Use the Law of the First Deal to Reach Financial Freedom with Apartments
Book: Financial Freedom with Real Estate Investing | Author: Michael Blank
Previous: 8 Ways to Manage Your Apartment Building for Maximum Profits
Step #7 in the Financial Freedom Blueprint might be the easiest step in the whole plan. Not because it requires no work, but because it mostly happens on its own after you close your first multifamily deal.
Blank calls it the Law of the First Deal. And it’s kind of wild once you see how it plays out in real life.
What Is the Law of the First Deal?
The idea is simple: your first multifamily deal (any size) sets off a chain reaction that can make you financially free within about three to five years. After deal one, you’d have to work hard not to do deals two and three.
Blank says you’re now roughly one to two years from replacing your income and quitting your job. The hard part was getting that first deal closed. What comes next builds on everything you already assembled.
5 Reasons the First Deal Changes Everything
1. You have a track record. Even a small duplex counts. Brokers take your calls. Investors trust you more. Lenders see you differently. A lot of it is psychological, but psychology matters when you’re asking people for millions.
2. You have investors. The investors from deal one refer friends. Investors attract more investors. Your capital network grows without starting from zero every time.
3. You have a deal pipeline. By the time you close deal one, you know multiple brokers. Word spreads that you’re a performer. It’s common to have your second, larger deal under contract before you even close the first.
4. You have a team. Property manager, mortgage broker, attorney. They’ve been through one deal with you. The second deal is faster because you’re not building the team from scratch.
5. Your confidence and comfort zone expanded. You think bigger. You make offers on buildings that would have terrified you a year ago. Education and repetition stretch what feels possible.
Joseph Gozlan: The Perfect Example
Blank revisits Joseph Gozlan’s story because it shows the law in action. Early on, brokers wouldn’t return Joseph’s calls. Deal flow was weak. He admits he didn’t get the right training at first.
It took him two years to close a 22-unit building.
Then, six months later, he closed a 102-unit.
What changed? Track record, investors, broker relationships, team, confidence. The first deal opened up everything that was stuck before.
How to Estimate Your Financial Freedom Date
Blank gives a four-step framework to figure out how many units you need and how long it might take.
Step 1: Calculate average Income Per Unit. Use your financial analyzer to project your total compensation across cash flow distributions, acquisition fees, asset management fees, and sale profits. Divide by units and years to get a monthly average per unit.
His example: a 69-unit Memphis deal averaged about $100 per unit per month over five years (lumpy because of a big acquisition fee in year one and sale profits in year five). If you partner on early deals and own smaller GP shares, maybe your average is closer to $75 per unit.
Step 2: Determine how many units you need. If your Rat Race Number is $7,500/month and you average $75 per unit, you need about 100 units under control.
Step 3: Estimate the timeline. Blank shares real timelines from investors he’s interviewed:
- Drew Kniffin: 12 months total (3-unit, then 4-unit, then 32-unit, then quit W-2 job)
- Brad Tacia: Just under 2 years (12-unit, 12-unit, 63-unit)
- Tyler Sheff: 12 months (4-plex, 10-unit, 12-unit)
- Joseph Gozlan: 2.5 years (22-unit, then 102-unit)
The typical pattern Blank sees:
- 1st deal: 3 to 18 months from deciding to pursue multifamily
- 2nd deal: within 6 months of the first
- 3rd deal: within 6 months after that
- Total: 1 to 3 years to financial freedom
Deal size progression he commonly observes: 2 units, 10 units, 30 units, 50 units, 100+ units.
Step 4: Pick your first deal size. Meaningful but achievable. If you need $10,000/month passive income, a duplex might be too small to matter. If your Rat Race Number is $5,000/month, a duplex could be a smart entry point.
For the $7,500/month example with a 100-unit target, starting with a 10-unit building fits the progression. First deal in 3 to 18 months, then 30-unit and 50-unit buildings in year two. Within two to three years, you’re around 100 units and financially free.
What Financial Freedom Actually Means Here
At that point, you have options. Keep working or quit. Keep buying or stop. The point is you control your time. The income from your units covers your living expenses.
The Impatient Question
Blank knows what you’re thinking: “Eighteen months for my first deal? That’s a long time.”
Fair. That’s why the next chapter covers strategies to move faster. But he wants you to keep perspective. Even at the slow end, you’re on a three-to-five-year retirement plan. Most people are looking at decades.
The Law of the First Deal is the engine. Your first deal is the key that starts it. Everything after that is momentum you already built without realizing it.