Daimien Patterson is the CEO of Integrity Property Investment, a property investment company based in Australia. He regularly produces books, blogs and videos on the topic of property investing, helping thousands of people create financial security and freedom through education and property investment. Get started today.
My Property Investment Tip #27
How Many Properties Do You Need To Retire?
Now this is the real Tip #27!
Thanks to everyone who replied to yesterday’s question. Loving the feedback, and I’m glad everyone is getting value from these tips.
So how many properties do you need to retire?
The answer is 5. …well depending on how comfortably you want to retire.
Did you know that the average Australian, on the average wage, pays an average of 25% of their wage towards rent? Sounds about right doesn’t it?
So therefore, if you had four properties paid off, and were receiving rent on each of them, you would have 4 x 25% of an average wage, which of course equals 100%, or one wage.
And that wage would be paid to you forever. Even INCREASING as you get older, as rents rise over the years. Unlike your superannuation (which you cannibalise down to zero at your expected life expectancy), with your rental income, you can live as long as you like. And when you do pass away, you can leave that income to your kids. Or if you don’t like them, me ?.
But wait… we still need one more property! Why?
Well, because even when a property is paid off, it will still incur some bills, like council rates, water charges, insurance, and maintenance costs.
So we need a fifth property bringing in another 25% of an average wage to give us a total 125% gross, which then equals about 100% net when the bills are paid.
So then, grow your portfolio until you get to the number of properties you want, then focus on paying them off.
Or maybe not ?
Stay tuned for my next few tips which will focus on how to pay off your loans FAST.