How many people do actually really live 100% off rental cash flow?
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
How many people do actually really live 100% off rental cash flow?
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Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
1yI do because I live in a much cheaper market than Chris. You can live quite well in Vegas on a little over $200k/yr. it took 10 homes and 10 years but the very low cost of living and a simple life made it relatively easy. Insurance is “cheap”, property taxes are VERY low, and the lack of state income tax is a bonus 10% tacked on to your income.
Spend the beginning buying new primary homes that you move out of and rent to get the lower interest rate, not necessarily the lower downpayment. Unless you need that. If at all possible get 15 year mortgages. Again, lower your interest rate even if it increases your payment. The primary home and 15 year loan might save you more than a point. While that $5k/yr every year won’t come in cashflow, it is real money. Accumulate the number of homes you need. Then sink all the cashflow/profit back in paying them off. If you have a pension, a working spouse, or live in or move to an even cheaper market than me 5 homes should bring in $100k/yr. MUCH more than the average retiree.
I chose 10 because those were the cheap and easy loans and I didn’t need more. I did it for freedom and because the idea of hoping I died before I depleted my retirement accounts scared me. I’m a saver and will never touch the retirement funds I wasted the first 10 years of my life accumulating. I met my wife too late for us to have kids. But I can’t even imagine working until you’re 50 or 60 if you have kids. They say you’ll spend more time with them before they’re 18 than after, no matter how long you both live. But the real number is probably 14 or 15. Enjoy them while you can. It’s one of the few regrets I have.
Don’t compare your journey to anyone else’s. And Good luck.
89 Replies
- 1yAlecia LovelessPro MemberMember since 2019 · 3k+ posts · 2k+ votes
@Marcus Auerbach I don’t live 100% off my cash flow but I’m working part time when my former full time job has availability if it’s convenient for me.
I have reserves for all my buildings that I add to each month to cover expenses and CapEx.
I make about 3/4 of my income from my rentals. My lender looks at each application for a loan based on its own circumstances and knows I’m working part time. They still continue to lend based upon my whole picture.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
Quote from @Alecia Loveless:
@Marcus Auerbach I don’t live 100% off my cash flow but I’m working part time when my former full time job has availability if it’s convenient for me.
I have reserves for all my buildings that I add to each month to cover expenses and CapEx.
I make about 3/4 of my income from my rentals. My lender looks at each application for a loan based on its own circumstances and knows I’m working part time. They still continue to lend based upon my whole picture.
That sounds like a pretty nice balance. From a lifestyle point of view, I think part-time work has a lot of advantages: obviously time for other things, but you also get the job satisfaction and social connections that come with a it.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Quote from @Marcus Auerbach:
That's the big dream: passive income, property management, no alarm clock, no office to go to. Gone fishing on a Tuesday.
I wonder how many people have gotten to the point where they actually live that dream? Or do you still work on something, while your RE portfolio is doing it's thing?There is the financial side of it: at what point can you afford it not to work and basically retire based on passiv income? How much equity does it take (I think a better metric than # of doors)? And how do you handle large capex like new roofs or kitchens?
And then there is the mental aspect: are you actually satisfied with what you have built. Do you feel content to just leave it at that and stop growing something? Or do you still feel the itch to build?
I think a lot of investors are entrepreneurs at heart and not happy when they can't work their butt off. This is exactly the trait that let them hustle relentlessly when they built their portfolio in the first place. Can you just stop and go fishing?
Very few as it is extremely challenging. It also depends on your lifestyle. For example I live in Washington DC area and had a six figure salary along with my spouse and for us to replace both of our incomes with passive investments we would need probably $10M in real estate, which honestly is not something I would want if I had to manage it on my own. I run a company right now larger than that with 8 employees and personally I would rather get 6%-8% in the markets than own real estate for the same. Not so say I would not hold real estate by any means, but I would not rely on it, it for me when I retire would be more for hobby.
7e investments53 Reviews - Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes1y
I do because I live in a much cheaper market than Chris. You can live quite well in Vegas on a little over $200k/yr. it took 10 homes and 10 years but the very low cost of living and a simple life made it relatively easy. Insurance is “cheap”, property taxes are VERY low, and the lack of state income tax is a bonus 10% tacked on to your income.
Spend the beginning buying new primary homes that you move out of and rent to get the lower interest rate, not necessarily the lower downpayment. Unless you need that. If at all possible get 15 year mortgages. Again, lower your interest rate even if it increases your payment. The primary home and 15 year loan might save you more than a point. While that $5k/yr every year won’t come in cashflow, it is real money. Accumulate the number of homes you need. Then sink all the cashflow/profit back in paying them off. If you have a pension, a working spouse, or live in or move to an even cheaper market than me 5 homes should bring in $100k/yr. MUCH more than the average retiree.
I chose 10 because those were the cheap and easy loans and I didn’t need more. I did it for freedom and because the idea of hoping I died before I depleted my retirement accounts scared me. I’m a saver and will never touch the retirement funds I wasted the first 10 years of my life accumulating. I met my wife too late for us to have kids. But I can’t even imagine working until you’re 50 or 60 if you have kids. They say you’ll spend more time with them before they’re 18 than after, no matter how long you both live. But the real number is probably 14 or 15. Enjoy them while you can. It’s one of the few regrets I have.
Don’t compare your journey to anyone else’s. And Good luck.
- 1yJoe S.Pro MemberInvestor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
Quote from @Bill B.:
I do because I live in a much cheaper market than Chris. You can live quite well in Vegas on a little over $200k/yr. it took 10 homes and 10 years but the very low cost of living and a simple life made it relatively easy. Insurance is “cheap”, property taxes are VERY low, and the lack of state income tax is a bonus 10% tacked on to your income.
Spend the beginning buying new primary homes that you move out of and rent to get the lower interest rate, not necessarily the lower downpayment. Unless you need that. If at all possible get 15 year mortgages. Again, lower your interest rate even if it increases your payment. The primary home and 15 year loan might save you more than a point. While that $5k/yr every year won’t come in cashflow, it is real money. Accumulate the number of homes you need. Then sink all the cashflow/profit back in paying them off. If you have a pension, a working spouse, or live in or move to an even cheaper market than me 5 homes should bring in $100k/yr. MUCH more than the average retiree.
I chose 10 because those were the cheap and easy loans and I didn’t need more. I did it for freedom and because the idea of hoping I died before I depleted my retirement accounts scared me. I’m a saver and will never touch the retirement funds I wasted the first 10 years of my life accumulating. I met my wife too late for us to have kids. But I can’t even imagine working until you’re 50 or 60 if you have kids. They say you’ll spend more time with them before they’re 18 than after, no matter how long you both live. But the real number is probably 14 or 15. Enjoy them while you can. It’s one of the few regrets I have.
Don’t compare your journey to anyone else’s. And Good luck.
Your situation is unique and you seemed to time it just right. :)
- 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Joe S.:
Quote from @Bill B.:
I do because I live in a much cheaper market than Chris. You can live quite well in Vegas on a little over $200k/yr. it took 10 homes and 10 years but the very low cost of living and a simple life made it relatively easy. Insurance is “cheap”, property taxes are VERY low, and the lack of state income tax is a bonus 10% tacked on to your income.
Spend the beginning buying new primary homes that you move out of and rent to get the lower interest rate, not necessarily the lower downpayment. Unless you need that. If at all possible get 15 year mortgages. Again, lower your interest rate even if it increases your payment. The primary home and 15 year loan might save you more than a point. While that $5k/yr every year won’t come in cashflow, it is real money. Accumulate the number of homes you need. Then sink all the cashflow/profit back in paying them off. If you have a pension, a working spouse, or live in or move to an even cheaper market than me 5 homes should bring in $100k/yr. MUCH more than the average retiree.
I chose 10 because those were the cheap and easy loans and I didn’t need more. I did it for freedom and because the idea of hoping I died before I depleted my retirement accounts scared me. I’m a saver and will never touch the retirement funds I wasted the first 10 years of my life accumulating. I met my wife too late for us to have kids. But I can’t even imagine working until you’re 50 or 60 if you have kids. They say you’ll spend more time with them before they’re 18 than after, no matter how long you both live. But the real number is probably 14 or 15. Enjoy them while you can. It’s one of the few regrets I have.
Don’t compare your journey to anyone else’s. And Good luck.
Your situation is unique and you seemed to time it just right. :)
agreed..
- Member since 2019 · 3 posts · 1 vote1y
- Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes1y
@Marcus Auerbach this answer is not for you but6 for new investors reading along to give them some perspective.
Almost nobody lives 100% off cash flow. And those that can are able to because they never lived off the cash flow in the first place. They used the cash flow and equity to grow the portfolio until they could live off the cash flow.
If you buy a rental and spend the cash flow you will greatly slow your growth in both cash flow and wealth.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
Quote from @Ned Carey:
@Marcus Auerbach this answer is not for you but6 for new investors reading along to give them some perspective.
Almost nobody lives 100% off cash flow. And those that can are able to because they never lived off the cash flow in the first place. They used the cash flow and equity to grow the portfolio until they could live off the cash flow.
If you buy a rental and spend the cash flow you will greatly slow your growth in both cash flow and wealth.
Hi Ned, yes, thanks - that was exactly my intent. It seems like a topic that is not talked about enough and I think it's important to have realistic expectations as a newer investor. And not feel like a failure if you are not flying private after the third duplex..
We have never taken money out of REI, always reinvested, grown or improved. After 15 years we are getting to the point where we feel we could live off it, if we had to, but we don't want to, so for now we keep reinvesting.
- Encinitas, CA · Member since 2011 · 192 posts · 252 votes1y
Quote from @Marcus Auerbach:
That's the big dream: passive income, property management, no alarm clock, no office to go to. Gone fishing on a Tuesday.
I wonder how many people have gotten to the point where they actually live that dream? Or do you still work on something, while your RE portfolio is doing it's thing?There is the financial side of it: at what point can you afford it not to work and basically retire based on passiv income? How much equity does it take (I think a better metric than # of doors)? And how do you handle large capex like new roofs or kitchens?
And then there is the mental aspect: are you actually satisfied with what you have built. Do you feel content to just leave it at that and stop growing something? Or do you still feel the itch to build?
I think a lot of investors are entrepreneurs at heart and not happy when they can't work their butt off. This is exactly the trait that let them hustle relentlessly when they built their portfolio in the first place. Can you just stop and go fishing?
I started investing in real estate rentals about 32 years ago. I now have 21 San Diego county rental units with my last mortgage paid off about 2 years ago. It was not so much a plan I started then, but more of an evolution. It started when my wife and I decided to hold on to the condos we each lived in before buying our primary shortly after we got married. Picking up some properties cheap during the 2008-11 financial crisis helped. For most of my life I was busy with a professional career while slowly growing my real estate portfolio and equity. Some of my guiding principals that got me to this point:
1) Buy and hold for the long term in good areas. I have rarely sold anything and never done a 1031 exchange. Not having frequent transaction costs in and out helps in the long run.
2) Any refinance I have done has reduced my rate and shortened, not extended my loan term. Aside from using credit lines on my rentals for other investments (when they were cheap and more readily available) I have never taken cash out on a refinance.
3) I have never planned to rely solely on rental income to pay life's expenses, but over the long term, as mortgages have paid off, positive rental income has improved dramatically to the point where rentals do more than cover my family's expenses.
4) The idea of dead equity used to bother me, but I came to learn to accept and embrace it. It's there to utilize if I need it, but I don't think I will need to. I don't have any credit lines on my properties currently.
5) Real estate is a people business. Treat it as a business and treat your tenants and vendors fairly. Address any situation to avoid a build up of resentment if possible. Your good reputation pays back dividends and makes the real estate journey easier.
- 1yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votesI can easily live off my cash flow.
Quote from @Rob K.:
Quote from @Marcus Auerbach:
That's the big dream: passive income, property management, no alarm clock, no office to go to. Gone fishing on a Tuesday.
I wonder how many people have gotten to the point where they actually live that dream? Or do you still work on something, while your RE portfolio is doing it's thing?There is the financial side of it: at what point can you afford it not to work and basically retire based on passiv income? How much equity does it take (I think a better metric than # of doors)? And how do you handle large capex like new roofs or kitchens?
And then there is the mental aspect: are you actually satisfied with what you have built. Do you feel content to just leave it at that and stop growing something? Or do you still feel the itch to build?
I think a lot of investors are entrepreneurs at heart and not happy when they can't work their butt off. This is exactly the trait that let them hustle relentlessly when they built their portfolio in the first place. Can you just stop and go fishing?
I started investing in real estate rentals about 32 years ago. I now have 21 San Diego county rental units with my last mortgage paid off about 2 years ago. It was not so much a plan I started then, but more of an evolution. It started when my wife and I decided to hold on to the condos we each lived in before buying our primary shortly after we got married. Picking up some properties cheap during the 2008-11 financial crisis helped. For most of my life I was busy with a professional career while slowly growing my real estate portfolio and equity. Some of my guiding principals that got me to this point:
1) Buy and hold for the long term in good areas. I have rarely sold anything and never done a 1031 exchange. Not having frequent transaction costs in and out helps in the long run.
2) Any refinance I have done has reduced my rate and shortened, not extended my loan term. Aside from using credit lines on my rentals for other investments (when they were cheap and more readily available) I have never taken cash out on a refinance.
3) I have never planned to rely solely on rental income to pay life's expenses, but over the long term, as mortgages have paid off, positive rental income has improved dramatically to the point where rentals do more than cover my family's expenses.
4) The idea of dead equity used to bother me, but I came to learn to accept and embrace it. It's there to utilize if I need it, but I don't think I will need to. I don't have any credit lines on my properties currently.
5) Real estate is a people business. Treat it as a business and treat your tenants and vendors fairly. Address any situation to avoid a build up of resentment if possible. Your good reputation pays back dividends and makes the real estate journey easier.
I am also in San Diego. My path has some similarities and differences as Rob’s. At 40% expense ratio, my cash flow is $300k/year with fairly high leverage.
My unit count is only a few units higher. Seeing Ron’s are all in good areas and mine are mix of quality locations, I suspect the value of our RE is similar (I have a few more units, his are likely worth more on average).
1) Rob has only purchased in good areas. I have purchased in various quality areas (class c- to a-). I believe Rob’s approach is superior to my approach with long holds. If I was starting over long ago, I would have taken less initial cash flow for the better quality areas and tenants.
2) I have regularly refinanced to keep leverage up (cash out refi) so that the money can be leveraged elsewhere. If you want maximum return, it is achieved via leverage. Rob’s approach is safe and clearly has worked great for him. I have not extracted any value since the rate increase (since q2 2022). If starting over, I would choose my approach.
3) I also would have been fine without any cash flow as I made a fair amount of money in both tech and mineral rights. My (versus the family's) first rental was also my initial OO that I house hacked and turned into a full rental when I moved up to my next house. I made more in RE than tech or mineral rights combined (each has been over 7 digits). Seeing my RE is somewhat high leveraged, I suspect Rob's cash flow exceeds mine. My rentals pay more of my expenses than I ever suspected when I started.
4) dead equity would bother me and does explain our difference in extracting value. As Rob pointed out, it is there if he ever needs it. I have accepted that I enjoy making money. However, I also enjoy giving money away which makes the net worth yardstick not as appropriate at it could be. For the past 3 years I have given away more than my taxable income and last year much more than my taxable income. If I enjoy making money, I need to use my head and my money to make the money (because I no longer like regular work). If I did not so enjoy making money, Rob’s approach would be very tempting as I have enough to have a quality life. So I understands Rob’s approach at this stage, not sure if I would have understood it on the path to where he is, but it worked out for him.
5) I do not believe in karma but I do believe in treating everyone fairly. If I cannot succeed without $crewing someone then I do not deserve to succeed. Also most tenants are squeaking by. If something is not the tenant’s fault, even if the tenant is legally financially responsible, consider letting them off. I had a gay tenant that homophobic neighbors drove out of the unit resulting in breaking the lease. Not my fault. Not the tenant’s fault. I let the tenant break lease with no charge knowing that it would cost me some money (tenant flip of the unit and the resulting vacancy). In good conscience I could not charge the tenant for the homophobic neighbors.. The contacts you make and how you treat people both play into RE success not due to karma but due to people want to deal with people they can trust. I made an offer 2 weeks ago that there were 4 offers higher than mine. I was hoping my reputation would swing things my way. It did not, but I know it did not hurt my cause.
Wishing everyone success.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
Quote from @Dan H.:
I can easily live off my cash flow.Quote from @Rob K.:
Quote from @Marcus Auerbach:
That's the big dream: passive income, property management, no alarm clock, no office to go to. Gone fishing on a Tuesday.
I wonder how many people have gotten to the point where they actually live that dream? Or do you still work on something, while your RE portfolio is doing it's thing?There is the financial side of it: at what point can you afford it not to work and basically retire based on passiv income? How much equity does it take (I think a better metric than # of doors)? And how do you handle large capex like new roofs or kitchens?
And then there is the mental aspect: are you actually satisfied with what you have built. Do you feel content to just leave it at that and stop growing something? Or do you still feel the itch to build?
I think a lot of investors are entrepreneurs at heart and not happy when they can't work their butt off. This is exactly the trait that let them hustle relentlessly when they built their portfolio in the first place. Can you just stop and go fishing?
I started investing in real estate rentals about 32 years ago. I now have 21 San Diego county rental units with my last mortgage paid off about 2 years ago. It was not so much a plan I started then, but more of an evolution. It started when my wife and I decided to hold on to the condos we each lived in before buying our primary shortly after we got married. Picking up some properties cheap during the 2008-11 financial crisis helped. For most of my life I was busy with a professional career while slowly growing my real estate portfolio and equity. Some of my guiding principals that got me to this point:
1) Buy and hold for the long term in good areas. I have rarely sold anything and never done a 1031 exchange. Not having frequent transaction costs in and out helps in the long run.
2) Any refinance I have done has reduced my rate and shortened, not extended my loan term. Aside from using credit lines on my rentals for other investments (when they were cheap and more readily available) I have never taken cash out on a refinance.
3) I have never planned to rely solely on rental income to pay life's expenses, but over the long term, as mortgages have paid off, positive rental income has improved dramatically to the point where rentals do more than cover my family's expenses.
4) The idea of dead equity used to bother me, but I came to learn to accept and embrace it. It's there to utilize if I need it, but I don't think I will need to. I don't have any credit lines on my properties currently.
5) Real estate is a people business. Treat it as a business and treat your tenants and vendors fairly. Address any situation to avoid a build up of resentment if possible. Your good reputation pays back dividends and makes the real estate journey easier.
I am also in San Diego. My path has some similarities and differences as Rob’s. At 40% expense ratio, my cash flow is $300k/year with fairly high leverage.
My unit count is only a few units higher. Seeing Ron’s are all in good areas and mine are mix of quality locations, I suspect the value of our RE is similar (I have a few more units, his are likely worth more on average).
1) Rob has only purchased in good areas. I have purchased in various quality areas (class c- to a-). I believe Rob’s approach is superior to my approach with long holds. If I was starting over long ago, I would have taken less initial cash flow for the better quality areas and tenants.
2) I have regularly refinanced to keep leverage up (cash out refi) so that the money can be leveraged elsewhere. If you want maximum return, it is achieved via leverage. Rob’s approach is safe and clearly has worked great for him. I have not extracted any value since the rate increase (since q2 2022). If starting over, I would choose my approach.
3) I also would have been fine without any cash flow as I made a fair amount of money in both tech and mineral rights. My (versus the family's) first rental was also my initial OO that I house hacked and turned into a full rental when I moved up to my next house. I made more in RE than tech or mineral rights combined (each has been over 7 digits). Seeing my RE is somewhat high leveraged, I suspect Rob's cash flow exceeds mine. My rentals pay more of my expenses than I ever suspected when I started.
4) dead equity would bother me and does explain our difference in extracting value. As Rob pointed out, it is there if he ever needs it. I have accepted that I enjoy making money. However, I also enjoy giving money away which makes the net worth yardstick not as appropriate at it could be. For the past 3 years I have given away more than my taxable income and last year much more than my taxable income. If I enjoy making money, I need to use my head and my money to make the money (because I no longer like regular work). If I did not so enjoy making money, Rob’s approach would be very tempting as I have enough to have a quality life. So I understands Rob’s approach at this stage, not sure if I would have understood it on the path to where he is, but it worked out for him.
5) I do not believe in karma but I do believe in treating everyone fairly. If I cannot succeed without $crewing someone then I do not deserve to succeed. Also most tenants are squeaking by. If something is not the tenant’s fault, even if the tenant is legally financially responsible, consider letting them off. I had a gay tenant that homophobic neighbors drove out of the unit resulting in breaking the lease. Not my fault. Not the tenant’s fault. I let the tenant break lease with no charge knowing that it would cost me some money (tenant flip of the unit and the resulting vacancy). In good conscience I could not charge the tenant for the homophobic neighbors.. The contacts you make and how you treat people both play into RE success not due to karma but due to people want to deal with people they can trust. I made an offer 2 weeks ago that there were 4 offers higher than mine. I was hoping my reputation would swing things my way. It did not, but I know it did not hurt my cause.
Wishing everyone success.
Thanks for sharing Dan! I am coming around on the dead equity issue as well and we are doing a number of things that are somewhat contradicting: we pay off smaller loans in full and keep them free and clear, but we also do a couple 1031 exchanges every year and take out larger loans. Fortunately, most of our properties are already in above median price areas (B class), but we have a few that are below median and systematically trade those up. The trigger is typically when a tenant moves out. The properties we buy are about 350 to 400k and we have a large downpayment from the 1031, so we may finance about 50% LTV, but that is still new loans we are taking out. So that's the contradiction, because we are paying off some of my original 30y fixed with low balances on one side and taking out larger new 5y loans on the other, but I figure I'd rather have 3 free and clear than just 1. And while I see value in 30y fixed, free and clear is still better.
But the overall goal is to reduce friction. It's maybe 5 tenants that cause 80% of our problems and that is often times location-correlated, so by trading up into better neighborhoods, we should get to fewer headaches per month.
As far as the dead equity, here is my plan for 10 years from now (I started with 34 and I am 50 now). Instead of reducing leverage, I could re-leverage some of the equity. In principle, we should be able to leverage about 3% of our equity every year without increasing the LTV, just floating up with rent increases and appreciation. That would be about one property every year. I like the fact that it is tax-free and at some point in life you should splurge a little - preferably before you are too old to enjoy it.
Would I do things differently if I had to start over again? Maybe a little, because I would focus more on quality locations and equity and less on cash flow. Like everyone else I was very cash flow-minded. But when you start building your portfolio, you need the cash flow to keep growing faster. Otherwise, it's just all W2 money.
- Investor · TX · Member since 2021 · 53 posts · 59 votes1y
I do. I retired from my job as a Federal Agent after 3 years of investing. But I also make returns from when I profit on my BRRRR's on the refi side and when the market turns around I'll probably sell a couple of them off as we are doing 3-4 BRRRR's a month. Even at 70+ doors I do think it would be tough to live off just cash flow. I easily could, but there are always those months that you could have a lot of vacancy and repairs at the same time. I hedge my bets against that by having about 65-70% of my portfolio on vouchers so rent is guaranteed and a lot less vacancy. And we do full gut job remodels with long term hold in mind when budgeting. I'm replacing all roofs, HVAC systems, Water Heaters etc while we are doing the remodel. So my cap ex is super low. So it's possibly. And last but not least, I live well below my means. I am single with no kids so I know it may be difficult for someone who has a family to support as welll. But I find it pretty easy as long as you budget well and have a lot of reserves. Which I do. So I felt comfortable leaving my career. Especially when I'm profiting off 1-2 BRRRR's what I would take home in a year as a Fed.
- 1yJoe S.Pro MemberInvestor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
Quote from @Gabriel Watts:
I do. I retired from my job as a Federal Agent after 3 years of investing. But I also make returns from when I profit on my BRRRR's on the refi side and when the market turns around I'll probably sell a couple of them off as we are doing 3-4 BRRRR's a month. Even at 70+ doors I do think it would be tough to live off just cash flow. I easily could, but there are always those months that you could have a lot of vacancy and repairs at the same time. I hedge my bets against that by having about 65-70% of my portfolio on vouchers so rent is guaranteed and a lot less vacancy. And we do full gut job remodels with long term hold in mind when budgeting. I'm replacing all roofs, HVAC systems, Water Heaters etc while we are doing the remodel. So my cap ex is super low. So it's possibly. And last but not least, I live well below my means. I am single with no kids so I know it may be difficult for someone who has a family to support as welll. But I find it pretty easy as long as you budget well and have a lot of reserves. Which I do. So I felt comfortable leaving my career. Especially when I'm profiting off 1-2 BRRRR's what I would take home in a year as a Fed.
So you’re pulling money out when you are refinancing and you say you’re doing three or four a month that sounds spectacular. :-)
I think the OP was talking about how many people were living off of rents from their rentals. It sounds like you are running an active business and there is a difference at least there’s a difference in my opinion.
- Investor · TX · Member since 2021 · 53 posts · 59 votes1y
@Joe S. I'm doing both. I live off my rents. Use the money I make from the BRRRR's to continue to re invest. All of the projects are purchased with cash and so are the rehabs. I use to have to use hard money and then refi out into long term debt. I don't spend any of the BRRRR money. I live off my cash flow from my 70+ doors that continues to grow at a pace of 3-4 a month as I continue to add to my portfolio. But it's passive either way, I'm not turning a tool or anything lol. I was gone for 3 weeks last month and the projects continued on. All about how you set up projects and teams in place :)
- Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes1y
@Marcus Auerbach you wrote
'It seems like a topic that is not talked about enough and I think it's important to have realistic expectations as a newer investor."That is pretty much why I post here; is to give new investors a realistic expectation of what this business is about.
- Tulsa ok · Member since 2025 · 84 posts · 60 votes1y
This is great post to read and great hearing from investors all over the country and what it takes in different areas to have a chance to be financially free. I am an active investor for 23 years and just turned 45 and i am hands on all my properties in every aspect from buying,rehabbing and leasing. I live solely off casflow of my properties no other job for the past 11 years. I very seldom feel like I am working because I enjoy what I do. I am looking to scale and increase my cashflow by purchasing multifamily assests over the next 10 years even though I could finally live comfortable the rest of my life working 10 to 15 hrs per week. But I believe most off us on these forums are driven to keep building and progressing and enjoy the challenges this business brings. Love the success of the other investors that shared their journey.
- Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes1y
I do. We started our business in 2016 and spent the last of our savings buying value-add multifamily in 2020. We were already living off savings when we started our buy and hold business but were not going to be able to stay retired. Since 2020, we have continued to grow the business by using cash flow and equity from earlier purchases. We still take out just what we need to live-- Not for much longer though. Once we quit focusing on growing the business, I'll start working on maximizing cash flow per door.
- Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes1y
Regarding dead equity, I have a lot of it as I paid off the commercial loan on our apartment community when it reset into the upper 7s; so, our portfolio is now free and clear. It does not optimize returns but it is a risk free return during a period of higher interest rates and tighter real estate margins.
I enjoy my job; so, we don't live off our real estate.
- Rental Property Investor · Perry Hall, MD · Member since 2016 · 588 posts · 600 votes1y
I started buying rentals in 2014 but picked up most of my units off market during the pandemic via BRRRR. Not able to live the life we want off of cash flow yet but on paper it's possible in the next 6 years. We *could* live off of cash flow today, but it would require a lot of very careful budgeting and living the life we had to vs what we wanted to. I still have a full time W-2 and intend to keep it until we get to the desired number. All rental/investment income is reinvested. We live solely off my W-2 income.
I'm no longer in acquisition mode. Definitely leaning more passive these days with my investments and I don't anticipate having any problem not working even if it's on my own business.
- 1yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
great post, and thanks for your contributions as always. debt is a huge component here, right? the interest rates / LTV on your portfolio is going to drive your ability to cash flow, or not. and, new investors are looking to come in now and borrow at 8+% to get a 6% return, just to "do a deal." random example:
Financing a deal
and as @Mike Dymski and you both point out, there is value in lower risk returns. if we all continually "optimized" we'd be constantly transacting. that seems exhausting =) i want a balance of risk and return.- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
Quote from @Nicholas L.:
great post, and thanks for your contributions as always. debt is a huge component here, right? the interest rates / LTV on your portfolio is going to drive your ability to cash flow, or not. and, new investors are looking to come in now and borrow at 8+% to get a 6% return, just to "do a deal." random example:
Financing a deal
and as @Mike Dymski and you both point out, there is value in lower risk returns. if we all continually "optimized" we'd be constantly transacting. that seems exhausting =) i want a balance of risk and return.Yes, that's the core of the issue: net cash return on equity is probably only 4-5% on average, which sounds crazy low. So, you need a lot of equity to just live off cash flow. That's why I always like higher rents: I'd rather do all the work (per tenant) for $2,400 in rent than for $800. More rental revenue means more principal pay down and probably also more appreciation -> more equity, faster!
The post you linked is the classic example of 80% DSCR + 20% HELOC financing trying to get started. Plus no reserves and no experience. And no path to buy a second property for the foreseeable future.
- 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
living off of rental income to me is just another business.. your running a rental business instead of working for someone else.. IE self employeed still takes risk/effort and attention to details.
I think were many get romanced into this is thinking Rentals = no or very little work..
There are many business you could live off of cash flow with the same investments. IE millions in debt and Lots of cash dumped into them to buy the rentals..
Just another form of American Small business which is the backbone of our economy and lifestyles here in the US>
One thing that does make it easier to enter though many can get debt with zero experience where as buying a business acquiring debt normally takes some experience.
Lastly to me it really depends on the Asset class IE if your buying lower end C D section 8 much more work required and less likely you will ever live strictly on the cash flow over debt and cost to run them..
And of course the bonanza happens when you retire your debt like many who have posted thats when life gets good.. but today max debt cash flow assets is going to be very hard except for those that are also flipping and creating income outside of the rentals and never touch rental income
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
Quote from @Jay Hinrichs:
living off of rental income to me is just another business.. your running a rental business instead of working for someone else.. IE self employeed still takes risk/effort and attention to details.
I think were many get romanced into this is thinking Rentals = no or very little work..
There are many business you could live off of cash flow with the same investments. IE millions in debt and Lots of cash dumped into them to buy the rentals..
Just another form of American Small business which is the backbone of our economy and lifestyles here in the US>
One thing that does make it easier to enter though many can get debt with zero experience where as buying a business acquiring debt normally takes some experience.
Lastly to me it really depends on the Asset class IE if your buying lower end C D section 8 much more work required and less likely you will ever live strictly on the cash flow over debt and cost to run them..
And of course the bonanza happens when you retire your debt like many who have posted thats when life gets good.. but today max debt cash flow assets is going to be very hard except for those that are also flipping and creating income outside of the rentals and never touch rental income
One trend I see in the responses here is that people who live off their rentals are also the property manager and the handyman. I don't mean that negatively in any way; I love working with my hands and it is very satisfying. But financially speaking, a portion of their income is compensation for doing these tasks.
When you look at the guys that really have scaled, most of them have started their own PM company and are vertically integrated. But that's the cool thing, you can design your biz the way you like it, do the things you can enjoy and outsource what you are not good at. (Or hate, like in case my bookkeeping LOL)
- Member since 2024 · 65 posts · 63 votes1yI don't think I could stomach giving away deposits and 10% of rents to a management company who could care less about my property. I can do 90% of what they do, but only better with minimum time spent on my part all while keeping my W2. At some point I'll have to start my own and hire an employee, but that's after scaling to 50ish doors. IMO management companies are like factoring invoices, IFKYK.
Quote from @Marcus Auerbach:
Quote from @Jay Hinrichs:
living off of rental income to me is just another business.. your running a rental business instead of working for someone else.. IE self employeed still takes risk/effort and attention to details.
I think were many get romanced into this is thinking Rentals = no or very little work..
There are many business you could live off of cash flow with the same investments. IE millions in debt and Lots of cash dumped into them to buy the rentals..
Just another form of American Small business which is the backbone of our economy and lifestyles here in the US>
One thing that does make it easier to enter though many can get debt with zero experience where as buying a business acquiring debt normally takes some experience.
Lastly to me it really depends on the Asset class IE if your buying lower end C D section 8 much more work required and less likely you will ever live strictly on the cash flow over debt and cost to run them..
And of course the bonanza happens when you retire your debt like many who have posted thats when life gets good.. but today max debt cash flow assets is going to be very hard except for those that are also flipping and creating income outside of the rentals and never touch rental income
One trend I see in the responses here is that people who live off their rentals are also the property manager and the handyman. I don't mean that negatively in any way; I love working with my hands and it is very satisfying. But financially speaking, a portion of their income is compensation for doing these tasks.
When you look at the guys that really have scaled, most of them have started their own PM company and are vertically integrated. But that's the cool thing, you can design your biz the way you like it, do the things you can enjoy and outsource what you are not good at. (Or hate, like in case my bookkeeping LOL)
- Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes1y
Quote from @Stetson Oates:
I don't think I could stomach giving away deposits and 10% of rents to a management company who could care less about my property. I can do 90% of what they do, but only better with minimum time spent on my part all while keeping my W2. At some point I'll have to start my own and hire an employee, but that's after scaling to 50ish doors. IMO management companies are like factoring invoices, IFKYK.Quote from @Marcus Auerbach:
Quote from @Jay Hinrichs:
living off of rental income to me is just another business.. your running a rental business instead of working for someone else.. IE self employeed still takes risk/effort and attention to details.
I think were many get romanced into this is thinking Rentals = no or very little work..
There are many business you could live off of cash flow with the same investments. IE millions in debt and Lots of cash dumped into them to buy the rentals..
Just another form of American Small business which is the backbone of our economy and lifestyles here in the US>
One thing that does make it easier to enter though many can get debt with zero experience where as buying a business acquiring debt normally takes some experience.
Lastly to me it really depends on the Asset class IE if your buying lower end C D section 8 much more work required and less likely you will ever live strictly on the cash flow over debt and cost to run them..
And of course the bonanza happens when you retire your debt like many who have posted thats when life gets good.. but today max debt cash flow assets is going to be very hard except for those that are also flipping and creating income outside of the rentals and never touch rental income
One trend I see in the responses here is that people who live off their rentals are also the property manager and the handyman. I don't mean that negatively in any way; I love working with my hands and it is very satisfying. But financially speaking, a portion of their income is compensation for doing these tasks.
When you look at the guys that really have scaled, most of them have started their own PM company and are vertically integrated. But that's the cool thing, you can design your biz the way you like it, do the things you can enjoy and outsource what you are not good at. (Or hate, like in case my bookkeeping LOL)
Great point. I just started self managing my Class A Indianapolis SFH. I was paying a small time PM 10% of monthly rent and he wouldn't do annual maintenance checks. His thought was "if I don't hear from my tenants, all is good"...geez. That's the flip side of a tenant that is constantly calling you with issues. A quiet tenant could be ignoring signs of damage in the house or not be aware of them. Luckily my tenant would bring up concerns pro-actively and this is a newer home (not the 100 year housing stock like my Class C).
He also wouldn't call service people for me - I'm the one who called the plumber and handyman and I'm 2000 miles away. I communicate with my great long-term tenant frequently.
I think Class A properties with excellent tenants can be self managed from far away but it's more difficult with Class C, which I use a large PM company for.
- 1ySeth McGatheyBusiness MemberReal Estate Agent · Milwaukee WI · Member since 2024 · 321 posts · 254 votes
I'm not there yet, but my goal isn't to just "relax". It is to have freedom. I love the phrase "selfishly employed". Where you work when and where you want. And at any time you can walk away from your job and do something else because you don't rely on your jobs income to survive. That is my goal. And I should be able to hit it in the next 5-9 years. Which is pretty good because that will make me 39-43.
Seth McGathey - Shorewest Realtor4.912 Reviews - Member since 2024 · 18 posts · 8 votes1y
This is one of the best topics/threads I have read yet on BP. Gives me hope that financial freedom is possible via REI. Ultimate goal is to replace W2 income with REI.
- Specialist · San Clemente, CA · Member since 2014 · 50 posts · 75 votes1y
I retired at 52 ( now 59) and live off the cash flow from 5 doors; class B properties in Orange County by the beach. Started buying in Y2K using leverage but paid off each using cash flow, living off my day job and using HELOCS on existing properties for the down stroke on new ones. Contrary to conventional wisdom of refi-til you die we always paid off as soon as possible. I self manage but this takes minimal work as we do full guts when we bought.... including new sewer, electrical, water, new roof in addition to all the cosmetic stuff ( no lipstick on the pig remodels). As a result the ongoing maintenance is minimal and we keep tenants long term. I am not pulling in 200k net like Bill, but have plenty to live comfortably on SoCal and to do all the stuff we enjoy; traveling, long distance sailing etc. It was not get rich quick, but at the end of a couple of decades it has been rewarding enough for us. If you look at our cap rate based on current values it is pathetically low, and many would think we are idiots not using leverage to keep expanding, but we are happy where we ended up.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
Quote from @Bob Ritner:
I retired at 52 ( now 59) and live off the cash flow from 5 doors; class B properties in Orange County by the beach. Started buying in Y2K using leverage but paid off each using cash flow, living off my day job and using HELOCS on existing properties for the down stroke on new ones. Contrary to conventional wisdom of refi-til you die we always paid off as soon as possible. I self manage but this takes minimal work as we do full guts when we bought.... including new sewer, electrical, water, new roof in addition to all the cosmetic stuff ( no lipstick on the pig remodels). As a result the ongoing maintenance is minimal and we keep tenants long term. I am not pulling in 200k net like Bill, but have plenty to live comfortably on SoCal and to do all the stuff we enjoy; traveling, long distance sailing etc. It was not get rich quick, but at the end of a couple of decades it has been rewarding enough for us. If you look at our cap rate based on current values it is pathetically low, and many would think we are idiots not using leverage to keep expanding, but we are happy where we ended up.
Let me guess: you are looking at a 4% return on your portfolio value.
- Specialist · San Clemente, CA · Member since 2014 · 50 posts · 75 votes1y
Quote from @Marcus Auerbach:
Quote from @Bob Ritner:
I retired at 52 ( now 59) and live off the cash flow from 5 doors; class B properties in Orange County by the beach. Started buying in Y2K using leverage but paid off each using cash flow, living off my day job and using HELOCS on existing properties for the down stroke on new ones. Contrary to conventional wisdom of refi-til you die we always paid off as soon as possible. I self manage but this takes minimal work as we do full guts when we bought.... including new sewer, electrical, water, new roof in addition to all the cosmetic stuff ( no lipstick on the pig remodels). As a result the ongoing maintenance is minimal and we keep tenants long term. I am not pulling in 200k net like Bill, but have plenty to live comfortably on SoCal and to do all the stuff we enjoy; traveling, long distance sailing etc. It was not get rich quick, but at the end of a couple of decades it has been rewarding enough for us. If you look at our cap rate based on current values it is pathetically low, and many would think we are idiots not using leverage to keep expanding, but we are happy where we ended up.
Let me guess: you are looking at a 4% return on your portfolio value.
Spot on
- Member since 2024 · 6 posts · 0 votes1y
Quote from @Bob Ritner:
many would think we are idiots not using leverage to keep expanding, but we are happy where we ended up.
I've had similar attitudes but I just remember the stress of watching for the interest rate announcements and waiting to see whether the mortgage payment would go up. I like being totally unaware of the timing of those announcements nowadays. (UK mortgage rates aren't set for the period of the mortgage, though French ones are so that's been tempting, occasionally).
- Member since 2025 · 2 posts · 2 votes1y
Interesting question... I live in Serbia and rent 3 properties.. I could live of them if I am in for a decent humble life but if I want a travel to dubai or china I need to work extra..
When I started working my dream was to retire early so I have all the free time and now after 17 years of working independent I figured out that I love the action more than the money...
- 1yJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
I could probably afford to live off the mailbox money now after 10 years of investing in RE with SFR. My net profit is around 20k/month not counting cap ex, maintenance and vacancies. So say around 15k give or take after those random expenses. My wife retired due to the rental income 3 years ago and I could afford to retire now if I wanted to, but I enjoy my W2 which is sort of a part time job.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
Quote from @John Morgan:
I could probably afford to live off the mailbox money now after 10 years of investing in RE with SFR. My net profit is around 20k/month not counting cap ex, maintenance and vacancies. So say around 15k give or take after those random expenses. My wife retired due to the rental income 3 years ago and I could afford to retire now if I wanted to, but I enjoy my W2 which is sort of a part time job.
Nice! The freedom to design your own life is priceless. One pattern I see is that it seems to take on average 10 years to get there..
- 1yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
Quote from @Marcus Auerbach:
That's the big dream: passive income, property management, no alarm clock, no office to go to. Gone fishing on a Tuesday.
I wonder how many people have gotten to the point where they actually live that dream? Or do you still work on something, while your RE portfolio is doing it's thing?There is the financial side of it: at what point can you afford it not to work and basically retire based on passiv income? How much equity does it take (I think a better metric than # of doors)? And how do you handle large capex like new roofs or kitchens?
And then there is the mental aspect: are you actually satisfied with what you have built. Do you feel content to just leave it at that and stop growing something? Or do you still feel the itch to build?
I think a lot of investors are entrepreneurs at heart and not happy when they can't work their butt off. This is exactly the trait that let them hustle relentlessly when they built their portfolio in the first place. Can you just stop and go fishing?
My portfolio is half invested in high yield commercial mortgage notes (and associated syndicated interests) and half in real property with very little or no leverage (loans).
My passive income average about $750,000 per year.
Yet I continue to work as a syndicator of both real estate notes and (much less) real property itself.
Because many of my investment are speculative in nature my passive income can easily drop by 1/3 under “normal” circumstances, and probably 1/2 in another 2008 style financial environment. But the upside is that I stand to earn some outsize capital gains, which though “one off” can significantly propel my net worth upward. Like all real estate portfolios mine is somewhat susceptible to downward valuation in “bad times” or merely because of failed investment results.
Since I LOVE real estate investing, I don’t have plans to “give it up” willingly. LOL.
@Ned Carey hit the nail on the head. Early years of wealth building REQUIRE the REINVESTMENT of cash flow IF you intend to build a substantial portfolio. The
reinvestment" can be in improvements to property you currently own, or, if the ROI is greater, or diversification lowers risk significantly enough, new "deals" that you invest in.The “formula” isn’t taught by the “gurus” with their $40,000 mentorship’s, nor by the wealth managers with their “market beating” portfolios, additional “alpha”, or retail funds attempting to imitate hedge fund strategy.
The formula is exceedingly simple. Spend less than you earn, and invest the difference for the highest RISK ADJUSTED ROI. And if you're new and have no idea what I'm talking about, make the effort to thoroughly learn and understand this basic formula BEFORE you waste money on gurus, waste time attempting to "wholesale", and waste capital attempting to "flip".
@Ned Careyundefined
- 1yJoe S.Pro MemberInvestor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
Quote from @Don Konipol:
Quote from @Marcus Auerbach:
That's the big dream: passive income, property management, no alarm clock, no office to go to. Gone fishing on a Tuesday.
I wonder how many people have gotten to the point where they actually live that dream? Or do you still work on something, while your RE portfolio is doing it's thing?There is the financial side of it: at what point can you afford it not to work and basically retire based on passiv income? How much equity does it take (I think a better metric than # of doors)? And how do you handle large capex like new roofs or kitchens?
And then there is the mental aspect: are you actually satisfied with what you have built. Do you feel content to just leave it at that and stop growing something? Or do you still feel the itch to build?
I think a lot of investors are entrepreneurs at heart and not happy when they can't work their butt off. This is exactly the trait that let them hustle relentlessly when they built their portfolio in the first place. Can you just stop and go fishing?
My portfolio is half invested in high yield commercial mortgage notes (and associated syndicated interests) and half in real property with very little or no leverage (loans).
My passive income average about $750,000 per year.
Yet I continue to work as a syndicator of both real estate notes and (much less) real property itself.
Because many of my investment are speculative in nature my passive income can easily drop by 1/3 under “normal” circumstances, and probably 1/2 in another 2008 style financial environment. But the upside is that I stand to earn some outsize capital gains, which though “one off” can significantly propel my net worth upward. Like all real estate portfolios mine is somewhat susceptible to downward valuation in “bad times” or merely because of failed investment results.
Since I LOVE real estate investing, I don’t have plans to “give it up” willingly. LOL.
@Ned Carey hit the nail on the head. Early years of wealth building REQUIRE the REINVESTMENT of cash flow IF you intend to build a substantial portfolio. The
reinvestment" can be in improvements to property you currently own, or, if the ROI is greater, or diversification lowers risk significantly enough, new "deals" that you invest in.The “formula” isn’t taught by the “gurus” with their $40,000 mentorship’s, nor by the wealth managers with their “market beating” portfolios, additional “alpha”, or retail funds attempting to imitate hedge fund strategy.
The formula is exceedingly simple. Spend less than you earn, and invest the difference for the highest RISK ADJUSTED ROI. And if you're new and have no idea what I'm talking about, make the effort to thoroughly learn and understand this basic formula BEFORE you waste money on gurus, waste time attempting to "wholesale", and waste capital attempting to "flip".
@Ned Careyundefined
My passive income average about $750,000 per year.
Don, that should be enough to eat out from time to time if you drink water with your meals and don’t order appetizers or desserts. 😁
- 1yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesDepends on future debasement of the currency (inflation).
Quote from @Joe S.:
Quote from @Don Konipol:
Quote from @Marcus Auerbach:
That's the big dream: passive income, property management, no alarm clock, no office to go to. Gone fishing on a Tuesday.
I wonder how many people have gotten to the point where they actually live that dream? Or do you still work on something, while your RE portfolio is doing it's thing?There is the financial side of it: at what point can you afford it not to work and basically retire based on passiv income? How much equity does it take (I think a better metric than # of doors)? And how do you handle large capex like new roofs or kitchens?
And then there is the mental aspect: are you actually satisfied with what you have built. Do you feel content to just leave it at that and stop growing something? Or do you still feel the itch to build?
I think a lot of investors are entrepreneurs at heart and not happy when they can't work their butt off. This is exactly the trait that let them hustle relentlessly when they built their portfolio in the first place. Can you just stop and go fishing?
My portfolio is half invested in high yield commercial mortgage notes (and associated syndicated interests) and half in real property with very little or no leverage (loans).
My passive income average about $750,000 per year.
Yet I continue to work as a syndicator of both real estate notes and (much less) real property itself.
Because many of my investment are speculative in nature my passive income can easily drop by 1/3 under “normal” circumstances, and probably 1/2 in another 2008 style financial environment. But the upside is that I stand to earn some outsize capital gains, which though “one off” can significantly propel my net worth upward. Like all real estate portfolios mine is somewhat susceptible to downward valuation in “bad times” or merely because of failed investment results.
Since I LOVE real estate investing, I don’t have plans to “give it up” willingly. LOL.
@Ned Carey hit the nail on the head. Early years of wealth building REQUIRE the REINVESTMENT of cash flow IF you intend to build a substantial portfolio. The
reinvestment" can be in improvements to property you currently own, or, if the ROI is greater, or diversification lowers risk significantly enough, new "deals" that you invest in.The “formula” isn’t taught by the “gurus” with their $40,000 mentorship’s, nor by the wealth managers with their “market beating” portfolios, additional “alpha”, or retail funds attempting to imitate hedge fund strategy.
The formula is exceedingly simple. Spend less than you earn, and invest the difference for the highest RISK ADJUSTED ROI. And if you're new and have no idea what I'm talking about, make the effort to thoroughly learn and understand this basic formula BEFORE you waste money on gurus, waste time attempting to "wholesale", and waste capital attempting to "flip".
@Ned Careyundefined
My passive income average about $750,000 per year.
Don, that should be enough to eat out from time to time if you drink water with your meals and don’t order appetizers or desserts. 😁
- Member since 2024 · 6 posts · 0 votes1y
I do, after a few years of spending on refurbs for the older properties I bought which needed catch up maintenance, for which I'm still carrying losses forward on my tax returns. I only have five fairly low rent properties. I'm amazed at the high incomes mentioned that still aren't enough and am wondering if the cost of living in the USA is just very high compared to what I'm used to in the UK and France.
- 1yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
Quote from @Debra Williams:
I do, after a few years of spending on refurbs for the older properties I bought which needed catch up maintenance, for which I'm still carrying losses forward on my tax returns. I only have five fairly low rent properties. I'm amazed at the high incomes mentioned that still aren't enough and am wondering if the cost of living in the USA is just very high compared to what I'm used to in the UK and France.
The cost of living in many areas of the USA is SIGNIFICANTLY lower than Paris or London.
Most Americans have the NEED to work, to feel that they’re PRODUCTIVE. That’s why in private industry we start with 2 weeks vacation, and after 15 years go to three…. Although everyone I know takes about 5 -7 vacation days annually and “accumulates” the rest.
- Member since 2024 · 6 posts · 0 votes1y
Quote from @Don Konipol:
Quote from @Debra Williams:
I do, after a few years of spending on refurbs for the older properties I bought which needed catch up maintenance, for which I'm still carrying losses forward on my tax returns. I only have five fairly low rent properties. I'm amazed at the high incomes mentioned that still aren't enough and am wondering if the cost of living in the USA is just very high compared to what I'm used to in the UK and France.
The cost of living in many areas of the USA is SIGNIFICANTLY lower than Paris or London.
I would expect so - just as in North Yorkshire (my home UK area) and the Charente (my home area of SW France) the cost of living is a fraction of the cost in London and Paris respectively. I didn't read all those who were quoting high incomes needed as living in capital cities? If that's the case, my mistake.
As for starting with two weeks annual vacation - I really don't think that's the choice of employees. I worked for an American company for many years and everyone I knew in the head office in New York would have loved to have had the standard starting 4 weeks paid holiday per annum that we then had in the UK.
As for needing to work to feel productive - that wasn't the whole question. I understood the question was (at least half) about whether people COULD live on their rental income, not whether they chose not to because they needed to feel productive. I was answering the ability to do it part of the question and wondering why people there seem to need such high incomes but you're perhaps saying they don't actually need those incomes but just prefer to continue working? - Member since 2024 · 6 posts · 0 votes1y
Quote from @Don Konipol:
The cost of living in many areas of the USA is SIGNIFICANTLY lower than Paris or London.
I looked it up and the cost of living in London and Washington DC is very similar - though they allow for private schooling and I wouldn't say that's normal in London.
As for Paris, you would need around 7,675.3€ (8,884.4$) in Washington, DC to maintain the same standard of life that you can have with 6,200.0€ in Paris (assuming you rent in both cities).
See https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou... - Member since 2024 · 6 posts · 0 votes1y
I guess by the time you get to the bottom of this page my question is answered - yes, the cost of living is high in the USA compared to France (and probably the UK, though that's higher than France and they even pay for higher education now).
https://livingcost.org/cost/france/united-states
Note that these pages are obviously written from an American perspective because they quote costs for an 'international school' and most European, even British, migrants wouldn't pay for an international school but would consider it important for their children to integrate and go to the local French school, which is free. Education is free in France all the way through, unless you go to a private university and even those are still way cheaper than what the UK currently charge (UK now charge for university level onwards).
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes1y
@Marcus Auerbach I know many who could, in theory, just kick the feet up n sit back on cash-flow, but I don't know any who do.
I have a good friend who recently hit this point, the cash-flow was at a point that it would "retire" him, but nothing special or exceptional, just amply covered all living expenses.
He wanted help in thinking on what to do next. So, we removed emotion and jumped into the #'s and analysis. When we got to what equity he was sitting on, the ability to consolidate things into commercial financing, he declared it a no-brainer and jumped on it.
This is what everyone I know in these shoes does, some iteration of equity cycling.
My friend effected a 7 figure liquid position with this simple adjustment which moved his monthly cash-flow hundreds.
And he's a doer, the thought of siting back and watching grass grow was a no-go. He stepped back his working time for more family time freedom but is still at it, hunting down great deals, making them happen etc..
And he's found his deals are all home runs if not grand-slams, because he is doing it all with 0 pressure to make a deal happen. Which makes him keep doing it all the more.
I imagine this is more the rule than the exception, because those who get-there, there gonna be doers. And to get there means sizable equity, as I keep banging on that drum cash-flow is a result. So a doer, on Mt Equity, yeah good chances the doer is gonna want to do.
And my friends income from the doing is more than if he just sat on cash-flow.
REI is his only income at this point, has been for some years now. He has other side passions but they barely make $ or even loose $.
He is about 23yrs into his REI journey.
Started flipping the ugliest small "junker" properties, doing everything himself. Took about 15 yrs scaling this up while working FT j.o.b.. Next 5yrs was FT REI but $ was tight and pressure was on to make deals happen on a regular basis. About 3yrs now where he has that safety net that he doesn't have-to make anything happen, he takes them as they come.
He'd say he's not "rich", just secure. If you walked past him you'd never guess, he's as average Joe as one comes.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
Quote from @James Hamling:
@Marcus Auerbach I know many who could, in theory, just kick the feet up n sit back on cash-flow, but I don't know any who do.
I have a good friend who recently hit this point, the cash-flow was at a point that it would "retire" him, but nothing special or exceptional, just amply covered all living expenses.
He wanted help in thinking on what to do next. So, we removed emotion and jumped into the #'s and analysis. When we got to what equity he was sitting on, the ability to consolidate things into commercial financing, he declared it a no-brainer and jumped on it.
This is what everyone I know in these shoes does, some iteration of equity cycling.
My friend effected a 7 figure liquid position with this simple adjustment which moved his monthly cash-flow hundreds.
And he's a doer, the thought of siting back and watching grass grow was a no-go. He stepped back his working time for more family time freedom but is still at it, hunting down great deals, making them happen etc..
And he's found his deals are all home runs if not grand-slams, because he is doing it all with 0 pressure to make a deal happen. Which makes him keep doing it all the more.
I imagine this is more the rule than the exception, because those who get-there, there gonna be doers. And to get there means sizable equity, as I keep banging on that drum cash-flow is a result. So a doer, on Mt Equity, yeah good chances the doer is gonna want to do.
And my friends income from the doing is more than if he just sat on cash-flow.
REI is his only income at this point, has been for some years now. He has other side passions but they barely make $ or even loose $.
He is about 23yrs into his REI journey.
Started flipping the ugliest small "junker" properties, doing everything himself. Took about 15 yrs scaling this up while working FT j.o.b.. Next 5yrs was FT REI but $ was tight and pressure was on to make deals happen on a regular basis. About 3yrs now where he has that safety net that he doesn't have-to make anything happen, he takes them as they come.
He'd say he's not "rich", just secure. If you walked past him you'd never guess, he's as average Joe as one comes.
Yes. Because it takes a certain amount of "drive" to get there, but the "drive" is who you are and you can't just suddenly turn that off when your cash flow hits X. So for most of us, it's on to the next adventure.
- Tulsa ok · Member since 2025 · 84 posts · 60 votes1y
Quote from @Marcus Auerbach:
Quote from @James Hamling:
@Marcus Auerbach I know many who could, in theory, just kick the feet up n sit back on cash-flow, but I don't know any who do.
I have a good friend who recently hit this point, the cash-flow was at a point that it would "retire" him, but nothing special or exceptional, just amply covered all living expenses.
He wanted help in thinking on what to do next. So, we removed emotion and jumped into the #'s and analysis. When we got to what equity he was sitting on, the ability to consolidate things into commercial financing, he declared it a no-brainer and jumped on it.
This is what everyone I know in these shoes does, some iteration of equity cycling.
My friend effected a 7 figure liquid position with this simple adjustment which moved his monthly cash-flow hundreds.
And he's a doer, the thought of siting back and watching grass grow was a no-go. He stepped back his working time for more family time freedom but is still at it, hunting down great deals, making them happen etc..
And he's found his deals are all home runs if not grand-slams, because he is doing it all with 0 pressure to make a deal happen. Which makes him keep doing it all the more.
I imagine this is more the rule than the exception, because those who get-there, there gonna be doers. And to get there means sizable equity, as I keep banging on that drum cash-flow is a result. So a doer, on Mt Equity, yeah good chances the doer is gonna want to do.
And my friends income from the doing is more than if he just sat on cash-flow.
REI is his only income at this point, has been for some years now. He has other side passions but they barely make $ or even loose $.
He is about 23yrs into his REI journey.
Started flipping the ugliest small "junker" properties, doing everything himself. Took about 15 yrs scaling this up while working FT j.o.b.. Next 5yrs was FT REI but $ was tight and pressure was on to make deals happen on a regular basis. About 3yrs now where he has that safety net that he doesn't have-to make anything happen, he takes them as they come.
He'd say he's not "rich", just secure. If you walked past him you'd never guess, he's as average Joe as one comes.
Yes. Because it takes a certain amount of "drive" to get there, but the "drive" is who you are and you can't just suddenly turn that off when your cash flow hits X. So for most of us, it's on to the next adventure.
Couldn't agree more
I started this journey with the goal of becoming a millionaire and creating enough cash flow to cover my daily living and take my wife on a nice vacation every couple of months once the kids were out of the house. Now that I’ve reached that point — with solid income, equity, and just one child still at home — I don’t quite feel like I’ve “made it.” The drive is still there, not because I need more money, but because I’m motivated by the challenge. I want to keep growing and proving to myself that I can reach the next level. Ironically, it feels like the next 10 years could be more productive — and more fulfilling — than the first 23. Those years seemed like the daily grind to achieve the goal i sought after when i was young and ambitious.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes1y
Quote from @Marcus Auerbach:
Quote from @James Hamling:
@Marcus Auerbach I know many who could, in theory, just kick the feet up n sit back on cash-flow, but I don't know any who do.
I have a good friend who recently hit this point, the cash-flow was at a point that it would "retire" him, but nothing special or exceptional, just amply covered all living expenses.
He wanted help in thinking on what to do next. So, we removed emotion and jumped into the #'s and analysis. When we got to what equity he was sitting on, the ability to consolidate things into commercial financing, he declared it a no-brainer and jumped on it.
This is what everyone I know in these shoes does, some iteration of equity cycling.
My friend effected a 7 figure liquid position with this simple adjustment which moved his monthly cash-flow hundreds.
And he's a doer, the thought of siting back and watching grass grow was a no-go. He stepped back his working time for more family time freedom but is still at it, hunting down great deals, making them happen etc..
And he's found his deals are all home runs if not grand-slams, because he is doing it all with 0 pressure to make a deal happen. Which makes him keep doing it all the more.
I imagine this is more the rule than the exception, because those who get-there, there gonna be doers. And to get there means sizable equity, as I keep banging on that drum cash-flow is a result. So a doer, on Mt Equity, yeah good chances the doer is gonna want to do.
And my friends income from the doing is more than if he just sat on cash-flow.
REI is his only income at this point, has been for some years now. He has other side passions but they barely make $ or even loose $.
He is about 23yrs into his REI journey.
Started flipping the ugliest small "junker" properties, doing everything himself. Took about 15 yrs scaling this up while working FT j.o.b.. Next 5yrs was FT REI but $ was tight and pressure was on to make deals happen on a regular basis. About 3yrs now where he has that safety net that he doesn't have-to make anything happen, he takes them as they come.
He'd say he's not "rich", just secure. If you walked past him you'd never guess, he's as average Joe as one comes.
Yes. Because it takes a certain amount of "drive" to get there, but the "drive" is who you are and you can't just suddenly turn that off when your cash flow hits X. So for most of us, it's on to the next adventure.
My wives friends are now entering this phase where there husbands are starting to retire, and it's asked of my retirement. She just laughs and says I will never stop working, only change how I work. She's right.
It's a part of me, I just can't turn that off, it's who I am, I like doing things. It's to the point that when on vacation, she schedules windows of time for me to explore biz potentials because she just knows, no matter where we are, what we are doing, something will pop up, lol.
We were out snorkeling in the Indian Ocean and next thing you know I'm entertaining Catamarans, lol. Shopping properties in Constantia. Flat's in Soho. Food truck in D.C.. There is always something to catch the fancy and tantalize the interest.
I'm an investor, the hunt is exhilarating, the potential exciting. The profit at end, almost somber. It's the doing, that's what it's all about really. ironically what get's most started at it, making $, in my experience, tends to become an almost after-thought. I don't chase dollars anymore, I chase projects. The dollars are just a weight of measure. Ok, now I just sound snobby, lol.
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes1y
I think it's fairly rare and usually comes after a fairly long career and/or when you are able to pay off all or most of your mortgages. It's hard to have sizeable cash flow before then as the cash flow usually gets eaten up on recurring capital improvements (or new acquisitions).
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
@Debra Williams technically, I retired on rental income in June 2015 when I quit my well compensated corporate job. What I found out very quickly is that all my friends were working and you can only watch so much day-time TV. It's not only that I was not busy or productive, but also the fact that I really enjoy building things and it's a huge source of personal satisfaction. I was not sure what to do next, that's when I got licensed, originally only for my own purposes, but quickly found out there was another opportunity to build something.
Lifestyle design is also huge for me. I tend to work a lot and also most weekends, but we take a least 4 larger vacations every year: we just got back from 3 weeks in Austria and in October I am going to be riding a motorcycle across Africa. Beeing able to do these things is huge for me - when I started working corporate in the US I remember I was so excited to live in the US and go to all the national parks and then realized I would not have much time - maybe one week per year, the rest to visit family in Austria. So I think you always have to look at time and money together, it does not help to have more money, if you have no time freedom.. like most things in life, a good balance is ideal
- Member since 2024 · 6 posts · 0 votes1y
Quote from @Marcus Auerbach:
"@Debra Williams ........
Lifestyle design is also huge for me. I tend to work a lot and also most weekends, but we take a least 4 larger vacations every year: we just got back from 3 weeks in Austria and in October I am going to be riding a motorcycle across Africa. Beeing able to do these things is huge for me - when I started working corporate in the US I remember I was so excited to live in the US and go to all the national parks and then realized I would not have much time - maybe one week per year, the rest to visit family in Austria. So I think you always have to look at time and money together, it does not help to have more money, if you have no time freedom.. like most things in life, a good balance is ideal"
Yes, that's it exactly. I'm about to have an empty nest as my youngest leaves to go to university and my aim is to be free to travel and see more of the world, now I'll have only myself to worry about (at least on a day to day routine basis anyway - parents will always worry about their children!).
I've done the corporate life of long hours and high stress and I wouldn't want to go back to it but if I did, only having four weeks holiday per year would be a nightmare, never mind only one or two! It's the live to work vs work to live argument. I'd rather just be free, with enough income to go off and explore.
edit: to put the bit I quoted in because it doesn't seem to be showing even though I can still see it when I edit......
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