Hi all,

I'm new here and have been trying to find an answer to a question I had about what I'm calling the 25x rule (Yearly Expenses x 25 = Total you need to retire). I own a rental property that is making me some decent money and the property itself is appreciating nicely. In terms of the 25x rule, I was wondering how to factor these in. I was thinking I could subtract the yearly rental income from my yearly expenses and multiple that by 25 but I was unsure if I should then count the value of the property itself towards the total assets I need to retire.

In other words, I own a property worth $X, it earns (after taxes, expenses, etc) $Y per year, and my expenses are $Z per year. So the calculation I was doing was (Z-Y)x25 to get the total I need to retire (T) and then T-(X+rest of my assets) to figure out how much MORE I need to save. It occurs to me though that I might essentially be counting my rental property twice (the rental income to reduce expenses and the equity factored into my assets).

How do you suggest I apply the 25x rule factoring in the rental income and equity in the property? Thanks for the insight.