• Brian & Jenny

How You Can Replace an $80K Income with Income Properties

Updated: Feb 26

It would be pretty wonderful to be able to quit your job and make money on income properties alone, right? It might seem impossible but it is actually doable and I will explain how you can make that dream a reality. The amount of properties you need to generate 80K in a year depends greatly on how much money you can put down on each property. The ability to quit your job and live on passive income alone will also depend on how long you are willing to wait for the properties to mature and gain equity while you pay down the mortgages. There are plenty of companies out there who claim they have a way to make a million dollars in a year with no money down and no prior knowledge necessary. If you think that sounds far-fetched you are probably correct. Investing in income properties is a slow but steady gain in income that will eventually get you to your goal of a #FiananciallyFreeLife


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First Way to Replace an $80,000 Income with Income Properties: Buy About 5 Properties with Cash

The quickest and easiest way to make the most profit on income properties would be to buy them completely with cash. I realize cash buying is not possible for most people and that’s okay. I’ll walk you through some buying with loan numbers next. However, I am going to give you some example numbers for buying with cash so you can see how income properties can work for you. I’m a numbers person! I am going to break down some costs and profits from my hometown and you can do some online research for your town/city to see what properties are selling for and what rental income you can expect. In our town, a decent 3 bedroom, 2 bath house with a 2 car garage is going for about $250,000. The same house is renting for about $1,350 per month. Therefore, if you buy 5 of these 3 bed, 2 bath properties you can expect about $6,750 per month in income or $81,000 annually. So now you see how this would work!


I want to acknowledge here that I’m going to leave out maintenance/repair costs in all of my calculations because it’s a hard number to nail down and I’m working with approximate numbers anyway just to give you an idea of how income properties can work for you. I’m also being conservative in my revenue numbers and in our experience when you buy nice properties (my biggest real estate tip!) the maintenance costs are generally low so these numbers are a good educated guess.


My numbers also assume you will manage your properties. I don’t think managing a few properties is a big deal at all but if you don’t want to deal with managing properties you can pay a management company about 10% of your rental income to take care of all of the management tasks for you. If you wanted to use a management company would just need to purchase extra properties so the additional income offsets the management cost. So what if you don’t have 1.25 million dollars lying around to invest in real estate? That’s okay, read on. If you do have this kind of money please send me a message and I’ll sell you some properties ASAP, ha!


Cash Buying Summary

Buy 5 Properties with Cash = 1.25 million total

Cash Per Month = $6,750

Annual Income =$81,000


***Note: The return on investment (ROI) here is 6.5% and this is low for a typical investment strategy. Single-family homes, as in this example, do not have the best ROI but typically they are the most hassle-free properties with the lowest turnover rates. In my first blog about the #1 Mistake Many Investors make you can read about why I recommend buying nice properties (https://www.destinationfamilies.com/blog/1-mistake-to-avoid-in-real-estate-investment)


Second Way to Replace an $80,000 Income with Income Properties: Buy 14 Properties with 20% Cash Down on Each

For this example, I’m going to use a duplex instead of a single family because the ROI is a little bit better than single-family homes. However, a duplex will tend to have a higher turnover rate than a single-family home so be prepared for that slight inconvenience if you go this route. For great tips on how to make your income properties hassle-free you can check out this blog: (https://www.destinationfamilies.com/blog/you-can-be-an-investor-part-time-and-not-lose-money).


In June of 2019 in my hometown, a duplex or townhome with 3 bedrooms, 2 baths, and a single car garage is selling for $168,500. This same unit would rent for about $1,150 per month. For rental properties, you have to put down a minimum 20% down, which would be $33,700. Your estimated mortgage on the remaining 80% would be about $683 per month (with a 4.5% interest rate). Therefore, your profit is $467 per month on one unit. If you purchased 14 of these duplex units you could make $6,538 per month or $78,456 annually. In order to purchase 14 units, you would need $471,800 in cash to be able to put down the 20% on all of the properties. Now, let’s say you hold onto these properties for 30 years and pay off all of the mortgages and are essentially making 100% profit on all of those properties. That would be a profit of about $16,000 per month in today’s dollars. In 30 years the rents would increase but the cost of living and salaries would increase as well so it’s best to use today’s dollars just to give you an estimate of the kind of profit you could expect on 14 rental properties. If you don’t have $472K lying around to invest please keep reading for my other scenarios.


20% Down Buying Summary

Buy 14 Properties with 20% Cash Down = $471,800

Cash Per Month = $6,500

Annual Income =$78,000


***Note: ROI here is 16.5% which is great for an investment strategy.



Third Way to Replace an $80,000 Income with Income Properties: Buy 22 Properties with 0% Cash Down on Each

I have a creative way to get 100% financing on income properties that I’ll share in my upcoming ebook. For now, let’s just assume you can get a 100% finance loan to see how many income properties you would have to buy to replace an $80,000 income with income properties. Let’s also use the duplex or townhome scenario for this one. You would purchase the same 3 bedrooms, 2 baths, 1 car garage unit for $168,500. You would put 0% money down so your loan payments would be about $852 per month. If your rent on the property was $1,150 then your profit would be $298 per month. Therefore, you would need to purchase 22 of these types of properties to make around $80,000 in annual income. The great part of this plan is the potential of buying properties with no money down. However, the strategy I have developed for this no money down approach would probably not work 22 times. However, in theory, the 22 properties with no money down could net an annual income of $80K.


0% Down Buying Summary

Buy 22 Properties with 0% Cash Down = $0

Cash Per Month = $6,560

Annual Income =$78,700


***Note: ROI cannot be calculated for this scenario because it is too high. There was no money down so you are essentially earning money with no investment and this makes the 0% down strategy ideal.


Fourth Way to Replace an $80,000 Income with Income Properties: A Combination of No Money Down, Some Cash Down and Waiting Several Years Until the Mortgages Can be Paid Off

The possibilities for this combination approach to buying income properties are endless. Let’s just walk through one scenario of combination buying to get the idea of how this could work to replace $80,000 in annual income. Ideally, you want to own 5-6 income properties with no mortgages on any of them in order to make a profit of around $6,700 per month, which would be $80K per year. Let’s assume you can stick it out at your current job for the next 10-15 years while you purchase and manage properties.


Years 1&2: Perhaps in the first couple of years you are able to buy 2 properties with 100% financing and are making about $600 per month on those properties ($300 per month on each property).


Years 3 &4: Then the next couple of years you are given some inheritance money and are able to purchase another 2 properties at 20% down. On those properties, you make $900 per month ($450 on each property). Now with all 4 properties, you make $1,500 per month.


Year 5: Now in the 5th year you decide to do something creative and you sell one of your first properties for a profit of $68,000. This is entirely possible because one property we have owned for 5 years has gained about $68K. With that profit, you are able to purchase 2 more properties at 20% down on each one. Now you have 5 properties total (one at 100% financing and 4 at 20% down) and you are earning $2,100 in additional income per month.



Year 6&7: You are able to buy 2 more properties with 100% financing and 0% down in the 6th and 7th years. You make an additional $300 per month on each of those. Now you have $2,100 per month from the 5 previous properties and $600 per month on the newest 2 properties. This is $2,700 per month on all 7 properties. Now you are making $32K in annual income from the investment properties and you can set that annual profit aside to put down 20% on other properties.


Year 8 & 9: You are able to use the annual profits from your rental properties to acquire 2 more properties with 20% down. Now you have 9 properties total and are making $43K in annual income from your income properties. You now have 3 properties purchased with 100% financing ($300 profits per month on each) and 6 properties purchased at 20% down ($450 profit per month on each).


Year 10: Perhaps you are able to sell your very first income property and acquire a good profit on it. You can combine this profit with your new annual rental revenue and purchase a house or duplex with all cash down. Or you can purchase 2 properties with 50% down. You now own and manage 10 or 11 properties and make a little over $5,000 per month or $65,000 annually on your income properties.


Years 10 and beyond: You can sell off a few of the older properties and pay off a few of the newer mortgages so that eventually you own 5 or 6 of the properties with no mortgages and you are making around $80,000 per year in revenue from your income properties. When it's time to sell a property check out my 4 secrets to selling a property quickly:(https://www.destinationfamilies.com/blog/4-secrets-to-selling-a-home-quickly)


Combination Buying Summary

Buy 10-12 Properties over 10-15 years, sell some & pay down mortgages

Cash Per Month = $6,700 or Annual Income = $80,000


This blog was not meant to be an all-inclusive real estate investment strategy but I hope it gets you thinking about how income properties could possibly help you achieve your financial goals. One thing that would greatly help you in making money on income properties is to get started right away. I often think back to the condo that my husband and I purchased in 1999 right after we were married. If we had kept that condo and rented it out over the past 20 years we could have made monthly income, acquired equity and we would be getting close to paying off the mortgage. Ah, if only we would have kept that one. I want to help other people get started with investing in real estate and not regret what they could have done years ago. Don’t be afraid to make a smart investment!



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