If your day job is paying you $100K per year, I am guessing that your annual take home is really about $65K. Your investment strategy only needs to replace $65K for you to maintain the same lifestyle you enjoy with your $100K salary.

If you are looking for rental property cash flow to do the job, then at $125 cash flow per month, you would need a 44 property portfolio assuming each property stays financed as long as you own it.

If your property is free and clear, then the $125 monthly cash flow improves to $375 per month. If your goal is to have the income from free and clear rental properties replace your take home pay, then you get there with 15 properties.

For this illustration let’s use $50K properties that you purchase with 80% financing at 6% fixed for 30 years. Purchase one property each year until you have 15 properties. For the property you purchase in the first year, paying an additional $400 toward the principal each month makes this property free and clear after 76 months.

Starting with the 77th month, apply the $400 in extra principal payments to the second prperty you purchased and also add in the $240 per month youj were paying for the mortgage on the first property. Adding an extra $640 to your monthly mortgage payment each month will have the second property free and clear near the ten year mark (124 months into your plan).

With two free and clear properties, you now have $880 extra to apply to the third property starting in month 125, which will pay off the third property just 167 months into your plan.

Now you have three free and clear properties and $1120 extra cash each month to apply to debt reduction. Adding an additional $1120 to the monthly payment for the property you puchased at the beginning of year four, will have this property free and clear just about 13 years into your plan.

Each time you pay off a property, you have more cash to apply to cascading debt reduction for the remaining properties. One month after you purchase your 13th property, four of your properties are already owned free and clear.

Following this startegy, you should have all your properties free around your 48th birthday. Assuming that all of your financed properties maintain $125 monthly cash flow, you will be able to completely replace your current take home pay and retire from your W-2 job before your 50th birthday.

If you have the time, patience, and discipline over the next 20 years, you can realize your goal of having enough passive income to replace your job.

This is the completely passive way to achieve your goal. As you get salary increases, I am sure that you can speed up the timeline by applying more discretionary income to debt reduction.

Many years ago, one of my co-workers allocated half of his salary increase every year to investments. Annual cost of living raises plus salary increases from promotions quickly gave him a significant amount of discretionary monthly income for his investments.