Summary: What is Fast FIRE, and why should you pursue it? In this article, we define what it is and why you can and should make it your financial goal. Specifically, we look at how investing in real estate can be a vehicle to Fast FIRE and why it’s more effective—and less burdensome in the long run—than one may assume.
Our site is built on the concept of Fast FIRE, yet we don’t yet have an article describing it—so here it is.
What is Fast FIRE?
Let’s start with the definition of FIRE. If you don’t know what this means, it’s an acronym for Financial Independence, Retire Early. The FIRE movement has gotten a lot of flak recently from the mainstream media and people like Suze Orman and her “I hate it, hate it, hate it” rant on Paula Pant’s Afford Anything podcast.
We agree with FIRE but with a slight wrinkle. Instead of Retire Early, we subscribe to Retire EARLIER (think 5 years, not 20-30). This is what defines what we call Fast FIRE.
Instead of slow and methodical, we aim to get there as fast as possible.
Why Does This Matter?
The word “earlier” makes all the difference in the world.
If your goal is to achieve financial independence as quickly as possible, you make completely different choices than if your goal is to get there in 20-30 years.
Let’s first look at the person who is just finishing residency in their early 30s and planning to use the FIRE method to retire early, at age 50. That gives them 20 years to slowly build up a nest egg that should (assuming nothing goes wrong) allow them to live comfortably for the rest of their life.
These are the people who meet their financial planners, figure out their monthly expenses, and then pick a goal number that will ensure they have enough income from their investments to cover those expenses.
They then choose investments that will get them there… slowly. Low interest but supposedly “safe” investment vehicles like index funds. More importantly, these people are adamant about choosing passive investments. They don’t have time to take out of their busy practices to pay attention to investments, so they want somebody else to make decisions about their finances.
It should because that’s what the majority of us do.
How is the Person Who is Pursuing Fast FIRE Different?
The difference is huge. A chasm really.
Fast FIRE advocates aim to get there quickly—think 5 years. Not only that, their financial goal is typically larger. Think an amount that will replace a physician’s income completely.
As we mentioned above, if your goal is Fast FIRE, you will make completely different choices than a typical FIRE advocate.
What Kind of Choices Will You Make?
If you are pursuing the goal of Fast FIRE, your choices are driven by what will give you the highest return and allow you to make the most money as fast as possible.
You don’t focus on the question of passive or active. You don’t have to love or even like what you are doing. All that matters is the level of return.
Readers tell us over and over, “I don’t want to have to manage properties.” More specifically, they say “I don’t want to get a call in the middle of the night for a leaky toilet.”
Let’s assume that owning and managing rentals directly gives you the highest possible returns, regardless of effort. As we’ve showed in previous posts, achieving 25% plus return (the plus is when you take advantage of appreciation/tap into hidden value and far surpass the 25% number) is achievable when investing in real estate for cashflow. It’s not only achievable, it’s fairly typical for our portfolio. We’ve shown you how one property generates 55% return and another will generate infinite returns (cashflow with no capital invested). And this type of return blows index funds out of the water.
Since that’s the case, if you make the decision to only invest in passive real estate investments or index funds, you are giving up the chance to achieve semi-retirement in just a few years. You are choosing to delay your freedom because you have excluded the fastest path to get there.
Now Let’s Layer in the Level of Effort
Is the pain of managing rentals enough of a reason to give up high returns and slow your path to FIRE? Is it better to be burned out at work for the next 20 years, or would you rather be financially free in 5 years in exchange for a few late night calls?
[Author’s Note: We’ve never gotten a single call in the middle of the night from any of our property managers]
Let’s take a pause and further examine the amount of effort required to successfully manage a rental portfolio like ours. We currently own over 40 units generating over $250,000 in cashflow.
We have teams in place to handle property management and repairs. While there is a lot of work to be done and emergencies can happen, we have systems in place to handle these issues. We are never the ones being called in the middle of the night (unlike what you experience with your pager).
We choose to layer in additional responsibilities like tapping into hidden value, searching for supported living opportunities, development projects or 1031 exchanging our properties into larger ones to maximize our return. Because we choose to do this, we can decide when it’s convenient for us to do the work. None of this has to be done.
So the question is, are you going to believe that you have to deal with leaky toilets or are you going to take action and pursue a path that will get you to FIRE as quickly as possible?