Stop Guessing: How to Calculate Your "Freedom Number"

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Alright, here's my question. You're going on a seven day trip. How many pairs of underwear are you packing?

Does the seven days include travel days? Y

seven nights you're gonna be gone seven nights.

Bring eight pairs. Underwear. Eight

pair. Alright, Kate. Looks shocked.

That's what I always do.

I bring one more than I need. Kate, how many you bringing?

Uh, 14 or 15?

All right, so here's my question for you. You're going on a seven day trip. How many pair of underwear are you packing? Seven day trip. I'm gonna pack, I'm gonna pack nine pairs of underwear. Nine. Hmm. Okay.

on a trip seven days. Seven [: 00:01:00

Um, does where I'm going. Have a washer and dryer. Sure. Why not? Well, in that case, I guess four, four. Okay. Yeah. Okay. Alright. Okay. And if it doesn't have a washer and dryer. 7, 7, 1 a day. All right. Okay. That's good. Thanks man.

Now, a few months back, a trend started on social media where women who were preparing for a girls trip asked their friends that same question, and the answers ranged from zero to 21, The more extreme the answer, well, the funnier the laugh, but that question got me thinking about business and specifically about real estate investing.

much do you need to make per [: 00:02:00

Some say, I don't know, some say. Well, whatever I make at my job and some just throw out a number that sounds good. Then I ask, what's your freedom number?

How many units. Deals or notes do you need for your business to pay your bills? Usually I get silence. That's when I channel my inner shark tank voice and remind them. You have to know your numbers.

But here's the truth, I didn't either, at least not in the first year as an investor. My goal back then was simple to replace my corporate income. I was a vice president at a Fortune 300 company, and I didn't wanna move backwards in income or lifestyle. That was my bar. But that number, it also felt massive, almost impossible.

ough units to hit my target. [: 00:03:00

Yeah, it wasn't emotional. It was math. Simple math. From there, I had a clear path forward. I stopped guessing. Each week, I updated my progress, like one of those old school ballpark scoreboards.

70 to go, 60 to go, 40 to go, 10 to go. My momentum built, and you know what else happened? My doubts disappeared. My self-doubt, my inner critic voice, they all disappeared. And for the first time, I could see my path to freedom. And the math always works. Last year when I was writing Fix This Next for real estate investors,

words is this book gonna be? [: 00:04:00

Some days I wrote a thousand words, but the average was seven 50 and in 73 days I had the draft in hand. It's the same principle. Once you know the goal, you can reverse engineer the path. So how do we find your number? Well, it's simple. Here's what we're gonna do. We're gonna begin with your personal comfort number.

r profit margin, and this is [: 00:05:00

Typically, in real estate investing, it's 25 to 30%. I've seen lower. I've seen higher. That's the typical, so if you don't know it, you can plug in one of those numbers and then what you wanna do is you want to figure out your average income per deal, or average income per unit, or average income per note, whatever it is that you're tracking.

For me, it was loans, my average income per loan.

So whatever a unit is for you, you want to find the average. Now, here's what we want to do. We want to take your personal comfort number, and we wanna divide that by your profit margin.

to chase. Once you know that [: 00:06:00

You can reverse engineer everything. Starting with your activities, take your close rate, your marketing volume, your mailings, your capital. It's all reversed backwards. It's all math. The plan stops being emotional. It becomes mechanical.

And that's when business gets fun. So back to the question that started all of this, for a seven day trip, how many pair of underwear are you packing? If you said zero or 21, you're probably just guessing my answer. It's math. It's one per day, plus two spare total of nine. You never know what's gonna happen on the road, so you gotta be prepared.

fix this next for realestate [: 00:07:00

I would love to know what your number is, so leave a comment, send me a note, and I will see you in the next.