Clayton Morris Might Actually Change My Life

[Raheem Jamaal]

What's going on BP Family?!

I'm so excited to share with you guys what I've discovered and the numbers I ran for my early retirement plan! I recently was introduced to a gentlemen's YouTube channel by a friend of mine. His name is Clayton Morris. Let me tell you this guy is no joke. He breaks down every aspect of creating passive income through buy and hold SFR and does it with such simplicity; no offense to him, but a 10 year old could understand it. I highly encourage you to check out that video because it could put your life into perspective as well.

Now, moving on to what I learned from Clayton. Clayton has this formula and idea called the 'Freedom Number'. What you do is you add up all your expenses for the month (you can do this by checking your bank account online obviously) and I mean ALL EXPENSES; including going out to eat or to the movies, then you add 10% to it just give you a little breathing room so you're not so constricted on your spending. So lets say all your expenses add up to $4,500 a month and you add the 10% for good luck. So 4,500 times .10; that equals an added $450. Which gives us a total of $4,950. Now just round that up to an even $5,000. $5,000 a month.

There it is, your Freedom Number! Oh, but it gets better! Now we're going to find out how many rental properties it's going to need in your portfolio to meet that goal of $5,000 a month. So what we're going to do is take the average rental price of $700 dollars a month. We want to be kind of conservative on this estimate so what Clayton does is he takes 40% out for repairs and vacancies. So 700 times .60 (the 40% taken out) equals $420. Alright, here is the moment of truth. We take the $5,000 and divide that by the $420 and we get 11.9. Round that up to 12 and that is the number of properties that you will need in your portfolio to reach $5,000 a month in cash flow! Amazing, right?!

So I ran my own scenario. Keep in mind, I don't have any expenses as of now. I don't even own a car and I have no credit history (I'm 24. Live at home with mom. Not afraid to admit it). What I've always wanted to do is just travel with my girlfriend and have money to spend while I'm traveling the world. So what I did is I made an Airbnb budget of $200 dollars a night or less for a one month vacation. That's $6,200 for one month plus I through on $5,000 for the plane tickets and anything else I might want to do or purchase while I'm on vacation. So $11,200 dollars MAX for a one month vacation.

I drew out a 10 year plan to retirement and here is what it looks like based on the Freedom Number method.

Starting at age 25

Retire by age 35

Acquiring 36 properties in 8 years

This would be 5 properties a year.

Which would be 40 properties by the end of year 8.

That would be $16,800 a month or $201,600 a year ( CONSERVATIVE ESTIMATE BASED ON THE FREEDOM NUMBER SHEET BY CLAYTON MORRIS)

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Break down for 1 year:

$2,100 a month or $25,200 a year.

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By year 2, TECHNICALLY, I could quit my day job as an HVAC Technician making $4,200 a month or $50,400 a year as full time real estate investor.