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The Fast FIRE System

Fast FIRE system

Summary: If you have read enough of our articles, you know what Fast FIRE is about. But how do you actually do it? What are the strategies that you can use to achieve financial freedom as fast as possible? In this post, we lay out the Fast FIRE System: See the Money, Make the Money, Keep the Money, and Expand the Money. We cover the exact methods we’ve used to build our real estate portfolio quickly and achieve financial freedom while we’re still young enough to enjoy it!


We’ve covered the concept of Fast FIRE on this blog before. But we’ve never clearly laid out the exact steps we’ve taken to achieve it. This week’s post is the first time that we are laying out our real estate investing “system” in one place. This is the exact blueprint we used to build our portfolio, and it has enabled us to achieve financial freedom while we are still young enough to enjoy it.

We want all of you to see how you can follow our Fast FIRE System and build a rental empire that will fund your financial freedom. We also want all of you to realize that financial freedom through cashflowing rentals is a possibility for anyone who truly desires it. You just have to be willing to take the necessary action to make it happen. 

Our Fast FIRE system consists of four parts: See the Money, Make the Money, Keep the Money and Expand the Money. Let’s cover each in detail so that you can clearly visualize your path to Fast FIRE.


See the Money

If you believe it, it will happen.

This step in the Fast FIRE System is absolutely the most important. Essentially, it boils down to believing in your capability to achieve it. You will never achieve financial freedom quickly if you don’t believe it is possible. The reason is, you will sabotage yourself, even subconsciously, along the way. 

You’ll do this in a number of ways:


1. You won’t really give your full effort.

This will be reflected in your language of uncertainty (“I hope,” “I might”), which will be reflected in the actions you take or don’t take. 


2. You’ll focus on the wrong things.

You’ll be spending your energy worrying about all the things that might go wrong instead of the things that will go right. The result is analysis paralysis. 


3. You will let the bumps along the road derail you.

When you hit them, you’ll use the experience to justify your previous fears about real estate and quit as a result. You won’t fight through it and persevere.


See the Money is all about getting your mind right before you start investing.

That’s why Kenji and I have done so much work on our own mindset over the years. It’s what led us to spend $200,000+ on an exclusive one-year membership to a program called the Tony Robbins Platinum Partnership.

The strength of our mindset is what has helped us to be persistent, focused, and to make it through all of the challenges. And it’s the reason we spend an entire week of our new Zero to Freedom training course working on mindset.

So how do you See the Money? First, you must establish a strong “why” or your reason for investing. Second, you must set clear and specific goals. Third, you must identify your limiting beliefs and replace them with beliefs that serve you, rather than hinder you. These beliefs will reflect your true capabilities, which are far greater than what most people believe they’re capable of.

Success is 80% mindset. Real estate investing is no different.


Make the Money

Build up your number of properties and tap hidden value to create more cashflow and force appreciation.

The second pillar of the Fast FIRE system is to build a portfolio of cashflowing rentals and tap their hidden value. 

Cashflowing rentals are assets that put money in your pocket each month. Because we buy only properties that cashflow, we ensure that our properties enrich us by giving us an additional source of tax-free income (read how this works here) on top of our regular W-2 income. 

Though you may only earn $3,000 to 5,000 in cashflow per year per door, once you own several properties, the amount of cashflow can become substantial enough that you begin to feel it. Once you get up to 15-20 doors (remember this is tax-free!), you’ve bought yourself a lot more freedom and flexibility.

The second part of Make the Money is tapping hidden value.

Hidden value in a property is what most people don’t see. It represents extra cashflow and appreciation from your property that you can earn if you tap into it.

For example, most owners would look at a detached garage and make no improvements to it. They’d simply give it away to their renters for free to use as storage or for parking. In contrast, when we see a detached garage, we see an extra $150-400 a month in rent if you rent it to a third party (not one of your tenants). In order to tap this value, however, you need to put a little money into it. You’ll want to secure it with a metal roller door and block out the windows for extra security. You will also want to run separate electricity to it so the third party renter has the option to use this space as a workshop. 

We’ve done this with our properties and we have garages that rent for $250 to $400/month. (We got this idea from a fun read called Buy and Rent Foreclosures.) That’s an extra $3,000 to $4,800 in cashflow per year! Even more exciting is the amount our properties appreciated in value as a result. This amount of cashflow represents about $50,000 to $80,000 in property appreciation, respectively (assuming a 6% cap rate)!

Now that’s how you Make the Money!

When you follow the Fast FIRE System, you only buy properties that make you money from day one. Then, you actively seek and tap ways to increase cashflow even more after purchase. That’s how you can get your returns up from 10% cash-on-cash to far greater, and beat the stock market by leaps and bounds. 


Keep the Money

Reduce or eliminate your taxes and recycle the money back into purchasing more properties. 

This step in the Fast FIRE system is about using the tax-loopholes created specifically for real estate investors to get tax-free cashflow AND shelter W2 income. Then, you reinvest the cashflow and tax savings and you benefit from compounding growth to grow your wealth even faster.

As I mentioned above, cashflow is tax-free at baseline because of all the write-offs. But there’s nothing particularly special about this type of tax savings because everyone benefits from tax-free cashflow (assuming you know what you’re doing). 

What we’re talking about is creating a massive tax shelter using Real Estate Professional Status (REPS), something that only a small percentage, maybe 1 to 2% of physicians utilize, according to a survey that we conducted.  

An even smaller percentage of high-income earners take a strategic approach to taxes and attempt to shelter all of their W2 income. Imagine getting both tax-free cashflow (nothing special about this) plus paying ZERO income taxes on a $300,000 to $500,000 salary. Now that is special!

How is this possible? We create strategic losses in two key ways: 


1. We buy value-add properties

This means we buy properties that need work, and then we rehab them. This allows us to write off the renovation/repairs and substantially increase rents as a result (increasing our cash-on-cash return). In addition, it decreases maintenance costs (boosting total return) and adds to the sale value of the property in the form of forced appreciation. 


2. We strategically buy properties based on the income we need to shelter

Most of us know exactly how much income we’ll make in a year. If you are a salaried employee, its entirely predictable.

So why not create a tax shelter that exactly matches your income each year?

How? Using something called cost segregation/bonus depreciation (you can read the details of this here). For example, if you need to shelter $300,000 of income, purchasing a $1.2 million property would likely be enough to shelter all of this income. As mentioned above, you do need to qualify for REPS in order to take advantage of this tax shelter. Otherwise, you wouldn’t be able to use these losses to shelter earned income, and they would be carried forward every year in your tax forms as suspended passive losses. 


One final key to Keep the Money is achieving REPS as soon as possible. The sooner you can get money in your pocket, the sooner you can reinvest it back into your real estate business and grow faster. We see so many people delaying this choice (yes, it is a choice) for no good reason. It goes back to mindset. If you believe you can achieve REPS in the first year, you’ll do it. If you think it will take 3 years, it will take 3 years.

In addition to believing it, you need to put in place a plan to achieve it. This might mean investing in a low cost of living area, so you can grow your real estate portfolio quickly. Your spouse may have to become the REPS even though they don’t have any interest in real estate. Maybe you’ll have to cut back at work to qualify for REPS. You may be surprised to find that cutting back doesn’t change your take home pay very much because of the combination of cashflow and tax savings, both of which are tax-free.

In summary, Keep the Money has three core characteristics:

  1. Achieve Real Estate Professional Status as quickly as possible
  2. Buy value-add properties and write off costs of renovation
  3. Be strategic and shelter all of your income using cost segregation and bonus depreciation


Expand the Money

Harvest lazy equity tax-deferred to grow your empire rapidly.

The final pillar of our Fast FIRE system is turbo-charging the growth of your portfolio by harvesting lazy equity.

We covered lazy equity in a prior post, but in brief, it is the money you accumulate in a property that isn’t making any money for you. It is the product of property appreciation and debt paydown. 

In terms of property appreciation, this comes in two forms: market appreciation and forced appreciation. We don’t rely on market appreciation. Instead, we force appreciation by tapping into hidden value like the example with the garage above. We increased the value of our properties disproportionately by renting out the garage. Forced appreciation is how you increase the market value of a property even though the properties around it aren’t appreciating. It’s how you make your property appreciate in value in a short amount of time. In the garage example above, we raised the value of the two properties by $50,000 and $80,000 respectively and renovating the garages took less than a month. So in total, we raised the value of our portfolio by $130,000 in less than 30 days!

The key to Expand the Money is to not only accumulate a lot of lazy equity quickly, but to also harvest it regularly and reinvest the money back into real estate.

There are two ways to harvest lazy equity:

  1. Sell properties and roll them into larger properties tax-free using 1031 exchanges.
  2. Do a cash-out-refinance on your properties to get money out of them and invest it into new properties.

Each of these require their own posts to cover them in detail. But suffice to say, that this is how you really build your wealth quickly.

The Fast FIRE System forms the basis of how Kenji and I built our rental portfolio and achieved financial freedom so quickly. Hopefully you, our readers, can now clearly see the necessary components of our system. Laid out as a blueprint, you can simply follow them to create your own real estate investment success.

Want more? If you want more in-depth training and to have us be your mentor/coach, sign up for our new Zero to Freedom Through Cashflowing Rentals Course. Registration will open again in a few months, so click here to be put on our waiting list so you can be the first to be notified when course registration opens. Who knows, maybe there will be a bonus for those who sign up for the course through our waiting list??


Do you want to learn how to creatively fund your real estate portfolio and achieve financial freedom? Join the conversation! Follow our Semi-Retired MD  Facebook page and join our Doctors or Professionals  group!

Semi-Retired M.D. and its owners, presenters, and employees are not in the business of providing personal, financial, tax, legal or investment advice and specifically disclaims any liability, loss or risk, which is incurred as a consequence, either directly or indirectly, by the use of any of the information contained in this blog. Semi-Retired M.D., its website, this blog and any online tools, if any, do NOT provide ANY legal, accounting, securities, investment, tax or other professional services advice and are not intended to be a substitute for meeting with professional advisors. If legal advice or other expert assistance is required, the services of competent, licensed and certified professionals should be sought. In addition, Semi-Retired M.D. does not endorse ANY specific investments, investment strategies, advisors, or financial service firms.


Hi, we’re Kenji and Leti

we provide coaching and mentorship for doctors and high-income earners

Several years ago, we were newlyweds working as full-time hospitalists. On paper, it looked like we had everything: the prestigious careers, the happy marriage, the luxurious rental home, the cars, etc.

But in reality? Despite having worked for several years, we had very little savings. Despite our high income, we had very little freedom in terms of time or money.

One thing was clear: we had to do something.

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