How Many Paychecks Do You Need to Buy Your First Rental Property?
Most people never even stop to ask this question: How many paychecks do you actually need to buy your first rental property?
I didn’t buy my first deal until I was 34 years old. Today, I own over 10,000 units, but if I had to start over right now, paycheck to paycheck, this is exactly how I’d do it. And I’m going to walk you through it step by step.
Step 1: Define Your Target
The single biggest reason people don’t invest in real estate isn’t lack of money, it’s lack of a target.
Let’s make this real. Say you want to buy a $150,000 single-family home. Most lenders will require about 20–25% down. That’s roughly $37,500 for your down payment.
Before you say, “I don’t have that kind of money,” stick with me. Divide that number by your monthly take-home pay.
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If you earn $4,000 per month and save $1,000, you’ll reach your goal in about 37 months.
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That’s just over three years, or faster if you increase your savings or leverage other people’s money.
The truth is, it’s not that you can’t afford real estate. It’s that you haven’t set a clear target to acquire any.
Step 2: Flip the Savings Model
Here’s where 99% of people fail: they save whatever is left after spending. That doesn’t work.
Flip the model. Save first based on your target, and then spend what’s left.
Here’s the play:
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Create a dedicated account and name it First Rental.
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Auto-transfer money from each paycheck into that account, even if it’s just $200.
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Make it hard to touch. No debit card. No easy phone access.
This isn’t just about discipline, it’s about creating a system that works for you even when you don’t feel like saving.
Step 3: Eliminate High-Interest Debt
If you’re carrying credit cards at 18–20%, you’re bailing water from a sinking ship. Before you invest, pay down every loan or card above 8%.
Why? Because every dollar of interest you eliminate is a dollar you can funnel into your property fund. That’s how you start turning the tide in your favor.
Step 4: Use Leverage the Smart Way
Here’s the secret the wealthy have always known: you don’t need a six-figure savings account to buy real estate.
If you’ve got a steady W2 job, good credit, and some discipline, you can use bank money to control an appreciating, cash-flowing asset.
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FHA loans: As little as 3.5% down (great for house hacking).
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VA loans: Zero down, if you qualify.
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Conventional loans: 20–25% down, but plenty of properties under $200,000 still exist in today’s markets.
Back in 1995, I put $30,000 down on my first rental and borrowed the rest. The deal only cash flowed $50 a month, but it taught me more than any job ever could.
Step 5: Learn to Underwrite in 60 Seconds
Here’s my 60-second rule for underwriting deals:
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What is the rent?
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What are the monthly expenses (taxes, insurance, maintenance, HOA, etc.)?
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What’s the mortgage payment?
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Subtract expenses + mortgage from income.
If the number is positive, you’ve got cash flow. If it’s negative or razor-thin, pass.
Cash flow is king. Equity is just the cherry on top.
Step 6: Understand the Hidden Benefits
Even if your first deal cash flows just $200 per month, here’s what happens:
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Your tenant pays down your loan.
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You get tax write-offs that reduce your taxable income.
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Your property appreciates in value.
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You gain real-world investing experience that no book or course can replace.
That $2,400 in annual cash flow (plus all the other benefits) is often tax-free. That’s when your mindset shifts from saving money to multiplying it.
Your Next Steps
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Calculate your down payment target.
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Set up a dedicated savings account today.
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Kill your high-interest debt.
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Start walking small multifamily buildings, even just online.
Even if you’re not ready to buy, the act of looking at deals gets you into the game.
And here’s the truth: with the right strategies, you don’t always need to use your own money. Many investors build portfolios using other people’s money (OPM). That’s how I do it today, and it’s how you can scale too.
Final Thoughts
You don’t need to be rich. You don’t need to wait decades. You just need a plan, a target, and some discipline.
Before you buy your first property, be sure to download my free due diligence checklist on buying a rental. DOWNLOAD IT HERE
