How Many Rental Properties To Retire


Rising Equity And Net Worth Over Time

How Many Rental Properties Does it Take to Retire?

Because you dont have to sell off any assets to generate rental income, your net worth rises over time instead of shrinking.

Landlords see their equity grow from both directions at once. Their rental properties usually appreciate over time, growing in value. At the same time, their tenants pay down their mortgage for them, so their debt shrinks even as the property value rises.

Eventually, their tenants pay off the mortgage entirely, leaving them with a free and clear rental property and even greater cash flow for retirement income. Rather than hoping you dont run out of money before you die, you can leave behind a substantial inheritance for your children or charity of choice.

Other Blog Posts In The #drawdownstrategy Chain

As I mentioned in the beginning, Im not the only one who has written about this. At least 20 other interesting and intelligent bloggers have shared their own drawdown or withdrawal strategies. Most are not real estate investing based, which makes them even more interesting. You learn the most from those outside your circle of competence.

So, I recommend you check some of them out.

Rental Property Retirement Formula

Many people use a retirement calculator to estimate how much money they need when investing in traditional assets like stocks and bonds. Fortunately, the formula for rental property retirement is pretty straightforward:

  • I = M x C

Where I is the income needed in retirement to pay for living expenses, M is the money invested in rental property, and C is the cash-on-cash return the rental property generates.

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Want To Invest In San Diego Rental Properties

WeLease Property Management Company helps landlords owning all types of rental properties in San Diego County with all their property management needs. No matter if they are condos, single-family homes, multi-family units, or large apartment complexes.

Contact us before you invest in San Diego area rental properties, We can introduce you to experienced qualified Realtors to help you find all types of rental properties.

Steven Rich, MBA Guest Blogger

How Can You Buy Rental Properties With Less Money Down

Ebook cover

I can buy rental properties with about $30,000 cash in my market using financing. Some people are in markets with higher prices or they dont have $30,000 to invest. Even if you do have $30,000 to invest you do not want to spend all of it buying and repairing a property. Expenses will come up or it may take longer than you expect to rent and you need money set aside to make repairs or handle vacancies.

There is a simple way to buy with less money down, but it takes some sacrifice. Buy as an owner occupant, live in the home one year, then rent out the home. When you buy as an owner occupant you can put as little as 3.5% down with FHA or $0 down with a USDA or VA loan. The payment will be higher than the 20% down loan, because of the higher loan amount and because these loans will require mortgage insurance in most cases. That mortgage insurance can add $200 or more per month.

Once you buy a house, live in it one year and then rent it out,. You can repeat the process over and over again as long as you keep qualifying for new loans. As long as you live in a house for a year or whatever the owner occupant requirement is for your lender, you can legally rent out the home.

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What Is A Real Estate Syndication

Syndication is when many people get together to buy property. Its usually set up by a GP or a group of GPs which stands for General Partner. GPs find multifamily investment opportunities, negotiate the terms of the purchase, arrange a first mortgage on the property, create the business plan, collect money from the Limited Partners, and close on the transaction on behalf of all the partners. Limited partners have no liability other than their initial investment.

Is Property Investment Your Only Means Of Wealth Creation

One of the first matters that youll need to determine is whether you’re going to have other investments or income producing assets working for you. If not, you may need to consider several investment properties within your wealth creation strategy.

Note: Other sources of passive income may include investments in stocks and company stocks.

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The Importance Of An Asset Protection Plan

Of course, this strategy depends on the growth in your property portfolio and your ability to ride the property cycle.

This means that as you build your asset base, buying high-growth properties and adding value, you will need an asset protection plan to see you through the ups and downs that youll experience.

After all, over the next 10 years, well have good times and bad.

There will be periods of high-interest rates and times of lower interest rates.

And well have periods of strong economic growth, but there will also be downturns.

Savvy investors count on the good times but plan for the downturns by having an asset protection plan, as well as a finance and tax strategy to make sure they set up their structures in the most efficient way.

Dont get me wrong, while Ive just made gaining financial freedom from property investing sound simple, its not easy.

And thats not a play on words.

The fact is, around 20% of those who get involved in property investment sell up in the first year and close to half sell their property in the first 5 years.

And of those investors who stay in property, about 90% never get past their second property.

So if you want financial freedom from property investment to fund your dreams, youre going to have to do something different to what most property investors are doing.

Youre going to have to listen to different people to who most Australian property investors listen.

Buying the right type of property is the key.

Investing For The Upside

How Many Rentals Do You Need to Retire

Investing for the upside means you continue to prioritize long-term growth of your wealth. This gives you the flexibility to pay for discretionary expenses. It also allows you to contribute to important causes, leave an inheritance, and prepare for the unknowns.

In many ways, the approach is similar to the investing you did to build wealth in the first place. Youll need to find an overall growth strategy for the portion of your wealth not invested for the income floor. And it will need to meet your personality and risk tolerance.

One of my core strategies has been investing in quality real estate leveraged with safe debt. So, that will continue to be part of my upside investing approach, especially with inflation as a possible future challenge. But as my investment portfolio becomes larger, I continue to reduce the overall percentage of leverage. Im closer to 50% leverage now. But over the long run, Im moving towards a more comfortable 25% of my overall portfolio.

I also invest in my self-directed IRA with private notes, limited partnership investment properties, and broadly diversified stock index funds. For an early retiree who doesnt touch these funds, retirement accounts are perfect for upside investing vehicle.

One final consideration in my withdrawal plan has to do with backup plans and flexibility.

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Target Retirement Income: $48000 Per Year From Five Homes

However, if the investor were able to retire on $4,000 per month and generate an average 7% cash-on-cash return from a rental property retirement portfolio, the money needed to invest in rental property would be $685,714:

  • $48,000 Income / 7% Cash-on-cash return = $685,714 Money invested in rental property

In this case, an investor would need about five rental homes to retire, assuming an average home price of $140,000 and an average cash-on-cash return of 6%.

How Many Rental Properties Do You Need To Be A Millionaire

The first step to becoming a real estate millionaire is acquiring enough rental properties that the asset value exceeds the million-dollar mark. In some areas, you can achieve this with as little as four homes. You may have to own at least 10 properties to have an asset value of a million in other areas.

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Cash Flowing Rental Properties For Rental Income

Cash flow rental properties usually cost less money to acquire because theyre not in as desirable areas, but these types of rental properties will likely provide far more passive income to those who own them through monthly cash flow. The main reason for this is that the expenses will be much lower. Although these properties are more cash flow based, they still do appreciate but it is usually at a much slower rate.

A good rental property does both. Every real estate investor should be looking to acquire rental properties that cash flow and have a strong chance of appreciating.

The number of rentals you need before retiring is completely up to you, but many real estate investors find it easier to own only a few rental properties that are larger in size with multiple units than to own many rental houses that only contain a single unit. The reason for this is that investment properties that have more units are more stable, reliable, and make your portfolio more efficient to manage.

How Many Rental Properties Do You Need To Retire

How Many Rental Properties Do You Need to Retire?

So far Ive shared the simple math of real estate retirement, two examples of rental retirement portfolios, and 5 steps to calculate the number of rental properties you need to retire.

Will this be a perfect prediction of your retirement rental income? Of course not. But it doesnt need to be perfect in order to move you towards your goals. A solid, approximate goal will do the job.

But most importantly I hope this information will give you confidence and a solid framework. You can then build upon those to create a retirement income from rental properties for yourself.

Keep in mind that this article primarily shared the end result of a retirement plan. If you want case studies and articles that explain how to grow your portfolio and move towards retirement, Ive got more reading for you:

> > > You can also buy my book, which has all of my best advice all in one neat, portable package! Its available in . < < <

I wish you a successful journey towards rental retirement income!

How many rental properties do you need to retire? Were these examples and steps helpful for you? What do you think about using rental income to fund some or all of your retirement?

I look forward to receiving your comments below!

Also Check: Financial Strategies For Successful Retirement

How Much Do I Need To Retire If My House Is Paid Off

There are a few tips you can follow if you want to live comfortably during your later years. One is that 70 percent of your pre-retirement salary will be needed for this purpose. If your job has just been paid off and your health is excellent, you might be able to set aside that amount when you leave.

Gps Responsibility Post Closing

After closing, it is the responsibility of the GPs to actively manage the asset and create value, usually in the form of renovations. The GPs are highly experienced investors who know the ins and outs of the business. The LPs should feel confident that their money is being put to work in a way that maximizes the LPs return on investment or ROI.

Recommended Reading: Retiring At 62 Health Insurance Cost

Can I Live Off Investment Income

If you invest your money in income-producing investment vehicles, you can create an income for yourself that will allow you to live without working. The trick is to have enough income to avoid having to withdraw any principal for living expenses. You should cut out any expenses you dont really need.

Real Estate Income For Retiring: Pros Vs Cons

How Many Rental Properties do YOU Need to Retire Early?


About the author:G. Brian Davis is a real estate investor who has owned dozens of investment properties over the last 15 years. Hes also the co-founder of, an online resource which provides free landlord education and video series for anyone looking to build passive income from rentals.

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How To Fund Your Retirement With Investment Properties

When done correctly, rental property investments can be a profitable avenue for anyone to explore. In fact, using rental properties to fund your retirement has proven to be an excellent option for some people. However, investing in real estate takes a lot of time, money, and effort. So, if youre interested in learning how to fund your retirement with investment properties, just keep reading.

Your Home Can Be An Investment Too

When coaching my clients, I try and encourage them to approach a home purchase similar to an investment purchase. I realise this is not always possible and there are maybe lifestyle considerations. However, I know the significant compounding benefit to my clients of buying a home that generates a strong amount of capital growth. Sometimes its possible to have your cake and eat it too i.e. a nice home that also makes a good investment.

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How Many Rental Properties Do You Need To Generate Your Target Income In Retirement

Now that we know why people use rental property to retire, lets take a look at how many rental properties someone might need in retirement. We can back into the answer to this question by asking how much money someone needs to support themselves in retirement, then use a little bit of reverse engineering.

Should I Sell Rental Property In Retirement

How Many Rental Properties Do You Need to Retire?

Wait until retirees reach retirement age to take into account a lower tax bracket than they enjoyed during their working lifetime. an investor delays the sale of his investment property until after retirement since capital gains and depreciation are reduced if the investor receives federal taxable income after his retirement.

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What Are The Basics Of Investing In Rental Properties

Getting great returns on rental properties is not easy, but great things in life rarely come without a price. To make money on rental properties I like to follow these guidelines:

  • Buy rental properties below market value
  • Buy rental properties that cash flow
  • Do not count on appreciation, unless you have a solid plan in place to deal with market down turns
  • Find a great lender that will help you leverage your money
  • Have a great team in place that can help you buy rental properties: real estate agent, lender, contractor and attorney if needed
  • Stay on top of your tenants and maintenance
  • Have an emergency fund set up for unexpected costs

How Many Properties Do You Really Need To Retire


Why do you buy Australian property? For your family, or perhaps as an investment piece to generate wealth for later in life? The Australian Prudential Regulatory authority takes stock of all of the country’s lending, and found that as of the December quarter last year, there was a cool $500.7 billion borrowed for residential property investment.

That’s 36.1 per cent of all lending – more than a third of what we borrow for housing goes to investment property. Clearly, it’s a popular option for many people looking to generate wealth. And with the benefits of capital gains and positive cashflow real estate, why wouldn’t it?

But one important question persists – how many investment properties should you have in order to retire comfortably?

How much money do you need to retire?

Before we work out how many investment properties you might need, first let’s look at the official figures given as necessary for retirement. The Association of Superannuation Funds of Australia releases a quarterly retirement standard, which details the annual cost of settling down. As of the December quarter of 2015, they were listed as follows.

  • For people aged about 65, it would cost $23,797 per year to live modestly on ones own .
  • To live a comfortable solo lifestyle at this age, the cost per year is $43,184 .
  • At age 85, a modest single lifestyle is priced at $23,176 per year
  • Meanwhile, a comfortable lifestyle from 85 is $38, 675 per year for singles .

Planning the portfolio

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Why People Use Rental Property To Generate Retirement Income

There are numerous ways that people could retire, such as investing in growth stocks, relying on a pension or retirement savings plan, depending on Social Security, or living frugally and saving as much money as possible. Or, a combination of all of the above.

So why is it that people use rental property to retire?

The answer is that unlike the traditional ways to retire, real estate investments provide several unique benefits to help people to retire on real estate:

Cash flow

One of the main reasons people use rental property to retire is for the cash flow or cash-on-cash return. Cash-on-cash return representss the pre-tax cash income earned on the cash invested in a property. It is calculated using the following formula:

  • Cash-on-Cash Return = Annual Pre-Tax Cash Flow / Total Cash Invested

If an investor paid $95,000 for a rental property and earned an annual pre-tax cash flow of $5,500 per year, the cash-on-cash return would be 5.8%:

  • $5,500 pre-tax cash flow / $95,000 total cash invested = 0.058 or 5.8%

The tenant pays the rent, the investor pays for operating expenses and repairs, and keeps the remaining cash flow or cash-on-cash return as profit.


Home prices in the U.S. historically have increased over time. As the Federal Reserve Bank of St. Louis reports, the median sales price of houses sold for the United States have more than doubled since Q1 2000.


Tax benefits

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