February 2026 - Money Machine - Deep Pockets

It’s been said – ‘Go Big or Go Home’. That can apply to a lot of things and is especially applicable to investors as they develop an investment portfolio. The Money Machine espouses a plan whereby an investor is encouraged to acquire 10 rental properties. Generally, a mixture of single-family, duplex and triplex. And, of course, that can branch to encompass condos and even commercial and industrial. But there are reasons for a minimum of 10. The first, obviously, is an adequate income upon retirement. Suppose, for example, you bought one investment property. A duplex, perhaps. That’s great! But suppose you stopped there. You simply can’t retire comfortably on two rents. Suppose they produce a gross monthly income of $3,600. After taxes and expenses, that might net you $2,900/month. A real help, but not enough to support a lavish lifestyle. But now, suppose you went ahead and acquired the full portfolio of 10 properties. Perhaps a mixture of singles, duplexes and triplexes. You might conceivably have 18 to 20 ‘doors’ or rentable units. To simplify the math, let’s suppose the average property was worth $600,000. With 10 that’s a net value of $6,000,000. And once paid for, you can realistically expect 4% return on your money net. That’s $240,000/year. And both the value and the rents are indexed to inflation. Now you are in a position to retire in style. But there is another significant advantage to a large portfolio, and that is the mitigation of risk. To illustrate what I mean, I want you to think about an insurance company. Suppose someone opened up an insurance company and all they had in place was one policy. First of all, they couldn’t keep the doors of the company open with only one premium coming in. It wouldn’t even cover the receptionist’s salary. But think about the risk. If that one property they had the policy on ever burned down, they would be wiped out. They couldn’t handle the payout. Now, instead, suppose they had 100,000 properties insured. The total annual premiums coming in would be in excess of $100,000,000. Now the likelihood of a claim is much greater, but the exposure is not. If a house burns to the ground, they can handle it. They can handle a house a week burning to the ground. The same is true with your portfolio of investment properties. Last year, a tenant in a triplex I own called to tell me they had no heat. Turned out I needed to replace the boiler. Obviously, it’s not something I could put off till a more convenient time. It was winter. A new boiler costs just over $23,000. Imagine if I only owned one investment property. That would be a huge financial hit. I would have been scrambling to find a way to cover it. But with a reasonably large portfolio, the cash flow from all the rents would handle the cost. And of course, the same applies to vacancies. I find that whenever a tenant vacates, it means lost revenue while I carry the unit vacant and additional expense as I do necessary repairs, such as painting the unit. If I only had one property, it would be a challenge. Perhaps an insurmountable one. But with multiple properties, I’ve spread the risk. It’s something the business can handle. Developing an investment portfolio is the way to develop a passive investment stream for retirement. It’s the way to go. But the initial stages, where you own only your first or perhaps first and second property is where you are most vulnerable. Plan for it. Set up a credit line to handle emergency situations. And don’t stop acquiring. You’ll find the way to security and prosperity can be simply summed up as – Go big or go home.