The idea of owning rental properties for many investors is to create a retirement vehicle for themselves.
That brings up the question, how many does it take?
Well, when you think about it there is no single answer that fits everyone. After all everyone’s personal situation is different.
Joe the lawyer may need $30,000 a month of income to replace his lawyer’s salary while Jimmy the furnace cleaner may only need $3,000.
That’s just one of the issues. It also comes down to your properties and how much they generate per month, which drastically changes once the mortgage is paid off!
Someone hoping to replace their $5,000 per month income with properties that generate $100 per month per property will need 50 properties.
If that same person had properties generating $1,000 per month cash flow suddenly they only need five rental properties.
Perhaps time is on your side as well. If your five properties all generate $1,000 per month but you’re not planning on retiring for 10 years you could commit that $5,000 monthly cash flow to paying off two, three or more of those mortgages off within ten years.
With only two mortgages completely paid off that would still be a huge bump in overall cash flow by the time you made it to ten years.
Ultimately the question isn’t “how many rental properties do you need to retire?” It’s “what’s your plan to make it work?”
Focus Areas For Rental Properties
Focusing On Cash Flow
Focusing in cash flow should be a priority if you want to replace a job, or if your timeline for retirement is shorter.
Larger cash flowing properties can fill that need and supplement other retirement income or completely replace it.
Ideas for this are multi family properties or multi unit like duplexes, suited properties, four plexes or small apartments.
In my mind cash flow solves all problems. The higher your cash flow the easier it is to navigate the inevitable hurdles.
Focusing On Equity
Maybe your long game is to get rid of your debt, then you may want to consider focusing on increasing the equity in your properties and paying off all the mortgages.
As I mentioned earlier once your mortgages are paid off your cash flow increases significantly. Timing that with your retirement becomes the perfect solution.
Imagine having three, four or even more properties completely paid for and seeing substantial cash flow coming in every month.
Focusing On Volume
Maybe you simply want tons of properties!
After all once you figure out how everything works and get all the right systems in place for yourself it does get much easier.
Maybe you simply add another property or two to your portfolio every year for 25 years. If you have 25 year mortgages on every property your cash flow will grow and grow every year as they start getting paid off.
Find Your Number
Ultimately you need to find the number of properties (and type of properties) that work for you.
That’s why having a long term plan or vision can help you get there. Haphazardly buying may get you there by accident, but understanding where you want to be and with what type of cash flow five, ten and even 25 years down the road will make your life and your retirement so much easier.
So, how many properties do you need? Leave a comment below!