The Rental Property Wealth Calculator: Your Path to Millionaire Status

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rental property wealth calculator

Do you have a passion for real estate? Have you ever wondered how fast your rental empire could grow? And how quickly you’d become wealthy?

I’ve spent quite a few nights trying to figure out over the years:

  • When we’ll have enough money to buy the next rental
  • How much we’ll earn from year to year
  • And how much our net worth will grow as I acquire more and more rentals

Pretty much I always ended up with a notebook page filled with scribbles and cross-outs, and a very vague sense of how everything would play out with the rentals 10+ years from today.

Finally, I decided that I’ve had enough with my rough estimations! It was time to figure out all of the details exactly. So you probably know what that means! It was time to build another Excel-based calculator! 🙂

(Interested in all the free tools I’ve made for my readers? Check out my Free Tools page.)

The Rental Property Wealth Calculator

The first thing you need to know is that I buy rental properties with cash, and I advise all of you to buy rentals with cash too. So, it only makes sense that my rental property wealth calculator was created for all-cash purchases.

Sounds crazy, huh? But you know what? I bet you’ll be shocked how quickly your wealth grows once you get moving.

Don’t believe me? Try the tool and see for yourself.

Download the Rental Property Wealth Calculator Here! – You’ll see the Excel file download in the lower left hand corner of your screen. Open it and follow the instructions below to see how quickly you’ll be able to buy your empire of rentals!

1) Enter your starting cash position

How much cash do you have saved for that first rental? $30,000? $50,000? More? Simply enter the amount into cell K11.

Do you already have some rental properties? Then just add their value into your initial savings.

rental property wealth calculator

2) Enter the amount you can save each year

If you really want to get ahead with your finances, you’ve got to put as much toward your investments as possible. Those that are really winning in life are earning more, spending less, and socking away $20,000 or more away toward their future rental properties.

How much are you able to sock away each year? Enter that dollar figure into cell K12.

rental property wealth calculator

3) Enter the average rental house cost

What’s the cost of the rental properties that you’re interested in? In our area, we’re constantly looking for 3 bedroom, 1 bath homes that cost roughly $80,000. We need to find an extreme deal to accomplish this, but it’s definitely possible! We’ve already proven it once!

What’s the average cost of your future rentals? Enter that number into cell K13.

rental property wealth calculator

4) Enter the average rental income per house

With the average rental house cost that you just entered, how much will a property like that produce each year? Be sure to deduct property taxes, insurance, and some maintenance costs to get down to the actual net income. Liz and I earn $1,200 a month with our rental house, which equates to $14,400. After subtracting the expenses, we’re left with approximately $10,000 a year.

If you have no idea what your rental income will be, just use the 1% rule. Meaning, if you purchase your property for $100,000 as a steal of a deal, figure you’ll receive a net income of $1,000 a month (1% of $100,000), or $12,000 a year.

Enter your yearly rental income into cell K14.

rental property wealth calculator

Drum-roll…..The Results!

Saweet!! Since the tool is now up and running, it’s time for us to finally figure out how quickly our rental empire will grow. For Liz and I, we plan to buy properties that cost $80,000 and yield a net income of $10,000. With my work income and our tremendously low cost of living, I figure we can save nearly $30,000 a year for our rental investments. And, we bought our first $80,000 rental this past year, so I entered the “Initial Savings” amount as $80,000, the cost of that property.

rental property wealth calculator

 

Now, let’s make sense of what this calculator is telling us.

Rental Property Wealth Calculator

  • Column A shows the number of years you’re investing, starting with Year 1 of course
  • In column B is your cash savings. Your additional money saved from your day job each year is in column C.
  • Then Columns D through M show when you’ll be able to buy your first rental, your second rental, your third…etc etc. All the way up to your 10th. Each purchase can be easily seen with the green highlight.
  • Column N shows your total net rental income
  • And finally, column O shows your total net worth of rental properties and your savings. I bet you’ll be amazed how quickly your net worth grows after the first few years of rental property investments.

In our example, the rental property wealth calculator shows our first property in year one. Perfect. Then, we’re left saving up cash for two more years before we can buy our next one. And then another two years of savings for rental property #3.

But then things really start moving!

At that point, we’re still saving $30,000 a year from our work income, but our three rental properties are now adding another $30,000 a year. So that means in the year after we buy our 4th rental, and then the next year our 5th, and then in the very next year our 6th…

For 6 straight years we’ll be able to buy one property after the other. And then in the next year we’ll actually be able to buy two.

After just 11 years, the rental property wealth calculator projects that we’ll own 10 rental properties, have a rental income of $100,000, and have a net worth of $1.1M.

BOOM.

THAT is a beautiful thing.

So What About You?

First of all, this isn’t a contest of us vs. you. It’s more a contest of you vs. you.

Sure, you might be out of debt, feeling pretty good about yourself. But do you have any plans for your future? What do you want to achieve? What do you want to do? And what kind of legacy do you plan to pass on to your children? Maybe it’s time to take action on this whole rental property investment idea that you’ve just been toying around with. Maybe it’s time to actually work toward becoming wealthy.

So what does your rental property wealth calculator tell you?


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13 comments to The Rental Property Wealth Calculator: Your Path to Millionaire Status

  • Curious Derek what part of the country you’re in. I live in Atlanta so real estate is cheaper but not $80,000 for a 3 bedroom. Are you buying in your same city or outside of where you live? Thanks for the posts. Keep them coming.
    CoupleofCents recently posted..2016 Financial Review: +$61,330 Net Worth

  • Wow! This is indeed a brilliant calculator and food for thought –thank you. I have never envisaged owning more than 2 rental properties and this article and calculations have just opened my eyes to a whole new world. By the way, properties in your area are so reasonably priced – I wish I live in West Michigan 🙂
    Esther recently posted..7 Fun and Romantic Ideas for Valentine’s Day While Spending Less

    • YES! Glad you love it! I was a bit discouraged that more people weren’t using it, but you know what? Probably less than 5% of the population is financially ready to invest in rentals, so it totally makes sense! Isn’t it AWESOME to see how quickly the ball gets rolling when you have 3+ rentals? It’s CRAZY!

      And yes, we are EXTREMELY lucky to live in a place with such reasonable real estate prices. I LOVE West Michigan!

  • […] Want to see how quickly you could rack up rental properties with cash? Check out this Free Rental Investment Calculator! […]

  • […] 3) Once you’re out of debt, think invest, invest, invest. Do you realize how quickly you could build a rental empire by purchasing properties with cash? I know it seems like it would take forever, but if you can muster up an extra $30,000 a year (by getting out of debt and reducing your lifestyle), it would only take you 11 years to purchase 10 rental properties that would then yield over $100,000 a year and be worth over $1.1 million dollars (don’t believe me? I did the math and even built a tool for it). […]

  • MM

    I am super impressed with your calculator! There’s one thing that I could see it be more realistic: if the average cost of the rental property AND the rent generated would account for inflation year-over-year (the same way purchased property accumulates value)

    • Glad you liked the calculator MM! Since inflation hits the purchase price as well as the rental income, they basically wash themselves out. No need to over-complicate things.

  • Terry Pratt

    Every income property is someone else’s outgo property. Rental property does not create wealth; it merely redistributes wealth from those unable to retain their own wealth to those able to retain their own wealth.

    • That’s a pretty black and white way to look at it, Terry. For my tenants, they’re using this rental as a way to keep their costs low and buy a place for themselves down the road. To me, that’s a win-win for both of us!

  • Terry Pratt

    Sorry about that; as a borderline poor renter paying half my income to (sub)rent a room from a nonperforming house lessee, I’m overly stressed right now.

    You read that right; the house lessee has a rent delinquency for August and for part of July. The landlord is in the process of evicting the lessee, who is claiming habitability issues. The landlord has directed the rest of us (sublessees) to NOT pay rent to the lessee and to hold our rent money until he directs us otherwise. Lessee insists the rest of us owe HIM room rents for September. I think I do have a rent obligation to the lessee but money I pay the lessee will never reach the landlord, and once in the lessee’s pocket, will be money I can’t pay the landlord; plus I also have the sense that it’s a good idea to comply with the landlord’s direction unless unlawful or immoral. Since the rest of us have not paid the lessee for this month, he’s very difficult to deal with for as long as he remains here. (He says he’s not leaving until end of the month.) Any suggestions? He’s not taking this well and neither am I.

    p.s. You can probably make a great post regarding subleasing issues – many issues involved which are often overlooked.

    • Sheesh… sounds terrible. If it were me, and I had a contract with the lessee only, I’d pay that (while keeping the best relationship I could with the landlord and explain the situation). In the meantime, I’d be looking for a new place to rent immediately. Things aren’t going to end well between the landlord and the lessee, and therefore things won’t end well for you either.

      For your protection, I’d seek out a lawyer friend of the family and get their advice…since I’m not one.

      Best of luck to you Terry.

  • […] to see how quickly your real estate empire could grow? Check out this Rental Property Investment Calculator! It’s amazing how quickly your investments can […]

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