What could your savings buy?
By Josh Elberg, founder of Palavir · Published · Updated
Palavir is a Michigan data and automation consultancy.
Short answer, for $55,000 (change it below)
With the starting numbers below, $55,000 buys a $275,000 rental that leaves about $1,940 a year after the mortgage, grows about $4,010 a year in an index fund after inflation, or covers the 10% an SBA lender asks on a business priced about $478,000. That business leaves about $99,000 a year after loan payments, before you pay anyone to run it.
The business number uses a loan of $495,000 and the seller's own profit figure. If profit is 30% lower, the cash left falls to about $45,000. Change any box and see your own answer.
Your numbers
Digits or a short form like 150k. We start at $55,000.
$60,000 is an illustration chosen by Palavir, not a market figure.
Change the assumptions (rates, down payments, price multiple (price in years of profit), extra costs)
Starting value from Freddie Mac PMMS, 30-year fixed, published Oct 22, 2026 (read Oct 27, 2026).
Starting value from 15% to 25% is the common range for an investment-property down payment; we use 20% (SuperMoney, a lender-comparison site, read Oct 27, 2026).
Starting value from Single-family rental cap rate 7.3%, Q4 2025, as reported by CRE Daily, Mar 20, 2026 (read Oct 27, 2026).
Starting value from S&P 500 with dividends reinvested, 1926 to 2026: 7.29% a year after inflation (OfficialData.org, read Oct 27, 2026).
Bigger businesses ask more years of profit: from 1.97 years under $100,000 to 5.23 years at $5 million and up (middle of 1,809 US listings with a clear price and profit, by price band). Untick to set your own below.
15% is a Palavir assumption. Your deal will differ; a lender sets the real figure.
10% is the SBA minimum for buying a business, counted on the total project cost, not just the price. Confirm with a lender.
Assumed, not a lender quote.
Assumed, not a lender quote.
Yearly cash from $55,000: rental $1,940, index fund growth $4,010, business $99,238 before a manager and $39,238 after a manager.
Yearly cash from $55,000, side by side
- Rental propertycash after the mortgage$1,940
- Index fundgrowth inside the fund, not cash in hand$4,010
- Business, you run itcash after loan payments$99,238
- Business, a manager runs itafter paying $60,000$39,238
All bars share one scale. An empty bar means zero or less.
The business figure uses a loan. You borrow $495,000. If profit comes in 30% lower than the seller says, the cash left after loan payments drops to $45,299 a year, before anyone is paid to run it.
A. Rental property
$1,940 a year
- Price = $55,000 / 20% down = $275,000
- Borrowed = $220,000 at 7.32% for 30 years
- Rent left after running costs = price x 7.3% = $20,075
- Mortgage payments, 12 months = $18,135
- Cash left = $20,075 - $18,135 = $1,940
- Also in year one: about $2,101 of the loan gets paid down. That builds equity and is not cash.
Left out: your time, big repairs, a bad tenant, closing costs, taxes, and any rise or fall in the home price. The rental rate is a national average; yours depends on the town.
B. Index fund
$4,010 a year
- Growth = $55,000 x 7.29% = $4,010
- Before inflation (10.47% a year) the same cash would grow $5,759.
Left out: it takes no work, but an average hides big swings. Some years the fund falls, and the past promises nothing about the next ten. Taxes come on top.
C. A typical business
$99,238 a year
$39,238 a year if you pay a manager
- Whole project = $55,000 / 10% = $550,000
- Of that, business price = $478,261; stock, closing costs and working cash = $71,739
- Yearly profit = price / 2.66 years = $179,797 (2.66 years is the middle asking price for businesses priced $250,000 to $500,000, 375 US listings)
- Borrowed = $495,000; payments over 10 years at 10% = $80,559 a year
- Cash left = $179,797 - $80,559 = $99,238
- After a manager = $99,238 - $60,000 = $39,238
Left out: the profit is the seller's own figure and often includes the owner's pay, so someone has to do that work. Income tax is not taken out.
This is not financial advice.
Why the three results differ so much
The difference comes from how much each choice lets you borrow against your cash. A lender asks more down on a rental, so $55,000 reaches a smaller asset. Business loans in the example need less down (10% is the minimum for an SBA 7(a) business acquisition under SOP 50 10 8.1; confirm with a lender), so the same cash reaches a bigger one. A bigger asset carries a bigger loan and relies on the seller's numbers being right.
If you have never thought about buying a business, start with can you own a business without running it. To see how real listings are priced, read what 6,104 businesses for sale show. If you have a listing in front of you, run the free business listing check. The whole section is on the Buy a business hub.
What this data cannot tell you
- These are asking prices, not the prices businesses sold for.
- Profit is the seller's own figure. It often includes the owner's pay, so someone still has to do that work.
- It is a snapshot of listings from October 2026, not a survey of all businesses.
- The 15% for stock, closing costs and working cash, the loan terms (10 years at 10%) and the manager salary are our assumptions, not a lender quote.
- The business multiple is an asking multiple (asking price in years of profit), not a sale multiple.
- The rental and index fund figures are national averages and leave out taxes and fees.
Have a listing? We check it free.
Questions people ask
Is buying a business better than rental property?
It depends on what you want. With the same $55,000, our starting numbers show a rental leaving about $1,940 a year after the mortgage, because 20% down buys a $275,000 home that has to carry a large loan. A typical business leaves about $99,000 a year after loan payments, because the SBA lets $55,000 cover 10% of a $550,000 project. That business needs someone to run it, its profit is the seller's own figure, and if profit comes in 30% lower the cash left falls to about $45,000. Change the boxes and compare for your case.
How much money do I need to buy a business?
For an SBA 7(a) loan to buy a business, your cash has to be at least 10% of the total project cost: the price plus stock, closing costs and working cash. With $55,000 and our assumption that those extras add 15% to the price, you reach a business priced about $478,000. The middle US listing in our data asks $489,000 (1,809 listings with a clear price and profit). A lender sets the real terms; the loan terms here are assumptions, not a quote.
Is an index fund safer than buying a business?
An index fund spreads your money across hundreds of companies and needs no work from you, so one failure does not sink it. A single business is one bet and depends on its owner. The fund can still fall sharply in a bad year, and a long-run average promises nothing about the next ten years.
Where do the rental and stock numbers come from?
The 30-year mortgage rate is from Freddie Mac's weekly survey (7.32%, published October 22, 2026). The 15% to 25% investment-property down payment range is from a lender-comparison site (secondary source). The 7.3% rental cap rate is a Q4 2025 figure reported by CRE Daily, which does not name its source. The 7.29% stock return is the S&P 500 with dividends reinvested from 1926 to 2026, after inflation (10.47% before inflation), from OfficialData.org. Each is linked on the page with the date we read it.
Do I have to run the business myself?
Not necessarily. You can hire a manager, and the calculator shows the yearly cash left after paying one (we use $60,000 as an illustration). Software can also take over routine work such as invoices, reorders and customer replies. In our close reads of 228 listings none could run with nobody at all, so someone still makes the decisions.
Sources
- Business numbers: Palavir Deal Scout, US listings from nine marketplaces and brokers, October 2026. The price multiple is the middle asking price divided by seller-reported yearly profit for listings in the same price band (1,809 US listings with a clear price and profit; from 1.97 years under $100,000 to 5.23 years at $5 million and up). Asking prices, not sale prices; seller-stated figures; a snapshot. The 15% for stock, closing costs and working cash, the loan terms (10 years at 10%) and the $60,000 manager are Palavir assumptions.
- Mortgage rate: Freddie Mac Primary Mortgage Market Survey, 7.32%, published October 22, 2026. Read October 27, 2026.
- Investment-property down payment: SuperMoney guide, a lender-comparison site and secondary source that gives 15% to 25% as the common range. Read October 27, 2026. We default to 20%.
- Rental income: single-family rental cap rate of 7.3% for Q4 2025, as reported (source not named) by CRE Daily (a trade news brief, March 20, 2026). A cap rate is yearly income as a share of price, as reported (cap rates are normally net of operating costs). It is a national average and varies a lot by town. Read October 27, 2026. For a rough expense check, the 50% rule says running costs are about half of rent, before the mortgage.
- Stock return: OfficialData.org, S&P 500 with dividends reinvested, 1926 to 2026: 7.29% a year after inflation (real) and 10.47% before inflation (nominal). The 2026 value is a part-year figure. A second source, Dimensional, gives 7.0% a year after inflation since 1926. Read October 27, 2026.
The business figure is before income tax. Rental and fund figures leave out taxes and fees too. This is not financial advice.