Ever wish you’d started investing in rental properties when you were younger?

Maybe you’re in your 40s or 50s, looking at retirement, and wondering if you’ve missed your chance to build enough wealth.

It’s easy to assume that you need decades of owning rental properties before they can make a meaningful difference in your retirement.

But what if a more deliberate financial system could help you make progress toward that goal over the next 10 years?

On last week’s Not Your Average Investor Show, Pablo and I sat down with Ryan Lee, founder of Wealth Outside Wall Street and author of Retire in 10 Years or Less, to explore how he connects earning, financing, and rental property ownership in his retirement plan.

Let’s dive in.

How Much Freedom Are You Actually Building?

Imagine spending years working hard and saving for retirement, only to discover you couldn’t afford to stop working when your family needed you most.

That’s what happened to Ryan.

In 2008, the financial crisis wiped out much of his savings. Around the same time, his young son needed emergency open-heart surgery.

Sitting in the hospital, Ryan realized his accounts had fallen to about $28,000. And after considering what he could actually access, he had enough to cover only three months of his family’s expenses.

That changed how he thought about retirement. He needed income that would give him more control over his time.

Four years later, he’d built enough income from assets to cover his family’s basic needs. So when his boss asked him to start traveling again, Ryan had the freedom to say, “I quit.”

So what does the system he eventually developed look like?

The Three Gears of Financial Freedom

Ryan calls his approach the Passive Income Machine. Here’s a simple way to understand its three connected parts:

1. Make Money: Keep earning and set aside part of that income for the future. Ryan uses a goal of at least 10% of what he earns.
2. Keep Money: Build a place to save and access capital. Ryan uses a specially structured whole life insurance policy, which he calls his Vault.
3. Deploy Money: Use available money and financing to buy rental properties that can produce income and build equity over time.

Here’s how those three parts work together.

👉 Is Buying More Rentals Enough to Retire in 10 Years?

In Ryan’s example, money borrowed against the Vault helps fund a down payment. With 20% down, an investor may be able to purchase a property worth five times that initial amount.

Of course, policy loans carry interest, mortgages add financial obligations, and leverage increases risk. The amount available to borrow also depends on the policy and lending conditions.

When Ryan bought his first three rentals, he discovered each property was generating roughly $200 to $400 a month. When he calculated how many he’d need to support his desired lifestyle from cash flow alone, he came up with about 80 properties!

That’s a lot of houses to own and manage.

But as we’ve discussed many times on the show, monthly cash flow is only one of the five profit centers of rental property investing.

Over time, home price appreciation and principal paydown can build significant equity, even when monthly cash flow remains modest.

The challenge? That equity is sitting in the property. You can’t simply use it to pay your monthly bills.

So how might investors eventually use that equity to support their retirement?

Connecting Your Equity to Your Retirement Income

Ryan calls his approach the Equity Mill. The idea is to connect the wealth growing in rental properties with a way to access it when needed.

Here’s an example he shared.

👉 How Can Rental Property Equity Help Fund Retirement?

Ryan describes a plan involving 12 to 16 rental properties and $500,000 in policy cash value built over roughly 10 years.

After that, he illustrates taking $100,000 in policy loans annually to cover living expenses. Several years later, he may refinance some properties, use the equity to repay those loans, and potentially repeat the process.

It’s an interesting way to think about accessing accumulated wealth, but the numbers are illustrative, not guaranteed.

Policy loans are borrowed money, rather than income earned from rental properties. They carry interest, and their tax treatment depends on the policy and circumstances. Refinancing also adds mortgage debt and depends on future property values and lending conditions.

But there’s another important part of making this work: property management.

Ryan learned this the hard way. His first three rentals took so much time to manage that he’d practically created another job!

That’s why we talk so much about the basics of property management: caring for homes, keeping good residents, collecting rent consistently, and reducing unnecessary turnover.

When the goal is to own properties for 10, 15, or 20 years, those everyday practices help make long-term ownership sustainable, giving appreciation and principal paydown time to contribute to the bigger picture.

NOT YOUR AVERAGE INSIGHT: Measure What Your Portfolio Can Support

👉 Does Your Rental Strategy Have to Last Forever? 

Investors’ priorities can change over time. Someone focused on growing a portfolio today might eventually value consistent income and fewer properties to manage.

And that brings us back to the concern we started with.

Maybe you didn’t begin investing as early as you hoped. But understanding what you want your money to accomplish over the next decade can give you a clearer picture of where you stand today.

That means looking at the income your properties provide after expenses, the equity you’ve accumulated, and what it might cost to access that equity.

Your income helps show what your portfolio can support today. Your equity represents wealth that may provide more options down the road.

Both can help you understand how your rental properties fit into your retirement goals, even as those goals change.

Because ultimately, the purpose of building wealth is to have more choices about how you spend your time.

And that’s a meaningful way to think about retirement, no matter when you started investing.

Just remember… Don’t Be Average.
Gregg Cohen
Co-Founder, JWB Real Estate Capital