Fifteen Doors - Financial Independence Through Single Family Homes

This is for those of you who want financial freedom to do the things you are passionate about. It’s a simple formula to give you wealth, lasting income, and freedom from W-2 employment. Too few real estate investors discuss the power of modest targets, and it’s too common for the limelight to focus on those investors who want hundred or thousands of properties.

But with only fifteen doors, you can have the financial independence to pursue your dreams no matter what they are.

You want to provide for your children, ensure they can attend college, and set aside money should they care to start a family. You want to know the final decade of your life will be covered no matter your medical needs.

With fifteen doors, you’ll have the financial insurance to thrive for a lifetime.

Don’t believe? Let’s run an example. Pretend, you’re thirty-five, and you buy your first investment property today. Its value is $100,000. You have a family of five; your children are three-, two-, and one-years-old, and monthly expenses are $5,000. That means you need a minimum of $60,000 income each year—though you earn $70,000. You also know, as your family ages expenses increase.

For the sake of ease, pretend you live in a world with no inflation and stable market conditions. Over the next fifteen years you buy one property per year for $100,000. In the beginning you might pick up a part-time job to earn a bit of extra cash for the 25% down payment, but by the third door, the overflow of rent income accelerates your savings enough that you have your down payment, which is good because you want to save for emergencies.

You put each property on a 15-year mortgage. Each cash flows $100 a month. By age 50, you own 15 doors with the first paid-in-full.

You quit your job to live on the income from your properties. $1,500 in cashflow a month isn’t close to enough to cover your expenses, but you have options. Even though you have growing expenses, you aren’t concerned.

Your oldest child has just been accepted to Spendy University. You’re proud of her hard work and want her career to start debt-free, so you pay her $25,000 annual tuition.

Thankfully, you can refinance your paid-off house. You leave 25% in the property, and pull out $75,000 cash. Your properties still cashflow $1,500 a month, totaling $18,000 in cash each year. Because you were wise in saving for repairs and capital expenses, you never worry about issues with the rental properties. They pay for themselves and then some.

After paying your daughter’s tuition, you have $68,000 left for the year. Though you’ve taken a $2,000 pay cut, you have one less mouth to feed.

Knowing it’s likely your daughter will marry soon—she’s been dating the same boy she met in high school, and you reluctantly approve of him as any proud parent can never fully approve of losing a child—you set aside $3,000 for wedding expenses. It’s a modest sum, but fair. You’ve always taught the importance of frugality and your children thrive by budgeting.

Next year, your son is ready for college. The money’s almost out, so you refinance your second home. The same math will put you in a bit of a pinch, so you agree to finance college through loans, but you’ll still pay. You pay half of both tuitions up front and set a payment plan for the remainder.

Year three, your last child enters college. You refinance property three, and pay a third of each tuition. This debt isn’t ideal, but you have more than enough to cover the shortfall. By the way, remember that every refinance is tax free money. Isn’t that nice?

After 15 more years, you’re back to student-debt-free. You’re empty nesters. All your friends are retiring from their corporate jobs and wondering if they’ve saved enough in 401ks and IRAs to make it the next fifteen to twenty-five years.

You, on the other hand, are entering the golden years of finance because now you have a perpetual income of $98,000, perhaps even social security. In another fifteen-years you’re eighty-years-old. You’ve travelled the world, spent ample time with your kids and grandkids, paid for graduations, and spoiled kids with birthday gifts and Christmas gifts.

Meanwhile, some of your friends have had to reduce their lifestyles as their retirement accounts shriveled. It’s sad to see their lives consumed by anxiety, and you’re glad you invested in real estate, because at 80, you need more care than you used to and decide to move into an assisted living facility. You rent your primary home, arrange for each of your children to manage five of your properties—it’ll be their inheritance after all—and your total income covers all the care facility’s bills with leftovers for luxuries.

When you pass away, you leave five properties to each child, a half million each. They pay no taxes inheriting the properties, because real estate is amazing that way.

A Word On Reality

Is that a life you could appreciate? Most people feel it is. And in reality, the numbers tend to be extremely more generous. Few properties cost only $100,000. Most properties appreciate over time. Property appreciation tends to outpace inflation. Rent costs tend to rise, slightly outpacing inflation.

At fifteen doors, you’ll spend a minimal amount of time managing properties, giving you ample time to pursue your passions. The same kind of people who have the patience, persistence and financial wisdom to build a fifteen-door portfolio are the kinds of people whose passions often earn them additional income, writing novels, starting food trucks, quilting, honey farming, or river rafting. Whatever your true passion is, fifteen doors can fund that dream.

The only real question is, can you figure out how to get fifteen doors in five years instead of fifteen?