Some of our investors buy tens of homes to earn a substantial real estate investment return. Our investors do this in the expectation of a comfortable, even wealthy retired life. I myself have invested in hundreds and have created an empire! For a lot of people, this could sound difficult or even unattainable. However, this is actually much more doable than one would think. While it is true that some people choose to just buy one solitary home, many buy their first, rent it out, see how streamlined the whole process is, and are ready to buy more… and more! They often ask me, how many homes does one need to buy to generate an income of $100K a year?
As I explain in my podcast, I calculate backward to answer this question: how many homes should I have bought to earn a hundred thousand a year now? Firstly, the thing to keep in mind is that real estate investing is not just a get-rich-quick scheme. It is a sound investing system that one needs to commit to over 10 or 15 or 20 years. It can and will be life-changing over the long term precisely because of the real estate investment return it generates.
So, assuming that one started investing some years back, keeping in mind current property values and rental rates, I would say that an investor should have bought eight homes. We speak of a hypothetical situation where an investor would be able to generate a return of $100K a year. In my podcast, I crunch a few numbers to explain how someone who started investing 10, 15, or 20 years ago would fare today.
How many rental homes do you need to invest in to make $100K a year? My estimate would be eight homes. - Adiel Gorel
What is the value of the property? What is the rental income? What is the rate of inflation right now and in the near past? I take all of this into account when I arrive at this number of eight homes. It is important to keep in mind that a homeowner has several expenses that would typically cut into their rental income. They have to pay property taxes at rates that would be determined by the state where they invest. They also have to pay for home insurance and homeowner’s associations (if any). Homeowners would also have to pay management fees and pay for any repairs or replacements needed to be made in the home. All this has to be factored into calculating what you need to do to achieve the projected real estate investment return.
If you are someone that is intimidated by the thought of buying several homes, it is important to remember that buying your first home is the most difficult. Every subsequent real estate acquisition will be easier. By now you’ve already sorted out your doubts and concerns. You’ve been there, done that. Buying more homes will seem positively boring. So, don't be worried about the idea of buying eight homes.
If you're wondering how you're ever going to be able to afford to invest in eight homes, we have a lot of very creative solutions for you. We will speak more about the sort of real estate investment return that you can expect in our upcoming expo. Sign up for free to learn more about investing from some top experts and me.
