Passive Income Calculator
Estimate how much capital may be needed to pursue an income goal, or how much income an investment could potentially generate.
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Talk to UsHow much do you need to invest to earn monthly income from real estate?
The math is simple: capital needed = annual income goal ÷ annual cash yield. Cash yield is the cash an investment pays you each year as a percentage of what you put in. The higher the yield, the less capital it takes to reach the same income, and usually the more risk you take on to get there.
Example: a goal of $2,000 a month is $24,000 a year. At an 8% cash yield, that takes about $300,000 of invested capital. At a 12% cash yield, it takes about $200,000. Use the calculator above to try your own goal and yield, or start from an amount you already have to invest.
What is cash yield?
Cash yield, sometimes called cash-on-cash yield or distribution yield, counts only the cash paid out to you during the year. It does not include appreciation, loan paydown or profit from a sale, which show up in total return. That makes it the right number for income planning, but not the whole picture of how an investment performs.
What changes the income you actually receive
- Fees: property management, asset management and other fees come out before you are paid. Ask whether a projected yield is before or after fees.
- Performance: vacancies, repairs, insurance increases and interest rate changes all move the cash a property produces from year to year.
- Structure: in private offerings, a preferred return and profit split decide how cash is shared between investors and the sponsor.
- Timing: some investments pay monthly, others quarterly, and new investments can take time to reach full distributions.
- Taxes: depreciation can offset some or all of the cash you receive on paper, which may defer taxes. Your CPA can tell you how it applies to you.
Frequently asked questions
How much money do I need to make $1,000 a month from real estate?
$1,000 a month is $12,000 a year. Divide that by the annual cash yield you expect: about $150,000 at an 8% yield, $120,000 at 10%, or $100,000 at 12%. Yields are never certain, so it helps to plan with a conservative number.
What is a realistic cash yield on real estate?
It depends on the strategy, the market and how much debt is used. Stabilized properties bought at today's prices often produce mid-single-digit cash yields. Value-add and short-term rental strategies may target more, with more risk and more variation from year to year. Treat any projected yield as an estimate, not a promise.
Is a projected cash yield a promise of income?
No. A projected or target yield is an estimate based on assumptions about revenue, expenses and financing. Actual distributions can be higher, lower or paused depending on how the property performs. Read the offering documents to understand what drives the payout and what happens if a property underperforms.
Is income from real estate taxed?
Generally yes, but depreciation often offsets part or all of the cash you receive from a rental or a private real estate investment, which can defer taxes until you sell. Investors in private deals usually receive a K-1 each year. The details depend on your situation, so confirm with a CPA.
What is the difference between cash yield and total return?
Cash yield is the cash paid to you each year. Total return adds appreciation, loan paydown and the profit when the investment is sold. An investment with a lower cash yield can still have a strong total return, and the reverse can also be true.
Can I invest in real estate without managing a property?
Yes. Investors who want real estate income without finding, financing, furnishing and managing a property can invest passively in private real estate offerings run by an experienced team. Most of these offerings are available only to accredited investors and require holding the investment for several years.
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See what a deal could actually pay you after the sponsor's share, and know what to ask before you invest with anyone.