On the journey to early FI, there is such a HUGE focus on accumulating wealth and building up our cash flow, net worth (or both) every step of the way… There is absolutely no denying that “money talks”, and for many of us, we won’t have the courage and conviction to walk away for good from our day jobs until we have amassed enough F U money…
One thing that I’ve learned as an early FI blogger through the years is this — If you want to be liked (and popular), keep churning out and regurgitating the same content that is universally accepted and liked by the masses. Deviate from the road most travelled, and well, you’re going to have your fair share
Early FI is the ultimate dream… It’s something that has universal appeal and everyone wants it…
But as the years go by, I’m learning and experiencing first-hand just how tough and arduous a task accomplishing that wonderful end goal is becoming…. Right now, I’m back in the Bay Area, and I’m astounded on a daily basis just trying to grasp how expensive everything has gotten in such a short period of time… You know, when I walked away from my job for good in early 2016, a six figure salary in the $130-150k/year range used to be pretty impressive…
I’m hearing on a regular basis from some of my former colleagues and friends that they are now pulling in
One thing about being a world traveler is that over time you get to build a comprehensive database filled with so many different people and personalities. But no matter where I go, one thing is constant — Everyone desires financial independence.
In other words, “work (by necessity) sucks”, and everyone out there knows that…
However, when it comes right down to it, I would say only a small minority of the people that I’ve ever met have that burning desire and hunger to actually do something about it so that the amazing dream of being financially free can become a reality.
The dream of achieving early financial independence is one that I find very easy to sell. It’s like tempting someone with good food… Who’s going to say no to that? Unfortunately, we are now in the later stages of a bull market in general equities and real estate, so it is my own belief that there is not much juice left to squeeze with those conventional assets…
“Just buy index funds and you’ll get there in no time!”
Sounds good, in theory… Perhaps the majority of blogs out there are pitching that to you, but I just can’t do it… Sorry, I don’t believe in that at all and think buying up ANYTHING at all-time record highs is a risky (scary) proposition!
But as you guys know, I’m terrible with marketing and too oftentimes my best work gets lost in the mix with all my other posts…
Anyway, for anyone who is serious about getting to early FI (and I know there are a ton of people who are based on the number of emails, messages I get), please put in the time and watch this video in its full length and entirety.
I don’t pull any punches here and I’m telling it to you guys STRAIGHT UP what works and what doesn’t work.
If anyone was to ask me, “What’s the secret to early FI? How do I get there ASAP?”
Owning the best Tier 1 assets (across all asset classes, don’t discriminate!) is the absolute best, most reliable, most sustainable, and fastest path to early FI. Period.
Tier 1 assets are not always on sale, that’s the dilemma here… Most people think I’m crazy but there is a very good reason why I’m so fixated on precious metals and clean energy stocks right now. Market cycles. Don’t ignore and dismiss Market Cycles; the macro always wins out in the long run. It may not seem obvious, but because I want to buy so many more tier 1 rentals, I’m concentrating 100% of my efforts elsewhere, trying to gobble up tier 1 properties (mineral deposits are properties, don’t hate) across different asset classes that are a hell of a lot more affordable than real estate is right now.
“Buy low and sell high.” Everyone knows it, how many actually do it?
Day 1 cash flow is the most deceiving (misleading) metric newbies focus on when it comes to real estate investing.
Property value appreciation potential is far more important than Day 1 cash flow for long-term success (if a property has massive appreciation potential you will as a byproduct experience massive rent appreciation, which will inevitably churn out that massive cash flow you so desperately seek).
Anyone who thinks property value appreciation is overrated has never thought long and hard about exit strategy. World class tier 1 rental properties never make you feel like you’re trapped in Hotel California… Junk rentals that never go up in value do!
This ain’t rocket science! The best school districts, highest quality and most robust paying jobs environment, beautiful weather, world class amenities/infrastructure, low crime rate, etc. are the ingredients found in world class tier 1 rental properties! No wonder these investments only keep becoming more valuable over time!
Dividend Growth Investing (DGI) >>>> Turnkey Investing. DGI is 100% passive, Turnkey Investing is a pain in the ass. Again, don’t fixate on Day 1 numbers. The best DGI stocks start off at 4% yield but the growth rate will surpass turnkeys in no time so your Yield on Cost (YoC) starts to outperform only after a few years down the road. With turnkeys, properties need to be maintained and you can only defer maintenance for so long before those costs come due. Newbies never factor this into mind when doing their initial Day 1 analysis. 12% cash-on-cash return on Day 1 will NOT be 12% in Year 5 (probably)! A property will NEVER perform as well as on Day 1/Year 1! Dividend growth stocks get better with time, turnkey properties don’t! My biggest investment mistake ever was going out of state and buying turnkey properties.
The “slow and steady” approach is too much work, too many headaches, and does not provide enough “juice” to make it worth the squeeze. Focus on the “low hanging fruit” type of investments that offer a ton of upside potential at relatively low risk. Assets that don’t have the capability to significantly increase their value over the years are a waste of time.
When in doubt, stick to world class tier 1 assets and you won’t go wrong. Early FI beckons for those who are smart enough to not settle for junk.
Quality over quantity. I would rather own a single Bay Area rental property than to go out of state and buy ten properties out in the “hood”.
Speaking of early FI, when I’m out on the beach in the Philippines or the Dominican Republic, the last thing I want to have to deal with is properties and tenants! Tier 1 tenants are the best of the best and will leave you alone for the most part (they are too scared of you raising their rents again). Class A, tier 1 for the win, again and again! Class C tenants will never fear you, in fact you probably need them a lot more than they need you!
Making mistakes, having to jump through hurdles, and dealing with setbacks is all part of the process. Never forget, we are all human beings and constantly learning and evolving. Do your best to learn from the failures, pick yourself up off the ground, and continue to Fight On!
I am willing to share my journey and document all my progress so readers can avoid any pitfalls and learn from my fuck ups that I made along the way. Also, whatever I did that works, you can be sure I will emphasize that non-stop!
Tier 1. Tier 1. Tier1.
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