Retiring early with a few rentals paid off

[Tim B.]

I've been browsing the forums and it seems that many people are into leveraging their money by buying numerous rentals looking for long term wealth. That sounds great... However, I want to retire ASAP. My SFH will be paid off soon. I'm considering renting out our house ($1,300/month based on two rentals across the street) and getting a bigger home as we're quickly outgrowing our current.

As I mentioned, I'd like to retire early. I'd like to own 2-4 rental properties renting for approximately $1,300/month. My plan is to pay them off as soon as possible. I figure this should go pretty quickly given that I have one property paid already. I like this idea as it reduces my risk and increases my monthly income very quickly. Not only that, but that's only 2-4 families that you have to deal with. My trouble with leveraging numerous properties is that you deal with that many more people, drama, vacancies, repairs, etc. I also plan on continuing to work part-time which will pull me about $24k/year.

Has anyone else done this? If so, how did it go for you? 

[Dawn Brenengen]

@Tim B.I recently ran a calculator to see how quickly I could pay off all the houses I own (six homes) if I use the mortgage payment from the first paid off one to work on the second, and then use both of those to work on the third, etc.  If I snowball without making extra payments, I will make the last payment in 23 years.  That's NOT what I wanted to see. I was hoping to use those rents to live off one day.  So, new plan - once I'm done buying, I'll start aggressively paying down.  

Anyway, I think a five year plan might be a bit optimistic if you want to have four properties.  It might make more sense at two, but that's probably not enough income to live off of.  If your rents are 1300 (x2), and 40% of that goes to expenses, that only leaves $1560/month. Health insurance alone will take a chunk out of that, plus you'll still have the mortgage on your personal home to pay.