If each property cash flow $500, is 20 unit enough to retire?

Question

Cash flow about $10k per month and home expensive about $7-8k for entire family.

Anyone have any experience on retire life? How do you manage your money any strategy?

Thank you in advance

Bill B. · Answer

You forgot to put your location in your profile. The easiest step would be to move somewhere cheaper or live a better lifestyle. Unless you have 5 kids you should be able to live comfortable on $5-6k.

The problem with your $10k is that’s going to be $8k after federal taxes and might be $7k or less if you haven’t moved to a tax free state yet. So you could be lucky to tread water until an ac unit, or a roof, or several go out at once. (20 properties should mean 2 of every kitchen/laundry appliance plus 1-2 roofs, plus 1-2 ac units, plus 1-2 furnaces every year.)

I retired easily on 12 units cash flowing $1,200/mo each. But we don’t have kids, we have 3 year old cars and don’t pay state income tax. We could probably live the same life with 6 properties.

Ps. That reminds me, when my wife retired with me that cost us an extra $1,000/mo in health insurance and we started spending an extra $1-2k/mo with free time. So you could be another few thousand upside down there.

Joe Villeneuve · Answer

Nobody here can answer that question for you.  The only ones that can, are you and your accountant.

Ricardo R. · Answer

@Tina Lee you have received some great advice here I’ll try to add another workshop perspective like many have said no one can really answer that question but you because only you know what you want retirement to look like and what responsibilities you have. However this may help —- take an average cash flow per property as you already have in your example ($500/mo.) and then create natural phases which will occur naturally during growth, for instance:

1. How many properties will you need to cover all of your essentials only i.e. food, housing, transpo. Etc.

2. How many properties will you need to cover all of your essentials and ALL of your other expenses

3. How many properties will you need to cover all of your expenses and give you an income (this is subjective to you)

4. How many properties will you need to cover all expenses, give you a steady income and also give additional income to save to continue to invest

A natural progression so that you know where you are and where you’re going; you’ll need to do some homework’s but should be fun. Something to also keep in mind —

A) cash flow does not stay static it moves, usually up. Your expenses will too but your cash flow should outpace expenses because your rent is all encompassing.

B) More properties more down time for example: if you had 12 properties (12 months) can we reasonably agree that theoretically every month you would have a turn-over; or another example if you 20 properties can we reasonably agree that every year you would be paying for a new roof on a 20year shingled roof.

C) there will likely be a snow ball opportunity which will increase and/or speed up projections. For example understanding that you will likely not acquire all 20 properties in one day but instead over a period of time - perhaps years - some will have more equity and less loan balance than others —- you may find being in a situation one day perhaps even before retirement where you are able to focus ALL cash flow from ALL properties into ONE and freeing up its mortgage payment, which would give you more CF and would speed up your snowball into the next one even faster.

Just food for thought.

Nathan Gesner · Answer

Yes.

No.

Maybe so.

I know people retired on under $3,000 a month. I know others that retired with $15,000 a month and they struggle. There are a lot of factors that go into this.

As a general rule, I would say most Americans can retire comfortably in America with less than $6,000 per month and no debt. Most financial advisors will tell you to have 80% of your pre-retirement income. If you live with $100,000 today, then you'll want $80,000 in retirement.

Chris Vargas · Answer

When considering retirement always consider the type of lifestyle you will live in retirement with all that free time will probably mean much more spending. When you retired you want to enjoy it so probably means spending on entertainment, travel, and with age health related finances. Also, think about the value of your cash flow now will not be equivalent with the same value in 5,10 years etc. due to inflation. Maybe your cash flow can sustain your lifestyle right now but not the same during retirement. But at the end retirement is just a mindset because we never fully retire from real estate, why would you!

Allen Williams · Answer

@Tina Lee

Talk to a financial advisor, but usually in that case because of taxes and random life expenses if it were me I would try and get to 12K at least (if I didn’t want to do anything anymore). But then may want to think on getting a HELOC on the investment properties and in your new retirement keep growing the portfolio using your equity. But that is just me, everyone is unique and different with their lifestyles and interests

Greg M. · Answer

Why are you asking this in a landlording forum? Might as well ask it on a baking forum.

Hire a financial planner. Not one that is going to be selling you investments, just a pure planner. Give them your real numbers and goals. Most people underestimate costs in retirement.

Tina Lee · Answer

@Bill Brandt , thank you bill! Very interesting and smart point of view

Joe Villeneuve · Answer

Why are you counting properties?  The number of properties means nothing at all...in any shape or form.  If you want to collect properties, there's a much easier and cheaper way.  Take pictures on your phone, and transfer them to your computer.

One more thing.  There's no such thing as an "average cash flow per property".

Joe S. · Answer

Sure you can retire on that. There’s people living under the bridge for less. Lol

50 pound bag of beans cost a lot less than steak and lobster and probably better for you to boot.

If each property cash flow $500, is 20 unit enough to retire?

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