A cheat sheet - Amazon S3

Your Freedom Number

A cheat sheet

Clayton Morris

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Introduction

The Freedom Number is the foundation of building legacy wealth. Without it you don't know where you're going or where you've been. It's the single most important guide post along your journey to financial freedom.

When I learned this simple formula from a big time investor it changed my life. Because for years I threw around arbitrary numbers, like "I want to be a millionaire," without any idea as to "why." When you run this simple Freedom Number formula be shocked to find that you don't need to make a million dollars at all. True financial freedom is quickly attainable with real estate investing.

I also guarantee that you'll be shocked at just how many rental properties it'll take for you to reach Freedom. I know I was. So without further ado, here's my Freedom Number formula.

Step 1.

Open your bank accounts and look over the last 6 months of your expenses. Expenses are what it takes to run your family every month. They may looking like this: Electric bill, cable bill, groceries, gas for the car, Netflix subscription, tuition, taxes, mortgage or rent, a few dinners out, a movie. Don't leave anything out and don't cut corners. If you're reading this during the holiday season then you'll want to leave that out. Skip the holiday's because they'll throw everything out of whack.

Take those six months worth of expenses and find the average of those months. Let's say for the sake of argument that your number is $4,500 a month.

Great. Now I want you to pad it a little. So add about 10% just to give you some extra Freedom. In this example 10% of $4,500 is $450... just round it up so we have an even $5,000.

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So $5,000 is our Freedom Number for this example. If we had an additional $5,000 a month coming into our house we'd have everything covered. We would have achieved financial freedom. Doesn't sound like a lot does it? It's not, and you don't need to be a millionaire to achieve it.

Step 2.

The next step is the fun part. This is the part where we figure out how many rental properties it would take to cover our $5,000. Most of the rental properties that I fix and sell to my investors, or keep for myself, are 3 bedroom 1 bath houses in states like Indiana, Mississippi, Pennsylvania, Etc. And most of them rent between $600-$900 a month. Each of these houses cost roughly $29-40,000 after they've been rehabbed. But for now we're only concerned with the rent. For the sake of this example lets use an easy rental average of $700 per month.

Step 3.

Then I like to be super conservative in my estimations so I take $700 and I want to account for an additional 40% for vacancies and repairs (both of which are rare especially since we just renovated the house). 700 x .60 = $420. In a worst case scenario we'd be making $420 per month on this house. Again, I do it to be conservative and safe.

Step 4.

Now here's the magic moment to find our Freedom Number. We now simply take our expenses number of $5,000 and divide it by $420. We get 11.9. let's round that up to 12.

12 properties cash flowing $700 (minus repairs, vacancies, etc.) or $420 a month is all it would take for us to achieve our Freedom Number. Isn't that remarkable?

Recap

To recap: Add up your monthly expenses and pad it by 10%. Then take the average single family rental $700 X .6 (vacancy and repairs) = $420. Take your monthly expenses and divide that by 420. You're left with 12. It would take simply 12 rental properties to achieve financial freedom.

If you're ready to take action right now to build legacy wealth for you and your family, book a call with our team today. Our consultation is totally free. We'll spend 30 minutes on

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the phone talking through your goals in real estate investing. Book a call today by clicking our calendar link:

Or by visiting I can't wait to talk with you. I'm looking forward to it!

Clayton

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