$700k Net Worth in 4 Years Thanks to “Super Assets”

It didn’t take Addison Freeman long to realize what worked in school, wouldn’t work in real life. Those who got good grades and followed the standard playbook weren’t rewarded as plentifully on the investing front as they were in the classroom. When Addison realized it would take her over thirty years to hit millionaire status on the conventional track, she knew she needed a change.

Addison started to look for, as she likes to call them, “super assets” or assets that grow while putting cash in your hand. She started with a house hack duplex where she was able to pay her mortgage by renting out one side. Then, she started to get into self-storage investing, which is now her husband’s main job. Along the way they tried (and failed) at starting businesses, but never took their foot off the gas on their journey to financial independence.

At the age of 26, Addison and her husband are financially independent, sitting on a net worth of over $700,000 with an almost guaranteed chance at being part of the millionaire class very, very soon.

Mindy:
Welcome to the BiggerPockets Money Podcast, show number 237, where we interview Addison Freeman and talk about the four levers of financial independence.

Addison:
It’s really not rocket science. People get paralysis analysis and don’t do anything. If you just consistently accumulate cash flowing assets and hold them for the long term, then you will be fine. You will have plenty of wealth and you will have plenty of options. So, that’s what we’ve done, and that’s why I wanted to share this, because it’s very doable for anybody.

Mindy:
Hello, hello, hello. My name is Mindy Jensen, and with me, as always, is my wide angle lens co-host, Scott Trench.

Scott:
That’s a cute intro. Mindy, thank you so much.

Mindy:
Oh, my goodness. Scott and I are here to make financial independence less scary, less just for somebody else, to introduce you to every money story, because we truly believe that financial freedom is attainable for everyone, no matter when or where you’re starting.

Scott:
That’s right. Whether you want to retire early and travel the world, go on to make big time investments in assets, in super assets, like real estate, self-storage, and other small businesses, or start your own small business, we’ll help you build a position capable of getting money out of the way and launching yourself towards those dreams.

Mindy:
Okay, Scott, you just said super assets, and that is the subject of today’s episode. Our guest today invests in assets, but not just assets, they’re super assets, or assets that produce income that covers her expenses, and therefore allows her to be financially independent. I love how she phrases this, I don’t consider them assets, I consider them super assets. And frankly, I consider her assets to be super duper assets, because she is really, really crushing it with not only the choices of assets that she’s making, but also how she is using those to further her financial position.

Scott:
This is… We’ve interviewed a number of people, and I’ve met a number of people who have gone on to build substantial portfolios, tens of millions, hundreds of millions. And their journeys are often, they start out something like this, right? If you go and listen to a Mark Cuban style, this is the kind of stuff that he did, is what Addison and her husband are doing. They are… They’ve gotten on the other side of financial independence, and are just crushing it and racing towards building a huge portfolio. And it’s something that if you’re willing to do the work, especially in the few years out of college, to really grind over to the other side and build those assets in the early days, then I think you have a chance at a really dramatic financial outcome for your life that gives you a lot of options. And so, I think Addison’s story should hopefully inspire some folks to think through that, and we’ll see over the next 20 years if my prediction that there’s tens of millions of dollars in her future comes true, I guess. You’ll have to wait and see.

Mindy:
Let me look into my crystal ball, Scott. You’re right. Addison Freeman, welcome to the BiggerPockets Money Podcast. I’m so excited to talk to you today.

Addison:
I’m excited to be here.

Mindy:
I really love your journey. And I would love to share it with the rest of our listeners. Can you please tell me where your story with money begins?

Addison:
Sure. So, my story actually has not been for very long. It started back in 2017, so four years ago. I’m only 26 years old, so not very old. I’ve been adulting for about four years. But 2017, that’s the year when I graduated from college. And I graduated from the University of Alabama, Roll Tide, and studied economics, concentrated in statistics, and ended up getting a data analytics role. That’s what I do full time now. But for me, I was always the model student. I never got a B in my life. Everything at school just came easy to me. And so, I just assumed that after I graduated from college, building wealth would be just as easy. You just work hard, get a good job, and you get millions of dollars. I just thought that’s how it worked. And turns out that’s not exactly how it works.
So, my now husband, his name is Harrison, we were just dating at the time, and he asked me the question, when I was graduating, he said, “How do people make millions of dollars?” And I thought about it. And I was like, “Well, I really don’t know.” I had never thought about it before. My first salary graduating was 65,000 per year. And I’m a math person, so I did the math. If I were to save 50% of $65,000, that’s about 32,000 a year. If I were to save that, it would take me more than 30 years just to get to a million dollars. And that doesn’t even take into account the fact that you have to pay taxes on your salary, so it’s hard to save 50% of your income. So, I was floored. I did not know the answer to this question. That did not seem like the way to do it. And so, ended up… Harrison pointed me to the book Rich Dad, Poor Dad by Robert Kiyosaki. And that really changed everything with my mindset.
One of the chapters is called The Rich Don’t Work for Money, and how you can have money work for you. And that’s such a mindset shift for me. And then also, if you look at his definition of an asset and a liability, that was really mind changing, because he says that an asset is something that puts money in your pocket. A liability is something that takes money out of your pocket. I had never thought about it that way. And ever since, I actually came up with a new nickname, because people don’t know the difference. An asset, I call it a super asset if it puts money in your pocket. And a liability that takes money out of your pocket is a super liability. And so, I had a game plan now. The recipe to building wealth was to collect super assets, and not collect super liabilities. And so, since 2017, my journey has been just collecting a variety of super assets on my balance sheet.

Mindy:
I like that name, a super asset. So, what is a super asset?

Addison:
Yeah, so it can really be anything. For me, I chose three different types of assets. One of them was house hacking. So, that’s the first asset that I look looked at collecting. And then another was investing in self-storage. So, did that. And then the last thing was starting a small business. My husband and I started a moving company. And that actually didn’t end up being a super asset, because it did not put money in our pocket, unfortunately. But a super asset is anything that has value and puts money in your pocket. And the idea behind that is because of compound interest and time, the more super assets that you have, the more your money will work for you, versus a super liability that takes money out of your pocket is going to do the opposite for you.

Mindy:
Okay, I can’t type all these great quotes fast enough.

Scott:
I love it. I think you’re thinking about it in a really strong way here. So, what are some of the things that you’ve been doing against these?

Addison:
Yeah, so I guess I realized I can actually focus on one thing at a time. I really can’t do more than one thing at a time. So, when I graduated from college and started my first job at a big financial company as a data analyst, the first thing I decided to do was house hack. And part of that was, Scott, I read your book Set for Life. And that seemed like a very great way to get started. I also read Brandon’s book about rental property investing. So, real estate just intrigued me. But the short answer is I just picked it. I just picked house hacking. But basically what I did is my first year graduating from school, I was fortunate enough that I did not have any student loan debt, and I also did not have any consumer debt either. So, my net worth was basically what I had in my checking account, which was, I don’t know, maybe a couple of thousand dollars or so.
But what I did was I saved about 30% of my income that first year working, about $1,500 per month. And by the end of my first year, I had 20,000 in cash just ready to invest into a duplex. The other thing that I did, Scott, is I chose an apartment right across the street from my company to cut out the biggest cost of transportation. So, I literally could have walked to work and done the Set for Life plan fully, but I was in San Antonio, Texas, and it was really hot. So, I don’t think I ever actually walked to work, but I could have.

Mindy:
Okay.

Scott:
Almost, we got so close.

Mindy:
What I’m hearing Addison say, Scott, sounds a whole lot like a female Scott Trench saying these same things. She chose three types of super assets, house hack, or as you like to say, spend less, self-storage, or as you like to say, invest wisely, start a small business, which is what you say do. No clever way to describe that. And it didn’t work out, the small business. I want to explore that a little bit. But also, I hear Scott say, well, nine out of 10 small businesses fail. That tells me I need to start 10 small businesses. So, I would like to hear how this one didn’t work out, because I think there’s this misconception that, oh, you can just make a lot of money working for yourself. And that’s not always the case.

Addison:
Sure. So, I think part of it was the fact that I never failed in school. Like I said, I never got a B before. And so, I think I had a little bit of arrogance in the fact that because I had never really failed before, that if I started a small business, it was just going to be this wild success, which was not the case. But to give you a little bit more context about the moving company, so at this point, Harrison had already started investing in self-storage. And that was going really well for us. We had some of our customers ask us if we had moving companies that we recommended. And because of that, we thought that a moving company would just be a natural fit for storage. But we didn’t… It did not work out like we thought. And there are two big reasons for that. One is that the profit margins were not there, and second, it was just a terrible fit for our personality. And sometimes that happens.
So, what actually happened is Harrison, we made this nice business plan for the moving company. He quit his engineering job. And to go full time in this business, we thought it would be a wild success, he even sold a duplex that he had invested in, in house hacking to get the seed money for the moving company. I think he put about 40K in or so. We were all in. And then when we started it, we realized that, oh, my goodness, just, if you look at the budget, once we got into the numbers, it was not high profit margins. And the reason for that is with a moving company, and a lot of small businesses, you have a lot of competition. And when you’re starting to get new customers for the first time, you’re having to often pay for marketing to get the customer to come to you, you’re having to lower your prices to get those first customers. And so, what we found was that we were having to pay a lot for Google ads, for leads to get these moving customers. And then we were having to lower our prices to get them to pick us. And so, at the end of the day, we weren’t being able to make a lot of margins versus businesses that are well established, they have a lot of… They have a big brand, basically, and so they can get customers at a higher margin.
The second thing is that it just wasn’t a good fit for our personalities. So, Harrison and I are both perfectionists. And if you start a moving company, your day is just going to be chaos. Things are going to go wrong. And so, we had some customers, even friends of ours, that chose to move with us. And we put our best crew on that day, and grandmother’s vase would be broken. Some family heirloom would be broken. And it’s just one of those things where claims and things going wrong is part of the moving business. And it just hurt our souls when that stuff happened, to have to talk to the customer about what was broken and all of that stuff, versus when you look at the storage business, you’re not selling a service or a person which is flawed. You’re selling a metal box. And so, there’s a lot less that can go wrong when you deploy storage versus a moving company.
So, my advice would be if you start a small business, it’s great. It’s a great learning experience. I don’t regret it, because it’s okay to fail. One way to say that we failed, but we learned so much. And we also learned that it’s okay to test into something and see if you like it or not and see if it would be profitable for you.

Mindy:
Do you have any plans to start another small business, or did this kill the entrepreneurial bug?

Addison:
It definitely did not kill the entrepreneurial bug. I’m married to a serial entrepreneur. He has thousands of ideas per week. But we probably won’t do a purely service based business again, just because it’s tough.

Mindy:
Okay, so then this was a success. It wasn’t a failure, it was a success, because now you’ve discovered that you don’t want to do this anymore. And that can be… There can be people who do this a lot, only to discover down the road, wow, I really don’t want to be in the service business after starting and closing multiple service businesses.

Scott:
How much did you invest in the business? And what was your cumulative loss or gain?

Addison:
Sure, so we invested 70,000 total, and we ended up losing about 40,000. So, we got 30,000 back. But there was also about a year’s worth of time invested too, which is valuable as well.

Mindy:
So, what does your husband do now?

Addison:
So, now, the funny thing is, throughout this whole moving company business venture, we still had storage facilities that we were invested in. And it was funny, I think I was filling out a personal financial statement, and looked at the value of our storage property that we owned, and realized how much it had grown since we purchased it in 2018, versus the moving company was just costing us money. So, because of that, we realized that storage was the way to go. So, since the moving company was closed, we actually focused back on self-storage. And that was last year. And since last year, Harrison has been full time working on buying additional self-storage properties, and then also working on finding self-storage properties to manage as well. So, we’ll purchase storage facilities and manage them and hold them. And then we’ll also manage small self-storage facilities for owners who don’t want to manage it themselves.

Mindy:
Okay, and what part of the world are you in?

Addison:
We are in the Southeast, and we invest only in Florida, Alabama, and Mississippi.

Mindy:
Okay, so you’re concentrated in your location. I love self-storage as a business. I think it is fascinating. Way back, 1000 years ago, I read in article in the Chicago Tribune that said the self-storage business… Of course, I didn’t take any action on it then. I would have been a bitrillionaire by now if I would have. But it said the self-storage business is exploding. And why? Because people have things they don’t want to get rid of, but they also don’t want them cluttering up their house. And if anybody is questioning if self-storage is a good investment or not, I challenge you to call up local self-storage companies and ask them if they have any vacancy. What is your rate of… What is your vacancy rate, 0%? Do you have a waiting list for the big units? Because there are people… My parents live in an RV. They travel around the country building churches. And they had… At one point, they had two full sized storage units built. They’ve had these for 14 years. People park their things in storage units, and then don’t go back. They just keep paying for the storage month after month. It’s such a great investment. I wish I would have invested in it in 1995.

Addison:
Yeah, you’re so right, Mindy. Self-storage was originally built to be a short term place where people keep their stuff while they’re moving from place to place. That’s not the case. Our customers stay for over a year, at least. And it’s… They just keep their stuff there. So, we have seen that, and all of our facilities except for one right now is 90 plus percent full.

Mindy:
And what’s the one? Why is the one not 90% full? Is it brand new?

Addison:
It is a facility that we just took over in June of this year. And when we bought it, it was only 60% occupied. But we’ve gotten it up to 77% already.

Mindy:
Okay, I am shocked that it is so low. And I’m wondering if it’s in a small town or a really rural location?

Addison:
There was no Google listing for it.

Mindy:
Oh, I didn’t know that was an option to not be listed on Google. I thought everything was on Google.

Addison:
You don’t have to have a Google listing technically. Some people are old school.

Mindy:
Oh, okay. So, how many units… How many facilities do you have?

Addison:
So, we own three, and we have one that we just managed it for some friends of ours.

Mindy:
We didn’t talk about your house hack. You mentioned that your super assets are house hacking, self-storage and the small business. Storage and small business go hand-in-hand or are like two… One thing covers both categories. But what about the house hack?

Addison:
Sure, I purchased a duplex in San Antonio. It was back in 2018, a year after I had started working. And it was a great… It’s a great property. I still own it. It’s three bedrooms, two bathrooms on each side, a side by side duplex. And the thing that’s really nice about it is, it’s in a nice neighborhood really close to my work. And in the neighborhood, it’s pretty much all single family homes, except for three duplexes on that street. And so, it’s a nice neighborhood. I found it on the MLS actually back in 2018, and bought it for 293,000. And now, it’s probably worth 380 or so. So, seen quite a bit of appreciation since then. The duplex was really great for me. I actually lived there in one side and rented out the other side for… I lived there for over a year. And the cool thing was I got to live for free. So, I received 1,200 in rent from one side, and then I had two roommates who paid me another 1,200 or so. And the mortgage was only 2,200. So, I was living for free with a little bit of extra cash flow, which was really nice.

Mindy:
That’s the way to do it. Craig Curelop on episode 35 talked about how he would rent out his property. He was cash flowing something ridiculous, cash flowing $1,200 a month, cash flowing maybe even $2,500 a month. I can’t remember the details of his episode because that was a really long time ago. But that… Yeah, that was 202 episodes ago. But house hacking is an excellent way to live for free, or close to it. It’s an excellent way to reduce your biggest expense, which is your housing expense. But let’s talk about your… Did you say your mortgage was 2,200?

Addison:
Yes.

Mindy:
Okay, so you clearly don’t live there anymore. You’ve moved to the Southeast. So, how much does it rent out for now?

Addison:
Sure. So, rents have gone up since I moved out and since 2018, and now rents for closer to 1,400 per month. And now both sides are rented out to long term tenants. So, it’s bringing in 2,800. And the mortgage with taxes and insurance is 2,300 now. So, the cash flow is about $500 per month. That does not take into account maintenance and repairs. So, I guess the thing I want to point out about house hacking is the cash flow isn’t always life changing. But for me, it got me in the game. It got me the confidence that I can do this, that I can invest in real estate. And it gave me the confidence to move on to commercial real estate. So, for those people who are just starting out, it’s just a great way to get started.

Scott:
Completely agree.

Mindy:
Of course you do, Scott. That’s how you did it.

Scott:
It’s the cheat code to financial freedom for folks. And you can see the power of it in your journey here with that. So, what is your portfolio today?

Addison:
Sure. So, now, I’m going to include Harrison, my husband and I, we have a net worth of 700,000. 400,000 of that is just in self-storage appreciation. About 100,000 is the house hack, so that duplex in San Antonio, Texas, and then 100,000 is in a 401K. The remaining 100,000 is in stocks and cash, index funds and cash, I would say.

Scott:
How do you compute the value of your self-storage interest? That’s a business, right?

Addison:
Yeah, so that’s actually something I really wanted to talk about. There’s this magic with self-storage and how it’s valued. So, with residential properties, the value of the property is based off of the neighborhood. And so, if your neighborhood goes up, the value of your property will go up. Storage is a little bit different because it’s valued based off of the profit it produces. And it’s valued on a multiple of that profit. So, to give you an example, when we bought our first self-storage facility back in 2018 near Mobile, Alabama, we bought it for 500,000 on a seven cap. So, what that means is the profit, or often it’s referred to as net operating income, NOI, was about 7% of that purchase price, so 30,000 or so. But since then, the really cool thing is as long as you increase that profit, you increase the value of that facility. And so, what we’ve done since we purchased the property is make it much nicer.
So, we go in whenever we purchase a facility, we power wash it, we make it look good, add a Google listing if there’s not a Google listing yet. And then we also have added the ability to move in online. We have eliminated the need for an onsite manager to manage the facilities, and so that’s a big expense savings. And so, once we do that, then we can raise the rents to market rates. And so, we look back at our Daphne property, and since 2018, when we first bought it to now, we’ve nearly doubled the rents and the profit. So, now, instead of being a $500,000 property, it’s worth closer to a million.

Scott:
So, why do you estimate 400,000 in wealth if not… Instead of the total equity value that you just discussed there?

Addison:
That’s a great question, Scott. I forgot to mention, so we actually have partners that we buy our properties with. So, actually, Harrison’s parents, we have an LLC partnership with them. And the partnership is 60-40, so they own 60%, we own 40%. We also come up with 40% of the capital when we purchase new facilities, and they provide the other 60%. So, that’s another thing with storage. If you don’t have the cash, you can create a partnership to get more capital so that you don’t have to do it just by yourself. So, that interest of the 400-

Scott:
So, your-

Addison:
Go ahead.

Scott:
Your equity portion is the 400K.

Addison:
Correct.

Scott:
And do you take a salary for operating the business?

Addison:
Not currently. So, as of now, we are… Harrison and I are living off of my W2 salary, and all of the profit that comes off of the business from storage, we reinvest back into self-storage. So, we don’t even touch it right now.

Scott:
That sounds like a great deal for the parents. What is your cash flow from this 400,000 equity interest?

Addison:
Sure. So, right now the properties are throwing off about 6,000 in just profit. We do actually have management fees that are retained within the business, and that’s to pay our call center expenses. So, we have a virtual assistant that answers our phone calls and handles the day-to-day operations, and Harrison manages our VA. So, we have… With that, that’s another 2,000 in management fees. So, altogether, about 8,000 per month.

Scott:
Okay, great. And you get 40% of that?

Addison:
Correct.

Scott:
Awesome. That’s a wonderful cash flow situation for that. And that seems like… It seems like even better than a 7% NOI that you’re underwriting to with that in terms of your total cash flow.

Mindy:
What is on the horizon for you? You’ve got your… Let’s see. What are the levers you’ve got? Spend less, earn more, create a business, and invest wisely. So, you’ve got the spending less pretty well down. The earn more, have you pulled that lever? Do you have plans to pull that lever?

Addison:
Yeah, so that’s a good question. I think we plan on expanding self-storage. So, right now, we’ve been investing in fairly small storage properties versus larger self-storage properties. So, we plan on in the future continuing to expand into storage. Our goal is two per year. But as we acquire larger facilities, we will need to raise capital to do that, which will require some new learning on our part. And then we’ve also thought about expanding our cash flow or income by taking on other self-storage owners who need someone to manage their facility. We can get more income by managing their facility for them.

Mindy:
Well, that’s an interesting option. What sort of cash flow do you get from managing someone else’s property?

Addison:
Sure. So, there’s a big gap right now, actually. If you look at the cost of manage a self-storage facility, it really only makes sense right now for some of the larger facilities, because the management fees are quite high, at least $3,000. There’s not much in the way of small facilities, but we’ve seen other management companies charging around $1500 to manage. So, if we could do something like that, manage smaller facilities for owners who are just not wanting to have to deal with the hassle, then we could get some economies of scale there with 1500.

Mindy:
Yeah, that was the note that I was just typing in. I wonder if there’s a market for the smaller storage facility management? What is a small storage facility? What kind of units are we talking about?

Addison:
Sure. So, anything under 20,000 square feet would be considered a small self-storage facility. And once you get to the above 60,000 square feet, then you’re starting to get into the bigger facilities. The 100,000 square feet, that’s pretty gigantic. But we actually have been very successful in the smaller self-storage. We probably want to go from 12,000 to 18,000, where we are now to 20 to 50,000 in the future. But we really like the small storage model, because you don’t have to have that onsite manager. We’ve created a nice system for being able to cut that out with technology.

Scott:
Going back one step here, what are your… How much do you spend on a household basis on an annualized basis with this, just to live your life?

Addison:
That’s a good question. We do not spend very much. We spend about 40,000 a year for our living expenses.

Scott:
And that is more than covered by your current income from your job. Would it also be covered by the business income and the investment income here?

Addison:
Yeah, so I guess ironically, if we looked at the cash flow from our business, we could cover that. But we don’t want to do that, because we don’t want to cannibalize our income that could go into more super assets. So, my current salary is 98,000 per year. We’re currently living off of 40,000. So, that gives us a lot of cushion that we can use to save even more money to reinvest in storage, and then all of the storage profit, we stick right into index funds. We don’t touch that. And so, we have quite a bit of margin so that we can have more income to buy more assets with.

Scott:
What is your lifestyle like over the past three, four years while you created the situation? Were you working 20 hours a week, part time, and relaxing on the weekends?

Addison:
See, I work full time during the week. And then I guess we work quite a bit on weekends on the small business ventures. But we like this stuff. We think it’s fun to invest in great businesses. So, we’re kind of weird in that way.

Scott:
What I want to point out, though, is you’ve clearly painted a picture in my mind of somebody who graduated, spent very little, has a very disciplined approach to money management, works a full time job, and then a second full time job on top of that building a side business. You’re doing this in partnership with your husband, who sounds wired exactly the same way you are with these things. And now you are, what, 26, is that you said?

Addison:
26.

Scott:
Yeah, now you’re 26, and you’re financially independent. You have crossed the threshold to financial independence. You have more passive income than you spend on an annualized basis to fund your lifestyle. And you are just getting started on this front. And so, for the rest of your life, as long as the goalposts never… For your spending, the goalposts as far as the spending you want to fund your lifestyle do not move faster than the level of passive income that you’re able to produce, you will never have to work. You will have every option available to you with that. I’m sure that $40,000 at 26, you probably have another couple of years to pad that significantly with that. But you’re going to have that option for the rest of your life because of this.
And what I want to point out is that this is not a 40 hour a week, spend as much as you want, travel the world type thing. You don’t get there by doing that. You get there by grinding 100%, spending very little, earning as much as you can, making smart decisions, investing, and working the weekends and nights to start your business on the side. And that is what produces the lifetime of options that you’re about to have in your life. So, just congratulations on that. And you’ve done every lever. You’ve pulled every lever in the toolkit to get here, and you’ve had some failures, but you’ve done so much right that you’re just… You’re set up for life. Is that right?

Mindy:
Nice little plug for your book, Scott.

Scott:
I guess that’s right.

Mindy:
No, nice little plug for your book, Scott. But let’s look at this for a second. She has pulled the four levers, and she’s working a lot… Probably a lot more than you think you are, Addison. Because it’s just an hour here, it’s just a couple hours there. But you’re probably working, like Scott said, two full time jobs. But in four years of being graduated from college, and doing this investing, you are at a position where you are making two years of spending every year you work just in your W2. In addition, you are making another year of spending through your investments, your super assets. So, your super assets are really super duper assets. And your liabilities, we haven’t even talked about yet, are kind of immaterial. What liabilities do you have? What do you own that doesn’t put money into your pocket?

Addison:
Cars?

Mindy:
Oh, [inaudible 00:35:53]. Next? Why aren’t you running [inaudible 00:35:56]? Come on, hustle, hustle, hustle. Grind, grind, grind.

Addison:
It’s a good idea. I don’t know, Mindy. I haven’t gotten to that one yet.

Mindy:
But I think you’re doing all the things. And most people don’t do this. What is the quote? Live like no one else today so that you can live like no one else tomorrow. Every year that you work, you have that year’s income… I’m sorry, that year’s expenses, plus next year’s expenses, plus the next year’s expenses, because of your investments. So, the next year, you’ve already got three years of expenses right there. Next year, you work, you’ve got three more years. The next year you work, you’ve got three more years. And you’re going to continue to add to these. So, the next year you work, you’re going to have four more years, and the next year after that is going to be five years. And then maybe you decide that you don’t want to work your W2 anymore. So then, you’re only making three times your annual expenses every year just through your investments. You’re living the exact thing that we are always preaching on this show, spend less, earn more, create a business and invest wisely. And you’ve done yes, yes, yes, yes. So, you won life.

Addison:
That’s what I want people to realize, is it’s really not rocket science. People get paralysis analysis, and don’t do anything. If you just consistently accumulate cash flowing assets and hold them for the long term, then you will be fine. You will have plenty of wealth, and you will have plenty of options. So, that’s what we’ve done. That’s why I wanted to share this, because it’s very doable for anybody.

Mindy:
It really is.

Scott:
Yeah, I also want to point out that there is an unfair advantage of starting as young as you started, and your position is of life, which we have to acknowledge here, right? This is… It is easy if you’re in your early 20s, willing to work essentially 80 hour weeks, even if you call it fun, as your hobby with that, and spend that little with that. And it’s an unfair advantage. And guess what? More people should do exactly what you just did. Because like I mentioned earlier, as long… You’re going to want to spend more at some point in your life, potentially, right? With the way you’ve set things up, you’re going to have that option. You’re going to be able to live an upper middle class lifestyle in three to five years just on passive income with that. You’re probably going to want to do that. But as long as you never spend more than the passive income that you’re generating, you’re always going to be on the other side of this financial equation, where you’re never going to need to work. Work is going to be optional with that, and you can continue to start businesses, or invest, or work at something that you like, because of what you set up here. And it is that simple and that easy.
But the stakes are super high for getting more people into the position that you’ve gotten into at this point in your life, because I don’t know what you’re going to do next, but you’re going to do something that is going to have a big impact on your community or society with this, because you’re going to be starting a business, or doing work that’s very mission oriented and not financially driven, or whatever, along those lines. And so, I just think it’s commendable, and it’s awesome, and congratulations.

Addison:
Well, when I first read about financial freedom, I even read The 4-Hour Workweek by Tim Ferriss, and I was like, I want to do that. I want to not work. I want to travel the world and do all this stuff. And now, I do not have those feelings anymore. I do not want to travel that long. I like to have a routine, have a home base, be near friends and family. So, it sounded really awesome, but now I’m like, no, I don’t want to do that. I like working. I like my job and data analytics. It’s challenging. I’m good at it. And so, I’m going to keep working. What would I do all week if I didn’t have data analytics? It’s really fun for me. But really, I had to take a step back. And I don’t know necessarily if I’ll do it forever. But I really love my job right now. And my husband and I, we love Alabama football, and we just want to have some extra cash to go to football games. And one day we’re going to be those really old fans who have the season tickets. That’s our dreams now. They’ve changed since we were 22.

Mindy:
Since you were 22.

Scott:
That’s awesome. I think you going to have a good time being an Alabama fan for the next 50 years or so. Well, I think it’s awesome. You’ve got a great setup with all this kind of stuff. I think… I have no doubt you’re going to crush it and continue to build an amazing portfolio and awesome life with this kind of stuff.

Mindy:
Addison, I think your story is fantastic. I think you perfectly embody the four levers that Scott is always saying are the four levers to reach financial independence. And like he said, you’re already there at age 26. I love that you love your job. I love that you want to keep working. I agree with you, I don’t want to sit there and just continue to travel and… That’s keeping up with the Joneses of the personal finance world. Not everybody wants to travel all the time. It’s fun to see places, but it’s also really great and really reassuring to have a routine. So, I love that you’ve come to all of this realization. You’re wise, decades wise beyond your years. There’s people that are my age that haven’t figured this out yet. And I think you’ve really dialed in everything that you want. I think it’s fantastic. And I think anybody listening to this story can learn from you that you’re right, those four levers are what you need to pull to reach financial independence. So, I want to thank you for your time today. However, we are not done. We still have our famous four. These are the same four questions we ask of all of our guests. Addison, are you ready?

Addison:
Ready.

Mindy:
Okay, Addison, what is your favorite finance book?

Addison:
Besides Rich Dad, Poor Dad, I would say Profit First by Mike Michalowicz. And that’s been how we’ve systematized our budgeting process. It’s really awesome, if you haven’t read it. Basically, what it says to do is you put all of your money into one checking account from your paycheck, and then from there, you allocate the money to specific spending accounts. And so, that way, you always are able to save and invest a specific amount, and then you just know whatever’s left in your checking account is what you have to spend. So, it’s been a really great way for us to put our budgeting on autopilot.

Scott:
Love it. What was your biggest money mistake?

Addison:
Our biggest money mistake was selling a duplex that was cash flowing to use that money to start the moving company, which did not work out. We probably should have bootstrapped it, tested into it before making that big of an investment.

Scott:
Okay, I want to point out something why I like this mistake so much, is you made a decision. You said, “I can arbitrage the money that’s in here for a better risk adjusted return in a business with that.” And you made the decision based on that, and it didn’t work out. To me, that’s a good decision, bad outcome, not a mistake with that, even though you’re characterizing it as mistake, which makes sense in the way you’ve done that. But I think that’s about as good a mistake as you can make in the world of finance. If you’re going to make a lot of mistakes, make them like that.

Mindy:
Okay, Addison, what is your best piece of advice for people who are just starting out?

Addison:
It would be to pick something and do it. If you look at my journey, I just picked house hacking, and did it. And then storage, we just picked it, and it worked out well. So, just pick something and try it.

Scott:
Awesome. What is your favorite joke to tell at parties?

Addison:
Okay, so because I’m an Alabama fan, I have to tell this joke. So, why is Bryant Denny football stadium cool, even when it’s hot outside?

Mindy:
Oh, I don’t know.

Addison:
Because they’re over 100,000 fans.

Scott:
I’ve been saving up a lot of Alabama jokes, but I’ll have to find another place to use them, I guess. No, no one got that?

Mindy:
Oh, no.

Scott:
Saban? Okay, let’s move on.

Mindy:
Oh, Saban. [crosstalk 00:44:45].

Scott:
Where can people find out more about you?

Addison:
I’m not really on social media, so I would say you can email me, [email protected] And if you have financial questions or if you need help with storage, we’ll share. We like to help other people, so you can reach out to me that way.

Scott:
Do you have a few links or things that we could link to in the show notes here about self-storage as well for folks that are looking to get interested, things that maybe sparked your attention or that you found very helpful?

Addison:
Yeah, we could probably share some of that.

Scott:
Awesome. So, we’ll link to all of that on the show notes at biggerpockets.com/moneyshow237.

Mindy:
Awesome. Addison, thank you again for sharing your story with us. I thought this was a lot of fun, and I need to get that self-storage bug back and start looking for self-storage units by me, because I just… I can’t think of a better real estate investment right now than something that is… I don’t want to say it’s so easy, but it’s… Is it difficult? Is it… Do you think every day, this is such a slog? You’re not dealing with toilets, you’re not dealing with tenants, you’re not dealing with problems at three o’clock in the morning. It just seems like a really good entrance into real estate investing.

Addison:
Completely agree.

Mindy:
Okay. Well, thank you so much, and we’ll talk to you soon.

Addison:
Thank you.

Mindy:
Okay, Scott, that was Addison Freeman, or the… Let’s see, how do I say this? The… I want to say the butt kicking Addison Freeman, because she really is cranking it out. But that’s… Is that family friendly? The amazing Addison Freeman.

Scott:
What, kicking and cranking it out? No, definitely not, Mindy. Sorry, completely inappropriate, yeah. But what I think Addison’s journey reminded me of is the game CASHFLOW from Rich Dad, Poor Dad. Have you ever played that, Mindy?

Mindy:
I have not played that game yet.

Scott:
So, the game is a board game-

Mindy:
We should have a game night.

Scott:
It’s kind of expensive. But I have played it because I’m a huge nerd, and of course, I’d play that game. And basically, the game is set up in… There’s two circles, right? One is the rat race. And to get out of the rat race, you have to develop more passive income than lifestyle expenses. And you start with a profession like a doctor, or a carpenter, or whatever, a variety of different things. You have different expenses that go along with that, and you just have to build enough in the way of passive income to get out of the rat race. And once you’re out of the rat race, in the rat race, the squares are buy a doodad, like a jet ski, or have a kid, and all these different types of things. And once you get out of the rat race, it’s like… You saw other things like have a kid and the family stuff, but you have, meet the mayor, save 40,000 lives in this country through a charitable foundation that you set up, buy a 400 unit apartment complex.
And that outcome of that game reminded me… It just translated so clearly in my mind to what Addison is doing here, where she has, and her husband, have worked to build a net worth that is not a crazy high number at this point. But it is high relative to their spending, and it’s high relative to where they are in life. And they’re going to live most of life on that outer circle of the rat race game, if you’re following my analogy there.

Mindy:
You see, I think you’re wrong. I think their net worth is super high. They’re 26 years old and have a net worth of $700,000. I think that’s pretty flipping amazing. And now, I need to get CASHFLOW, the game. So, I’ll come into the office and we’ll play that game, Scott.

Scott:
Yes, we should get a copy for the office, Mindy, and have it available here.

Mindy:
Okay, Scott, should we get out of here today?

Scott:
Let’s do it.

Mindy:
From episode 237 of the BiggerPockets Money Podcast, he is Scott Trench, and I am Mindy Jensen, saying go make some art, sweetheart.

 

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