How Many Properties Do You Actually Need To Be Financially Free?

https://www.youtube.com/watch?v=QIBa44ZHqco A lot of people talk about 10 properties in 10 years but how many properties do you actually need to be financially free? Resources Mentioned: 0-130 Properties in 3.5 Years by Steve McKnight Property Tools 2 Properties To Financial Freedom Recommended Videos: How To Own Multiple Properties Transcriptions: a lot of people talk about 10 properties in 10 years or obviously they're Steve McKnight's famous book of 0 to 130 properties in three and a half years but how many properties do you actually need to be financially free do you need 10 do you need a hundred and thirty that's all we're going to talk about in today's episode hey i'm ryan from on-property helping you achieve financial freedom and really excited to get down to the nuts and bolts of this topic to help you assess how many properties you actually need to be financially free because there's a lot of different things that changes how many properties you're going to need your investment strategy what the rental yield of that property is going to be as well as what income level you want to achieve in order to consider yourself financially free I like to think of two different income levels when it comes to financial freedom baseline financial freedom and that's the financial freedom where look I can get by I can live a pretty good pretty happy life but I don't have those little extra luxuries in life I don't have a lot of extra money to travel overseas every single year etc so you got baseline financial freedom we can just live a normal everyday life don't get your coffee once a day twice a day three times a day four times who's judging alright no one's judging you yeah you can live kind of a normal life on that baseline financial freedom so there's a few ways that you can look at this and a few ways you can calculate how many properties you need to be financially free and they're going to explain why Steve McKnight needed 130 properties and why you might only need two properties so 132 - they're obviously very different so let's get into it I think one of the best ways to understand okay how many properties do I need as a baseline to start with is to actually estimate owning properties without a mortgage so let's pretend you're investing today you're purchasing properties you're going to go principal and interest hopefully they're positive cash flow but over time you're going to pay those properties off and eventually you'll own those properties outright so how many properties would you need to know own outright in order to be financially free now depending on how much you want to be earning and depending on the rental yield other properties is going to depend on how many properties you need so let me get my phone out and do some calculations here so let's say we're gonna need a hundred thousand dollars in passive income in today's money now when we're looking at the rental income of a property they're still going to be some expenses in there okay we've got insurances council rates property manager fees etc so generally you'd want to calculate about twenty to thirty percent of that income for those expenses so a hundred thousand dollars let's say we're calculating twenty percent that's actually only eighty percent of the total rental income that we need so we need a bit more than that so that when we take out our twenty percent we're left with a hundred thousand that we can live off so to do that calculation we do a hundred thousand divided by eighty that gives us the total value of one percent and then times by 100 so that means we need one hundred and twenty five thousand dollars per year in rental income in order to achieve that hundred thousand dollars a year now let's go ahead and divide that by 52 because there's 52 weeks in a year that's going to give us a total amount of two thousand four hundred and three dollars and 85 cents so let's call that let's just call it two thousand four hundred dollars in order to make things easier now if we're investing in property let's just say single income properties up here in North Brisbane you could purchase a property around three hundred eighty four hundred thousand that might rent for four hundred dollars per week so two thousand four hundred divided by 400 that means we're going to go ahead and we'll need six properties in order to achieve our income goal now remember that six properties completely paid off owned outright now let's say we do the two properties to financial freedom strategy and we get that four hundred dollars rent but we also go ahead and build a granny flat on that property so actually getting to comes from the properties and our rent jumps from about 400 a week to about 710 so getting about 310 dollars for the granny flat so if we do 2,400 divided by 710 then we can see we need 3.4 properties in order to get to that $100,000 mark in today's money now you also need to understand you've got inflation happening you've got rental growth happening over time as well so over time it's going to get easier and easier and you need less properties to achieve the hundred thousand because that's seven hundred and ten dollars per week over the next 15 or 20 years will likely go upwards of $1,