What if you could replace your salary from your 9-5 job with passive income through real estate investing? You might think this sounds like a tall order, but it’s actually quite attainable. I’ve done it, and I’ve watched other investors do it too. All you have to do is follow a simple formula, and you’ll be earning a passive income in no time!
I came up with a idea one day when looking at my finances. It seemed like at the end of every month, there were still bills to pay, and no paycheck left to cover it. Does this sound familiar?
I started thinking about what I could possibly do differently, and I realized that if I wanted to be financially free, I would have to put my money to work for me. In order to start creating cash flow and passive income, I would have to implement an actionable plan based on tangible numbers.
A lot has changed since those days spent agonizing over bills. Now, I purchase single-family homes at a low price, fix them up, and fill them with reliable tenants who pay me an average of $850 per month in rent.
So, if you’re trying to replace $70,000 a year, here’s how rental real estate can help you get there:
$70,000 salary/52 weeks = $1346/week
$850 monthly rental income x 12 months = $10200 annual rental income
$70,000 salary / $10200 annual rental income = 7 rental properties
That means in order to completely replace a $70,000 salary, all you have to do is acquire 7 rental properties.
PLEASE NOTE THIS IS JUST A GUIDE. THIS WAS BASED ON RENTALS FOR $850 PER MONTH. EVERY AREA HAS A DIFFERENT RENT BASE. PLUG IN YOUR BASIC AVERAGE RENT FOR YOUR AREA TO GET THE NUMBER OF RENTAL PROPERTIES NEEDED TO REACH YOUR GOAL. You can check your local newspaper to see what is your average rent for your area.
This simple formula can be used with any salary range you choose, lowering the salary lowers the overall number of properties you will need to reach that salary goal.