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7 Steps to Replacing Your W2 Job with Rentals


Do you wish you could quit your jobfor good? With enough rental income, you could! The very first step is to calculate your financial freedom number, and in today’s episode, we’ll show you how to do just that. Then, we’ll give you a step-by-step roadmap for reaching it!

Welcome back to the Real Estate Rookie podcast! Whether you’re eager to hand in your two-week notice or dream of retiring with real estate, Tony and Ashley provide a simple blueprint any beginner can follow. By the end of this episode, you’ll know how much money you need to comfortably leave your nine-to-five job behind, how many rental units you’ll need to achieve your cash flow goals, and proven tactics you can use to build and scale your real estate portfolio.

But that’s not all. You’ll learn about the different ways to tap into your home equity and buy properties faster, choosing an investing strategy that supports your lifestyle and long-term goals, and the variable expenses you’ll want to account for during real estate investment analysis!

Ashley:
What if one simple number could tell you exactly how many rentals you need to walk away from for your nine to five, and when that day could be circled on your calendar?

Tony:
We’re about to play the Rookie Freedom Number game and by the end of this episode you’ll know your personal freedom number and the property roadmap to hit it step by step.

Ashley:
This is the Real Estate Rookie podcast. I’m Ashley Kehr

Tony:
And I am Tony j Robinson. And with that, let’s get into the steps you need to follow to find and execute on your freedom number. Alright, so we spent most of this episode talking through this seven step journey, but let’s focus a little more attention on your actual finish line. So one of the things that you’ll start to notice as your portfolio grows is that your equity starts to grow as well. And different investors have different plans, ideas, beliefs when it comes to equity, some want to leverage it, some want to protect it, and it’s a very personal choice that every investor will have to make for themselves. But equity is capital that can be used to help you keep growing your portfolio if you choose to do it that way. And I think the goal for us is to just quickly talk through planning for your equity and how you can use it to scale your portfolio to get to your freedom number faster. So step number one is to define your baseline. What is the amount of money you need to keep the lights on for your life, for your lifestyle? Think housing, food, transportation, insurance, just the basics to necessitate and sustain your current lifestyle.

Ashley:
I think one of the really easy ways to do this, you can do back of napkin math and just be like, okay, my mortgage is this. My car payment is this food. I probably spend this amount every month, but is actually going through your bank statement and your credit card statement. Because if you have never done this, I think you’ll be very surprised where your money is actually going. Like those $99 subscriptions from Apple from your streaming device, they really add up quickly. So I think actually going through line item by line item, there’s a bunch of apps too that you can use where you could actually connect your accounts and then it will say like, oh, okay, Wegmans, or whatever your grocery store is, that is food. So that goes into the grocery bucket and then it’ll actually allocate those for you. So you can look each month and say, okay, I’ve spent $800 on groceries, I’ve spent $500 on dining out getting one of those apps, the one I use as Monarch money. But you can get that to help build out that process of really understanding where your money goes because you could take those bills and add them up, but all that discretionary income really adds up to.

Tony:
Yeah, Asha, I love the idea of going through line item by line item. I do that probably a couple of times a year, both in our business and in our personal life, just cause it’s good to have that exercise of understanding am I actually overspending in certain places that I don’t need to? Like I said, I’ve mentioned this before, but I just did this again last actually a couple weeks ago where I went through all of our business transactions specifically looking at software charges and we had a bunch of different software that we didn’t even need anymore. Again, we had people that were in the software that we weren’t even working with anymore. So it’s good both on a business and a personal level expert, at least the last 90 days. I feel like that gives you a good snapshot of both regularly recurring charges and then some of those one-off expenses.

Tony:
But if you look at the last 90 days and you just go boom, boom, boom, boom, boom, I found that to be a super easy way to do it and my little hack here using a tool like Monarch Money, super cool. Why in my brain it just makes more sense for me to just use Excel, but when I do it in Excel, I’ll export all my statements and I’ll sort them by the vendor or who I’m paying that money to. That way it’s super easy to categorize all of those by vendor at the same time. Don’t do it by date. I used to do it that way. Then I found myself relabeling the same thing over and over again, sorted by vendor, copy and paste all the way down and you can get through it a lot faster.

Ashley:
Yeah, the app is way easier. You like things automatic, do want to have to export, import, sort, total equal sum. Come

Tony:
On. You’re supposed to be the spreadsheet expert over here and you’re telling people to automate, but no, yeah, there’s probably tools that do it. A lot of you could probably even do chat GT now,

Ashley:
But the Excel is free. I’ll say says Excel is free.

Tony:
Yeah, I mean someone could probably even use some sort of chat GT or Clot or Gemini or whatever to also help with this now too. Those tools are getting pretty smart there and I don’t think the goal is you guys go through this exercise is to fill force into cutting a lot of expenses. We’re not saying that you need to go like Dave Ramsey Nuclear, but just understand, hey, what is a reasonable baseline for me in my life to sustain what we currently have? Because we also don’t want this freedom number to be a life where it’s like you’re eating nothing but what does Dave Ramsey say? Beans and rice. Rice and beans. We want you to still be able to go out and have a date night with your spouse. We want you to be able to go on vacation. We want you to be able to do all the things that your life currently allows you to do, otherwise it’s not really freedom, you’re just barely getting by.

Tony:
But that’s the first step is to understand what your current baseline number is. Alright, step number two is to add your lifestyle cushion. The reason that we say this is that we want you to add, call it a 20% life upgrade buffer. Because again, the first step was just making sure that you’re maintaining all the basic, but that cushion is for all the other things that you still want your life to be able to do. So we talked about vacations, your kids’ sports, maybe you like a nice truck, whatever it may be, but you want to add some additional cushion on top of that baseline.

Ashley:
So with this goes, I just kind of started learning about this on social media and so I’ve been looking into it more and more and there’s this trend this summer called revenge saving. And so most people say most people used to do revenge spending where they go through a breakup and they buy themselves something to feel better or something bad would happen and they’d splurge on a vacation or whatever. So now this trend is revenge saving and part of the concept is after COD, so many people splurged on things, increase their lifestyle to make up for lost time I guess, of COVID or whatever. But now people are revenge saving and part of the concept is also when you do feel that pain of losing your job and not having the money or something else financially detrimental happening to you, revenge saving is when you don’t want that feeling again. So you’re going to save so that you have that buffer. So if something else happened to you or the same thing happened to you again, you would have that savings. So that whole concept of just revenge saving I think fits into this so well as to when you’re starting to learn how to invest or to reach this financial independence, you do need to know how to save your money and you do need to have reserves and life savings set aside.

Tony:
Ash, I couldn’t agree with you more, and I think personal finance really comes down to two different levers. You have offense and you have defense. Offense is your ability to earn defense is your ability to save. And if you can aggressively attack both of those, that’s when you really start to put yourself in a position to get to this freedom number even faster. So I think the more you can focus on both of those things simultaneously, I feel like Dave Rams is all about defense, defense, defense, defense, defense wins championships, and I talk like maybe Grant Cardone is the opposite, where he’s like, just focus on making more money, make more money, make more. But if you can blend both of those, you tend to maybe land on a more sustainable approach that actually produces more consistent results over the long run. So both of those things are super important

Ashley:
And I think that’s like you want to have that money to enjoy your life too, know what your lifestyle costs you, but also be aware of how much you need to save every month. What is that cushion that makes you comfortable so you can do your revenge saving. But yeah, so you should have both of those out as to how much for your discretionary income, how much do you need for your lifestyle, but also for that saving for retirement or just to put into a savings account, whatever that may be, make sure you’re adding that into your dollar amount of how much you need every single month. The last thing I want to say towards this is this idea of saving budgeting or figuring out your number and reaching that financial independence. Do you remember that TV show was on TLC and it was like they would interview people who are extreme budgeters?

Tony:
Wait, I think, wait, I feel like I’ve seen one of the clips on social where it was a guy at the grocery store and he used a bunch of coupons and it was supposed to be like 97 cents was his total and it came out to a dollar oh four and he was upset that it was four pennies off. I think it might’ve come from that show.

Ashley:
Okay, no, that’s extreme couponing. That’s a different one. But same concept. One would go to people’s houses and they would show how they didn’t use toilet paper, buy paper towels because they had this one rag that they continuously rewashed to save money. How they would just, they would take one minute showers because their water bill would decrease that much by not running a five minute shower and stuff. Just like these extreme things. And so I want to make that this episode and that your journey in life, it shouldn’t be about depriving yourself, it should be about having control over your money. And I want to make that clear that this isn’t about, oh, we’re going to turn you guys into extreme budgeters and you have to live off rice and beans like Tony said, or my favorite Raymond or Ramen noodles, however you prefer to say it. Just remember that this isn’t about depriving yourself, this is about having control over your money.

Tony:
By the way, the show is called Extreme Cheapskates for anyone that’s interested, I looked it up while Ash was talking and it’s streaming on HBO Max. So if you want some motivation, you guys can find it there

Ashley:
And honestly it will motivate you because you’ll feel really guilty for things. You said money.

Tony:
Now, before we keep moving, I just want to give a baseline, right? Let’s say that you are in step one, you identify your baseline to be, call it 3,800 bucks a month. And that’s between your mortgage utilities, food insurance, discretionary spending you at $3,800 per month is your baseline. That 25% cushion that we talked about in step two, that would push you up to 47 50 per month. So that gives you an extra 25% to cover those other things that you want to do. So 47 50 is now your freedom number. So that is how you back into what number do I need to plan for. Now the rest of this episode, we’re going to more so talk about how to get you to that number, but that is the baseline that you want to shoot for. Now Ash, let ask you a personal finance perspective. Are there any other things that Rick should think about when trying to plan this freedom number?

Ashley:
Yeah, I think maybe just taxes. Are you self-employed that you have to pay? You have a business or something where you’re making estimated tax payments, make sure that’s included in that. Or if you usually have a tax bill at the end of the year, make sure that’s included. Literally think of everything that can come up your kids’ annual dentist appointment or every six months. What is that? Think of those fees that maybe only come up once a year or a couple times a year that need to be included in that amount too. And then just retirement, I did mention that briefly, but how much do you need to save for retirement? Do you have a college savings fund for your kids that you’re contributing to? So it is difficult to think of everything and account for it, but I think having that nice buffer, Tony said, were some of those things that you might miss out on. Weddings are so expensive not to have a wedding, but to attend a wedding, how many weddings do you expect to attend a year? That could be a couple thousand dollars attending just a few weddings,

Tony:
But I think that takes them to step three ash, which is to just run a quick sanity check on the freedom number that you landed on. I think a good rule of thumb is that it should be somewhere close to what your current after tax income is. And let’s say that your freedom number is, again, let’s use 47 50, but your after tax income, like your take home pay is 37 50. Well that means you’ve been subsidizing a thousand dollars per month using some form of debt, most likely, right? So if you notice there’s a big swing between what your freedom number is and what your current actual pay is, that’s probably not a sustainable lifestyle. So you want to make sure that you bring those numbers back down somewhere. You got to trend the fat somewhere. But if you’re in line or maybe you’re even under what your current take home pay is, and maybe you’re just someone who saves really aggressively already, then you’re in a really good spot.

Tony:
But I think what I would encourage a lot of you guys to do is to get this number visually present somewhere in your life. I know investors who have little cards on their mirror. So when they wake up every morning and they’re brushing their teeth, they see their goals right there as they’re brushing their teeth. So maybe that’s a good place for you to slap your freedom number every morning, every night as you’re brushing your teeth, you’re staring at that number and is staring right back at you to re-center yourself on what’s important. Because guys, I will tell you right now, your ability to be successful as a real estate investor will not always come down to skill. It will not always come down to intellect. More often than not, what it comes down to is your ability to stay consistent over a long period time.

Tony:
And I think that’s what most people misunderstand. And the stronger emotional motivation you can have, the easier it becomes to really stay motivated. So for real, managing tenants can feel like a lot of work, but they don’t have to be. For me, it all changed when I found Turbo Tenant. They’re a free software that makes managing rentals super easy. I used to waste so much time on paperwork chasing down rent, but now with Turbo Tenant, I have everything in one place. They even have state specific leases, digital condition reports, and a simple way to schedule showings without all of the back and forth. Their automated rent collection saves me hours every month and their maintenance management keeps me organized. Everything’s in one place on your phone so you can be a landlord from anywhere. I’m actually good at managing rentals now, not just finding deals. Check it out at turbo tenant.com/biggerpockets and create your free account today.

Ashley:
So the next thing is to choose your strategy and you want to do this before you actually figure out how much you need from each door and decide on what kind of door you’re actually buying. So there’s many different real estate investing strategies out there. There’s long-term rentals, rent by the room, midterm rentals. So you have to figure out, in my opinion, where do you have the most opportunity? I know some people say, oh, you want to leave your nine to five, find something you enjoy? Well, you love designing homes and you should flip houses. I think it’s actually the opposite. I think you should do, even if it’s boring, you should do what is going to be the best opportunity and where you have an advantage. So for example, for me, I knew investor that had long-term rentals. I was working as a property manager, so I already had knowledge of how to manage a long-term rental, what rents were in that market.

Ashley:
I knew I knew a lot and that was an advantage to me and that’s where I built my foundation with long-term rentals. So to choose your strategy, I would look at do you have any opportunities or any advantages whether that be in a market because maybe you lived there before, so neighborhood to neighborhood, you went to college there. Maybe you have somebody that lives in a market that you’ve analyzed and it’s pretty good and you know, have that boots on the ground person to actually walk properties for you, things like that. And then for your strategy, do you have an advantage as to you have an uncle that does midterm rentals and he’s willing to mentor you and help you through it? Or do you live in a market that there really is a need for rent by the room and co-living because housing has just got so expensive that people can’t afford to rent to their own place? So take a look at what those opportunities and advantages might be that you already have.

Tony:
Yeah, couldn’t agree more. I think the opportunities you have are great kind of filter. I think some other things to assess are how much capital do you have? Because different strategies require different amounts of capital. Buying a short-term rental in a popular vacation destination market is probably more expensive than buying a long-term rental in Davenport, Iowa. Different purchase prices, different costs to get those properties rent ready, different down payment options, like everything kind of shifts depending on what market share and what strategy you’re taking. So ask yourself what access to capital do you have? And I guess not even just capital, but what is your overall purchasing power? So how much capital do you have to cover down payments and closing costs and set up or rehab? And then also, what kind of loan can you get approved for? Can you get approved for a million dollar loan, which opens you up to virtually every market in the United States or can you get approved for $100,000 loan, which maybe limits your options a little bit.

Tony:
So available capital purchasing power, I think is the first thing to consider. The second decision filter on which strategy you should choose is your available time and energy. Again, different strategies require different amounts of time, but depending on the person, they also require different amounts of energy. I would be a terrible traditional long-term rental manager, it just doesn’t give me the excitement in a way that launching a new short-term rental does. So for me, the energy required to be a good long-term rental landlord is a lot more than what it takes for me to be a good short-term rental landlord. And that’s just me personally flipping actually, I don’t mind flipping as much for someone else. Flipping might be the biggest energy drain they could think of. So as you go through these different strategies, how much available time do you have to commit to them? And then from an energy perspective, does it drain you? Does the idea of doing it make you want to roll over and die or does it create energy? It make you want to do more of those things.

Ashley:
Along those lines is you should also completely understand what your role and responsibilities are for that strategy. What will you actually be doing? So for short-term rental hosts, you’re in the hospitality biz baby. It is way different than a long-term rental. And so having an understanding of, like Tony said, your time commitment that you’re going to be putting in and what actual job description that is going to be and if there is the option to outsource the things that you don’t like or don’t want to do. And looking at that and seeing if the numbers still work with hiring the help that you would need to actually do the job. So that time piece and what you’re actually going to be doing, is it something that you could actually handle? I could never be a wholesaler because that involves a lot of talking on the phone or talking to people face-to-face and a lot of personal interaction to get these deals done. And I am terrified of just answering the phone if I dunno who it is and having a awkward silence or awkward conversation. So I could never wholesale because of that piece that I am just not comfortable or good at even is small talk with people to kind of build that rapport, that relationship.

Tony:
So those are the first two decision filters and there’s two more that I want to cover. So we already talked about capital, we talked about time and energy as the second point, the third, and this kind of ties into what Ashley said, but it’s just desire and skill. So do you think you’ll actually be good at this or do you have the capacity to get good at this? And if you can honestly answer no to both of those questions, it doesn’t matter how much capital that strategy will produce, if you don’t have the actual skillset or the capacity to build the skillset to get good at it, you’ll never do well in that situation anyway. I think we saw a lot of that in the short-term rental industry where a lot of folks saw the potential didn’t necessarily have the skillset or the ability to develop the skillset to do it well, and they ended up buying deals that were mismanaged. They bought deals that shouldn’t have purchased and it didn’t work out the way that they wanted it to. So you’ve got to ask yourself desire and skill, do you have it?

Ashley:
And I think too, understanding that strategies, markets, laws and regulations can shift because when I started in 2018 with my first little rinky dink Airbnb arbitrage, it was very different time to be an Airbnb host. It was very, very low expectations. We didn’t have to fluff the pillows, offer every kind of coffee flavor available, do all these little unique touches fresh. We do one property now we have fresh flowers upon arrival. These little things like you could basically respond short little yes or nos. We didn’t have automated messages set up with a guidebook and all these things. And as time has shifted, the expectations of being an Airbnb host has drastically changed. So think about that as you go into a strategy. Are there things that could change that you would not have time for or be able to conform to? And I know it’s hard to predict, but look at other strategies and things that have changed over the years, like just tenant landlord laws being able to understand, do you have the capabilities to pivot and change if your state were to change laws and things like that. But a lot of those go with short-term rentals and midterm rentals as rules, laws and regulations change too. And I

Tony:
Think that’s a great segue into the fourth decision filter, which is your individual risk tolerance. Different strategies carry different levels of risk and which risk are you willing to accept? Like Ashley said, if you buy a 100 unit apartment complex, you’ve got a hundred different tenants that you’ve signed leases with, you are subject to all the local landlord tenant laws. And depending on what location you’re buying in, maybe those laws are swinging in your favor as a landlord. Maybe those laws are swinging out of your favor as a landlord if you choose to flip, if you’re flipping in a high cost of living area, there’s a lot of capital you have to put out to be able to get the return you’re looking for. And are you willing to accept that risk? Obviously with short-term there’s a regulatory risk, so every strategy carries some form of risk.

Tony:
If there was no risk, there’d be no reward in real estate investing. So no strategy is risk-free, but which strategy gives you risk that you’re willing to accept? So those are the four things to consider. Again, capital time and energy, desire and skill and your overall risk tolerance. And as you go through each of those, apply them against those filters to see which one actually aligns best with your specific profile. I think the last thing I’ll say, Ashton, we’ve seen this a lot with guests on this podcast, don’t be afraid to mix and match or combine these strategies as well. You can house hack, say you’ve got limited capital, you can house hack, call it a triplex. You live in one unit, you do the second unit where you rent by the room and maybe the third unit you do a midterm rental and now you’ve got a mix of all these different strategies. You got ’em for a very low cost because it’s your primary residence, you’re reducing your expenses, now you’re able to save more money for your next deal and it all just starts to snowball together. And we’ve seen lots of folks combine the strategies

Ashley:
And you renovate it as a live and flip too and then sell it for two.

Tony:
So there’s so many different ways you can go about it. So don’t feel like you’ve got to choose just one. If you find a deal that allows you to tackle multiple, that’s a good next step. Alright, step number five is to pick a cashflow target per property. Now the reason step five comes after step four, right? The reason you have to pick your cashflow target per property after you choose your strategy is because the strategy you choose will help dictate your cashflow target per deal. So I dunno, let’s say that you have a traditional long-term rental in today’s environment. Maybe you should be happy with $200 in net cashflow per door. If you’re doing rents by the room, maybe your goal is $200 in cashflow per room, right? So if you’ve got a three bedroom, maybe it’s 600 bucks. If you’ve got a midterm or a short-term rental, maybe your goal is a thousand dollars per door.

Tony:
So different strategies and different markets will give different targets you should shoot for. But you’ve got to identify, okay, what is my buy box? What is the baseline that I’m looking for on a per deal basis? So then we can back into the other parts of this equation. But again, let’s go back to our example. The 47 50 is your freedom number. And let’s say that your goal is, or the strategy that you choose is traditional long-term rentals. And let’s assume that for your specific market you can get 2 75 a door. So 2 75 per door is your target for your strategy in your market. Your freedom number is 47 50. 47 50 divided by 2 75 gives us 18 doors. So now all I need to do is get 18 doors that at minimum meet my cashflow target and I’ve been able to achieve my freedom number so you guys can see how it all comes together to really back you into a singular number that you need to focus on.

Ashley:
And so when you’re finding this number, this 2 75 per door, make sure you’re being conservative with it that you’re not maxing out. So if you’re going to try and say, well, I want less doors, I’m going to aim for maybe $500 per door, then I need less doors. If that is very, very, very hard to achieve in your market where you’re not going to be putting any more cash down to have a lower mortgage payment every month because you put more cash into the deal, that is just going to stall your acquisitions. So make sure that the cashflow number is reasonable and you can actually find a deal because yes, I’d love to say I’m only going to buy properties that have a thousand dollars cashflow with putting 20% down in my market right now. That actually would be pretty difficult to do to find that and I probably, it will take me so much longer to actually reach my goal because it is harder to actually find a deal that does that.

Tony:
That’s a great point, Ash. You definitely want to make sure that these numbers are rooted in reality and I think you’ll be able to understand what a good cashflow target per door is once you start analyzing deals that meet your strategy within your specific market. And maybe if you do that analysis and to Ashley’s point, you’re like, man, I actually can’t get that number here. Or maybe instead of it being 18 doors, it’s got to be 30 doors, you’ve got to double that number. Then you’ve got options. Either go back and pick a different strategy within that market or maybe go to a different market where you can get better margins. That’s why the whole plan all kind of works together as you do this. But that’s step number five is to pick your cash flow target per property. Step number six is to set your acquisition pace, right?

Tony:
So how quickly do you want to do this and maybe a more aggressive timeframe is five years maybe a more balanced approach? Let’s call it 10 years and maybe a more lifestyle approach is 15. I feel like we’ve met a lot of folks in the podcast, Ashley, who within that 10 year timeframe have been able to replace their W2 income. We just interviewed Matt Kruger and I think he said it took him seven years to be able to replace his income. We interviewed Laura side who I think within three years between flipping and her rentals, she was able to replace her income as a teacher. So we’ve interviewed folks who have done it quickly, we’ve interviewed folks who have done it longer, Dion McNeely and other prime example, someone who did within a decade. Coach Carson did it within a decade. So there are lots of folks who if you just kind of consistently plug away, doing it within 10 years is actually a very reasonable goal to have.

Tony:
But your ability to scale really comes down to three skills and ton. I’ll break down each of these one by one, but skill number one, and we talked about this earlier, but it’s your personal savings rate, the wider the gap between your income and your lifestyle spending. The quicker you can reload money for down payments and rehabs and acquiring that next deal. But if all of your income is going towards just sustaining your lifestyle, where are you going to get the money to buy your next deal? So you’ve got to be able to increase the amount of money you’re saving. And again, like I said earlier, that comes from either playing better offense, making more at your job, getting a side hustle or playing better defense, decreasing your expenses.

Ashley:
One thing with this too is to how you’re going to acquire the properties is you need to be comfortable with your loan to value. So if you do find that you’re able to get low money down on these deals, things like that, make sure that you’re still going to be able to sleep at night and not be stressed because all of a sudden you have all this debt or you have these high mortgage payments, things like that. Make sure that it’s still within how comfortable you are. So maybe part of your plan is going to be to save more, to put 20% down even if you could get the deal for 10% with using private money or whatever it may be. So make sure you are comfortable on whatever level you decide to how you’re going to acquire these properties because you can acquire properties really, really fast by using low money, but are you going to be comfortable with that, that you have no equity in these properties even though they’re cash flowing? But what if you have a vacancy or you have a bunch of vacancies and all of a sudden you can’t make these mortgage payments because you are so leveraged and you don’t have any equity to tap into, you can’t sell them because you would actually have to bring money to closing. So as you’re putting together your acquisition plan, make sure you take that into an account, what your comfortable level is.

Tony:
Alright, your second option is your portfolio cashflow. So the goal here is that you reinvest every dollar of net cashflow from your existing doors and use that as fuel for your next acquisition, not money that you get to spend. And again, this is a very consistent theme we’ve heard from our own lives, from folks we’ve interviewed on the podcast that those early days of your portfolio are not for discretionary spending, it’s for helping you buy that next deal. And the cool part is that this starts to snowball. You’re going to use a lot of energy to try and get that first deal. It’s almost like sending a rocket into space. I’m going to make up a number here, but it’s directionally correct, but rockets use like 80% of their fuel just to get out of earth’s atmosphere. That’s where they burn the majority of their fuel.

Tony:
Once they’ve made it out of the atmosphere, then there’s no gravity, you’re flowing, you’re going, everything’s moving smoothly. And real estate investing is much the same way. That first deal, it’s going to use up 80% of your energy, of your reserves, of everything you have. Once you get that first deal, now things start to snowball. The second deal becomes easier. So using the proceeds, the net cashflow from your first deal to help buy your second deal and then your deals number one and two, those proceeds to buy your third deal, you’re saving more money, you’re compounding all these things together, you start to acquire properties faster. So number two, using your portfolio’s cashflow. And number three, and this is a skill that Ash and I have both leveraged to build our portfolios, but it’s using other people’s money. This is where you create the ability to raise capital, private lenders, JV deals, whatever it may be.

Tony:
That way you are no longer capped by your own wallet, but you’re able to tap into the resources of folks that you know who know and trust you to make it a win-win where they’re getting a good return on their investment, you’re able to continue to build your portfolio and get you close to your freedom number. Now one thing I will say, if you are raising money from other folks, if you’re doing it as private money where they’re just funding your rehabs and you’re paying ’em back off when it’s done, that doesn’t really change the math. But say you’re doing equity deals where say me and Ashley buy a deal together. We’re 50 50 partners. Now I need to that 2 75 number I had on my cashflow target per door. Well that number gets cut in half. So instead of me needing 18 now I need an extra deal to get to that same number. So just be cognizant of how partnerships and equity sharing impacts that freedom number that we talked about earlier.

Ashley:
Okay? Then step seven is to make sure you account for a vacancy. And really there should be several things that you’re accounting for that isn’t a fixed number. These things can vary. So we call ’em your variable expenses over time. So having that vacancy buffer of 10% is kind of a rule of thumb. And then your cap X expenses, so these are capital expenditures for big ticket items that actually add value most often are depreciated on your tax return and these are not repairs and maintenance, but things that kind of add value to the property or increase the longevity of your property like putting on a new roof siding and replacing your HVAC system. So these expenses hopefully do not come up every year for you, but you need to save for them when the time comes. So you want to make sure it’s accounted for.

Ashley:
So you could use five to 10% each month to actually, that’s your number that you know that in the future you will have to use and you’re just going to take that out of your cashflow every month. I think that when you’re trying to determine your percentage for CapEx, you should look at how old the property is, how old are different things in the property. If it’s a very old property and it’s had a septic that’s been there for 20 years, it’s had an HVAC system that’s 10 years hot water tanks, my God, what do they last these days? Five years. So looking at how old the things are in your property, you want to have a higher percentage that you’re accounting for in your numbers. If you’re getting a brand new property or maybe it’s just recently had all new mechanics put into it, then you could do this lower. So you want to make sure that that’s per door that you’re accounting for these percentages.

Tony:
So those are the seven steps to actually use your real estate portfolio to help you get to your freedom number. What we’re going to cover next are the different exit strategies as you start to build your portfolio and how they impact you getting to your feed number faster or slower. First, we’ll take a final break to hear a word from today’s show sponsors. So what we’re going to cover are seven steps you need to follow to figure out the exact number of units you need to help you get to your freedom number. So just really quickly, a few ways you can leverage the equity that’s in your portfolio. There’s the cash out refinance where you’re keeping the door, you get a tax free chunk of cash, but you’re swapping out whatever your original mortgage was for this new mortgage. Maybe that’s great if you locked in an 8% mortgage and you refinancing down to a six, maybe not as great if you locked into three and you’re refinancing up to an eight, right? So depending on where you started cash out refinances could be good.

Ashley:
Tony, I actually looked at this in one of my properties that I have a lot of equity in that I bought in 2018 I think it was, and I had purchased it at X amount or whatever and amortized it over 15 years and the mortgage has been paid down slowly. I looked at it though, if I went and refinance and pulled out a cash out refinance, I could pull out a good chunk of money, restart my amortization over another 15 years and my mortgage payment would stay exactly the same. Yes, I’d be paying it longer, but that would give me the availability to not affect what my cashflow is right now. And I could pull out, I think it was like another $50,000 I could pull out right now and my mortgage payment would stay the same. It was just resetting that amortization and that’s like I feel like a car salesman now.

Ashley:
They say like, oh, your payment will only go up $1 if you add this warranty in, but yet you’re having to add on five more payments. But I’m just saying as a real estate investor, you’re pulling that cash out. You can use that $50,000 for another investment or something like that. It’s not affecting the cashflow that’s coming in from that property and it’ll still be paid off over time. You’re just extending. So it depends on what you would rather, would you rather the property be paid off sooner or tap into the equity and use it now?

Tony:
And that’s the benefit of the cash out refinance, right, is that it gives you the ability to use some of that equity today. The second option to tap into your equity is a 10 31 exchange. So a 10 31 exchange for folks that aren’t familiar with it is basically the IRS tax code allows you to sell a piece of real estate and defer any capital gains tax if you use all of those proceeds to buy another piece of real estate. So you could do a 10 31 exchange where an Ashley situation, maybe she sells and she gets, call it 70 5K that she uses as a down payment on a bigger property that maybe cash flows even more than the property she has right now. Then that’s another way to tap to your equity. The third way is just to straight up sell the property. Whatever money you have, just sell it.

Tony:
You get a check, typically you do have to pay taxes on that. So I think that’s maybe the downside there. And then the fourth option would be maybe a HELOC or some sort of portfolio line of credit. If you’ve got multiple deals with equity as well, and this works almost like a big credit card where your properties are the collateral and you use it, then you pay it down, you use it, you pay it down. So those are all the different levers you can start to look at as your portfolio grows to free up equity to then buy more deals, which then gets you to your freedom number faster. Now going back to the debate that we kind of started earlier of, is that the right choice? Does it make more sense for me to deleverage and live debt free or does it make more sense for me to leverage and accelerate my growth?

Tony:
The truth is, I don’t know, it’s a very personal choice and it’s a personal decision based on your philosophy, based on your risk profile, based on where you’re at in your life and what do you value more. If you’re a younger single person, then yeah, maybe scaling faster and taking on a little bit more leverage makes more sense. If you are someone who’s closer to retirement than they are to college graduation, then maybe de-leveraging and paying off these deals makes more sense. But just know those are the two different paths you can take to help you get to your freedom number is either, Hey, lemme just pay everything off and I’ve got eight paid off rentals that give me the 47 50 a month I’m solid. Or maybe I’ve got 40 rentals that are leveraged at 90%, but hey, I’m at my freedom number there as well. Either path works fine.

Ashley:
I actually had somebody reach out to me the other day that was an investor in the area and he’s looking to sell his portfolio or whatever, but he is very, very conscious of how he’s going to do it because he wants to keep some of them for a little bit and he’s going to do a 10 31 exchange and things like that. But he and offer some seller financing because he has had them all paid off and he chose to have a smaller portfolio and work to pay those ones off and then just continue to have that cashflow that’s coming in. I think I’m a mix of it. I’ve always made sure I have a couple properties that are paid off, but I’m not opposed of doing a cash out refinance. I have three rental properties that have lines of credit on them to tap into that equity that I used to acquire a lot of deals or to pay for the rehabs on things. So you can also mix it where it’s not set in stone to either you’re working towards paying off your property or you’re just going to continue to to grow your property and expand. And I think it also depends on really the numbers. If you’re going to do a cash out refinance, is that cash more valuable in another deal where it’s going to make you more money in the long run?

Tony:
Well, Ricky, those are the steps that we’d encourage you to follow to find your freedom number. Now, I know Ash and I, it’s what been 40 minutes? We kind of blew through a lot of these topics, but the goal here was to give you the overview. We’ve got a lot of other content on the podcast, YouTube, or wherever you want to listen that goes in depth on some of the strategies that we talked about. But at a high level, I think the goal and the purpose of today’s episode is to force you to think a little bit more strategically about your plan as a real estate investor. And if you can start with the end in mind, it becomes easier to create a plan that works and actually gets you closer towards that goal. Because we’ve seen a lot of investors who spin their wheels a lot of activity, but they’re not actually close to the goal that they have. So start with the end in mind, then work backwards, and we hope this episode helps get you there.

Ashley:
Thank you guys so much for joining us today. I’m Ashley, and he’s Tony. And make sure you’re following us at a BiggerPockets rookie on Instagram. Thanks so much for watching. We’ll see you guys next time.

 

Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here. Thanks! We really appreciate it!

Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected].

Delta Brings Back 12Status SkyMiles Program for Another Seahawks Season


Delta Brings Back 12Status SkyMiles Program

Delta is bringing back 12Status this year, a Washington-based SkyMiles loyalty program to reward Seahawks fans for the team’s performance on the field.

For the 2025–2026 season, 12Status members will earn one mile for every Seahawks passing yard during all home and away games. That would normally mean a few thousand miles.

12Status is exclusive to Washington state 18 or older, who can sign up for or re-enroll into the 12Status membership at 12Status.com starting today. Members must be registered to begin earning miles and are encouraged to sign up or renew their membership (re-enroll) on the site before the first regular-season game on Sept. 7. Your address must match the address in your SkyMiles account.

See terms/details at www.12Status.com

About Natalia Henriques – MortgageDepot


With a strong foundation as a former Mortgage Loan Processor, Natalia Henriques brings a detailed, behind-the-scenes understanding of the loan process to her role as a Mortgage Loan Originator. Her hands-on experience reviewing financial documents, preparing loan packages, and navigating underwriting requirements gives her a unique edge when guiding clients through the mortgage journey.

Natalia is skilled in identifying potential issues early, streamlining the loan process, and ensuring all documentation meets regulatory standards. Her ability to communicate clearly with clients, underwriters, and closing partners stems from her processor background, where she managed files from submission to final clear-to-close with precision and professionalism.

Known for her attention to detail, confidentiality, and commitment to client success, Natalia applies these strengths to help borrowers secure financing with confidence. Her transition from processor to MLO makes her an invaluable resource for homebuyers seeking both guidance and efficiency throughout their mortgage experience.

These 6 Money Mistakes Will Cost You $517,000 by Age 65


ViDI Studio / Shutterstock.com

Advertising Disclosure: When you buy something by clicking links within this article, we may earn a small commission, but it never affects the products or services we recommend. Right now, you’re hemorrhaging money through six specific holes in your financial life. Not pennies—we’re talking about $517,000 by retirement, according to recent studies. That’s the difference between retiring…

Book authors hail ‘historic settlement’ as Anthropic dodges trial on how it actually acquired millions of copyrighted works to ingest



A group of book authors has reached a settlement agreement with artificial intelligence company Anthropic after suing the chatbot maker for copyright infringement.

Both sides of the case have “negotiated a proposed class settlement,” according to a federal appeals court filing Tuesday that said the terms will be finalized next week.

Anthropic declined comment Tuesday. A lawyer for the authors, Justin Nelson, said the “historic settlement will benefit all class members.”

In a major test case for the AI industry, a federal judge ruled in June that Anthropic didn’t break the law by training its chatbot Claude on millions of copyrighted books.

But the company was still on the hook and was scheduled go to trial over how it acquired those books by downloading them from online “shadow libraries” of pirated copies.

U.S. District Judge William Alsup of San Francisco said in his June ruling that the AI system’s distilling from thousands of written works to be able to produce its own passages of text qualified as “fair use” under U.S. copyright law because it was “quintessentially transformative.”

“Like any reader aspiring to be a writer, Anthropic’s (AI large language models) trained upon works not to race ahead and replicate or supplant them — but to turn a hard corner and create something different,” Alsup wrote.

A trio of writers — Andrea Bartz, Charles Graeber and Kirk Wallace Johnson — alleged in their lawsuit last year that Anthropic’s practices amounted to “large-scale theft,” and that the San Francisco-based company “seeks to profit from strip-mining the human expression and ingenuity behind each one of those works.”

Introducing the 2025 Fortune Global 500, the definitive ranking of the biggest companies in the world. Explore this year’s list.

1 Green Flag for Walmart Stock Right Now


The market isn’t looking at the retail giant in the right way.

The market wasn’t impressed with the fiscal second-quarter results that Walmart (WMT -0.23%) reported last week. Despite management’s previously upbeat view that tariffs would not much impact the retailer, it turns out that tariffs are indeed taking a toll on its bottom line.

But even though that was the piece of the report that the market zeroed in on, there was a lot of pleasant news for shareholders as well, and the story as a whole demonstrates Walmart’s strengths as a retailer. Walmart has my confidence, and there’s one specific metric that tells the story best.

Keeping the customers coming

Walmart is the largest company in the world by sales, with $693 billion in trailing 12-month revenue. It operates 10,500 stores globally, including 4,600 in the U.S. Its massiveness gives it a lot of leverage. That itself is an edge over smaller retailers, which can’t match its prices and assortment.

Despite its size, Walmart still reliably grows its sales. In its fiscal second quarter, which ended Aug. 1, revenue increased 5.6% year over year on a currency-neutral basis. It enjoys a number of growth drivers, including new store openings, new and curated merchandising efforts, store expansions and redesigns, and, what’s most relevant for this discussion, comparable sales (comps).

Image source: Walmart.

Comparable sales growth is a crucial metric for companies like Walmart. Many companies can achieve revenue growth by opening new locations, but a strict focus on the top line can obscure the performance of Walmart’s established stores.

That’s why shareholders look at comps growth — to get a more nuanced take on how stores are doing. High comps growth implies that customers are loyal, that they’re buying more products more often, and that stores are attracting new customers. Companies often break down the comps figure into traffic growth, transaction growth, and ticket growth. Each of those metrics can add detail to the picture of what’s happening. Walmart’s comps increased 4.6% in the fiscal quarter, although management didn’t provide a more detailed breakdown.

For Walmart to keep its top spot in retail, it will have to keep customers coming through its doors and spending money, and that’s where it’s focusing its efforts.

Tariffs, profits, and what matters most

When President Donald Trump announced his broad tariffs on imports, Walmart said that it didn’t expect to be highly impacted by the new taxes. Much of the merchandise it sells in the U.S. is made domestically, and its size gives it unusual leverage with its suppliers, allowing it to push back against their moves to raise wholesale prices or to ask them to cut costs through methods like cheaper packaging. However, in the August update, management said that tariffs are taking a toll on Walmart’s profits.

Wall Street analysts had been predicting the company would report $0.74 in adjusted earnings per share (EPS), and Walmart reported only $0.68 per share. That more than 9% miss is a big deal. Management blamed it on several factors, including general liability and workers’ compensation claims, but also pointed to higher costs due to tariffs. It also said that it expects those tariff-driven costs to keep climbing through the rest of the year.

Walmart is highly focused on giving customers the greatest value to keep them shopping in its stores, and it watches the competition carefully to ensure there’s a price gap between them. It absorbs some costs when necessary to make that happen. That affects the bottom line, but its top line is thriving.

CFO John David Rainey also pointed out that despite the miss on earnings and its expected increases in costs ahead, management isn’t changing its full-year outlook for operating income. It did raise its full-year guidance for revenue growth to a range of 3.75% to 4.75%.

The market is getting it wrong

If Walmart is feeling pressure from tariffs, it can be understood that all retailers are. Other retailers don’t necessarily have Walmart’s domestic producers or its leverage with suppliers. Smaller companies also won’t have the capacity to absorb as much of those higher costs as Walmart, so higher prices elsewhere are likely to drive customers to do more of their shopping at Walmart.

Walmart is in a very different operation than it was a few years ago. It has developed a robust e-commerce and omnichannel ordering system, and since it uses its stores as distribution centers, it can get orders out to customers more quickly than most competitors. Its e-commerce sales growth accelerated to 25% year-over-year in fiscal Q2, and orders delivered from stores increased by 50%. Orders delivered from stores within three hours made up a third of that total. That’s hard to beat.

It has also expanded its product assortment to cater to a more upscale clientele, and higher-income shoppers had the highest comps growth in the quarter. So even though it’s still the discount king, it has a wider consumer base. As it gets more customers into its stores, it has the real chance to make them lifetime loyalists.

Walmart’s main category is groceries, which everyone has to buy. Higher costs won’t prevent people from buying food, but it may cause them to shift where they shop. By keeping its prices low, it’s generating higher comparable sales and widening its advantage. That’s a great green flag for its future.

A Day in The Life of A Trader #memecoins #crypto #trading



A Day in The Life of A Crypto Trader #memecoins #crypto #trading

source

Chase Business Total Checking $750 Bonus (No Direct Deposit Required)


Update 8/26/25: New live $750 link, valid through 10/16/25. (ht nycdpj)

Update 4/8/25: We don’t have a link currently for the $750 offer. There is a $500 offer (details here) which some may prefer.

Update 3/18/25: Deal is back until 04/17/2025. Hat tip to reader clow

Update 11/21/24: New link shows 01/16/2025 end date. Hat tip to Mike

Update 7/15/24: New link shows extended expiration of 10/17/24 (ht Eric)

Offer at a glance

  • Maximum bonus amount: $300 – $750
  • Availability: Nationwide – online or in branch
  • Direct deposit required: No
  • Additional requirements: Deposit $2,000 – $30,000 & maintain it for 60 days + 5 transactions
  • Hard/soft pull: Soft
  • ChexSystems: No
  • Credit card funding: $500, but codes as cash advance
  • Monthly fees: $15, avoidable
  • Early account termination fee: Six months, bonus forfeit None
  • Household limit: None
  • Expiration date: August 3 October 19, 2023 January 18, 2024 October 17, 2024

The Offer

$750 | $400 link | New link $750 New Link

  • Chase is offering a bonus of up to $750 when you open a new Chase Complete Business checking account and complete the following requirements:
    • Deposit $30,000 in new money within 30 days of coupon enrollment & maintain that balance for 60 days from offer enrollment.
    • Complete 5 qualifying transactions within 90 days of account opening. Qualifying transactions are:
      • Debit card purchases
      • Chase QuickDeposit and QuickAccept
      • ACH (Credits)
      • Wires (Credits or debits)

There are also lower versions of the bonus with a lower deposit requirement (all other details the same):

  • Deposit $2,000 and get a $300 bonus.
  • Deposit $15,000 and get $500 bonus.

 

The Fine Print

  • Eligibility: Open a Chase Business Complete CheckingSM, Chase Performance Business Checking® (or Chase Performance Business Checking® with Interest), or Chase Platinum Business CheckingSM account.
  • Offer code is good for one-time use.
  • Account Opening: Enter offer code in the E-Coupon Application after account opening. Bonus will be deposited within 15 days after all conditions are met.
  • E-Coupon Receipt: Print and give to the customer.
  • Bonus/Account Information: Checking offer is not available to existing Chase business checking customers, local, state or federal government entities or agencies, Not for Profit organizations, Political Action Committees, or those with campaign accounts or whose accounts have been closed within 90 days or closed with a negative balance within the last 3 years.
  • You can receive only one new business checking account opening related bonus every two years from the last enrollment date and only one bonus per account.
  • To receive the business checking bonus: 1) Open a new Chase Business Complete CheckingSM, Chase Performance Business Checking® (or Chase Performance Business Checking® with Interest) account or Chase Platinum Business Checking accountSM, which is subject to approval; 2) Deposit a total of $10,000 or more in new money into your new checking account within 30 days of coupon enrollment; and 3) Maintain at least a $10,000 balance for 60 days from the coupon enrollment. The new money cannot be funds held by your business at Chase or its affiliates. 4) Complete 5 qualifying transactions within 90 days of coupon enrollment. Qualifying transactions are: debit card purchases, Chase QuickAcceptSMdeposits, Chase QuickDepositSM, ACH (Credits), wires (Credits and Debits). After you have completed all the above checking requirements, we’ll deposit the bonus in your new account within 15 days. Coupon is good for one-time use. Employees of JPMorgan Chase Bank, N.A. and our affiliates are not eligible. Chase reserves the right to withdraw this offer at any time without notice.
  • Account Closing: If the checking account is closed by the customer or Chase within six months after coupon enrollment, we will deduct the bonus amount for that account at closing.
  • Chase Business Complete CheckingSM has a $15 Monthly Service Fee unless you fulfill at least one of the following qualifying activities: 1) Maintain a minimum daily balance of $2,000 in your account as of the beginning of each day of the statement period, 2) Spend at least $2,000 in purchases (minus returns or refunds) using your Chase Ink® Business Card(s) that shares a business legal name with the Chase Business Complete Checking account, using each of their most recently completed monthly card billing period(s), 3) Deposit $2,000 into your Chase Business Complete Checking account from your QuickAcceptSM and/or other eligible Chase Merchant Services transactions at least one business day prior to the last day of your bank account statement period, or 4) Maintain a linked Chase Private Client CheckingSM account. Product terms are subject to change. Eligible Chase Merchant Services products include only those where the transaction history can be viewed through Chase Business Online, Chase Connect®, or J.P. Morgan Access.
  • Bonuses are considered interest and may be reported on IRS Form 1099-INT (or Form 1042-S, if applicable).

Avoiding Fees

Monthly Fees

Chase Total Business Checking com no monthly fee when you maintain a daily minimum balance of $2,000 or more. Otherwise a $15 Monthly Service Fee will apply.

Other ways to waive the fee:

  • $2,000 minimum daily balance
  • $2,000 in net purchases on your Chase Ink® Business Card(s)
  • $2,000 in deposits from Chase QuickAccept℠ or other eligible Chase Payment Solutions transactions
  • Link a Chase Private Client Checking℠ account
  • Provide qualifying proof of military status

Reports indicate that Chase usually waives the fee for the first couple months.

Early Account Termination Fee

Accounts need to be kept open for a minimum of six months; otherwise, the bonus will be forfeited. None

Our Verdict

We saw the $750 offer before with a lower $20,000 deposit requirement. The high interest environment we’re in makes the deal less enticing since the money won’t be earning any interest while in the Chase account.

The funds might only need to sit in the Chase business checking account for 31 days (day 31 – day 60) or possibly  it needs a full 60 days. In the end, you’re likely to end up losing $100-$250 in interest (assuming a 4-5% interest rate in high yield savings account). Some people might prefer doing the lower $300 tier with just $2,000 required.

When I tried doing this some months ago, there was something about my business type not being eligible for online opening and I decided against going in branch. The offer now is worse with the higher deposit requirement so I’m going to give this one a miss. Still could be a decent deal for someone interested.

Unfortunately you’re not eligible for this bonus if you’ve received a Chase business checking bonus within the last two years, so it won’t work for everyone. There used to be a clause that you had to keep the account for 6 months before closing, but I think (?) Chase has removed that now from all of their bonuses.

Useful posts regarding bank bonuses:

  • A Beginners Guide To Bank Account Bonuses
  • Bank Account Quick Reference Table (Spreadsheet) (very useful for sorting bonuses by different parameters)
  • PSA: Don’t Call The Bank
  • Introduction To ChexSystems
  • Banks & Credit Unions That Are ChexSystems Inquiry Sensitive
  • What Banks & Credit Unions Do/Don’t Pull ChexSystems?
  • How To Use Our Direct Deposit Page For Bank Bonuses Page
  • Common Bank Bonus Misconceptions + Why You Should Give Them A Go
  • How Many Bank Accounts Can I Safely Open Within A Year For Bank Bonus Purposes?
  • Affiliate Links & Bank Bonuses – We Won’t Be Using Them
  • Complete List Of Ways To Close Bank Accounts At Each Bank
  • Banks That Allow/Don’t Allow Out Of State Checking Applications
  • Bank Bonus Posting Times

Deal History:

  • Update 5/29/24: New working link added.
  • Update 4/6/24: extended until 7/22/24
  • Update 1/21/24: Deal is back and valid until 4/18/2024.
  • Update 1/7/24: New link has the lower tier with a higher $400 bonus (instead of $300). This $400 link expires 1/18/24. The $750/$300 link is still slated to expire 1/18/24. (ht to reader moneymaker)
  • Update 11/29/23: Available now online at this link, valid through 1/18/24
  • Update 11/23/23: Deal is back, but this time in branch.
 
 
 
 
 
 
 
 
 

How Much Student Loan Debt Is Actually Forgiven?


Key Points

  • President Biden forgave more than $188 billion in student loans for over 5 million borrowers, the largest amount of cancellation by any president.
  • Despite record forgiveness, total outstanding student loan debt grew from $1.565 trillion to $1.640 trillion during Biden’s term, as new borrowing outpaced relief.
  • Programs like PSLF, Borrower Defense, and Teacher Loan Forgiveness delivered billions in relief, but data on the true impact for individual borrowers remains limited.

How much student loan debt has actually been forgiven? The number is staggering: more than $188 billion erased for over 5 million borrowers during President Biden’s presidency, the largest wave of student loan forgiveness in history.

But the story doesn’t end there. Despite record levels of forgiveness, America’s student loan balance still grew, climbing from $1.565 trillion to $1.640 trillion.

The reason: new borrowing and interest continue to outpace the relief provided. That paradox raises important questions about what forgiveness really means, who benefits, and how much it changes the bigger picture.

Although there is some information about the total amount of student loan forgiveness and discharge, there is very little information about the actual impact on individual borrowers. For example, Public Service Loan Forgiveness (PSLF) requires the borrower to make 120 monthly payments in an income-driven repayment plan before the remaining debt is forgiven. It is unclear how much of the original debt and accrued interest is ultimately canceled on average.

This article breaks down where forgiveness came from: including Public Service Loan Forgiveness, Borrower Defense, Teacher Loan Forgiveness, and more, and why the numbers don’t always match what borrowers feel in their day-to-day lives. 

Understanding these details matters, because the future of forgiveness is shifting under the One Big Beautiful Bill Act (OBBBA) and new rules for student loan repayment.

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President Biden Forgave More Debt Than Any Other President

President Biden forgave more than $188 billion in student loans to more than 5 million borrowers, more than any other president. He did this by making existing student loan forgiveness programs more efficient and automated.

However, timing did work to his favor – with Public Service Loan Forgiveness finally hit its stride in 2024. The program started in 2009, but required 10 years of qualifying payments. However, to be eligible, it required Direct Loans and qualifying repayment plans. Most new students didn’t start taking Direct Loans until 2010 (then had 4 years of college), and repayment plans like PAYE didn’t start until 2014. So, the first “big wave” of borrowers hitting 10 years happened in 2024. And in October 2024, the 1 million PSLF borrower mark was hit.

This table shows the totals forgiven, as of January 15, 2025, based on U.S. Department of Education press releases. The U.S. Department of Education under the Biden Administration published press releases very frequently, whenever they had a significant amount of forgiveness. This yielded a continual drumbeat of new forgiveness announcements.

Program

Dollars

(Billions)

Number of

Borrowers

Average per 

Borrower

Public Service Loan Forgiveness (PSLF)

$78.5

1,069,000

$73,396

IDR Payment Count Adjustment

$56.5

1,400,000

$40,357

Borrower Defense And Closed School Discharge

$34.5

1,945,880

$17,708

Total And Permanent Disability

$18.7

633,000

$29,542

SAVE Accelerated Forgiveness

$5.5

414,000

$13,285

TOTAL

$193.6

5,461,880

$35,449

Total Exluding SAVE

$188.1

5,047,880

$37,449

More than 40% of the total student loan cancellation was through the Public Service Loan Forgiveness (PSLF) program. 

Despite all the forgiveness, there was more federal student loan debt outstanding when he left office than when he started. Total student loan debt outstanding increased from $1.565 trillion to $1.640 trillion. 

This is because new borrowing exceeded the amount forgiven. Since the start of the pandemic, there has been more than $80 billion of new borrowing each year and about $15 billion in progress in paying down debt. That yields a net increase of $65 billion per year before subtracting the $47 billion in annual forgiveness. 

Overall, the loan forgiveness during the Biden Administration represented more than 10% of the number of borrowers and dollars of federal student loans. 

Public Service Loan Forgiveness (PSLF)

Public Service Loan Forgiveness (PSLF) forgives the borrower’s remaining federal student loan debt after the borrower makes 120 qualifying payments while working full-time in a public service job. Qualifying repayment plans include income-driven repayment plans and the standard 10-year repayment plan. Qualifying employers include government employers and 501(c)(3) organizations. Only Direct Loans are eligible for forgiveness (not FFEL or Perkins).

As of July 31, 2025, a cumulative total of $85.5 billion in loans to 1,155,400 borrowers has been discharged through the Public Service Loan Forgiveness (PSLF) program (Excel File). That’s an average of $74,000 per borrower.

Of the total, 421,600 borrowers received $33.1 billion in forgiveness through PSLF, 7,300 received $0.3 billion in forgiveness through TEPSLF and 758,800 received $52.1 billion in forgiveness through the Limited PSLF Waiver (PDF File) that ended on October 31, 2022.

An additional 2.5 million borrowers have eligible employment and total outstanding balance of $224.9 billion in debt, an average of $87,700 per borrower. The balance may decrease by the time they receive forgiveness as they continue to make payments through income-driven repayment plans. 

Of borrowers who have applied from June 30, 2024 to July 31, 2025, 57% work for a government employer and 43% to a 501(c)(3) employer. 37% of applications were closed or cancelled without receiving forgiveness. 5% of the applications were closed because of employer eligibility issues. 

A precise calculation of the impact of the PSLF is not possible with currently available data from the U.S. Department of Education. Calculating the percentage of the original loan balance that is ultimately forgiven by PSLF would require information about the original loan balance, the interest rate and the annual income and family size.

But, a back-of-the-envelope estimate suggests that as much as half to three quarters of the original loan balance plus subsequent accrued interest is ultimately forgiven

Teacher Loan Forgiveness

Teacher Loan Forgiveness (TLF) provides student loan forgiveness for highly qualified teachers in low-income elementary and secondary schools. Up to $17,500 in loan forgiveness is provided after five years of full-time teaching in math, science and special education. Up to $5,000 in loan forgiveness is provided for teachers in other subject areas. 

As of February 2025, a cumulative total of $4.2 billion of Teacher Loan Forgivneess (TLF) has been received by 486,300 borrowers from FY2009 through FY2024. That’s an average of $8,542 per borrower.

The average per borrower has increased from $7,963 in FY2009 to $10,238 in FY2023 and $9,681 in FY2024.

It’s important to note that many teachers benefit from PSLF, and you cannot “double-dip” benefits (though the can be earned sequentially).

Borrower Defense To Repayment Discharges

The Borrower Defense to Repayment Discharge cancels a borrower’s federal student loan debt if their college engaged in fraud or false and misleading information concerning the college’s educational programs, charges or employability of graduates. The fraud must have affected the student’s decision to enroll in the college or borrow federal student loans. In addition to discharging the borrower’s remaining federal student loan debt, the borrower will receive a refund of loan payments they have already made. 

Data provided by the U.S. Department of Education in response to a FOIA request shows that 22% of borrower defense claims involve public or private non-profit colleges and 78% involve private for-profit colleges. The approval rate for borrower defense claims is 50% for private non-profit colleges and 23% for private for-profit colleges.

The U.S. Department of Education has also published a list of 3,379 colleges (Excel File) as of June 30, 2025 that have received a total of 979,580 borrower defense to repayment complaints. Only 5% of the complaints have been denied or closed, but 47% are still pending. 

The top 25 colleges received 46% of the complaints. 88% of the top 25 colleges are for-profit.

The complaints tend to parallel the geographic distribution of college students, with 13% of the complaints concerning California colleges, 9% Florida colleges, 9% Texas colleges, 6% Georgia colleges, 5% Illinois colleges, and 4% Ohio colleges. 

The average amount discharged is an estimated $23,000 per borrower. 

Closed School Discharges

The Automatic Closed School Discharge report (Excel File), which was last updated in June 2022, reports a cumulative total of 153,100 borrowers eligible for discharge of $1,889,800,000 in student loans due to attendance at a school that closed. About 5% of the discharges were still pending.

The average amount discharged was $12,344 per borrower. 

Death And Disability Discharges

Based on data from the federal budget, death and disability discharges represent an estimated 0.7% to 1.3% of outstanding federal student loan debt each year. That’s roughly $1.6 billion in student loans cancelled each year due to death or total and permanent disability.

Total and permanent disability discharge processing has experienced delays in 2025 due to system upgrades, so the data from earlier this year may be skewed.

Impact Of OBBBA On Student Loan Forgiveness

The OBBBA legislation has made several changes that will reduce the amount of student loan forgiveness.

  • The legislation affects Public Service Loan Forgiveness (PSLF) by replacing the four income-driven repayment plans with just one. The new Repayment Assistance Plan (RAP) has higher payments than under the SAVE repayment plan, which has been repealed. Payments under RAP may be lower than under Income-Based Repayment (IBR) for low- and moderate-income borrowers, but the payments are higher for borrowers with income over about $75,000. You can see a full RAP vs. IBR breakdown here.
  • The RAP plan forgives the remaining debt after 30 years of payments, longer than the 20 or 25 years required for forgiveness under IBR. 
  • Borrowers of Parent PLUS loans are not eligible for the RAP plan, which effectively ends the eligibility for PSLF for new parent borrowers. 
  • The legislation repeals the Grad PLUS loan. The Grad PLUS loan had an annual limit up to the full cost of attendance minus other aid received, with no aggregate limits. Although the legislation compensates by increasing the aggregate Federal Direct Stafford loan limits for graduate students and professional school students, these limits are low enough that they may shift some borrowing from federal student loans to private student loans. Private student loans are ineligible for loan forgiveness. 
  • The legislation delays the effective date of the 2022 Borrower Defense to Repayment regulations and closed school discharge provisions, thereby reverting to previous, more restrictive rules for new loans. 

In addition, the Trump administration has temporarily paused IBR forgiveness and has created a backlog for processing IDR Plan Request forms and PSLF Buyback Option application forms.

The Trump administration has also proposed changing the definition of qualifying employer for PSLF to exclude employers that engage in a “substantial illegal purpose” even if the employer is a government agency or 501(c)(3) non-profit organization. These changes could further limit student loan forgiveness.

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What Is a Muslim or Islamic ‘Mortgage’?


Charging or paying interest is prohibited in Islam, which can make conventional home loans off-limits for observant Muslims. But that doesn’t mean Australian Muslims need to save the entire value of their dream property in cash. 

Numerous Sharia-compliant financing solutions are structured to avoid conventional interest. And you don’t have to be a practising Muslim to access these products.

Muzzammil Dhedhy, co-founder and executive director of Islamic financial services provider Hejaz Group, told Your Mortgage that while Muslim homeowners make up the majority of customers, uptake among non-Muslim Australians is increasing.

“Many people like the ethical and transparent nature of Islamic finance,” he said.

Image: Supplied

“We’ve seen non-Muslims choose these products because they align with their personal ethics or values, or simply because they appreciate the predictable structure of payments.”

What is an Islamic or Muslim ‘mortgage’?

For a practising Muslim, financing a house purchase isn’t always as simple as perusing conventional mortgages or calling up a home loan broker. That’s not to say it’s impossible, or even particularly difficult.

“Islamic finance is built on two core principles: avoiding interest (riba) and avoiding excessive uncertainty or speculation (gharar),” Mr Dhedhy said.

“Instead of charging interest, Islamic home finance uses structures like Murabaha or Ijara.

“The goal is to keep transactions fair, transparent, and tied to real assets. It’s less about clever financial engineering and more about ensuring every deal has real value behind it.”

Here are three common Sharia-compliant methods of financing a home without a home loan:

How Islamic home finance works

1. Ijara (lease-to-own):

Under an Ijarah financing structure, the financier purchases and owns the property while the customer makes regular payments that function like rent. Unlike traditional rent, however, each payment is divided into two parts: a rental charge (which includes the financier’s profit) and a portion that gradually increases the customer’s ownership share. At the end of the lease term, the financier transfers full ownership of the property to the customer. In many ways, it’s similar to a rent-to-buy scheme.

2. Murabaha (cost-plus financing)

Another common form of Sharia-compliant financing is Murabaha – where the financier buys the homeowner’s preferred property and agrees to sell it back to them at a marked-up price, repayable over time.

3. Diminishing Musharakah (co-ownership):

Musharakah sees the homebuyer and the financier partner up to purchase the property. The owner’s deposit will determine how much of the property they own and the financier will charge them rent on the remainder. The owner will also agree to buy out the financier over time, effectively purchasing shares in the property on a regular basis until they’ve acquired 100% of the property.

Costs and features: What to expect

  • Pricing language
    When researching Islamic ‘mortgages’, note that the term ‘profit rate’ or rent will often be used where ‘interest’ would otherwise be.

  • Deposit requirements
    While many Islamic home finance products ask that customers have a deposit of at least 20%, some allow a homebuyer to enter the market with a deposit as small as 5%. Customers with smaller deposits may be asked to pay for Lenders Mortgage Insurance (LMI) like they would if securing a traditional mortgage.

  • Features
    Some providers offer offset and redraw facilities. Be aware, however, that most Sharia-compliant products are offered by non-bank lenders, which aren’t able to provide traditional offset accounts. Often, these facilities work similarly to a redraw with the added benefit of a debit card attached directly to the funds.

Are Islamic home finance products regulated in Australia?

Rest assured, if you’re considering a Sharia-compliant home financing solution, you’ll likely be protected under Australian regulations.

In Australia, Sharia-compliant home finance products must comply with the National Credit Code, enforced by ASIC. If an Islamic bank is licensed in the future, APRA would also play a role.

However, there aren’t Australian standards specifically covering Islamic financing principals. For that reason, it’s important home buyers understand exactly what they’re agreeing to when purchasing a home with the help of a Sharia-compliant financier.

Tax troubles to be aware of with Islamic home financing

One area where Sharia-compliant property finance can run into difficulty is transaction costs.

Stamp duty – a hefty tax often charged when property changes hands – poses a unique challenge, since some Islamic finance structures involve more than one transfer of title.

Certain states, like Victoria, have introduced relief to avoid double duty, but it’s still a complexity buyers need to be aware of.

Who offers Islamic home finance in Australia?

In the 20 years leading up to the 2021 Census, the number of Australians identifying as Muslim more than doubled. As Australia’s Muslim community has grown, so too has demand for Islamic home finance products.

But despite significant growth in the Sharia-compliant home financing market over the last few years, mainstream adoption is still a ways away, Mr Dhedhy noted.

“There are only a handful of providers who can deliver fully Sharia-compliant products end-to-end,” Mr Dhedhy said.

“Most customers still have to jump through a few more hoops, longer approval timelines, higher deposits, and less choice compared to conventional lending.

“That said, the market is maturing and institutions are investing heavily to make Islamic finance feel just as seamless as a traditional home loan.”

At the time of writing, these financial institutions are among those offering Sharia-compliant home financing products to the public:

  • Hejaz
  • Amanah Islamic Finance
  • MCCA
  • ICFAL
  • Ijarah Finance

All the listed institutions act as non-bank lenders. That means they’re not licenced to hold customer deposits, unlike traditional banks.

Australia does not currently have a live Islamic bank. Until recently, there were expectations that Islamic Bank Australia would graduate to an unrestricted Authorised Deposit-taking Institution (ADI) licence (ergo, a banking licence). However the outfit voluntarily handed back its restricted ADI in March 2024.

Islamic home financing: Red flags

No matter the mortgage or home financing product you’re considering, it’s important to be aware and observant of ‘red flags’ that could signal extra costs or inaccurate advertising.

One risk homebuyers should be aware of is the possibility that a financial product isn’t actually in line with Sharia principles, even if it says it is.

“Buyers should check if there’s an independent Sharia advisory board approving the product, and if the terms clearly outline ownership transfer and profit calculation without hidden interest clauses,” Mr Dhedhy said.

“A big red flag is when a product uses conventional interest rates behind the scenes but rebrands it with Islamic terminology.

“Transparency is everything, if a provider can’t clearly explain how they make money, that’s a warning sign.”

In addition, make sure you’re aware of the actual cost of the finance product you’re considering. While traditional mortgages must display interest and comparison rates – the latter reflecting the ‘true’ cost of an assumed home loan over a 25-year period – this isn’t necessarily the case with Sharia-compliant products. Take your time to read over any documentation provided to ensure you’re getting a good deal.

Sharia-compliant home financing: FAQs

Is there an Islamic bank in Australia?

Not currently. Islamic Bank Australia was expected to become the country’s first fully fledged Islamic bank, but it voluntarily handed back its restricted Authorised Deposit-taking Institution (ADI) licence in March 2024. At present, only non-bank lenders offer Islamic home finance products in Australia.

Do I need to identify as Muslim to apply for a Sharia-compliant finance product?

No. Islamic home finance is open to anyone, regardless of faith. While most customers are Muslim Australians, some non-Muslim borrowers also choose Sharia-compliant products because they value the ethical or transparent payment structures.

Can I get an offset account?

Some providers do advertise offset-style features, however, because most Australian Sharia-compliant financiers are non-bank lenders, the accounts may not function exactly like offset accounts with traditional banks. Always check the terms carefully.

How large of a deposit do I need for an Islamic home financing product?

Many Islamic home finance products require a deposit of around 20%. However, some providers offer options for those with deposits as small as 5%.

Image by Ivan Andriavani on Unsplash