:What’s up buddy? Glad to be right here.

Dave:I’m glad you’re right here as effectively as a result of I feel it’s honest to say each of us have kind of reached our personal model of monetary Freedom. Is that proper? Would you say that?

Henry:Yeah, completely. Completely. I’d say that it generally doesn’t really feel like that, however yeah, for certain.

Dave:Proper. I feel that’s form of the purpose although. I’ve kind of hit monetary freedom too, but additionally neither of us are literally retired at this level. We’re nonetheless working each

Henry:Day,

Dave:Which is principally kind of the massive secret on this complete trade. Everybody who says that they’re retired will not be truly retired. They’re simply perhaps doing one thing completely different than they have been doing earlier than they began entering into actual property investing. However that’s okay, proper? That’s, I feel the entire level of the episode we need to have right now is that the journey that you just tackle monetary freedom doesn’t look the identical. It’s kind of a shifting goal. It shifts and adjustments, and for my part, a minimum of each actual property deal I do, each choice I make ought to make me extra financially free and what the precise vacation spot is, I don’t even actually know, and that form of adjustments, nevertheless it’s about bettering your monetary state of affairs with each deal you do. In order that’s what we’re going to speak about right now and the way everybody’s targets are going to vary throughout a wealth constructing profession and the way it’s truly okay to make use of actual property to make your life higher proper now, even when meaning it’ll take you a bit of bit longer to succeed in some quantity that you could have in your thoughts. So Henry, let’s simply dive into your story a bit of bit. If you first obtained began, was monetary freedom even a objective? Do you know that phrase? Was that what you have been pursuing?

Henry:Yeah, that was 100% what I used to be pursuing.

Dave:It was. Okay. And what did it imply to you?

Henry:So I had this imaginative and prescient in my thoughts of in some unspecified time in the future I’d have sufficient rental property that I’d simply have cashflow coming in simply in droves, and I’d simply have the ability to sit on a seashore someplace and never should work. In different phrases, I simply had this picturesque imaginative and prescient of cashflow, funding the whole lot in order that I may go the place I wished and do what I wished and never have to fret about creating wealth as a result of my actual property portfolio simply kicks off all this cash for me.

Dave:You have been Scrooge McDuck simply diving

Henry:Into your pool of gold,

Dave:Simply pool of gold coin

Henry:Doing gold coin angels.

Dave:I imply, that may be a imaginative and prescient I feel lots of people have. It modified although, you mentioned that was your imaginative and prescient at the start, nevertheless it feels like there’s a however coming there,

Henry:Man, I don’t need to sound like a downer, however I need folks to have a practical understanding of what it’s. If you get on this enterprise, as you begin doing offers, what you begin to notice is sure, you purchase properties that do make cashflow, however realistically, in a long-term rental state of affairs, your properties are most likely kicking off between 100 and $500 per door of month-to-month cashflow. And so so that you can really dwell the approach to life you need, it most likely goes to take an entire lot of doorways for those who nonetheless have leverage in your property for that to grow to be a actuality. The opposite actuality is the extra doorways you purchase, the extra money simply is available in and goes out. And so sure, each month,

Dave:That’s a superb level.

Henry:I receives a commission from my property supervisor after which mortgage funds comes out and taxes come out and insurance coverage comes out and upkeep requests come out and I’ve over 100 properties. And so this morning I obtained an e mail, I’ve any person wished $1,100 to switch a entrance door that any person had kicked in and any person wished one other $3,000 to switch a siding glass door and a few trim in an condo, and that’s simply multiplied throughout a bunch of properties. Sure, in my underwriting, I accounted for these items to occur, however the cash is available in, the cash goes out. Until you’re just a few tremendous accounting spreadsheet genius, it’s onerous so that you can know at any given level precisely how a lot precise internet cashflow you’ve each single month. After which generally surprising issues occur. And so though I assumed I used to be going to have a lot internet cashflow, I’ve considerably much less. Perhaps this month I had 4 HVACs exit. And so what I realized was it’s actually onerous to dwell your life based mostly on that cashflow earnings as a result of each month is completely different,

Henry:And if each month is completely different, it’s onerous to have some consistency with having the ability to pay your payments and really dwell off that cash. And so what I shortly realized was like I don’t essentially need to dwell off my cashflow. I need my properties to cashflow, however I need to have the ability to have a special, extra constant earnings stream that I truly dwell off of. After which I can take the cashflow and I can concentrate on a quarterly foundation or on a semi yearly foundation on paying down the property with the cashflow that I’ve as a result of in some unspecified time in the future as extra property receives a commission off, that cashflow grows exponentially. Now I don’t have leverage to repay anymore. After which you’ll be able to really dwell off that cashflow,

Dave:Proper?

Henry:As a result of it’s kicking off a lot extra cashflow that it’s straightforward to truly plan your life round it, and it’s straightforward to handle the upkeep gadgets as a result of your cashflow will go from 100 to $500 a door to love a thousand to 1500 to $2,000 a door for those who’re not paying that

Henry:Mortgage fee each month on that property. And so I spotted that the true cashflow that I’m on the lookout for comes after the properties aren’t leveraged anymore. And if I cannot dwell off the cashflow and I can reinvest that cashflow into serving to me repay the property sooner, I can get to that objective sooner. And in order that’s why I began flipping homes to generate the extra constant earnings that I can truly dwell off of as a result of I can do the maths and know if I flip 5 homes a yr and I common 40 to 50 grand per flip, that’s good. I can handle my life off that.

Dave:I’d by no means, once I first began, suppose that you’d say flipping is the extra constant earnings, however the way in which you do it, it does truly make sense that for those who do sufficient quantity, it does grow to be truly extra predictable than cashflow on a month-to-month foundation.

Dave:I feel what you mentioned makes a number of sense is that cashflow is nice to carry onto your property, however till you attain a sure dimension of your portfolio, it’s not truly all that reliable, even when it’s reliable on an annual foundation or a long-term foundation, which it needs to be for those who’re underwriting effectively on a month-to-month foundation, you bought to make hire, you bought to pay to your automobile. You possibly can’t actually depend on that till you get a sure dimension. And truly what I assumed you have been going to say is cash’s coming in, cash’s popping out, which is true from a expense standpoint. However I feel the opposite factor that occurs is you begin to make cashflow and also you, even for those who’re buying it, you need to use it in the direction of your subsequent deal. You need to use it to fund your subsequent rehab. You don’t need to use it to your life-style. And that may kind of spiral too, as a result of if you wish to get to a major portfolio dimension, that you must sustain a fairly good reinvestment fee. That’s the way you compound. You simply hold pouring your a refund into your online business. And so

Dave:I feel that’s one other factor that kind of will get misplaced within the shuffle right here, however lemme simply take a step again as a result of if you first began, I get what you’re saying. You thought you’d dwell off cashflow. I feel everybody does. Did you’ve a quantity in thoughts? X {dollars} of cashflow would offer you your seashore dwelling fantasy?

Henry:Yeah. The unique quantity was simply to get to what my present month-to-month earnings was from my day job in month-to-month cashflow. So I used to be making about $10,000 a month proper

Dave:Earlier than taxes, earlier than

Henry:Taxes. So if I may get to $10,000 a month in internet cashflow, then I wouldn’t want my job anymore. Looks as if a fairly cheap factor to consider.

Dave:Wonderful means to consider it.

Henry:And also you get there, and like I mentioned, it’s simply not as straightforward to know that you just’re truly going to have $10,000 each month to spend. However what I actually began to study was that actual wealth is constructed via fairness and appreciation. That’s the place actual property is probably the most highly effective. Actual wealth isn’t constructed via leveraged cashflow. Leveraged cashflow. It’s extra of a measuring keep on with know you got a deal. That is sensible as a result of it makes you cash each month. That’s why they are saying actual property’s a long-term recreation. The true payday comes a lot later.

Dave:I do agree with that, and that has been my expertise as effectively, that cashflow doesn’t make you a ton of cash, particularly upfront. However I do suppose that there are occasions in my life once I have a look at my investing profession the place cashflow did have an actual important affect on my life-style at that second. My objective once I began actual property wasn’t to retire. I didn’t have this imaginative and prescient of like, oh my God, I’m going to take a seat on a seashore. I’m going to purchase sufficient rental properties. My unique objective was like I used to be ready tables and I used to be struggling to make hire, and I used to be like, if I may determine a technique to get 250 bucks a month,

Dave:That might be actually helpful to me. And that’s why I purchased my first deal. I had a good friend who was making a pair hundred bucks a month on a rental property and I used to be like, I need that. And once I obtained that 200, I feel it was truly extra, I wound up doing a bit of higher on that first deal that had a extremely massive affect on me. I may exit to dinner, I may make hire. I wasn’t a wrestle to make my automobile fee. And as my life-style obtained costlier, and I do know folks will say like, oh, you shouldn’t have life-style creep, however that was a part of my objective. I used to be 22 and I used to be scrimping by, I wished a greater life-style. I’m sorry. I wished to go on trip and to not fear about my funds on a regular basis. And in order I kind of settled into what I truly need my life-style to be, my targets completely modified. And that’s the place I took the strategy. You began saying like, oh, truly 200 bucks at a time will not be going to get me the place I need to get to. I obtained to go a special

Henry:Route. Yeah.

Dave:I feel that the wonderful thing about actual property is that for those who begin producing cashflow, whether or not it’s $200 a month or $20,000 a month is its flexibility. It means that you can determine each month based mostly on altering circumstances, do I need to reinvest this capital into my portfolio? Do I need to make investments it in one thing else? Do I need to use it to assist my life-style? To me, monetary independence, it’s not some vacation spot that you just get to the place you’re like, okay, I’m carried out. I’m by no means working once more. All the things’s superb. For me, it’s like, no, I’ve some degree of independence the place if I select to spend extra this month, I get to spend extra this month. If I select to reinvest it, I get to make that selection. To me, that’s the half that reduces my very important quantity of monetary nervousness that I’ve had for my complete life. That’s the factor that I discover beneficial. So let’s dig extra into this flexibility idea. It is a actually necessary factor that I feel a number of new traders perhaps don’t notice, and actually, I feel a number of skilled traders don’t benefit from as a lot as they need to. We do should take a fast break although. We’ll be proper again.

Dave:Welcome again to the BiggerPockets podcast. I’m Dave Meyer right here with Henry Washington speaking in regards to the journey that’s monetary freedom. So Henry, you mentioned at the start your objective is to switch your earnings was like $110,000. Have you ever up to date that objective?

Henry:No, not from a cashflow perspective. The place I’m at in my journey now’s I’m pretty comfy with the dimensions of my portfolio. Will I purchase extra rental properties? In all probability, however not on the tempo that I used to be shopping for them earlier than. I can’t move up an important deal in an important neighborhood. If I discover it, I’m going to purchase it. However for probably the most half, I’m not actively attempting to scale as a lot. And so for me now it’s extra about paying down the property that I’ve, the way in which I have a look at issues proper now, I can get to a special degree of monetary freedom quicker by eliminating a few of the leverage that I’ve versus shopping for extra doorways with extra leverage. So if the objective was cashflow in order that I don’t should work, I can both get there by buying lots of of doorways leveraged to get me to a month-to-month cashflow quantity that is sensible, or I can get there by paying down the doorways that I’ve and exponentially growing that cashflow. And after having a giant portfolio, I like the thought of not growing that portfolio an excessive amount of after which paying them off. As a result of massive portfolios, the extra doorways you’ve, the extra issues you’ve. There’s a number of work that comes with that.

Dave:Completely.

Henry:And so I can get there extra comfortably and luxuriate in my life a bit of extra by having a smaller portfolio with paid off property than having a bigger portfolio with extra leverage.

Dave:Okay, this simply made me suppose sizzling. Take query for you. Are you able to be financially free, really financially free, no matter meaning to you in case you have debt in your properties?

Henry:No,

Dave:You possibly can’t. Okay. You need to personal ’em outright. I form of like that take, I’ve by no means actually considered it earlier than, however I form of really feel like for those who’re kind of proper, you continue to have, there’s a specific amount of threat in that limits your quote, freedom. You probably have debt

Henry:And also you don’t really personal the asset till it’s paid off, somebody can come and take that from you and alter your monetary freedom state of affairs. If one thing occurs and you’ll’t make the funds, you’ll be able to lose that asset. After which your life-style is completely different. Additionally, the bigger the portfolio, the higher you need to be at managing your managers or managing these properties your self. And that’s a job. That’s not freedom. That’s work. And I’m not saying that I’m eliminating that work, however I’ll have an entire lot much less of it with much less doorways which can be paid off than with lots of and lots of of doorways which can be leveraged.

Dave:Yeah, that’s a superb level as a result of monetary freedom, you must have this cashflow quantity. There’s a sure quantity that you just want, however there’s additionally an quantity of threat that you just most likely need to get to an acceptable quantity of threat and an period of time that you really want to have the ability to put into that as a result of regardless of actual property being extra passive than a W2 job, it’s not solely passive. And so it feels like for you, Henry, that’s form of such as you want three completely different variables that you just’re attempting to work on, the entire amount of money you’re bringing in, the quantity of threat you’re taking and the time that you just’re placing into it.

Henry:And we’re speaking about monetary freedom right here, however there’s one other component to this that we’re not relating that’s additionally necessary to me. And it’s not simply the monetary freedom that comes with proudly owning the properties and getting the cashflow outright, nevertheless it’s additionally the legacy of having the ability to move on these paid off money flowing property. It’s the wealth that I need to move on to my kids, and the extra leverage I tackle, that’s extra leverage I’d move on to them. But when I get these items paid off, folks use the time period generational wealth on a regular basis, however I don’t know that they really take into consideration what meaning. In order for you that wealth to transcend you, you’ve obtained to get these property to a spot the place you personal them, you management them, your belief or your loved ones owns and controls them and never a financial institution or another monetary establishment. And in order that they’re truly producing significant earnings that you just move on to future generations of your loved ones. So it’s extra than simply monetary freedom for me, nevertheless it’s additionally monetary freedom for the people who find themselves going to be round after me and that’s going to require me to get these property paid off.

Dave:I really like that. It is a nice take. I like it. Monetary freedom, the three variables is basically cool concept. It’s not simply cash, it’s additionally these different issues that basically matter right here. However I must circle again to one thing you mentioned earlier. Has your monetary objective actually not modified? Is that 10 grand a month you have been attempting to switch nonetheless what you’re comfy with? Or has your life-style modified and had gone up?

Henry:After I mentioned the monetary objective hasn’t modified, I simply meant I haven’t sat down and discovered what the brand new quantity is. What I basically deliberate on doing after I discovered that the true wealth is in getting these items paid off was my unique plan was like, what number of doorways do I must get to for me to have the ability to unload a portion of my portfolio to repay the vast majority of the remainder? And in order that’s form of how I began this drawback. So in different phrases, if I had 100 doorways, may I promote 50 and repay the opposite 50, proper?

Dave:Yeah.

Henry:As a result of 50 unlevered goes to pay me, effectively greater than 100 levered. And so what I truly began to take a look at was like, okay, in my portfolio, which property are producing the way in which I assumed they need to or higher which property are underperforming, after which I can have a look at the property which can be underperforming and I can say, okay, does it make extra sense for me to promote this asset, take that fairness and repay one other asset, or

Henry:Is that this an underperforming property that’s in such a superb space that it makes extra sense for me to pour capital into that asset to get it to carry out higher as a result of the placement is so good? So my objective grew to become extra of an evaluation of like, okay, let’s get strategic with what you do have after which make selections on what you must promote to repay those you’re keen on or those which can be in the very best areas or those that you shouldn’t promote however perhaps want a capital infusion or perhaps some kind of exit technique pivot

Dave:So

Henry:That it does produce due to the placement or due to another high quality of that property that may say, I shouldn’t promote this property. And so I’ve simply gotten much more strategic.

Dave:That simply makes a lot sense. I hate the thought, I at all times say this, however I hate the thought of individuals being like, I’m going to purchase actual property and by no means promote. That simply doesn’t make sense.

Dave:Or I’m going to do one renovation. Perhaps that you must do one other. If you consider the way in which different folks make investments inventory market, you don’t not spend money on an important firm since you purchased it at 20 bucks a share. If you should purchase it at 30 bucks a share and also you suppose it’s going to go to 50, promote another inventory and purchase extra of that one. It’s the identical idea in actual property. You probably have some property which can be superb, however you’ll be able to have one that you just take from being a stable performer to an important performer, go try this. That’s the form of strategic factor that that you must be doing. I wished to ask you that query as a result of one, it makes me really feel higher about myself as a result of I used to be involved that you just mentioned, oh, I’ve simply had this monumental quantity of success in actual property and my monetary run and objective hasn’t modified in any respect. And that may’ve made me really feel horrible as a result of mine undoubtedly has,

Dave:However I feel the explanation I carry that up is as a result of form of the way it needs to be. I do know there are these monetary puritans on the market who’re like, you set a objective if you first began actual property to get 5 grand a month in cashflow, and when you’re carried out with that, you’re retired. And I simply don’t purchase that in any respect. I didn’t get into actual property to dwell the very same life-style that I had once I was 22 and scraping by, and that’s why I simply suppose this idea of monetary independence as a vacation spot or a single time limit is simply not

Henry:Actual.

Dave:What your objective goes to be adjustments on a regular basis, a minimum of mine does. And what I assumed my objective was once I was 22 is totally completely different from what it’s now, and it’s not simply from life-style creep. It’s as a result of I perceive issues like threat and time and inflation, which was simply by no means on my thoughts once I was 22. I used to be like, all i’ll ever want is $500 for hire. That’s what I used to be paying in hire. My expectations have modified rather a lot since then. And in order that’s why I feel this idea of locking in that you need to have this date or this quantity in thoughts is actually form of limiting. I simply suppose it’s by no means going to occur. You need to drift a bit of bit. And I nonetheless hold a objective. I’ve a five-year objective at all times, nevertheless it adjustments. It adjustments and it most likely will change once more.

Henry:And it’s not simply your life-style or what you need adjustments, however the state of affairs can change. For instance, I did, I sat up for a very long time. As soon as I get to 100 doorways, I have a look at promoting half to repay the opposite half. And once I sat down to truly try this train, I began a few of the property and I used to be like, effectively, I don’t actually need to promote that one in such an important location and it’s doing effectively and I don’t actually need to promote this one in such an important location, nevertheless it’s not doing effectively. And so I’d relatively attempt to save that one and perhaps promote another ones. And so then it turned out like, no, I’m not going to promote half to repay the opposite half, however I’m going to promote ones that it strategically is sensible to promote.

Henry:I’m actually closing on one right now. I’m signing docs proper after this to promote a six unit that I purchased only a yr and a half in the past as a result of it doesn’t carry out. I wished it to carry out and I can put that cash to make use of elsewhere. And one other state of affairs, I’ve a legacy property. I name it a legacy property. I knew the day I purchased it, I used to be like, I’m by no means going to promote this factor. I can throw a rock and hit the college. It’s eight models. I purchased it so low cost and it’s value a lot extra like that is the precise form of property that I need to move onto my kids. The placement is ideal. After which some fund got here and supplied me a lot extra money than it’s truly labored. Precisely, yeah. That I used to be like,

Dave:Take it. I’ll discover a completely different one. Take. Yeah, I’ll move one thing else onto my youngsters. Planes modified.

Dave:Precisely. That’s so true. Properly, I feel that’s true on a property degree, which of them you need to maintain and hold and alter. However for me, my life-style sensible, it’s additionally actually modified in my life too. I purchased my first deal. I wanted a pair hundred bucks, then I used to be like, all proper, I’m simply going to maintain buying models. That’s my objective, get extra models. However then impulsively I used to be working out of money to purchase extra models and I figured perhaps I ought to return to graduate college and I ought to spend money on myself in order that I can get the next wage in order that I can go forward and purchase extra models. And if I had simply tried to purchase extra models or if I used to be dwelling off my cashflow, I wouldn’t have been in a position to try this. And as an alternative what I did was I used to be home hacking on the time, so my dwelling have been comparatively low.

Dave:And for I assume a yr and a half, two years, I took my cashflow that I’d’ve reinvested into extra property or I’d’ve used for my life-style and I paid my tuition to grad college as an alternative of taking over loans. And I do know lots of people would say, oh my God, you slowed down. You didn’t purchase doorways for 2 years. No, I didn’t. And once I completed graduate college, my wage went up by like 80% and what number of extra doorways I may purchase after that quite a bit. That’s when my actual property investing profession actually began to take off. And I feel that’s the kind of your targets, your circumstances simply change. And so via speaking this out with you, what I’m realizing is flexibility is the objective, not even essentially a sure quantity that I’m on the lookout for. I simply need the flexibility to vary my life-style as I see match. And I assume in that approach, I’ve grow to be financially free. I can try this

Henry:Proper now. That’s 100%.

Dave:Despite the fact that I’m not at some magical quantity that’s going to love the quantity I need to die with as a result of who is aware of what’s going to occur. However I’ve reached a degree of monetary flexibility that I’m very pleased with and really comfy

Henry:With. We have to put that on a shirt. That’s what it’s. That’s 100%. What I used to be going to say to you too, it’s like what I actually wished as I dug down deep was to not be restricted in my capacity to do one thing that I need to do or one thing that I must do for my household. And for probably the most half, I’m there. Sure, there’s limits. Sure. I couldn’t go purchase a non-public jet and fly to Dubai and keep in a penthouse for six months of a yr. I’m

Dave:Not who wants that,

Henry:However I don’t need to try this just about. If I need to go someplace with a bit of little bit of planning and time, I can journey to that place if I must. I used to be speaking about this final night time with my college students as I used to be like, look, I simply wanted to get to the extent of monetary freedom the place you should purchase 4 tires at a time to your automobile. That’s a superb, oh my god,

Dave:That’s freedom. That’s so good Freedom. Yeah, you don’t have to only journey on the 2 entrance ones or bald as hell.

Henry:Most individuals can solely substitute the one tire that has an issue or the 2 tires, and you then obtained three several types of tires at three completely different ranges of tread, and also you simply do what you’ll be able to to maintain that automobile rolling. If I’ve an issue with my automobile and I want 4 new tires, Dave, I can provide 4 new fricking tires right now with out fascinated with it. I really like that. That’s the extent of monetary freedom that actual property has introduced me.

Dave:We must always begin rating, what number of tires are you? You at one tire, proper? Yeah. You’ve gotten one tire, you had two tires. You’ve gotten three tires. I really like that. It’s so

Henry:Humorous. You bought to get to 4 tires guys,

Dave:4 tire membership. It’s like, yeah, I can’t purchase a jet both. I don’t care. That’s not what I need. However Henry and I are going to Vegas a pair days early earlier than BP Con, and are we going to go do some dumb shit and spend a bit of bit of cash most likely. And now we have the monetary freedom to have the ability to do

Henry:That. That’s a assure, not a most likely.

Dave:Yeah, that’s an absolute assure. I simply didn’t need to say it of the podcast publicly what dumb stuff we’re going to do in Vegas, nevertheless it’s going to be a good time. We do should take a fast break, however extra with me and Henry proper after this. Welcome again to the BiggerPockets podcast. I’m right here with Henry Washington speaking about how monetary independence is extra of a journey than a vacation spot. Let’s get again to it. However I assume that’s why I need to have this dialog with you is I really feel like what will get misplaced in a few of the private finance stuff is like, yeah, you must compound, you must reinvest completely, but additionally get pleasure from your life. That’s the entire level. And for those who simply spend 20 years buying models and attempting to get to some vacation spot and don’t benefit from the course of alongside the way in which, what have you ever actually gained on the finish of the day, you simply misplaced 20 years of your life.

Dave:I’d relatively make my monetary journey go from 15 years to 25 years and luxuriate in each a type of 25 years as an alternative of being depressing for 15 on the hopes that once I retire, I’m going to seek out one thing significant for myself that’s going to supplant what I used to be doing earlier than. I don’t know, perhaps that is simply getting right into a life philosophy lesson, however I’d relatively simply discover a life I get pleasure from and sure, transfer nearer to monetary independence over that point interval, however not at the price of changing into tremendous monastic about it and never having fun with something and doing

Henry:Stuff. And all of us make trade-offs as effectively as a result of issues that all of us get pleasure from or vices that now we have that everyone’s like, man, if I solely made X quantity of {dollars}, I may go do that factor. And for individuals who’ve reached that degree of monetary flexibility, it’s not that they will simply go to the financial institution, take out the cash and do the factor. It’s extra about I can suppose via what I’ve and I can put collectively a plan to get there in a reasonably cheap timeframe. If I wished to go purchase a Ferrari tomorrow, I most likely couldn’t go purchase it tomorrow, however I most likely may have a look at my portfolio and if I actually really wished one thing that was costly, I may determine a technique to get there throughout the subsequent six months. And that’s monetary flexibility. I’m not saying that that may be a wise monetary choice, I’m simply saying I may get there. I’ve the pliability to get there.

Dave:So this asset that you just’re promoting proper after this recording otherwise you’re simply releasing up capital to make use of once we’re in Las Vegas,

Henry:100% blackjack cash, child, I’m double that cash in Vegas, boy. Yeah, that’s the brand new technique. Like it. My money on money return for taking part in blackjack with that cash is a lot larger than if I’d have simply left it on this property. Don’t take heed to me people. That is horrible monetary

Dave:Recommendation. No, it’s. This jogs my memory, there’s a blogger and private finance influencer. His identify’s Nick Majuli. We’ve had him available on the market twice. We truly simply had him on a pair days in the past. He’s superior. He has these ranges of wealth and monetary freedom that I actually like that he simply advanced it. However his outdated methods, ranges of wealth was like degree one is like I’m not wired about debt, which is a extremely necessary degree to get to for those who don’t have bank card debt and pupil mortgage debt. That’s wonderful. That’s a extremely necessary monetary milestone. Stage two. And I really like that this isn’t numbers or finance foundation. I don’t care what stuff prices in restaurant. And to me, I keep in mind virtually vividly the time in my life the place this grew to become true, whereas I wasn’t going out on a date with my spouse and ordering the most cost effective factor, and I may truly go by not the most cost effective bottle of wine, however the second least expensive bottle of wine.

Dave:I may speed up my life a bit of bit. And to me, these are the moments I keep in mind. Not when my checking account or internet value hit some quantity. Like, oh, I truly may exit to a restaurant, one thing I get pleasure from doing and never care about it. After which degree three is I don’t care what a trip prices. And that has been a newer monetary milestone for me. However that’s what I keep in mind. Once more, not how a lot cashflow I’ve each month, however I can go do that factor that I actually love and is one thing that’s necessary to me in my life, and I don’t actually have to fret about it. If I am going on a trip they usually nickel and dime me and this silly valet prices you 40 bucks if you present up that you just weren’t planning on it, you’ll be able to survive that and you’ll nonetheless have a good time and luxuriate in your self. And that’s how I’ve over time began to only take into consideration my portfolio. What does this allow for me? Not the quantity, not any vacation spot, however how does this make my life higher every day, even when I’m not utilizing my cashflow from actual property, which is true. I’m not utilizing my cashflow for actual property, however realizing that I’ve these beneficial property permits me to have extra flexibility and

Dave:Stay a bit of bit extra of, I assume I’d say a bit of bit extra of a carefree life.

Henry:100%. Look, I informed you degree one monetary flexibility for me was 4 tires at a time. Stage two, monetary flexibility for me will not be having to attend in strains. I pay folks to not have to attend in any strains for something. I hate strains.

Dave:For those who ever need to go someplace that’s busy, go along with Henry as a result of he can pay somebody to skip any line. And I like it. It’s my favourite factor about hanging out with you. I hate you’re going to a restaurant. There’s an extended line. Henry’s going to resolve that drawback and I don’t even should do something. I simply should be close to you and also you remedy that drawback.

Henry:You’re completely proper, my good friend.

Dave:So what’s degree three for

Henry:You? Oh, that’s a superb one. I feel. I didn’t take into consideration that one but. Perhaps I don’t know what that one is but.

Dave:Properly, we need to know. It’s not shopping for a jet. It’s not jet setting in your personal jet, nevertheless it’s someplace between shopping for 4 tires at a time at a non-public jet. That’s your degree 4. That’s your degree three

Henry:Monetary. That’s a good guess. Sure.

Dave:Properly, this has been a enjoyable dialog. I really feel like I’ve had an epiphany throughout this dialog about what monetary independence truly means. We might like to know what it means to you. So for those who’re watching this on YouTube or listening on Spotify the place now you can go away feedback on the episode, please tell us what your degree one, you’re degree two, and your degree three monetary freedom are. That will probably be a number of enjoyable dialog to have. And Henry, thanks a lot for being right here, man.

Henry:Hey, thanks for having me, man. This was an important dialog.

Dave:Thanks a lot for listening to this episode of the BiggerPockets podcast. I’m Dave Meyer. We’ll see you subsequent time. I.