If you researched something to the effect of “how to retire with rental income” you’re not the only one. It’s difficult to comprehend above the din of real estate investment pitches, books and three-day seminars. Yet it’s really not that scientific. You do need to know what to buy and what to pay and how how to retire with real estatemuch rent you can expect each month yet that’s another dynamic of real estate investing.

To see how much you’ll need to acquire to have enough rental income to comfortably retire, you need first determine how much extra cash you want in your golden years.

Let’s say you’re 45 years old and plan on retiring 20 years from now at 65. Not bad, in addition to future social security and pension income, let’s assume you decide you need another $3,000 per month when you retire and you want to fund that retirement with real estate. Working with a turnkey real estate company, you find your first prospect. It’s a $200,000 single family home with monthly rent of $2,000 per month. You finance it with a 20 year loan to coincide with your retirement date using a prevailing rate of 3.50%.

This rate over 20 years and an 80% LTV loan, the principal and interest payment is right at $800. Adding a monthly amount of insurance, taxes and maintenance provides a $1,075 per month total payment. Your monthly cash flow at the outset is $925. Once the note is retired in 20 years, your monthly cash flow is closer to $1,700 after subtracting insurance, taxes and maintenance. If you want an additional $3,000 per month upon retiring, all you need to do is find one more property with similar numbers.

It’s really nothing more than that and the hidden bonus doesn’t take into the wealth built over time through appreciation as well as the natural increase in rental rates over the next 20 years. That, my friends, is how to retire with rental income.