Can Buy & Hold Real Estate Fund a Comfortable Retirement? Check Out the Numbers!


I LOVE spreadsheets—lots of information, details flying around everywhere, on everything from expenses to profits. I love detail. The more, the better. We as investors spend a ton of time pouring over P/L sheets and rent rolls for our current and future deals, and we have to.

However, I had an interesting conversation with a real estate broker a few weeks back over lunch, and while chatting about a potential real estate deal, he said something very interesting. After we spent some time dissecting a few different scenarios on a couple of different deals, such as the locations, the neighborhoods, and our plans with the units, etc., he asked us, “How long do you plan to keep the units?” There are lots of specific questions in understanding the in-depth numbers and the specifics on cap rate, etc., if you really want to grasp the whole deal and know what you’re getting into.

The next thing out of his mouth caught my attention.

He said something to the effect of, “I know guys who can say they’ve owned the building for 20 years—they’re the ones making money.” I sat back in my chair—and it really made me ponder.

On the day to day it’s easy to get tied up with the little things, like service calls and repairs, or an over-texting tenant, and it’s easy to lose sight of what the end goal is—and for us, that is holding properties for long term cash flow, which then equates to long term wealth.

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An Example

Let’s say you buy a single family rental for $100k and put your $20k down, and you own in a traditional type of financing scenario. You get a long term mortgage note on it for 30 years at 4%, and the property rents for $1,100.

  • Mortgage: $381
  • Expenses (taxes, insurance, repairs, cap ex—45% of rent): $495
  • Cash Flow: $224

This is obviously very general, but for simplicity’s sake, you have $224 cash flow after expenses. Not to mention you are now depreciating your property, and the tenants are paying down your principal balance. You’re off to a great start.

Related: Buy & Hold Real Estate is the Ideal Investment: Here Are the Numbers to Prove It

Now, if you look at the 5, 10, 15, and 20-year marks for this property, what would you still owe on it?

  • September 2020: $72,217.27
  • September 2025: $62,855.33
  • September 2030: $51,424.42
  • September 2035: $37,467.33

So the tenants have beaten up the house a number of times, and you probably put a new water heater in at some point, along with some windows and maybe even a roof. You cleaned it every few years, or maybe you got lucky with some amazing tenants who stayed for years with little vacancy. Either way, looking at the 20-year mark with this mortgage payment and amortization, you have a house that you bought for $100k, renting for $1,100 (which, who knows what it would be in 20 years, but presumably more), and you now owe less than half of what the property is worth.

The $100k house is now worth, say, $125k.

– $20k you originally put down

– $37,467.33 (remaining mortgage balance)

= $67,532.67 in equity

That’s pretty awesome, right? Not to mention all the cash flow you have earned over the years—if you made your $224 monthly, that’s:

$224 x 12 months x 20 years = $53,760 in net cash flow

Can you say AWESOME? #winningwithcashflow

Yeah, I think so. With an asset you now own with less than 30% loan to value, you can now do a few different things.

1. Sell & Take Your Gains

You will need to work out with your accountant what kind of tax burden you have and whether or not you want to 1031 exchange, but either way, you sell for the $125k the property is worth.

Sales Price: $125k

Mortgage Balance: $37,467.33

Realtor Fees (6%): $7,500

Closing Costs (1.5%): $1,875

Net: $78,157.67

2. Do Nothing, Keep Paying, & Keep Renting

Why change what isn’t broken? Then just keep rolling. Another few years, you are all paid off and now a cash flow king.

3. Cash Out Refinance

This is my favorite. Keep the asset. Take some cash. Let’s say you refinance the property now, taking out up to 65% of the LTV of $125k because you still want to pay it off, but you want to get some cash out.

$125k x 65% = $81,250

$81,250 – mortgage balance of $37,467.33 = $43,782.67

We can’t wave a magic wand and know what the interest rates will be in 20 years from now, but for the matter of example, you are right around the same loan balance you started with, except now you have:

$20k initially invested (down payment)

Rents were $224 x 12 months (x 20 years) = $53,760 in net cash flow

Cash out refinance was: $43,782.67

And now you have your $20k (which had been paid back a long time ago with your cash flow) and an additional $77,542.67


What if You Bought 10 Properties?

I love chatting with people interested in investing, and I often hear guys who want to own 5-10 properties and let them pay for part or all of their retirement.

Related: The Beginner’s Guide to Buy & Hold Real Estate Investing

Imagine for a minute that you take this financial example, and you buy the 10 properties over the course of a few years. And as you near retirement, you have waited the 20 years I used in this example, and you cash out refinance and continue using the properties for cash flow:

10 properties x $43,782.67 (from cash out refi) = $437,826.70

And you are still making your $224 or so at that point in monthly cash flow, so that equals $2,240.

The power is in the TIME—the time you have allowed for the asset get paid off, for it to cash flow, and for it to be paid for by someone else living in it.

What About 100 Properties?

What if you had the big goal of at least 100 properties? In this example, your cash out refinance at that 20-year mark would be:

100 properties x $43,782.67 = $4.37 MILLION dollars and

Monthly cash flow of: $22,400

That will work for me!

Let the 20-year idea get you fired up. I know it does for me—for paying for my kids’ education, paying for a lifestyle I want, taking my wife out for a nice dinner or a nice vacation. Playing the long game with rental properties might be a real pain sometimes, and it might not be the sexiest option versus wholesaling or flipping houses, but let me know who couldn’t have a nice living with $22k monthly in cash flow and the $4.37 million check at closing at your refinance.

Pretty sure retirement would be looking sweet after that closing.

Are you using the long-term buy & hold real estate strategy to build wealth?

Let me know with a comment!

About Author

Nathan Brooks

Nathan Brooks is a dad, husband, worship leader, and real estate investor in the Kansas City market. Foodie. Coffee addict. Crossfit junkie.


  1. Larry S.

    Nathan……….I find your blog very accurate. My investment real estate portfolio numbers are almost identical to your example. Ten houses are not quite enough and 100 way beyond my lifestyle. I am very comfortable with 20 , with four remaining to be paid off. Its more money than I need for retirement or rental maintenance. The extra money allows me to “modernize” houses. Maybe a deck and awning, or tear a wall out between the kitchen and dining room and make an island. Maybe partial removal of a wall on the steps to the second floor to allow a king size bed to pass, Maybe hardwood floors in a few rooms. These things are unnecessary for renting but greatly add to the sell price, the rent price, and the quality of the applicants.

    Now today after 35 years of being a landlord, I find that my home cost less than some of the rentals. My vehicles are always one step away from the scrap yard. We buy most of our groceries at Aldis and Wal Mart. I get a lot of shirts at the veterans thrift store. That’s just our life style not necessity. But we enjoy a cruise every year, long vacations every other month like beaches, skiing, fishing, and touring. We go often to dinner and a play or concert at $100 a ticket.

    More readers should seriously study your excellent example. It epitomizes real estate investing for the smaller low key mom and pop investor.

    • Darrin Wesenberg

      Nathan, such a great, inspiring article! I often think about this topic. I’m not a “save up my 401k” kinda guy. I have $55k stashed in an IRA from my old “cubicle” job that’s doing nothing for me. I keep thinking I just want to take the early withdrawal penalty so I can use that money to invest in more real estate.

      And Larry, I aspire to have your exact lifestyle someday! I will always shop at thrift stores and drive my beater car til it dies, all the while accumulating properties along the way and being able to take sweet vacations. What you said really struck a chord.

      • maria giordano


        There is no need to cash out and take a penalty on your IRA. Simply roll it over to a company that does Self-directed IRAs. You are then in charge of your IRA and how you want to invest it. This was how my husband and I originally got started in real estate. Now I own my own real estate investment company and use mine and other peoples self-directed IRAs to invest in rental properties, fix-n-flips and other forms of real estate. It’s a great way to have more control over your investment portfolio.

    • Nathan Brooks

      This is awesome Larry! And an inspiration for me too … we are keeping after it. Thanks for the kind words … and to many many more years of your and your family enjoying those vacations and nice dinners. That’s what its all about.

  2. Mohammad (Asad) Asaduddin

    Nathan, congratulation on a well balanced analysis of long term hold. My financials on 17 houses is very similar except for my tenants do not pay. For example one tenant is on Housing assistance and approved for $510 less than my rent. She begged and promised to pay that balance. After moving in she plain denies any such agreement and I do not have good documentation. And there are others who pay after much time wasting. Have you had evil ones like these?

    • Bob Thompson

      Mohammad (Assad) Asaduddin, you mention the tenant on housing allowance but not paying the agreed upon extra amount. R U not able to terminate the lease after whatever the lease period was in the first place with 60 notice. I looked into Section 8 housing several years ago and did not go that route because of some weird things that were in the requirements that had to do with similar things about rents etc… I suppose the answer is definitely don’t skimp on the paperwork.

      I learned that I am not very good at dealing with folks who don’t pay. I could not for the life of me kick someone out before and it cost me dearly. I have now changed my attitude and will no longer be the compassionate guy. I will serve any notice right away and start proceeding as quick as possible. Every time my tenant told me a sad story I was right on the step nodding my head saying I understand – no more. I will let the USPS and the local Marshall/Sheriff’s office serve my required notices. I am too softhearted and although compassion is a good thing, people will take advantage of a soft hearted person.

    • Nathan Brooks

      We haven’t had that issue because we typically only do market rent… I’m sorry to hear that problem. You might have a conversation with the tenant and explain you will be calling the housing authority to report her, and continue to do so … she doesn’t want to lose that.

  3. Adam Christopher

    I think the hardest part is always getting started. It gets much easier with time. As each year passes there are less things to fix, more comfortable with screening tenants and more money on principle payments and cash flow. In the beginning the cash flow might not seem worth it, but just remember that it will be worth it in the long term.

  4. jason zullo

    This is exactly what I plan on doing, not 100 houses but maybe 10 if it can provide a decent retirement for me. I never believed in the stock market and Ive always had this plan but this year is the year I will get started in this. I make decent money now and Im young (32) so I don’t mind waiting 20 years to generate any decent cashflow. I never plan on selling the homes, If I need a quick infusion of cash I would just borrow against one of the homes and then let the rent pay the house off again.

  5. In 20 years 4.5 million will only be worth just over a million dollars after inflation adjustment. I just hope your buying in the right areas so you get some appreciation. If my rentals only appreciated 25k over 20 years I’d never buy a house again.

  6. Jerry W.

    Nathan, Thanks for the article. Now imagine where you would be if you used 15 year loans but never took any cash out monthly, you just broke even. The $200 month cash flow could be reinvested back into the loan payment to pay the loan off 15 years earlier. That is my plan.

  7. Jim Stallings

    Hey Nathan, Great article! This is pretty much what I have been doing for a few years now except I buy them Subject-To the existing mortgage or get sellers to take back the notes with $0 down and 0% interest. I prefer taking them Subject-To or getting seller financing simply because I don’t care for banks, especially when my name is on the note! I’ve acquired approx 60 SFR and only 2 are financed in my companies/my name. I’m working with a private lender now to get the bank paid off on those. I’d rather pay a little more in interest and deal with a actual person than just be a number at some bank and be subject to their guidelines!

  8. Larry S.

    There is some mention of retirement in these blogs.

    The term” retirement” should be refined. What exactly is retirement? For most its ending a job where you get a weekly paycheck and have a boss. You then want enough money to live on comfortably while you sit in your mobile home in an senior living court in Florida or Arizona. You can play golf every morning and sit in the patio room the rest of the day. Basically waiting to die.

    I have never met a real estate investor in my local REIA group that will ever retire. The term has no real meaning. . Most in this group will be on their death beds still looking for rehab deals, wholesale angles and no money down possibilities. They will still be attending the home improvement seminar on dry wall installation at Home Depot and asking around for a good honest plumber or property manager.

    I will ” slowly fade away”, but will never retire. Its a foolish concept.

  9. Dorian Smith

    This has been the one topic I have been struggling with every since I became interested in real estate. I am still searching for my first deal and I am deciphering what is the better option. Are there tools or evaluations that one could use to determine whether or not to buy and hold for flip?

  10. Pradeep Thadani

    Great advice, Nathan, and it is very accurate. In fact, with current interest rates and inventory available, we have had some luck getting 10 and 15 year mortgages with higher residual monthly cash flow which makes the case for early retirement!

  11. Alex Craig

    Owning these rentals for long term wealth, just like any other investment, is built for a long term hold. I get amazed that people want to sell their home the first time turbulent times happen, yet will not worry at all when their 401(k) shows that it is volatile or returns less then 4% (my IRA is in the red this year). This is a marathon, not a sprint. I like the buy, hold and payoff. The cash out refi is tempting b/c of the tax free money, but personally, I want my life to become more simple as I get older, not have to manage mortgage payments, etc. Less stress, live longer!

  12. Jordan B.

    Great article, I agree that a rental based business should almost always be a long term investment. Just as Alex Craig said above, keep a long vision. If people get nervous and sell everytime a market goes down, or sell stocks at every correction they will always lose money. i think it’s Mike Ramsey that says if your not looking at least five years into the future of any financial move its probably not a good move.
    Thanks for the great article

  13. Clayton Sneider

    Great article. However, I think you were way too conservative with your appreciation calculation on the house, and with rental increases. A 100K house only appreciating to 125K in 20 years? And no rental increase in that same 20 years? Does that happen? I can see certain areas of the country where the house basically never appreciates. But assuming rent is going to at least match inflation, then you are going to be cash flowing way more at the end of 20 years because your mortgage payment does not go up. I like to think about it in terms of a shrinking mortgage payment rather than everything else going up in price. Having a 30 year fixed mortgage is awesome when there is inflation, and there is pretty much always inflation.

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