The Perfect Portfolio for Financial Freedom

Happy Friday everyone,

Financial freedom is why most people get started in Real Estate.

The problem is as people start to accumulate a portfolio we all come to the same realization:

1. The capex we thought we accounted for DEFINITELY wasn’t enough

2. Our cashflow can be axed at any time by increased taxes and insurance

3. You need a HUGE portfolio to get any significant “True” cash flow.

This whole realization was why on the Collecting Keys Podcast I started preaching Massive Income before Passive Income.

If you can make a million dollars (or 2, or 3) you can achieve the same results and I would argue its actually easier than building the massive portfolio needed to reach TRUE financial freedom.

Ultimately, I think the best solution is kind of a hybrid model.

One where you get cashflow but also have the ability to turn on/off your high income without needing much involvement.

So if you’re serious about financial freedom sooner rather than later this is what I’d recommend (and what I currently do).

First, focus on learning to make large checks. Wholesaling, flipping, be a realtor that targets higher end homes.

You can grow this into a business or something you do on the side via your network, but you NEED something you can make $20-30k kinda quick if you need to.

Second, with surplus cash, but as many properties as you can afford (of course at a discount) and BE OK with them not making FAT net cash flow.

Big picture, youre going to benefit on the depreciation and appreciation more so than the cash flow anyways, so buy good properties in good areas for the best results.

Once you reach your desired net asset value, don’t buy any more properties.

Third, with your ability to make money and your base portfolio value established, put all excess cash into FIXED DEBT or Cash Flowing Partnerships.

Hard money loans, LPs, Debt Funds. Things that pay you 9%-12%+ pref on your money so you are literally getting straight cash flow.

Fourth, As your properties grow in value and your return on equity gets poor (or you get tired of the property), sell it and roll the proceeds into your FIXED DEBT options to MAJORLY spike your cash flow.

Five, once you reach your net cash flow requirements for FIRE, loosely maintain connections and skills so you can snag a big check whenever you wanna give yourself a bonus or get in a bind.

But wait this isnt all passive cash flow where I can just go sit at a beach or travel or do nothing all day!!

Correct. Because unfortunately I would argue if you want any significant income that is PROBABLY not possible without waiting a very long time 😕 

But trust me if you can nail the above, you can easily set yourself up to work 5-10 hours per week which is pretty much as good as it gets in modern times.

What do you guys think? Agree? Disagree?

Hit me up on Instagram or reply to this email.

-Mike