Real estate is one of the best retirement investments, giving you cash flow and appreciation that can outpace inflation and most other assets. But how many properties and how much cash flow do you need to retire on your terms? In this guide, we’ll show you how to use our free retirement calculator to find out in seconds!
Our simple retirement calculator makes it easy to determine exactly what you’ll need for retirement. With the calculator pulled up, follow these steps:
First, how much money will you need per month to cover your needs (and wants) in retirement? If you don’t know your monthly cost of living, tally up your average fixed and variable expenses from past bank statements, credit card statements, and recent bills. Will you have a paid-off home in retirement? If so, that’s a huge expense you can deduct from your cost of living!
If you own (or plan to own) rental properties, estimate the average monthly cash flow you’ll receive from one property in retirement. Keep in mind that your cash flow will likely change over time as you increase rent, refinance your mortgage, or pay off your property!
Need help calculating real estate cash flow? Try our Rental Property Cash Flow Calculator!
If you own multiple rental properties, calculate the average home price from your portfolio. If you don’t own any properties, choose a price point that is realistic for your budget and the market you’re investing in.
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Finally, how much money are you willing to invest in real estate per year? The more money you put aside, the sooner you’ll reach your retirement goal.
Hit “calculate,” and our tool will tell you how many properties you need to retire, how many years it will take to reach your goal, your total portfolio value at retirement, and how close you’ll be to your goal when you reach retirement age.
Now, it’s time to review your results and adjust your investing strategy to fit your retirement goals. Here’s what each number means:
Based on your average cash flow per property, this is how many rentals you’ll need to retire. For example, if you need $5,000 per month and make $500 per property, you’ll need 10 properties to retire.
This tells you how many years it would take to build your retirement portfolio if you started now. Lowering your expenses, increasing your cash flow, or investing more money in real estate will allow you to retire faster!
We can help speed this WAY up!
This is how much your entire real estate portfolio would be worth by the time you retire. This is solely based on how much you paid for these properties, and with appreciation, your portfolio could be worth much more down the road!
This is how much of your real estate retirement goal would be accomplished by your set retirement date. For example, if your “% Goal Reached by Target Retirement Date” is 50%, you may need to double your timeline to retirement (or speed up your investing!).
Why should you own rental properties versus investing in stocks, businesses, and other assets? Here are several unique benefits that real estate provides for investors:
Rental properties provide cash flow, which is the monthly profit you earn after expenses and debt service (your mortgage payment). This can be a consistent source of income to supplement your retirement withdrawals or fully replace your W2 income. If you own an entire portfolio of rentals, you’ll earn even more monthly cash flow, and one vacancy won’t throw off your monthly net profit!
In addition to cash flow, home value and equity increase over time as you pay down your mortgage, make home improvements, and ride out the housing market. This means you’ll make even more money when you sell!
The US government incentivizes real estate investing by providing all kinds of tax benefits. With rental property tax deductions like interest write-offs, operating expenses, and depreciation, you can (legally) keep more of your money from the IRS.
Work with the real estate investing EXPERTS and retire faster!
Looking to retire with rentals? We have the best retirement calculator to determine your investment property needs. Open up the tool, plug in your numbers, and then buy investment properties that will catapult you toward your retirement goals!
$500,000 isn’t enough for most Americans to comfortably retire on, but if you invest that money into 20%-down turnkey rentals, you could have $2,500,000 in real estate. With a 10% cash-on-cash return, this could provide you $50,000 per year!
The $1,000-per-month rule is a 5% withdrawal plan that says you need $240,000 saved for every $1,000 you withdraw per month. For example, if your monthly cost of living is $5,000, you will need $1,200,000 saved. While saving is a great skill, real estate investing can provide much more robust benefits, like equity growth, consistent cash flow, tax benefits, and a higher return than 5%.
While saving, stocks, bonds, and real estate all have their pros and cons, investing in real estate for retirement provides the most robust benefits—giving you both cash flow and appreciation to fight inflation. What’s more, it allows you to use debt to invest, which you can’t do with most other investments!