How to Retire in 5 Years (or less)

hey gasps my name is Tyler and if you're here watching this video then you're probably interested in things like passive income early retirement or just getting a boost on your overall finances and if that's the case then I think you're really going to enjoy this video you really get a lot out of it I just want to spend a few minutes sharing a strategy with you guys that I use to get myself to a six-figure income and a six-figure net worth within about three years of getting my first full-time job now this strategy does not require a college degree it does not require a high paying job and it doesn't even require any special skills or talents if that sounds like it's something that would interest you then keep on watching and let's get right into it all right so once again my name is Tyler and I'm gonna be sharing with you guys one strategy that you can use to boost your income jumpstart your finances and within a few years get yourself to a point where you don't even need to show up to a nine-to-five job anymore now that might sound like it's too good to be true but if it does sound like that to you then just keep listening I'm gonna make it real for you I started this strategy right out of college and since then it's provided me with enough cash flow that I never worry about how the bills are going to get paid I never worry about unexpected expenses and I can pretty much afford to do whatever it is that I want to do within reason this strategy also gave me the freedom and the confidence to be able to quit a job that I hated before I even found another one for most people that would be a pretty risky proposition everybody wants to know where their next meal is coming from where their next paycheck is coming from but because of this strategy I already knew where my next meal and my next paycheck were coming from and so I wasn't that worried about quitting my job and I was actually able to do it using this strategy even made it possible for me to upgrade my vehicle to a truck which I've always wanted and even upgrade my home to a home that I never thought that I would be able to afford at my age and I'm loving it on top of all that this strategy has enabled me to triple my income within just three years and put away a nice six-figure nest egg from us to set myself on a path for early retirement all right so what could I possibly done to make all of this happen in such a short amount of time well that's a good question but here's a better question ask yourself what is your biggest monthly expense what is the thing that you spend the most money on each month or if you still live at home with your parents then what do they spend the most money on every month now if you're like most people then the answer to that question is probably your housing expense whether it's paying rent or paying a mortgage or just helping out with the monthly bills housing is the largest monthly expense for the average American and it's not even close so with that being said what if we could eliminate housing as an expense that probably puts you on a pretty good path and probably puts you in a better situation than the average American right well yeah Tyler that'd be great but how am I supposed to eliminate housing has a monthly expense you want me to go buy a tent and go live in the woods actually you could give that a shot and you'd probably be better off than most of the people out there who are just throwing scads and learning at their landlord every month but no I'm not gonna recommend that you go out and buy a tent because actually my strategy is better than that because my strategy doesn't just eliminate housing as an expense it turns your housing into an asset and makes it work for you all right so we're getting pretty deep into this video and you're probably thinking this dude is just beating around the bush and he's never gonna tell us his strategy well you know what let's just get right to it let me go ahead and tell you what I did immediately after I graduated college I put everything I had into saving up for my first house it took me 15 months of scrimping and saving and skipping out on things that I wanted to do not taking expensive vacations not buying expensive toys or anything like that and I actually wasn't making a whole lot of money at my first job and so I actually to speed up the process I went back to what I was doing in high school which was delivering pizzas on weekends I wasn't gonna wait years to get this strategy kicked off because I knew it was gonna be life-changing and so I was I was impatient I had to to get this done as quickly as possible so everything that it took to save as much money as possible and get into that first house is what I was doing and just because I wasn't making that much money it took me 15 months but it might take you longer it might take you way less it just depends on your situation part of my situation was I was able to cut a deal with my parents to where after college I could move back home and pay them minimum rent I think it was like $200 a month plus just all my general expenses you know groceries phone bill car insurance health insurance all that stuff I paid them another $500 for all that stuff so my total expenses each month were only $700 a month and I was able to save pretty much everything other than that so that helped out a time but finally after 15 months I was able to scrape together about $15,000 which was enough for the down payment on the house the inspection the appraisal and all the other little things that go along with buying your first house and I was able to get into that house all right Tyler so you bought a house great congratulations but last I checked that's not a strategy well yeah you're right by itself that's not a strategy but what is the strategy is what I did with the house after I bought it because the house that I bought was a three-bedroom townhouse now what's so special about that well I was single at the time so what do I need with a three-bedroom house what am I gonna use this extra rooms for and that right there is the secret I read those two rooms out because what I realized way back in high school before I ever had a house or even had hope of getting a house I realized that if you can just rent out two bedrooms in your house it will actually pay for your entire housing expense it covers your mortgage covers your insurance covers all of your housing expenses effectively eliminating the largest expense of the average American so assuming that you bought a house that you can afford on your own without tenants which I would highly recommend by the way you have now freed up what would have been your largest expense so whatever that amount is that you would have been spending is now free for you to do whatever you want with it and ideally you'll invest that or at least save it for future investments think about how huge that is for me the amount extra that I was bringing in was around twelve or thirteen hundred dollars a month now that's twelve or thirteen hundred dollars a month more than I would have been able to save had I not been renting rooms out so instead of investing and saving with all this extra money I would have been investing in saving nothing and if you're investing or saving nothing and how are you ever going to improve your situation how are you ever gonna grow financially you just be showing up to your job every day hoping for a promotion or hoping for a raise or just hoping that you get lucky and win the lottery or something see a big part of this strategy is changing your mindset you don't need to depend on your job or your boss to improve your future that's your job you need to focus on that yourself and if you're sitting around waiting for raises or promotions then you're wasting your time you need to be planning that on your own and you need to be putting everything you have into that so yeah I don't need the lottery and you don't need the lottery all you need to do is take control of your finances and start planning for your future and you can grow your finances and plan your future and achieve early retirement as long as you are dedicated all right so enough preaching about that let's get into some of what would probably be your questions starting with who the heck do I rent these rooms to well that's the beauty of being a homeowner you bought a house you own the house you decide who you rent to it could be anyone from your best friend to somebody find on Craigslist or somebody found on some sort of roommate website like Roomster believe it or not there are tons of people out there looking for cheap or short term housing I've had about 20 tenants in the last three years and I can tell you 19 of them came from Craigslist so for me that is by far been my best resource but it could be different in your area but assuming Craigslist is the best resource in your area then all you got to do is post an ad and you can tailor the ad to be whatever you want it to be you name what you want if you want somebody who's never gonna be at home who is just gonna give you the house yourself all the time and still pay you rent they're going to work every single day or they work night shifts whatever the situation is put it in the ad believe it or not you'll find people that are that have the situation that you're looking for I have an ad up right now looking for that very thing someone who commutes into town for work and they just need somewhere to lay their head at night and then they go back home on the weekends believe it or not that you can find any situation that you're looking for if you want somebody that's gonna hang out with you if you want a friend you put that in your ad if you're a girl and you don't feel comfortable living with guys put that in the ad you only feel comfortable with girls once again the beauty of this strategy is that you are the home owner you are the boss in this situation set whatever rules and regulations that you want to every one of my tenants signs a rental agreement and in that rental agreement are a lot of rules that they have to follow I'll give you a few examples of rules that I have in my rental agreement that make my life way easier most of the rules I have in there are things that I learned after I started doing this and things annoyed me along the way one of my rules is no tenant can ever park in my garage or my drive way that ensures that I always get the best parking available and I always have a spot for my girlfriend park I have another rule that says no tenant can have overnight guests for longer than two consecutive nights that rule keeps things from getting too crowded in the house and it keeps people from moving somebody in basically in living rent-free the next rule is probably the biggest one in alleviating a lot of the concerns you might have with somebody that you don't know moving into your house and that rule is that all rental agreements are on a month-to-month basis that way if there's any disagreement or any problems at all we're just not getting along then that person can basically leave whenever they want they just have to give a two-week notice before they can move out or they can move out whenever they want but I get at least two more weeks worth of rent and actually I have a clause in there that says if they break any of the rules then their rental agreement can be terminated earlier than two weeks so because I've laid things out like that on the front end I'm never stuck living with anybody that I don't like for too long now after listening to that if you still have concerns about living with people then you know maybe this strategy isn't for you living with other people is not for everybody but how committed are you to your financial future do you want to keep going to your nine-to-five job every day for the rest of your working life till you're 65 years old I know that I don't and to be honest for me this strategy was not very much of a sacrifice because I've never really lived on my own anyway all the way up through high school I was living at home with my parents and then when I went away to college I was sharing an apartment with three other guys so it really is a small sacrifice and for me it is paid off big-time okay so Tyler you bought a house you rented out a couple of rooms and covered your housing expense but then what why is this strategy so great well after I bought the house to be honest I mean I was pretty cash poor I had just spent pretty much all my money on the house and then furnishing the house TVs and and everything that I needed in order to make it a desirable living situation for potential tenants so the only thing to do once I got the tenants in the house was just to wait for my cash to replenish and it replenished pretty quickly I was patting my bank account by an average of somewhere between twelve and fifteen hundred dollars every single month and just a reminder without those tenants I would have only been treading water so within a matter of months I was back up to where I had been before I bought the house but now I've got my own house and I've got two tenants so for my age I was killing it financially but I did have one big problem I absolutely hated my job I worked for a big auto insurance company and I was forced to just sit there all day and make as many cold calls as I could and it was just miserable I got cussed out multiple times daily and overall it was just depressing environment to be in but without my rental income I would have been forced to just stick it out at that job because I would have no other way of ensuring that I had my mortgage paid for they weren't giving me any paid time off and so I really had no time to search for another job or two interviews or anything like that if I stayed there but because I had that rental income and I knew my housing expenses were covered whether I had a job or not I had the confidence to be able to quit that job and take three months off and just clear my head and figure out what I wanted to do and find a job that would make me happier and I ended up finding a job making 66% more money and that also offered paid time off and benefits unlike my previous job and although I'd still rather be off I didn't hate waking up and go into my job anymore none of that would have been possible or at the very least it would have been very difficult if I didn't have that come to fall back on once I found that job I was off to the races my income was at an all-time high and I was shoveling money into my bank account and in fact it wasn't long before I was able to afford a second home so I called the same mortgage broker that I had used before and he gave me some awesome news he said that because I kept everything above board on my rental income because I paid taxes on it that he could cancel out all of my housing expense for the first house almost like I didn't own that house and so that I could qualify for a second house and because of my new higher paying job and all that rental income I actually qualified for a much bigger loan and so I could get a much nicer house now just because I qualified for a much nicer house didn't mean that I wanted to go crazy so I called the same realtor that I had used before and I had him on the lookout for a similar house to the first one a three-bedroom townhouse where I could comfortably rent out the other two rooms and actually the first house that he found was perfect for me and I pulled the trigger on that house and that's the same house that I'm in right now that I still live in to this day so once I moved over into this house I took the room that I was living in in my first house and I rented that room out and because it was a master bedroom with a private bathroom and it's just much bigger and nicer than the other rooms I can actually pull in more rent for that room and when I got here I filled the two rooms in this house with tenants as well and because this is a nicer house I actually pull in more rent per room here so now I own two homes with five total tenants and I actually bring in more in rental income than I do at my full-time job and guess what I'm not done I'm actually to the point now to where I can afford to go out and get a third house this strategy is extremely repeatable you can just keep doing the same thing over and over over again until you have enough tenants and enough real income to where you don't need to show up to a job anymore you can quit now eventually you might get tired of living with people or like me you might get into a serious relationship and want a little bit more privacy for yourself that's the situation I'm in and really that's the only reason that I'm not going out right now and buying a third property I'm still deciding what I'm gonna do but I believe what I'm gonna do is I'm gonna go out and get a house that is private for me and my girlfriend but also has the capability of renting something out something like a guesthouse or a basement that is just not connected to the rest of the house but don't get me wrong I'm still gonna keep this house that I'm in right now and in fact I believe I'm going to turn the dining room that nobody uses I'm actually using it as an office right now I believe I'm gonna turn that into a fourth bedroom bringing in even more rental income at this house my mortgage broker has let me know that the only thing that really holds you back in this strategy is that you can only have a total of seven mortgages but imagine if you had seven properties of all let's just assume that they were all three-bedroom townhouses the same as what I have for both of the houses and you had them all filled with with tenants that you were charging an average of let's say what my average is which is six hundred and fifty dollars a month per room now that adds up if you have the seven houses and you have all of them filled that adds up to about twenty tenants and 2010 its times six hundred and fifty dollars a month that comes out to a total of thirteen thousand dollars every single month and rental income if you had thirteen thousand dollars a month and rental income do you think you'd still need to show up to your nine-to-five job probably not and to be honest you would probably need to quit anyway so that you could manage those properties make sure that you kept them full all the time if that sounds like it's not a fun thing to do then just remember this you can always hire a property management company and they're typically you reasonably-priced all right now I know what you guys are probably thinking or what you've probably thought somewhere along the way Tyler you're making this sound ridiculously easy and you're not really giving us any of the negatives well look yeah there's been plenty of bumps along the road there have been times when I've had vacant rooms for weeks or even months at a time right after I got the first two tenants over at my first house my water heater went out and I actually had to spend $1,500 to replace it I've had tenants try to move in dogs or even their kids without asking permission there's been plenty of stressful times throughout the past few years but you're gonna have that with anything that you do the rewards have far outweigh the costs and I wouldn't be recommending this strategy if it hadn't worked out great for me now this video is just meant to share the general idea with you guys I could go on and on for hours about this strategy and you know what maybe I will but I'm gonna save that for future videos tell me in the comments what you'd like to hear about in the next video I'd be more than happy to answer any questions you have about this strategy or my personal experience I'm new to YouTube but I plan on sticking around and creating a lot of financial strategy type of videos please hit the like button comment and subscribe it'd be huge and helping me get my channel started and if you liked this video then I'm sure you're gonna like what I have in store in the future thanks for watching guys see you next time

Channel: Tyler Howell

Views: 2,729

Keywords: Passive Income, passive, retire, retire early, FIRE, rb40, 5 years, rentals, rental, rental income, tenants, tenant, retire young, invest, investing, invest young, getting started with rentals, first rental, first rental property, rental property, quit your job, finance, financial independence, make money, make money fast, house hack, hacking, house hacking, live rent free, free rent

Id: 9ksGtE2fwCs

Length: 20min 44sec (1244 seconds)

Published: Sun Feb 23 2020