How Many Rental Properties Does It Take to Retire Early?

Abstract

Ditch Your Day Job: How to Retire Early with Rental Income The Leveraged Rental Retirement Portfolio There is an endless debate about how much debt you should use in real estate investing. Positives/Negatives to The Leveraged Rental Retirement Portfolio Positives: You locked in low-interest, long-term debt secured by quality rental properties. 10 rental properties Total cost = $1,200,000 $1,200,000 equity capital invested $0 debt financing Total rental income/month = $12,000 Operating expenses/month = -$5,000 Net operating income/month = $7,000 Mortgage payments/month = $0 Total net positive cash flow/month = $7,000 Total net positive cash flow/year = $84,000 Using the math formula from earlier, we can calculate our cash on cash yield as follows: $1,200,000 x r = $84,000 r = 7% Just like the last portfolio, there are positives and negatives to this example. Step #4 - Create a Profile of Your Retirement Rental Property Earlier in this article, I described what a retirement rental property looked like for my example. If the properties in your market will cost $100,000 and if you plan to own them free and clear, you'll need 10 rental properties. How Many Rental Properties Do YOU Need to Retire? So far I've 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. 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? More Early Retirement Reads: 17 Clever Ways to Come Up with a Down Payment for a Rental Property How Recession-Proof Are Rental Properties? About the Author Chad Carson is a real estate investor, world traveler, father of two beautiful children, husband, and founder of CoachCarson.com.