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Can you retire on owning one single rental home?

Question:

Assuming you did have 8% appreciation on a home over 30 years, could you retire from the proceeds of the sale of that rental after 30 years?

Answer:

I don't think that you can retire on one home.
Maybe it will appreciate 8 or 10 or even 15% what does it matter?
Chances are, that inflation is in a smiliar range.

Could you retire right now on the value of one house?

Let's look.

Could I retire on a 800k home in the SF Bay area? Maybe if I moved to Nebraska. I guess I could live in Nebraska on 40k / year, so that 800k home would be good for 20 years at best. A reverse mortgage comes to my mind. During those 20 years, the cost of living goes up further, so in year 1 of my retirement I may need 40k, next year 42k etc.

The US government states that the inflation bounces between 2% and 5% but that's excluding the cost of food and energy. Read more on that here:

http://www.delphifaq.com/faq/personal_finances/f897.shtml


And we don't even want to think of what happens if you had a home outside California in mind. Like some $300k single family residence in Utah. Then you would have to move to Brasil or rural India to survive 20 years.

And what if you happen to be healthy and live longer than you thought?


In my opinion, the only way to retire on houses is to retire on rental income. You need to have these houses fully paid off.

Looking at current prices, I'd say you need 5 houses each producing gross $1000 rent (maybe $1200), then subtract each 10% for vacancy, management and repairs and each will you around $700 (or $800). 5 of those and you have $3500 - $4000 - that is enough to live on.

In 30 years those numbers will be * factor 10, but that does not matter. I always look at that '72 Corvette that was around $5k, now they're 10 times that much.


Generated 20:01:00 on May 26, 2018