How to Build Financial Freedom Through High-Cash-Flow Short-Term Rentals

Based on my conversation with Kirby Atwell on Pending & Trending

Real Estate Investing | Cash Flow | Short-Term Rentals | Financial Freedom

Most people get into real estate investing because they want to build wealth, create additional income, and eventually gain financial freedom. But there's a difference between making money in real estate and actually building a business that gives you more control over your time.

That's something Kirby Atwell learned firsthand.

After spending five years flipping houses and completing approximately 70 projects around Chicago, Kirby took a closer look at his financial situation and realized he was in nearly the same position as when he started. He was making money, but much of it was going right back into the business.

He realized he didn't want to spend the rest of his career constantly finding, renovating, and selling another property. He wanted assets that could generate consistent cash flow.

That shift led him to short-term rentals, a strategy that eventually helped him leave his full-time job in 2021 and grow his portfolio to 43 short-term rental listings.

I recently sat down with Kirby on Pending & Trending, and one of the biggest takeaways from our conversation was that building wealth isn't just about how much money you make. It's about what your investments actually produce and how much freedom they give you.

Here's what stood out to me from his journey.

From Flipping Houses to Building Cash Flow

Kirby began investing in real estate full-time after leaving the U.S. Army in 2011. With limited traditional financing options available to him at the time, he started flipping houses with a couple of partners.

Over approximately five years, they completed around 70 flips.

The business generated income, but Kirby noticed that the money wasn't translating into the financial independence he originally wanted. Much of the profit went right back into marketing, finding new deals, and keeping the business running.

It became a cycle of transactions.

He eventually started purchasing long-term rental properties, but the cash flow wasn't enough to replace his income without acquiring a substantial number of units.

Then, in 2017, he and his family decided to try something different.

They finished the basement of their home in Northwest Indiana, converted it into a one-bedroom apartment, and listed it on Airbnb.

The result surprised them.

During its first summer, that small apartment generated just over $22,000 in revenue. Kirby realized that one short-term rental unit had generated more income than some of his long-term rentals produced over an entire year.

That experience changed the direction of his investing business.

What I find interesting about this part of his story is that the opportunity didn't start with a large vacation property or an expensive acquisition. It started with space they already had and a willingness to look at it differently.

Why Small Multifamily Properties Can Be Powerful Short-Term Rentals

When people think about short-term rentals, they often picture beautiful vacation homes, lakefront cabins, or beachfront properties.

Those properties can certainly be attractive, but Kirby believes investors sometimes overlook a more practical opportunity: smaller multifamily properties in secondary markets.

His strategy focuses on markets just outside major cities, particularly throughout the Midwest and Southeast, where property prices can be considerably lower.

Instead of purchasing one expensive vacation home, investors can acquire a two-, three-, or four-unit property and operate each unit as an individual short-term rental.

There are several advantages to this approach:

• Multiple income streams: Each unit can generate its own rental income.

• Lower acquisition costs: Smaller multifamily properties in secondary markets can offer more accessible entry points.

• Cash flow potential: Short-term rental rates can produce more income than traditional long-term leases.

• Flexibility: If market conditions change, the units may still be operated as long-term rentals.

For me, the important distinction here is that Kirby isn't simply looking for properties that look impressive. He's looking for investments that make financial sense after all the expenses are paid.

And that brings us to one of the most important principles he shared.

The 1% Net Rule: Focus on What You Actually Keep

Many real estate investors are familiar with the traditional 1% rule. The idea is that a property should generate monthly rent equal to approximately 1% of its purchase price.

For example, a $300,000 property would need to generate $3,000 in monthly rent.

But Kirby approaches short-term rental opportunities differently.

He calls it the 1% Net Rule.

Rather than focusing on gross rental revenue, he looks at the actual amount left after expenses.

Consider his example of a $300,000 three-unit property:

• Monthly gross rental income: $7,000

• Monthly expenses: $4,000

• Actual net cash flow: $3,000

That $3,000 is what matters.

It accounts for expenses such as mortgage payments, property taxes, cleaning, utilities, and other operating costs.

Kirby made an important distinction when evaluating a deal: Is this money you can actually take to the grocery store and spend, or is it simply the amount you collected before paying all the expenses?

That's a question every investor should be asking.

A property might look incredibly profitable based on gross revenue, but once you account for the expenses, the actual return could be much smaller.

I would much rather understand what a property puts in my pocket than get distracted by an impressive revenue number.

True net cash flow is what can help replace a paycheck, cover living expenses, and create more financial flexibility.

Two Mistakes First-Time Short-Term Rental Investors Should Avoid

Getting started in real estate investing can be exciting, especially when you're purchasing your first investment property. But Kirby pointed out two common mistakes that can hold new investors back.

1. Buying a property just for the learning experience

Some first-time investors struggle to find a deal and eventually convince themselves to purchase a property with mediocre returns simply to gain experience.

Kirby cautions against this approach.

A poor investment doesn't just affect your immediate returns. It also ties up your capital, time, and resources that could have been used toward a better opportunity.

Your first property should still make financial sense. Learning is important, but it shouldn't come at the expense of buying a bad deal.

2. Choosing the property that looks the most appealing instead of the one with the best return

Many investors are naturally attracted to beautiful vacation properties with lakefront views, swimming pools, and impressive amenities.

But the property that looks the best isn't necessarily the one that performs the best financially.

Kirby explained that smaller multifamily properties without all the expensive bells and whistles can often outperform traditional vacation rentals when comparing the amount invested against the actual return.

This is a good reminder to separate emotional buying decisions from investment decisions.

A beautiful property might make a wonderful vacation destination, but a less glamorous property could make a much better investment.

When you're buying for investment purposes, the numbers need to make sense before the property wins you over.

You Don't Have to Manage Everything Yourself

One concern that often comes with short-term rental investing is the day-to-day management.

Who handles guest questions at midnight? Who coordinates cleaning? What happens when a guest can't access the property?

Kirby has built a system that allows him to manage his portfolio without personally handling every task.

Rather than hiring a traditional property management company, he works with a team of local cleaners, handymen, and virtual assistants.

The local cleaners handle turnovers between guests, while handymen take care of maintenance needs.

His virtual team manages bookings, coordinates cleaning schedules, communicates with guests, and handles daily operational responsibilities.

After growing to four or five properties, Kirby hired his first virtual team member in the Philippines. Today, he has four full-time team members supporting 43 short-term rental listings.

His approach is technically self-management, but that doesn't mean doing everything himself.

Instead, he's built a system where responsibilities are delegated, processes are established, and much of the day-to-day work is handled by his team.

I think this is an important lesson for anyone who wants to scale a real estate business. You don't necessarily need to do more work as your portfolio grows. You need better systems and the right people supporting the business.

Building a rental portfolio also means building the operations that allow it to run.

Understand the Market Before You Buy

Short-term rental regulations have become an important consideration for investors.

Airbnb policies, local ordinances, and township regulations can all affect how a property operates. Kirby emphasized the importance of understanding both the platform and the local market before purchasing.

Airbnb remains a major player in the industry, but Kirby also encourages property owners to develop direct booking relationships.

Guests who have already stayed at a property may want to return. Building relationships with those guests can create opportunities for repeat bookings outside the platform.

Investors shouldn't simply assume that a property will remain profitable because it performs well today.

They need to understand the regulations, demand, operating expenses, and alternative rental options in that particular location.

Having the ability to transition a property into a long-term rental can also provide another layer of flexibility if short-term rental conditions change.

This is why I believe the research you do before buying is just as important as the property you eventually choose.

Why Investing in One Market Can Help You Scale Faster

Diversification is often considered an important part of investing. However, Kirby believes new investors sometimes try to diversify too early.

Rather than purchasing one property in several different markets, he recommends initially building a portfolio in one market that offers strong investment opportunities.

Why?

Because operating multiple properties in the same market can create efficiencies.

Investors can:

• Build relationships with the same local real estate agents.

• Work with established cleaners and maintenance professionals.

• Become familiar with local regulations and rental demand.

• Develop systems that can be repeated across multiple properties.

• Reduce the complexity of managing teams in different locations.

Kirby experienced this firsthand.

His properties are concentrated in Northwest Indiana, approximately an hour outside Chicago.

By building his portfolio in one area, he was able to establish the relationships and systems necessary to grow without having to recreate his operations in every new location.

He explained that the cash flow from his portfolio eventually allowed him to leave his full-time job in 2021.

His advice is to focus on reaching financial freedom in one market first, then consider expanding into other markets as the portfolio grows.

I like this approach because it highlights something investors don't always consider: scaling isn't just about acquiring more properties. It's about making your business easier to operate as you grow.

Stop Prioritizing Net Worth Over Cash Flow

One of the most interesting points Kirby shared with me was his perspective on building wealth.

He believes many investors spend too much time focusing on net worth and not enough time building cash flow.

Traditional investments such as retirement accounts, stocks, and bonds may appreciate over time. However, they don't necessarily generate the immediate income someone needs to cover everyday living expenses.

Kirby recommends considering cash-flow-producing assets as part of an investment strategy.

His approach was to redirect money that might otherwise have gone into traditional investment accounts toward acquiring rental properties that could generate monthly income.

By using financing such as DSCR loans, investors may be able to purchase income-producing properties without having to fund the entire purchase price themselves. Kirby described using financing at approximately 80% of the purchase price in his strategy.

The objective was to build enough monthly cash flow to replace his salary.

Once he reached that point, he had something more valuable than a growing investment portfolio: control over his time.

He could step away from his full-time job without relying entirely on a paycheck.

This is a different way of thinking about wealth.

Instead of only asking how much your investments might be worth 20 or 30 years from now, consider how much income they can generate and how that income can support the life you want today.

To me, that's an important distinction between accumulating assets and building financial freedom.

Building a Short-Term Rental Business Requires a Repeatable Strategy

Kirby's experience eventually led him to create the Short-Term Rental Cash Flow Blueprint, a program designed to help investors understand and implement his investment strategy.

After launching his podcast, Living Off Rentals, in 2020, he began receiving questions from people who wanted more detailed guidance.

They wanted to understand how to identify profitable markets, choose financing, evaluate properties, and establish the systems needed to operate short-term rentals.

In 2021, he developed a step-by-step program covering the entire process.

He has since worked with approximately 400 people.

Rather than simply telling investors which property to purchase, Kirby helps them understand how to identify the right market, evaluate potential deals, and run the numbers.

He also reviews investment numbers with participants to determine whether a property meets his 1% Net Rule.

The goal is to help investors develop the knowledge and skills to evaluate future opportunities independently, rather than relying on someone else to find every deal for them.

I appreciate that distinction. The ability to evaluate an investment for yourself is a skill that can serve you well beyond your first property.

Final Thoughts: Build Assets That Give You Your Time Back

One of the biggest lessons from Kirby Atwell's investing journey is that making money and building financial freedom aren't necessarily the same thing.

He spent years flipping houses and generating income, but eventually realized he was still tied to a business that required constant transactions.

By shifting his focus toward cash-flow-producing rental properties, he created a business that could generate income without requiring him to personally handle every daily responsibility.

Today, his portfolio has grown to 43 short-term rental listings, supported by a team and systems that allow him to operate with greater flexibility.

For anyone considering short-term rental investing, his experience offers several important takeaways:

• Focus on actual net cash flow, not just gross rental income.

• Don't purchase a property simply to gain experience.

• Evaluate investment potential rather than emotional appeal.

• Understand local regulations and have an alternative rental strategy.

• Build systems and delegate operational responsibilities as you grow.

• Prioritize cash flow as a path toward financial freedom.

Real estate investing shouldn't just be about accumulating properties. It should be about building assets that support the life you actually want to live.

Because ultimately, the goal isn't simply to own more real estate. It's to create more choices, more flexibility, and more control over your future.

Continue the Conversation

I enjoyed this conversation with Kirby Atwell on Pending & Trending, where we explore real estate investing, entrepreneurship, wealth building, and strategies for creating financial freedom.

If you're interested in building wealth through short-term rentals, I encourage you to learn more about Kirby's approach.

• Website: Living Off Rentals

• Free Web Class: LivingOffRentals.com/start

• Podcast: Living Off Rentals

It's a conversation worth watching if you're looking for a different way to think about real estate investing and the role cash flow can play in creating financial freedom.

Follow Pending & Trending with Deidre Quinn for more conversations about building wealth, creating opportunities, and turning today's investments into tomorrow's financial freedom.