Do you want to build long-term wealth? If you buy one rental property per year—an achievable goal for many investors—you could reach financial freedom sooner and even retire early with real estate. In this article, we’ll show you how, with full breakdowns, numbers, and tips!
Disclaimer: The projections in this article are for illustrative purposes only and are based on assumed rates of appreciation, rent growth, and expenses. Past performance is not indicative of future results. Real estate investing involves risk, including the potential loss of capital. Consult a licensed financial advisor before making any investment decisions.
Summary:
Rental property investing is the average American’s path to retirement. No get-rich-quick schemes or sky-high risks—just predictable investments that grow your wealth over time. Like with any investment, you can get rental property investing wrong, but buying a few high-quality properties at the right price could cause your wealth to snowball over the next 10, 20, or 30 years!
Why should you buy one rental property per year? The sooner you start, and the faster you’re able to acquire properties, the more time these investments will have to compound. Using the rules below, let’s look at the impact that five years of buying rental properties could have on your net worth.
Model rules:
These numbers are purposefully conservative to show the power of real estate investing and compounding!
Now, let’s run the numbers using the Rent to Retirement Wealth Calculator!
In year one, you buy your very first rental property. Congratulations—you’re in the game! The property gives you a modest $430 in annual cash flow, but watch how this grows in the years ahead. Plus, you’ve already built $71,947 in total home equity!
Cash Flow: $430/Year
Equity: $71,947 (Down payment + appreciation + paydown)
You buy your second rental property in year two, and now you have two properties producing cash flow. Not to mention, they’re both growing in value!
Cash Flow: $1,404
Equity: $158,452
After buying your third property, your cash flow—and more importantly, your equity—continues to snowball. You’re now making over $2,500 in annual cash flow, and you’ve grown your wealth to nearly a quarter-million dollars between down payments, appreciation, and loan paydown alone!
Cash Flow: $2,689
Equity: $260,422
You’re now pocketing over $400 in monthly cash flow, which was around how much you were making per year only three years ago! Meanwhile, you’re closing in on $400,000 in total equity.
Cash Flow: $4,841
Equity: $378,812
After your fifth rental property, you now have a real estate portfolio that produces over $7,500 in pure cash flow. You’ve also crossed the half-million-dollar mark in total equity—a huge milestone!
Cash Flow: $7,638
Equity: $514,628
Note: The “cashflow” box above shows your total cash flow earned to date (not your monthly or annual cash flow).
Browse cash-flowing turnkey rentals with property management in place!
Now, if you were to stop buying rental properties in year five, your investments would simply continue to compound. Let’s break down the numbers:
After five years of buying properties and 10 years of investing, you’re now earning over $20,000 in annual cash flow. More importantly, you’re nearing $1 million in total equity as your tenants continue to pay down your mortgage and the housing market grows.
Cash Flow: $23,456
Equity: $897,504
It’s year 15, and in just five years, you’ve already doubled your annual cash flow from year 10. Plus, you have well over a million dollars in total equity!
Cash Flow: $41,793
Equity: $1,361,440
You’ve been investing in real estate for 20 years, and you have a ton to show for it. First, you’re making over $60,000 in annual cash flow, which is enough for some people to retire on. As for your total equity, you’re closing in on the $2 million mark, and those mortgages are close to being paid off!
Cash Flow: $63,050
Equity: $1,926,351
Are you starting to see the power of compounding? Buying one rental property every year for five years makes you a millionaire in just over 10 years, and in 20 years, you’ve got nearly $2 million.
In year 30, you’re paying off your first rental property, and without a monthly mortgage payment, your cash flow really starts to skyrocket. You’re making six-figure annual cash flow and have over $3 million in equity!
Cash Flow: $116,262
Equity: $3,468,586
You’ve been investing for 35 years, and now you own a portfolio of five completely paid-off rental properties. With nearly a quarter-million dollars in annual cash flow, you’re able to live a lavish lifestyle in retirement—without even touching your $4 million in equity!
Cash Flow: $241,054
Equity: $4,228,433
This is the repeatable path that average Americans use to become millionaires in real estate—and you only have to buy one rental property per year for five years!
For many, the thought of saving a 20% investment property down payment every year is a tough financial pill to swallow. Thankfully, you have options!
First, Rent to Retirement offers low-money-down loans on new builds, which could allow you to buy multiple rental properties with just 5% down and speed up your timeline to scale.
Many investors start with house hacking, a strategy that allows you to put as little as 3% down. The one caveat is that the property must start as your primary residence, so you’ll need to buy a multifamily property with two or more units or rent out rooms in a single-family home.
Getting a real estate side hustle or an investing partner can also help you get in the game faster!
Get your first turnkey rental for just 5% down!
Don’t want to wait 20 years or longer to retire? You may not have to! Buying the right types of rental properties can expedite your timeline:
Turnkey properties are newly built or renovated, so they often require less maintenance and have lower insurance costs than other properties, thanks to newer systems and appliances. But the best part? These properties also come with property management in place, which allows you to focus on your W-2 job or business and invest in real estate remotely while a professional handles your property’s day-to-day.
What’s more, Rent to Retirement offers 5%-down financing, allowing you to acquire properties faster!
Small multifamily properties have 2-4 units you can rent out, and with multiple tenants under the same roof, you can often consolidate expenses and get more monthly cash flow. Meanwhile, you’re only bringing one down payment and making one monthly mortgage payment!
Many investors prefer long-term rentals since they’re easier to manage, but if you have the time (or hire a great property manager), you could use the mid-term rental or short-term rental strategy to maximize your cash flow.
Like turnkey properties, new build investments usually require less maintenance than other rental properties since they have brand new systems and appliances. As of August 2025, new builds are even cheaper than existing homes in many markets, and some builders are still offering incentives like interest rate buydowns and closing credits.
Once you’ve bought a few rental properties, you’ll need to decide whether you want to use your cash flow to pay off those properties faster or buy more properties. While this largely depends on how many rentals you need to retire, many investors, after reaching their property goal, begin to pay off the property that either has the highest interest rate or the least debt. A paid-off property gives you much more cash flow, as it no longer has a mortgage!
If you want to reach millionaire status sooner than later, buying one rental property per year is one of the best ways to do just that. If you keep working your job and buy low-maintenance, turnkey rental properties that generate passive income, you could supercharge your investments and reach your goals much faster!
Andrew Carnegie is often credited with saying, “Ninety percent of millionaires become so through owning real estate.” It’s true that most wealthy people own real estate, as it gives them tangible, income-producing assets and massive tax advantages.
The 50% rule is a benchmark some investors use to gauge a rental property’s profitability before they buy. It suggests that you should allocate roughly half of the property’s gross income to operating expenses.
The 7% rule is a guideline some investors use to determine how much rental income a property should generate. It states that a rental property should be able to bring in at least 7% of its purchase price in annual gross rental income. So if you buy a $400,000 property, it should generate at least $28,000/year ($2,333/month) in rent.