Retire with 15 properties on 15 year mortgages

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Retire with 15 properties on 15 year mortgages

Sovat C.
Rental Property Investor · Rockville, MD · Member since 2015 · 59 posts · 22 votes

I heard this on a pod cast before where the investor buys 15 rentals, 1 every year for 15 years.  He puts them all on 15 yr mortgages. After the 15th home purchase, the 1st home purchase should be paid off and he refinances and uses the cash to live for the year tax free.  The next year he would do the same on the 2nd home and continue to do so on the 3rd through 15th and it would repeat back to home #1 after the 15th home.  GENIUS!! Question is, how is he able to qualify for a mortgage if he makes no income?!? 

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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
6y

@Sovat C.

The live tax free part is not true. His net rental income will be taxed. Further, should interest rates spike, he may be feeding an alligator after refinancing. Or, he can have invested in a Detroit in 2000 and the properties worth 25% 15 years later. Or price inflation could run double digits.  You never know

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  • Davido Davido
    Rental Property Investor · Olympia, WA · Member since 2012 · 544 posts · 311 votes
    6y

    @Sovat C.,   He does have income.  Rental income from the 15 properties.  Not having to work in this example means having the 15 rentals producing enough cash flow to pay all their costs, including all 14 old mortgages and the 15th (new) mortgage that is refinanced each year.   

    1Reply
  • Sovat C.
    OP
    Rental Property Investor · Rockville, MD · Member since 2015 · 59 posts · 22 votes
    6y

    @Davido Davido - Thanks!  I just made an excel model and you're right!  Forgot about the rental income part until I put it in excel.  I think I just figured out my retirement plan but you would have to pay taxes on the rental income.  I guess next would to figure out what is the max income I need to qualify for each mortgage so I can max the loan on each refi to live off vs rental income. 

    1Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    6y

    @Sovat C.

    The live tax free part is not true. His net rental income will be taxed. Further, should interest rates spike, he may be feeding an alligator after refinancing. Or, he can have invested in a Detroit in 2000 and the properties worth 25% 15 years later. Or price inflation could run double digits.  You never know

    Private Mortgage Financing Partners, LLC
    WebsiteView Page
    2Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    6y

    This is not much different than any investor who retires using real estate except that markets and life are not that linear. You may find 10 properties that meet your criteria one year and none in other years.  Your submarket will change.  Credit terms and availability change over time.  Life events and interests change over time too.

    Aside from that, for me personally, 15 properties is no man's land.  It's too small to have employees and efficiencies but more work than I'd want to handle myself relative to other interests.

    2Reply
  • Account Closed
    Specialist · San Antonio, TX · Member since 2012 · 865 posts · 351 votes
    6y

    The person that promoted this didn’t do this personally themselves IMO. 

    2Reply
  • Sovat C.
    OP
    Rental Property Investor · Rockville, MD · Member since 2015 · 59 posts · 22 votes
    6y

    @Don Konipol @Mike Dymski @Account Closed sounded too good to be true and way too many variables.  I'll keep my options open and keep learning.  

    0Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    6y

    You can EASILY retire with 10 paid off properties in Vegas unless you can’t “get by” on $150k a year.  That’s with a property manager handling everything and after their fees and reasonable repairs and vacancies baked in. This is In a state with no income tax, low maintenance homes, and a low federal tax bill due to depreciation. 

    Most retired couple, should be able to  “get by” with 5, especially if they have any other investment< social security or a pension. 

    2Reply
  • Joel O'Leary
    Investor · Los Angeles, CA · Member since 2016 · 94 posts · 93 votes
    6y

    @Sovat C. Which podcast episode is it that they explain this strategy?

    1Reply
  • Anna Buffkin
    Investor · Pawleys Island, SC · Member since 2015 · 324 posts · 385 votes
    6y

    @Sovat C.  I am not sure the need to refinance.  I would think the paid off property income growing each year from 15 properties would be plenty.  Assuming $1000 each for rent and 50% for expenses.  That is $7500 per month before any other saving or investment income.

    Also, @Mike Dymski is right about 15 being a headache.  I own 11 and self manage.  The first 5 are simple to manage.  Now at 11, there is something to do each month be it maintenance, tenant turnover, releasing, etc.  I am too small to have employees, but big enough to where its a small part time job for me.   

    Also, I don't tend to buy linearly.  I bought 4 for 2017 and none in 2016 as I had twin boys in 2016. 

    2Reply
  • Anthony GaydenPro Member
    Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
    6y
    Originally posted by @Joel O'Leary:

    @Sovat C. Which podcast episode is it that they explain this strategy?

    This strategy is actually discussed in the book 'The Millionaire Real Estate Investor'.

    I am actually doing a modified version of this plan. No need to use a 15 year mortgage. You can still do a cash out refinance of a property and use the money from the debt paydown and appreciation to live.  

    Podcast Guest on Show #21
    2Reply
  • Nicole Heasley Beitenman
    Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
    6y

    I remember that podcast. It was a great episode. 

    0Reply
  • Jackie P.
    Investor · Golden CO · Member since 2010 · 77 posts · 12 votes
    6y

    I wonder if this was John Schaub.  He wrote a book called Building Wealth One House at a Time.  Heard him in person in FL many years ago.  The concept works!

    0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    6y

    I do something a little different but very similar with mortgages. As an example, I will buy a loan with 180 payments left at a 12% yield to me. Lets say I paid $40k for it. I will then sell 120 payments to an investor for the $40k where they are getting 8%. I essentially get 60 payments on the back end of the loan for free. Rinse and repeat this several times per year every year and you build yourself some awesome cash flow in future years. Also do not deal with tenants, toilets, termites, maintenance etc. 

    7e investments53 Reviews
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  • Joseph Livingston
    Member since 2023 · 1 post · 0 votes
    2y

    Mind sharing a few more details on this strategy? Where do you purchase loans?

    0Reply
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