The one house a year, 15 year retirement plan

[Matt Murphy]

I have heard about this strategy previously, but can’t find much about it now or know what it is called.

For the sake of this example, I am going to assume there is no appreciation.

Buy 1 house worth $300k per year and rent it out. Do this for 15 years and put them all on 15 year mortgages. At year 16, when the first house is paid off, you cash out refinance and live off of that for the year. In this example, assuming 75% LTV, you would pull out $225k and it would be tax free.

Has anyone ever done this or heard about it?  It seems like a better way to retire off of buy and hold strategy vs traditional cash flow which might get you to retirement faster, but would require the management of many more units.

[Joe Villeneuve]

Matt, you need to put actual numbers in...not percentages, and not estimates of what you want to do...but what can be done.

Your "plan" (it's not really a plan...yet.  Where are the details?) is littered with landmines.

1 - You haven't input any numbers with $ in front, other than the property value.  Where are these properties?  Will they be available still in year 15?  How about year 10, or 5, or even next year?

2 - At today's interest rates, you would be looking at around a $2000/month +/- mortgage payment.  Add taxes, insurance, etc...  By the time you've input all of the monthly expenses, that you must have the tenant pay for (rent), you would need a minimum of $2750/month just to break even.  How many problems, costly ones, do you think you will encounter over the next 15 years that will cost you money?

3 - How long do you think know interest rates will be this low?...or how high do you think they might get over the next 15 years?

4 - 75% LTV on a $300k property means a 25% DP...or in actual money terms (the only number that matters), that's $75k/year. That means you have to accumulate $75k/year, every year, for the next 15 years to buy the same property, every one of those years. Don't expect that money to come from your cash flow...you won't have any cash flow.

5 - Where are these properties now?  Where are these properties 5 years from now?...10,...15?

These problems are just the tip.

I'm not trying to burst your bubble, I'f trying to tell you to put together an actual plan...with details, and numbers with $$ in front.  DON'T use numbers with %% behind them.  They don't tell you anything you need to know, and worse, they will lie to you.