Real Estate Investing Basics

How to Become a Millionaire Through Rental Properties

Expertise: Landlording & Rental Properties, Personal Development, Real Estate News & Commentary, Real Estate Investing Basics, Business Management, Flipping Houses, Mortgages & Creative Financing, Real Estate Deal Analysis & Advice, Real Estate Wholesaling, Personal Finance, Real Estate Marketing, AskBP
533 Articles Written
Happy young man on phone, indoors - inside. Close up of businessman talking on mobile phone - smartphone. Comunicative friendly hispanic man

Today I want to share with you a real simple explanation of how a person can go from almost nothing to becoming a millionaire by owning rental properties.

Let’s first get some clarification on how this works. We’re talking about buying rental properties, which means you buy a house—or maybe a duplex or an apartment building—and you rent it out.

But before I walk you through the math behind becoming a millionaire through real estate, I want to get us all on the same page as to the fundamentals about owning rentals.

The 4 Wealth Generators From Rental Properties

First, let’s talk about the four wealth generators. These are the four things that make owning rentals so awesome.

I talk about these way more in depth in my book, The Book on Rental Property Investing, but let me give you the quick and dirty on the four wealth generators.

1.) Cash Flow

This is the extra money every month that a property produces in profit (income minus expenses). The key to this, though, is making sure you have an accurate understanding of what those expenses are. They can be tricky. But basically, the money you’re left with in your pocket, that’s cash flow. 

2.) Appreciation

This is basically the simple truth that real estate tends to climb in value over time. Sure, things like 2008 happen and prices drop—sometimes a lot. But over time, prices do tend to climb.

As long as you can hold onto properties long enough, you should always see appreciation. And that’s why cash flow, which we just talked about a second ago, is so key. As long as I’m making cash flow each and every year, I can hold it as long as I need to—maybe forever.

3.) Loan Paydown

Now normally, when you buy a piece of real estate, you get a loan from a bank, which you pay on each month. But the cool thing is, over time, this loan gets paid down, which means you might start off owing $200,000 on property but eventually you’ll owe nothing.  

4.) Tax Benefits

Now, for our purposes, we’re not going to talk a lot about it. But in real life, man, the tax savings are HUGE! Like if you make $100,000 from real estate and your friend made $100,000 from a job or a business they own, you’d likely end up keeping WAY more money than your friend.

Related: How to Rent Your House [The Definitive Step-by-Step Guide]

How the 4 Wealth Generators Can Make You a Millionaire

Let me show you how these four wealth generators can make you a millionaire.

Let’s just say you bought a house as a rental. Maybe you put down 20 percent or maybe you found a more creative way to finance it and were able to do it with no money down. (This, by the way, is entirely possible. We’ve got a ton of content at BiggerPockets all about that. Heck, I even wrote a book on it!)

But anyway, let’s say you bought a house for $100,000 and put 20 percent down, so your loan is for $80,000. And let’s say you were able to make $200 per month in cash flow from that house.

$200 x 12 = $2,400 per year

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

So after one year, you’ve made $2,400. But there’s more to that, isn’t there?

During that time, your loan balance dropped from owning $80,000 to like $78,500. But assuming a 3 percent average appreciation, the value of the property has climbed to $103,000. So in reality, you made $2,400 in cash flow, but you also made $1,500 in the loan paydown and $3,000 in appreciation. We’ll ignore the tax benefits for now, but they make this even better.

So you’ve actually added about $6,900 to your net worth during the first year. You’re not a millionaire yet, but over time, the cool thing is, this speeds up.

You start paying off more and more of the loan, and the value goes up and up. In fact, assuming a 3 percent appreciation, after 10 years, the property might be worth around $135,000 and you should only owe around $60,000.

The difference between what you owe and what it’s worth is called equity, and with these numbers, it’s around $75,000. If you were to add in the cash flow you were making every month, you’ve actually added about $100,000 to your net worth.

I know a lot of you are thinking, “Ten year and only $100,000? That’ll take me 100 years to reach $1,000,000!”

But here’s the cool thing: This is just ONE deal. Once you’ve figured out how to do one, you can do another. And another. And another.

And you don’t have to stay small with $100,000 houses. In fact, what if you were to buy a $500,000 small apartment complex. The same principle applies here. Every year you’re paying off a little, and every year you’re increasing in value. Your cash flow is increasing, your net worth is increasing, and you’re getting wealthier.

And that’s how you become a millionaire through rental properties! You buy cash-flowing rentals that increase in value over time while also paying the loan down. All the while, your wealth is being built.


Related: 10 Tips For Maintaining Your Rental Properties

FAQs About Investing in Rental Properties

Now, here are a couple concerns you might be having. 

1.) How do I come up with all these down payments?  

In the beginning, maybe you’ll save up for the down payment. But honestly, I build my portfolio using more creative strategies—things like house hacking, the BRRRR strategy, using partners, or raising private money. Or maybe you’ll fix and flip a house and use that money to invest.

There are a lot of ways to put together a deal. But the bottom line is, if you have a good deal, you’ll figure out a way to finance it.

2.) How do you know if you have a good deal?

You’ve got to learn how to analyze ’em! We have calculators at that you can use, and I also teach a free webinar every week on BiggerPockets, where I walk people through the numbers. Sign up for my next one at

3.) How do you manage all these?

Well, the short answer is you don’t. I mean, you could, but for most of my properties, I hire a property manager to look after them. Of course, you still have to manage your manager, but they are the ones getting the phone calls from tenants. 

4) What if the market drops?  

This is why I buy cash-flowing rental properties. If the market drops, great. I’ll just keep holding onto them, and I’ll buy more properties because now everything is on sale.

The Bottom Line

You know what? You CAN become a millionaire through real estate. I did it in under a decade!

Sure, it won’t happen overnight, but it will happen if you’re patient, you stick to sound principles, and you continually educate yourself on how to be better.  

Have you began your journey toward becoming a millionaire yet? If not, why? How can I help you get started? 

Leave a comment below!


Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He began buying rental properties and flipping houses at age 21, discovering he didn’t need to work 40 years at a corporate job to have “the good life.” Today, with nearly 100 rental units and dozens of rehabs under his belt, he continues to invest in real estate while also showing others the power, and impact, of financial freedom. His writings have been featured on,,, Money Magazine, and numerous other publications across the web and in print media. He is the author of The Book on Investing in Real Estate with No (and Low) Money Down, The Book on Rental Property Investing, and co-author of The Book on Managing Rental Properties, which he wrote alongside his wife, Heather, and How to Invest in Real Estate, which he wrote alongside Joshua Dorkin. A life-long adventurer, Brandon (along with Heather and daughter Rosie) splits his time between his home in Washington State and various destinations around the globe.

    Tom Phelan Real Estate Investor from Miami, Florida
    Replied 5 months ago
    Sound advice. Imagine if you bit the bullet today and paid taxes on, say the 50% down and 50% Non Recourse financing and placed it into a ROTH IRA. The ROTH IRA buys the SFH. You would have Tax Free Income forever and never have to take distribution. For those whose believe Wall Street’s mantra, “Taxes will be cheaper when you retire” consider this, if you look at the top tax rate over the last 50-years it has averaged over 50%. Enjoy Trump’s tax rate while you can because with a 22-Trillion dollar deficit growing at trillions more each year I don’t see it lasting very long. Pay now and take comfort in the fact you won’t care what the tax rate is when you retire because it won’t matter, at least for you and hopefully by then your property will be mortgage free and a cash flowing property.
    Susan Maneck Investor from Jackson, Mississippi
    Replied 5 months ago
    Wait a minute. First you have to have the self-directed Roth IR or solo401K buy the property. You can’t buy it then put it in a Roth IRA. Also no-recourse loans (the only ones allowed in retirement accounts) are hard to get for these accounts and the interest is high. I own three properties in my solo401K (non-Roth) but I paid cash with money I rolled over from other IRAs.
    Jim Armitage Rental Property Investor from Massachusetts
    Replied 5 months ago
    Thanks for the inspiring post and perfectly timed as I had just signed up for your free webinar. I’ve already got a couple rentals but it wasn’t a great experience which made me sort of shy away a bit. I’m ready to get aggressive buying and holding additional properties and your post helped to nudge me along.
    Susan Maneck Investor from Jackson, Mississippi
    Replied 5 months ago
    Incidentally, I started investing in real estate in 2011 and am now just a little shy of my first million. Of course I’m 63 now an you need a million to retire if you follow the 4% rule. If I had not gotten into real estate I would now have about half of that and the thing is, with real estate you don’t have to follow the 4% rule, you just live off your rents.
    Jerome Hildreth
    Replied 5 months ago
    Hey been on bigger pockets for week! I see value and I put a plan together. In market in Chicago Illinois. I want went out my house and buy a 4 unit building for my first rental. Is that good idea.
    Tom Phelan Real Estate Investor from Miami, Florida
    Replied 5 months ago
    When I said “Bite the bullet” and pay “taxes” I was referring to rolling over a Traditional IRA into a ROTH IRA thus any limitation on annual contributions doesn’t apply. Also, with a SOLO 401(k) one can contribute up to $55,000 annually. With a ROTH IRA the limit is $6,000. A SOLO 401(k) can have two components, one Traditional (post-tax) and one ROTH (pre-tax). Up to 4-units Non Recourse financing is available through NASB (North American Savings Bank) but you’ll need a bigger down payment, e.g. 30% – 50%, 6-months reserves, and a slightly higher interest rate and a point or two extra. One of the biggest advantages of a SOLO 401(k) is … you don’t need a Custodian ergo No Fees. No need for a “Custodian” is why IRA Reps working for IRA Custodians won’t suggest a SOLO 401(k), it will put them out of work..
    Komi Kafui Aziagba
    Replied 5 months ago
    Hi,Turner, came accross a12 units apartment that is for rent at 500 CFA. My offer for 250 CFA rejected. My push- up for 300 also rejected. Seller stops dead at 400 CFA. But villa contains 8 chambers in city center. Worth renting and re-renting for cash flow?
    Andreas Mueller Rental Property Investor from Washington DC
    Replied 5 months ago
    Great post Brandon. Puts a simple visual paired with a specific goal in our heads.
    Senate Eskridge from Twin Falls, Idaho
    Replied 5 months ago
    Nice post, no reason you cant keep this going and get to 10 million or more.