The Financial Freedom Formula Has Changed (2025 Update)

Summary

BiggerPockets Real Estate Podcast: "The Financial Freedom Formula Has Changed (2025 Update)"

Release Date: January 13, 2025
Host: Dave Meyer
Guest: Henry Washington

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1. Introduction to Financial Freedom in Real Estate

In the January 13, 2025 episode of the BiggerPockets Real Estate Podcast, host Dave Meyer engages in a candid discussion with seasoned real estate investor Henry Washington. The conversation delves into the evolving landscape of achieving financial freedom through real estate, emphasizing the necessity of realistic expectations and diverse strategies.

2. Defining Financial Independence

The episode kicks off with Dave challenging the conventional notion of financial freedom. At [00:00], Dave Meyer states:
"You can achieve financial freedom through real estate. You just need to be realistic with your expectations of what financial freedom even means to you and about how you're going to get there."

Henry Washington echoes this sentiment, explaining his evolved perspective:
At [01:12], Henry Washington shares:
"Financial independence, what it means to me now is to not have to have active income. If I don't want to work anymore, then I don't have to, as long as my income needs are met through some sort of passive income."

He further clarifies that real estate isn't entirely passive but can significantly reduce the required active income.

3. Comparing Approaches to Achieve Financial Freedom

Dave and Henry contrast their paths to financial independence. While Henry fully transitioned to real estate by quitting his corporate job to focus on rentals and house flipping, Dave maintains his role at BiggerPockets, leveraging active income from his position while investing in real estate as an additional income stream.

At [03:12], Dave reflects:
"It's still great. You can still use real estate investing to become more financially independent and probably move your retirement date up by like 30 years."

Henry concurs, emphasizing that early retirement solely through real estate is unrealistic for most, requiring a balanced approach of active and passive income streams.

4. The Importance of Realistic Expectations

A central theme of the discussion is setting achievable goals. Both speakers caution against the binary thinking of being either "financially free" or not, advocating for viewing financial independence as a spectrum.

At [06:49], Dave Meyer explains:
"We treat financial independence as binary. But it's a path. The goal has always been to become more financially independent."

Henry adds that understanding the non-linear nature of real estate income helps in setting sustainable expectations.

5. Challenges and Trade-offs in Real Estate Investing

Transitioning to full-time real estate investment comes with its set of challenges. Henry highlights the unpredictability of income from house flipping and the necessity of maintaining robust financial reserves.

At [27:56], Henry Washington remarks:
"When I flip houses, it's not instant money. It can take four to six months to see returns, and if you slack, it affects your future cash flow."

Dave acknowledges the psychological strain of inconsistent income compared to the stability of a W2 job.

6. Strategies for Achieving Financial Independence through Real Estate

Both investors share their strategies for building a sustainable real estate portfolio. Henry outlines his approach to buying, stabilizing, and paying off assets while maintaining active income to support ongoing investments.

At [31:02], Henry Washington states:
"Our framework is exactly the same: buying assets, growing our portfolio, stabilizing those assets, and focusing on paying them off to achieve financial freedom."

Dave concurs, emphasizing the importance of incremental progress over striving for immediate, complete financial independence.

7. Psychological and Lifestyle Considerations

The conversation touches on the psychological aspects of managing finances without the safety net of a steady paycheck. Dave admits his reliance on a W2 for financial stability, which allows him to take calculated risks in real estate.

At [18:18], Dave Meyer shares:
"I like having a steady paycheck. It allows me to feel comfortable taking risks in real estate because I know that if something goes wrong, I'll be fine."

Henry contrasts this by describing the discipline required to manage fluctuating income streams from real estate investments.

8. Conclusion and Takeaways

In wrapping up, Dave and Henry emphasize that financial freedom through real estate is attainable but requires diligent effort, realistic expectations, and a balanced approach to income streams. They discourage the myth of achieving complete retirement within a few years, advocating instead for a long-term strategy of continuous financial growth and independence.

At [34:46], Henry Washington encourages:
"There should be less fear around getting started. Education and preparedness are key, and there is a strategy that works for almost anyone."

At [34:49], Dave Meyer concludes:
"Real estate is just as good an asset and business as it's ever been. Enter things with realistic expectations and recognize the more common path is building a portfolio over 10 to 15 years for maximum financial freedom."

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Key Quotes with Timestamps

• Dave Meyer [00:00]:
  "You can achieve financial freedom through real estate. You just need to be realistic with your expectations..."

• Henry Washington [01:12]:
  "Financial independence, what it means to me now is to not have to have active income..."

• Dave Meyer [06:49]:
  "We treat financial independence as binary. But it's a path..."

• Henry Washington [27:56]:
  "When I flip houses, it's not instant money. It can take four to six months to see returns..."

• Henry Washington [31:02]:
  "Our framework is exactly the same: buying assets, growing our portfolio..."

• Dave Meyer [18:18]:
  "I like having a steady paycheck. It allows me to feel comfortable taking risks in real estate..."

• Henry Washington [34:46]:
  "There should be less fear around getting started. Education and preparedness are key..."

• Dave Meyer [34:49]:
  "Real estate is just as good an asset and business as it's ever been..."

---

Final Thoughts

This episode serves as a reality check for aspiring real estate investors, illustrating that financial freedom is a gradual journey rather than an overnight achievement. By sharing personal experiences and strategies, Dave Meyer and Henry Washington provide valuable insights into navigating the complexities of real estate investment while maintaining financial stability.

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For more insights and strategies on real estate investing, subscribe to the BiggerPockets Real Estate Podcast available on YouTube, Apple Podcasts, Spotify, and other major platforms.

Transcript

[Dave Meyer]

You can achieve financial freedom through real estate. You just need to be realistic with your expectations of what financial freedom even means to you and about how you're going to get there. I'm Dave Meyer from Biggerpockets, and I'm here with my friend Henry Washington. We are both real estate investors who are on that financial freedom path right now. But as it turns out, we've taken sort of different approaches to achieve financial independence. Henry quit his corporate job to buy rentals and flip houses full time. I haven't done that, and I probably never will. Today we're having a real honest conversation about what financial freedom even means, the pros and cons of different approaches to achieving it, and which could be right for each of you. So, Henry, I have what I think is sort of a hot take about financial independence and retiring early that I want to share with you. But first, let me just ask you, what do you consider financial independence? What does that actually even mean to you?

[Henry Washington]

Well, when I first got started, I thought I was going to buy some properties and they would pay me every month and then I would not have to work.

[Dave Meyer]

Didn't work out that way.

[Henry Washington]

It didn't quite work out that way. But financial independence, what it means to me now and what I'm working towards is to not have to have active income. In other words, like, if I don't want to work anymore, then I don't have to. But my income needs are met through air quotes, some sort of passive income. And real estate's not truly passive, but the idea is that I could work less than 10 hours a week if I needed to and survive. That's what financial freedom really means to me now that I've started doing this business for a little bit.

[Unknown]

Yeah.

[Dave Meyer]

So it's not like fully retiring and actually just not working at all based on owning some rental properties.

[Henry Washington]

I think people have gotten a lot of these buzzwordy real estate goals intertwined because financial freedom is one thing. And then making enough income through real estate to quit your W2 is something completely different than financial freedom. And sometimes I think people kind of take those two goals and say, or use them interchangeably. Like I vividly remember somebody telling me, hey, I just hit financial freedom. I left day job. But that doesn't mean you have financial freedom. It just means you made enough active income in whatever else you're doing in real estate that replaced your W2 income.

[Unknown]

Right.

[Henry Washington]

You're still working. You're just now working in real estate, which is amazing.

[Dave Meyer]

That's a great point, because so financial independence, financial freedom, interchangeable terms in my mind. But retiring is, is kind of a different thing, like you were saying. But I'm curious because you could say that you quit your job, right? You, you quit your corporate job, what was it, five, six years ago now?

[Henry Washington]

That's right, 20. 20.

[Dave Meyer]

Yeah. So a couple of years ago. But would you say you're retired?

[Henry Washington]

No, no, no, no. I am not retired. I have to do something to make active income to survive.

[Dave Meyer]

But I think that's kind of the hot take. But it sounds like you sort of agree is like, I guess I just feel like these things have become conflated to the point where it's really detrimental. And people start looking at real estate and say, you know, there's not enough cash flow these days for me to retire from my job in three to five years.

[Henry Washington]

There wasn't five years ago either.

[Dave Meyer]

Yeah, unless you're starting with like 5 million bucks. Just like buy rental properties, all cash.

[Unknown]

It's.

[Dave Meyer]

You've always needed that active income. And then you can choose whether you want that active income to come through real estate like Henry has, or you can choose for that active income to be through a 1099 or a W2 job like I've done. And that's sort of the reality of the situation. And you know what? It's still great. You can still use real estate investing to become more financially independent and probably.

[Unknown]

Move your retirement date up by like 30 years.

[Dave Meyer]

But the idea that you can retire and do nothing in five years is not very realistic.

[Henry Washington]

No, that's absolutely not realistic.

[Dave Meyer]

Okay, I'm glad you agree.

[Henry Washington]

Could someone do it? I'm sure there's a way someone could pull it off.

[Dave Meyer]

Sure.

[Henry Washington]

But that's like the teeny minority of people, like most of us are going to have to generate some sort of active income in order to supplement our lifestyle. And I think we just have to be more clear about what it means because I think you absolutely can invest in real estate and in the course of a five year period, pick up some rental properties and then figure out how to make enough active income within the real estate niche to leave your W2.

[Unknown]

Sure.

[Henry Washington]

And that I believe is absolutely possible. But that doesn't make you financially free. It makes you financially dependent on another income stream that you like more and that you can leverage a lifestyle that simulates more freedom. Like you said, I am not air quotes fully retired from any active income. If I don't flip houses or help out on bigger pockets or do some of these other things that I Do to make active income, then my family would be in a tough position. We cannot and do not want to live off of our cash flow from our rental properties, not the lifestyle that we enjoy. And so I have to have the active income. But because I've built this muscle and learned this skill set within the real estate industry, I now have a tool or multiple tools that I know I can use to go generate cash, and I can do that on my own time and on my own schedule. And because I can do that, I can simulate freedom. You know, if I wanted to go to Europe next week, I mean, I could probably figure out a way to make that work. Dave. Like, yeah, I've done enough deals where I, sure, I could go buy a ticket and my family and I could go and we could be gone for a week or two, and my properties would continue to get renovated and worked on and get listed on the market, and I could enjoy my life and I could come back. Could I do that forever? No, I couldn't. Yeah, right. But the lifestyle and the skill set that I have obtained in real estate allows me to have this kind of semblance of freedom within the active income stream that I have in the real estate industry. I could not do that with a W2. So I get to experience what seems to be a whole lot more freedom than I had before. But, yeah, you have to have some level of active income.

[Dave Meyer]

I think what you said is just so important, and you're saying, like, it's simulating freedom, but it is real freedom. I think that the. The problem is that we treat financial independence as binary. It's like either you're financially free or you're not. When reality, like, it is a path. And the goal, at least for me, has always been to just become more financially independent. Right. Every deal you do, every financial decision you make, will hopefully put you in a better financial position so you have more flexibility. For some people like Henry, like, that flexibility might be going to, you know, going to Europe and just not working for a couple weeks. For me, I rest easy knowing that if Biggerpockets decided to fire me tomorrow, you know, I could not work for a couple of years and be very comfortable. And to me, wouldn't consider myself fully financially independent because if I left my job today, I would need to figure out active income, just like you, Henry. But I am more financially independent than I was 15 years ago before I started investing.

[Henry Washington]

Absolutely.

[Dave Meyer]

And I am more financially independent this year that I was last year and the year before that and the year before that and I feel like that really needs to be the goal is just to like keep moving in that direction. Because honestly your definition of what financial independence is going to change, like the amount of money I thought that I would have needed to feel comfortable when I started 15 years ago. I passed that number a while ago.

[Henry Washington]

Yes.

[Dave Meyer]

And my, my expectations, I try not to have lifestyle creep, but like, yeah, when you get older and you just have a more sophisticated life, like your expenses just go up. And so like that's why I feel like setting this goal and saying like I am financial independent or not. It's just not realistic. The goal is just to keep making progress.

[Henry Washington]

Yeah, that's absolutely true. You know, I was one of those people when I got started that I thought I would buy enough rental properties to produce enough cash flow in current days that I would be able to take the cash flow from the rental properties. And then when that number of cash flow hit the number of money I made per month in my day job, that I could leave my day job and live off of my cash flow. But as I started to buy properties, I started to realize that that wasn't necessarily going to be a thing. I was absolutely buying properties that cash flow. But your business and your properties, they don't function linearly. Like it's not like you buy it and then it cash flows and nothing ever happens or goes wrong. It just makes you just print set money every month and it's perfect and the world great, but that's not the case. Like the more properties you buy, things break at different times. Things break all at the same time. People move in, people move out. Like there's this constant flow of money that it's hard for you to be able to say, okay, Well I bought 10 properties and each property cash flow is $500 a month. And so now I have $5,000 every month that I just will take out of this account and spend on my bills. And it like the money is flowing to fluidly for that to be a reality. And so I realized that like if I truly want these properties to pay me cash flow that I could live off of passively, then it's going to happen far into the future when these assets are paid off. And so I had to pivot my strategy to think, okay, well how can I use real estate to still buy rentals but also make cash now so that I can a continue to grow my portfolio but also stabilize more portfolio and then start to aggressively pay off those properties so I can hit that goal sooner? That wasn't what I thought starting out.

[Unknown]

Totally.

[Dave Meyer]

Yeah. And I want to ask you about how you pivoted your business, but I'm just curious first, was that disappointing to you?

[Henry Washington]

You know, that's a, that's an interesting question. I don't remember feeling disappointed about it just because I was actively in the business at that point and knew I knew I had the foundational skill, which is I know how to go buy a good deal. All I had to change was the way I was monetizing that deal, which was, you know, flipping it and getting, you know, more cash up front versus holding onto it and taking a couple hundred dollars here or there. So no, it wasn't disappointing because I just love the business of real estate.

[Dave Meyer]

All right, we gotta take a break. But on the other side, more of my conversation with Henry Washington about what financial freedom means to us.

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[Dave Meyer]

Thanks for sticking with us. Let's jump back in with Henry Washington. Feels like people are avoiding getting into real estate because we people who are real estate educators, Biggerpockets is part of this have been saying hey, you know, you can get real estate financial freedom in a couple of years. And like I said, you know, in during the 2010s, it was always difficult but it was easier than it was today. It was easier for sure. But I guess I still feel like the prospect and the value of real estate investing is still so strong that it frustrates me when people are like, I'm not going to get in because now it's going to take 10 years to be financially freedom or 15 years to financial freedom. That's incredible.

[Unknown]

The average career in the United states.

[Dave Meyer]

Is like 45 years. So you're saying you can cut it into a third. Like, if that doesn't get you excited, I don't really know, like, what would. But I do feel like. I don't know if you hear this too, but I hear people saying, like, oh, I can't find cash flow. Like, I'm not going to get into it. But like. Like the fundamentals haven't really changed. This is kind of always how it's worked.

[Henry Washington]

The fundamentals are they haven't changed. They're more important now than they've ever been. Right. Like, it's the fundamentals you have to stick to now in order to be successful. But yeah, this is the best way to accelerate that path in any manner that a normal person could. Can you do it in other pathways? Can you do it in the stock market? Yeah, but you got to get really good at trading stocks. But the average person in real estate can do this without being a professional real estate investor. And that's incredible.

[Dave Meyer]

Given this, given the reality, it sounds like we agree that it's going to take you 12 to 15 years to do it. In my mind, that's fantastic. And you can sort of be agnostic, at least to me, about how you pursue that. Active income.

[Henry Washington]

Yeah.

[Dave Meyer]

I think there's a good argument to be made that you should just pursue whatever active income makes you the most money. And like, for me, that's continuing in a regular job. But it sounds like for you, why did you make that choice knowing that you needed active income to do it through real estate rather than you had a good job.

[Henry Washington]

Right.

[Dave Meyer]

Like, you had a good corporate job and you chose to leave that.

[Henry Washington]

Yes, I did have a great corporate job and I enjoyed my job. That's why I kept it as long as humanly possible. I was going to do both until I could not do both anymore. Right. Like, until I just. Someone was going to stop me from doing both. Right, Right. And I did. That's what happened is I quit when. When it cost me money to have the job, when they wanted me to work more hours and I just couldn't give them more hours because it would take away from what I was doing in real estate. But the answer to your question is I had to choose the real estate because, I mean, I'm just. I'M throw it all out here. I was making $110,000 a year, which isn't a ton of money, but it's good money, right? Like, it's good money. It's hard not to choose real estate as your full time income path when I'd have to trade 40 hours a week for 12 months to make a hundred and ten thousand dollars. If you count my bonus. I was probably making closer to $140,000 when I could flip two houses and make that. And I could flip two houses in the same month. Right, right. We just sold a deal and made 70k like last week. So like. And yeah, it took us five months to make 70K. But that wasn't the only house I was flipping. Like, I had to choose the real estate. It made more financial sen. I love it so much more than I loved my day job. I just, I liked my day job. I love doing this.

[Dave Meyer]

Obviously, I've chosen the other path. Right. I continue to work full time at Bigger Pockets and I think there are pros and cons, but for me, just, I like having a steady paycheck. I like knowing that my bills are covered. I like having benefits.

[Henry Washington]

That's the thing no one thinks about when they leave that W2 that insurance is stupid.

[Dave Meyer]

As you know, I just moved back to the United States and I'm like, holy crap.

[Henry Washington]

Yeah, it's no joke.

[Dave Meyer]

Insurance costs are insane. But that's just like my psychology. I like having that because what I feel like is it allows me to feel comfortable taking risk in real estate because I know that if, you know, I invest in a syndication and it doesn't do well, I'll be fine. You know, like my, my. I live within my W2 income and real estate is just like gravy for me.

[Henry Washington]

So said differently, if BiggerPockets went away tomorrow, would you go find another W2 because you like the consistent income, or would you figure out a way to use real estate full time?

[Dave Meyer]

I guess probably the latter, I think. You know, like, it's pretty hard for me to think about working at another corporation right now.

[Henry Washington]

I don't think me or James Danard would let you go get another job. We would just feed you deals until you got good enough to do this on your own.

[Dave Meyer]

Well, the funny thing is I got into my job at Biggerpockets because I really liked real estate. I got into real estate in 2010, sort of on a, on a whim. Like, it was a friend of mine was doing it and I was like, that seems fun. I'm going to do that. And I could really use 250 bucks a month. So I started doing that and then I went back to grad school and I was like, I really just like the real estate thing. And so I googled real estate tech jobs and found bigger pockets. It was like down the road from where I was living. It was just kind of coincidence. But I've always like really liked the real estate side of it. It was, you know, so I think I would find a way to either do private lending or, or flip houses or just be even more involved in my rental properties because I do think I probably give up 3,4% cash on cash return a year, more than that because I pay 8% to the property manager. But even on top of that, there's just an inefficiency of it. Like I can't spend enough time on it. And I'm okay with that because it allows me to make my income. But I would probably do something like that.

[Henry Washington]

Yeah.

[Dave Meyer]

Because I don't know, it'd be hard to think about just like starting a new corporate.

[Henry Washington]

Yes, yes, yes. That was the position I found myself in.

[Dave Meyer]

Yeah, I get that. Are there any, I mean, benefits. You just brought that up as one of the trade offs. But are there trade offs?

[Henry Washington]

Yeah, well, first and foremost, it's just scary. So what helped me jump off the cliff actually was we were selling a flip. So this was 2021. That was when things were going crazy. And what had happened was we're selling two properties and we ended up getting over asking on both properties and the amount over what we had underwritten them to sell at ended up being like a year's salary.

[Dave Meyer]

Oh my God.

[Henry Washington]

From the W2. And I was like, look, we got this extra money we weren't planning on. Let's just squirrel that away into an account. Account. And that gives us 12 months. We're used to this income. We'll just pay ourselves out of that account for 12 months. And if this real estate full time thing doesn't work, then I'll go get another job. And so that's. That was what gave us the confidence to really pull the trigger.

[Dave Meyer]

Yeah. I mean, I would imagine that it's harder for people now to do that. But I think it's also important to remember that was the anomaly. Not now.

[Henry Washington]

Yeah.

[Dave Meyer]

And people think, you know, I can't quit my job in real estate immediately. So, you know, because it was easier back then. But like, like that was unusual. The types of returns and the types of deals that you see today are actually closer to historical norms. And real estate was still a good investment in the 90s when you were, you know, when it was like still these kinds of returns or during the early, you know, 2010s when the returns were solid but not spectacular. Still better than any other asset class, at least in my opinion. So I just think it's important to remember even though you hear these stories about like fantastic returns, you don't need that. It's great. I hope it happens to everyone. But like you don't need that to become financially independent or to pursue financial independence through real estate. We got to take a break, but on the other side, more of the Biggerpockets Real Estate Podcast do you want to invest in cash flowing rentals but.

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[Dave Meyer]

We're back with the rest of the BiggerPockets Real Estate Podcast.

[Henry Washington]

I would say the biggest trade off, to answer your previous question, is it's not instant money. When I'm flipping houses, right, it can be quicker if you do assignments, but I don't do assignments. So if I'm making money, I have to find something, I have to buy the something and then I have to get it to a point to where somebody else wants to buy that something from me. And I also rely on somebody else needing to want to sell to me. It's not like I can just go to this open marketplace and buy properties that are going to make me a bunch of money. Yes, the MLS exists. Yes, there are deals on it. It takes a lot of effort to do that in volume and use it sustainably. Right. And so because I'm buying off market and because I have to flip a house, I'm doing work today that I won't get paid for for at least 60 to 90 days. And that's fast, but it's probably closer between four to six months. And so if you slack today, that doesn't hurt you now, it hurts you down the road. And if you find yourself in a lull where like you couldn't find a deal over 30 to 60 days or something, you're going to be in this position down the road where you're like, I don't know where money is going to come from.

[Dave Meyer]

Right, Right. Yeah. That's scary.

[Henry Washington]

That's a scary trade off. Right? Like, yeah. So you've got to be really good about your money and budgeting your money so that you can have income throughout the year because it's not a sustainable source. So, like, that's what I envy about what you have. You got money every two weeks, right. And it's not like that here. Yes, I make them in bigger chunks, but then you have to be more financially responsible with it so that it's not all gone at the same time.

[Dave Meyer]

See, that's why I can't do what you're doing. I'm not financially responsible. I always joke with my wife because I've become a financial educator and I've never had a budget in my entire life. I never had one.

[Henry Washington]

I didn't.

[Dave Meyer]

Neither I would just spend money and until I didn't have any, and then I'd eat ramen for a few days and you'd wait and you'd figure it out. Like, I just. I've never done that. And like, that's probably one of the reasons I like having this steady income, because it's like, I can't mess up that badly in two weeks. I am just kidding. I've obviously figured out a way to be financially responsible, but there is, like, a psychology element of that that, like, would worry me like, every, you know, if there was a lot for a month, even though it's not realistic, like, I would be fine. It would, like, sort of weigh on me a little bit. And it's also. When you were talking about that, it made me realize. Or think about how you almost have to. To be responsible. Do both at the same time if you're going to transition into it. Because you have gotten to a point where you do enough flips and you have such a good pipeline that, that even if you're, you know, you miss on one month, you don't get an acquisition, you're like, I'm going to get one next month. You have, like, a pretty good idea of that. But if you just quit your job and you're like, I'm going to go flip houses, then you better have that deal flow work out really quick. Just assuming you're an average person who doesn't have, like, months and months and months of emergency reserves that could get bad quickly. So you sort of have to develop the pipeline of deal flow while you're still working full time.

[Henry Washington]

You have to build some level of consistency into your business before you quit. Because someone has to want to sell me a house. Now I know how to go look for those people. I know how to help those people. Like, I've positioned myself in a way where that I can build a business around that. But it's not like I am relying on somebody else to decide that they want me to buy their home for me to make money.

[Dave Meyer]

Right.

[Henry Washington]

That's. Yeah, that's tough.

[Dave Meyer]

Yeah, for sure. And you're very good at it. And you've practiced a lot to be able to have that confidence. And it just doesn't come that quickly. And I'm enjoying this conversation because I. I really just want people to realize two things that Henry and I are talking about here. First and foremost, the idea that you're going to just do nothing in the next few years. Very unlikely. Unless you're starting from a very advantaged place with a lot of cash. And if you're going to do what, what, I don't know what, it's probably 95% or more of real estate investors still work for active income. I think it might even be higher than that.

[Henry Washington]

I think it's higher than that.

[Dave Meyer]

I think it's everyone. And like, you know, if you're going to do these things at the same time, earn active income and invest long term so that eventually you can really do nothing, you can choose either the path I've gone down, which is to, to work a more traditional career and invest on the side, or you could do what Henry's done and there are sort of just trade offs and pros and cons between both of them. But both are pretty common, you know, like if you do need active income and you don't need to quit your job, the more common way to do this is to find a way to earn income right now and invest that into passive assets for the long term.

[Henry Washington]

When we talk about kind of our approaches to real estate, they sound different, but the framework is ideally the same of what you and I are doing, which is we're buying assets, so we're growing our portfolio to whatever comfortability level we are with that. Right. And then we're stabilizing those assets. Right. And then we are focusing on getting those assets paid off. And across all three of those buckets, we, you and I both have active income coming in to help us fulfill what's happening in those buckets so that we can finally finish off that third bucket of paying off the assets so that we can be financially free. Like our framework is exactly the same.

[Dave Meyer]

Yeah.

[Henry Washington]

How we're generating the income and, and where within our process we are is different, but the frame is the same.

[Dave Meyer]

That's, that's a really good point. Yeah, I, I hope that is encouraging to people because I'm sure you hear this all the time, this expectation that you need to quit your job or to be in real estate or feel the pressure honestly to retire and do nothing just isn't necessary. And like, I think, you know, you were saying you think it's higher than 95%, but like, do you actually even know anyone who is truly retired from real estate?

[Henry Washington]

Maybe one investor, maybe of all the people I've ever met.

[Dave Meyer]

Yeah, right. Because everyone keeps doing stuff that dream.

[Henry Washington]

Of going in and sitting on the beach and retiring and living. Look, I know plenty of investors who move to the beach, but they work in one day there.

[Dave Meyer]

Totally. Yeah, exactly. Exactly. Yeah. So hopefully this Conversation helps normalize this for people. I just realized that like real estate is fantastic. It's incredible what it does for you. Just go into it with realistic expectations and not only will that like help you get in and get over some of the fear, I actually think it makes real estate investing easier.

[Henry Washington]

Yeah.

[Dave Meyer]

Let me just give an example. Like I will buy a deal right now that makes 3 or 4% cash on cash return because it's a great asset in a great neighborhood. And I don't need more than that. I don't need 8% cash flow because I don't need the money right now. And it allows you to sort of take this sort of long term view. Yeah, like deal selection and portfolio strategy becomes so much easier when you're not hyper focused on like how do I replace my income by tomorrow?

[Henry Washington]

Yes, that man. The pressure that you don't have to feel in order to do that is amazing. Yeah, it's just buy a good asset in a good appreciating neighborhood that pays for itself and just don't think about it for the next 15 to 20 years. That's pretty cool.

[Dave Meyer]

I just want people as we, especially entering a new year to go into things with realistic expectations. Because real estate just as good as an asset, just as good as a business as it's ever been. If you just have realistic expectations about what is feasible with this asset class and recognize that a lot of the marketing that was going on and biggerpockets is part of this over the last couple of years is not the most common way. The more common way to use real estate is to take 10 or 12 or 15 years to build out a portfolio and give yourself maximum financial freedom just over a longer period of time.

[Henry Washington]

Couldn't agree more.

[Dave Meyer]

Well, thank you. This was a very fun episode. I appreciate you being here.

[Henry Washington]

Hey man, thanks for having me. I love putting a realistic spin on things. This is still the greatest financial decision that I've ever made even though I still work on a day to day basis in a real estate business. So I'm, I'm. It's changed my life in more ways than I could have ever imagined. And I think that there should be less fear around getting started. There should absolutely be education and preparedness. But there is a strategy that will work for literally almost anyone. And you do not have to be a professional air quotes real estate investor to hit that level of financial freedom within 10, 12, 15 years. You can just be a regular Joe Schmo with a job and get that there.

[Dave Meyer]

All right, well, thank you all so much for listening. We'd love to hear your opinion about financial independence and what it means to you. So either hit Henry or I up on BiggerPockets or on Instagram or in the comments below if you're watching this on YouTube. Thank you all so much for listening or watching to this episode of the Bigger Pockets Podcast. We'll see you again soon.

[Unknown]

Thank you all for listening to the Bigger Pockets Real Estate Podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify or any other podcast platform. Our new episodes come out Monday, Wednesday and Friday. The host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calico, Content and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com. the content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk, so use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose, and remember, past performance is not indicative of future results. BiggerPockets LLC disclaims all liability for direct, indirect, consequential or other damages arising from a reliance on information presented in this podcast.