Real Estate Rookie – Episode Summary

Podcast: Real Estate Rookie
Hosts: Ashley Kehr ("A") & Tony J. Robinson ("B")
Episode: 7 Steps to Replacing Your W2 Job with Rentals
Date: August 27, 2025

Episode Overview

This episode revolves around the practical steps required to calculate your "freedom number"—the specific, personal dollar amount you need each month from rental properties to quit your 9-to-5 job. Ashley and Tony demystify the journey from zero to consistent rental income, introducing a step-by-step roadmap that includes goal-defining, strategy selection, cashflow targets, and building a portfolio that fits your unique needs and risk profile.

Key Discussion Points & Insights

1. Understanding Your Freedom Number

Step 1: Define Your Baseline

• Purpose: Calculate the minimum amount required to cover your current living expenses.
• Tips:
  • Review last 90 days of bank/credit statements to truly understand where your money goes.
  • Use apps like Monarch Money to automate spending categorization.
  • Excel/Spreadsheets can be a free manual alternative.
• Quote:
  • “You’ll be very surprised where your money is actually going… those $99 subscriptions really add up quickly.” – Ashley (01:42)
• Key Point: The baseline is about current normal lifestyle, not austerity.

Step 2: Add Your Lifestyle Cushion

• Purpose: Factor in a buffer (suggested 20–25%) for non-essentials, lifestyle upgrades, and unpredictable expenses.
• Notable:
  • Concept of “revenge saving”—building reserves out of a drive to never be financially unprepared again.
  • Consider future inflation and increased costs of living.
• Quote:
  • “It shouldn’t be about depriving yourself. It should be about having control over your money.” – Ashley (09:51)

Step 3: Sanity-Check Your Freedom Number

• Purpose:
  • Compare your freedom number to your actual after-tax income for realist alignment.
  • Visual motivation: Write your number somewhere you’ll see it daily.
• Quote:
  • “Your ability to be successful as a real estate investor will not always come down to skill… More often than not, it comes down to your ability to stay consistent.” – Tony (13:51)
• Pro Tip:
  • Include taxes, irregular annual costs (e.g., weddings, dental visits), and retirement/college savings in your calculation.

2. Crafting & Executing Your Rental Investing Roadmap

Step 4: Choose Your Strategy

• Investment Types: Long-term rentals, rent-by-the-room, mid-term rentals, etc.
• How to Decide:
  • Assess your personal advantages (market knowledge, connections, skills, time, and energy).
  • Make sure your chosen strategy matches both your capacity and your market's reality.
• Quote:
  • “You should do—even if it’s boring—what is going to be the best opportunity and where you have an advantage.” – Ashley (17:18)

Step 5: Pick a Cash Flow Target Per Property

• Why: Different strategies/markets yield different typical cash flows.
• Example Math:
  • $4,750 monthly need ÷ $275 per door = about 18 doors required
• Warning:
  • Don’t be unrealistically optimistic with cash flow estimates; set conservative, achievable targets.
• Quote:
  • “You definitely want to make sure that these numbers are rooted in reality.” – Tony (30:08)

Step 6: Set Your Acquisition Pace & Scaling Strategy

• Timeline:
  • 5-year aggressive, 10-year balanced, 15-year lifestyle approach.
• Scaling Skills Needed:
  1. Personal savings rate (play offense by earning more, defense by spending less)
  2. Reinvest portfolio cash flow into new deals
  3. Use other people’s money (private loans, partnerships), noting equity splits
• Quote:
  • “Your ability to scale really comes down to three skills… personal savings rate, portfolio cashflow, and raising capital.” – Tony (30:58)

Step 7: Account for Vacancy and Variable Expenses

• Vacancy: 10% recommended buffer.
• CapEx: Set aside 5–10% per month, more for older properties.
• Advice: Adjust for property age and recent renovations; always budget for repairs and unexpected costs.

3. Leveraging Portfolio Equity: Exit Strategies & Long-Term Scaling

• Ways to Unlock & Use Equity:
  1. Cash-Out Refinance: Pull equity without selling, but compare old and new mortgage rates/cashflow impacts.
     • “If I went and refinance… I could pull out another $50,000, and my mortgage payment would stay the same.” – Ashley (43:09)
  2. 1031 Exchange: Sell and defer taxes by reinvesting all proceeds into similar real estate.
  3. Sale: Liquidate for cash but expect capital gains taxes.
  4. HELOC/Portfolio LOC: Flexible borrowing against equity, much like a credit card.
• Personal Philosophy: Blending leverage vs. deleveraging is personal—age, risk, lifestyle, and market conditions all play in.
• Quote:
  • “Either path works fine… It’s a personal decision based on your philosophy, your risk profile, and where you’re at in life.” – Tony (44:34)
• Strategy Mixing: Don’t be afraid to combine approaches (e.g., live-in flips, house hacking, BRRRR).

Notable Quotes & Memorable Moments

• “We want you to still be able to go on vacation; otherwise, it’s not really freedom, you know? You’re just barely getting by.” – Tony (04:53)
• “This isn’t about depriving yourself—it’s about having control over your money.” – Ashley (09:51)
• “Every strategy carries some form of risk. If there was no risk, there’d be no reward in real estate investing.” – Tony (25:07)
• “As you put together your acquisition plan, make sure you take into account what your comfort level is.” – Ashley (32:34)
• “The rocket uses 80% of its fuel just to get out of Earth's atmosphere… real estate investing is much the same way. That first deal uses up 80% of your energy.” – Tony (33:58)
• “Let’s say you need $4750 a month. If your per-door target is $275, that’s 18 doors.” – Tony (27:11)

Timestamps for Key Segments

• 00:00: Introduction of the "freedom number" concept
• 01:42: Step 1 – Defining your financial baseline
• 04:38: Budgeting tools and methods
• 06:11: Step 2 – Adding your lifestyle cushion & “revenge saving”
• 09:34: Avoiding extreme austerity mindsets
• 11:02: Practical calculation example with buffers
• 12:01: Accounting for taxes, irregular costs, and retirement in your budget
• 13:13: Step 3 – Sanity-checking your number and daily visual motivation
• 17:18: Step 4 – Choosing your investment strategy
• 19:10: Decision filters: capital, time/energy, desire/skill, risk tolerance
• 27:11: Step 5 – Calculating your per-door cash flow target
• 30:08: Importance of realistic cash flow estimates
• 30:58: Step 6 – Acquisition pace and scaling strategies
• 32:34: Comfort with leverage and acquisition pace
• 33:58: The “rocket launch” analogy for getting started
• 36:26: Step 7 – Accounting for vacancy and capex
• 42:34: Leveraging equity—refinances, 1031, selling, HELOCs
• 46:59: Blending paid-off and leveraged strategies

Closing Thoughts

The episode reinforces that financial independence through rentals is attainable for “rookies”—not just seasoned pros. The hosts continually stress the importance of building a plan tailored to your numbers, strengths, and comfort zones, emphasizing flexibility, consistency, and smart, conservative projections. Whether you want a modest side portfolio or to transition full-time, this episode delivers a clear, step-by-step guide to set and achieve your freedom number, and ultimately, to design a lifestyle around true financial control.

Follow-Up Resources:

• For deeper dives into deal analysis, financing, and specific strategies, check previous Real Estate Rookie episodes and the BiggerPockets YouTube channel.

Hosts’ Social:

• IG: @BiggerPocketsRookie