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Dipping toes in
Old 06-02-2016, 10:55 AM   #1
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Dipping toes in

Hi Everyone:
Been a lurker for a year or two, decided to introduce myself so I could get some opinions.... and maybe start offering some of my own.

I am 51 married no kids and have had a long career at megacorp. Looks like I will be starting a year's leave of absence (family related) soon. The initial plan is to return to work after this time, but no guarantees from company that I will have a position. Besides being able to focus my time on some things I need to, I figure part of what I will discover during this time is whether I want to be RE or not.

I am wondering if anyone else has done that, and did you feel it gave you a real sense of what it is like to not be part of the W2 labor force anymore and whether the ER part of FIRE is right for you?

Also, I asked my husband to let me have this year, while he keeps working. I feel like I need this time to get to know "my non working self". Does this make sense to any of you? He is being supportive.

On another front, I have about 1/2 my net worth tied up in real estate. Half of this is my primary and second homes. The other half is rental property.

I have a solid handle on our expenses, but have trouble modeling withdrawal rates. Anyone have experience using these models with a more complicated portfolio that includes alternatives, syndicated RE etc?

Kind of hard to model firecalc with all of this (income, mortgages paid off, principal paydown etc), but when I look at my total net worth (assets minus liabilities) and total spending (spending as reduced by net RE cashflow) I am a bit under 3% w/d rate. If I exclude my primary and secondary homes it becomes about a 4% withdrawal rate, but then if you factor in principal paydown it becomes more like a 2% withdrawal rate. Once the mortgages are paid off in 12-13 years the w/d rate goes even lower. but at that point my assets would be even more weighted to RE. So it is "all over the map".

Anyone have a good method to use to model portfolio longevity when such a big part is real estate? My thought process currently is if things go sideways can always move into one of the rentals, or rent out second home etc.

Appreciate any feedback from the community and looking forward to contributing myself!
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Old 06-02-2016, 11:23 AM   #2
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I have rental property. I do not really have a withdrawal rate.

I just use my net income as a 'pension' with COLA in the various retirement planners.

I will be living 100% on rental income for the next 5+ years. That's an amount after mortgages are paid, and after allowing for 10% of rents for maintenance, 5% for vacancy and 7% for management fees. I do them all myself now, so I easily have more than I allow for.

Be sure to allow for these expenses if you can be exposed to them. Take the worse case that can realistically happen.

At 62, I will start to wean myself off rental income and switch to dividend income as I sell.
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Old 06-02-2016, 12:13 PM   #3
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Thank you. Wow, being able to live off the rental income even with some mortgages, you have set yourself up w/ a nice stream. I'm not close to that, though the income subsidizes....
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Old 06-02-2016, 01:27 PM   #4
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Welcome!

I look at rental property as an income generator. Whatever the net income of the rental portfolio is, it is subtracted from expected withdrawals. I use the net withdrawal to calculate WR.
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Old 06-02-2016, 01:39 PM   #5
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Originally Posted by BeachOrCity View Post
Thank you. Wow, being able to live off the rental income even with some mortgages, you have set yourself up w/ a nice stream. I'm not close to that, though the income subsidizes....
Most of them were purchased in 2008+. Five 4-plexes, 2-duplexes and a SFH. Most are paid off, I have 3 mortgages left, one that is scheduled to be paid off this year.

They actually produce about 3-4x what I spend now, but I anticipate ramping up my spending a bit after FIRE.
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Old 08-04-2017, 08:50 AM   #6
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Just an update......
I REALLY enjoyed the one year leave from work. Was able to reset stress levels, connect w/ family in a way I felt the need to, and definitely had plenty to occupy my time. I decided to return to work. I don't know how long I will stay, as if I want to I can afford to leave, but its not like I would never have to worry about finances.
I guess the bottom line is I decided that I am fine being RE or not RE. As long as work is not too much BS I am fine making a nice income and doing it. The BS part so far has not been an issue, but at Megacorp that can change pretty quickly. I also get the benefit off seeing how I feel about work after having a taste of ER.

All in all I may decide to permanently RE soon, or a few years down the road. I guess it is nice to have the option.
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Old 08-04-2017, 10:20 AM   #7
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.
All in all I may decide to permanently RE soon, or a few years down the road. I guess it is nice to have the option.
You nailed it! FI is really the goal - then you have options. Congratulations on your successful sabbatical and hope you enjoy being back in the workforce. But if not...you have options
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Old 08-04-2017, 10:43 AM   #8
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Just an update......

All in all I may decide to permanently RE soon, or a few years down the road. I guess it is nice to have the option.
In 2003 I got a notice to work 4th of July. It happened to be my regular day off. I told "them" if i work not only will you owe me time and a half, but you will owe me a day off( contract rules on Veterans working certain holidays). "They" told me to enjoy the overtime, & remember to bring my helmet and night stick to the festivities. I had 20 years at the time, I threw in my papers , retired and took off the entire summer. I was running my time and chickened out and went back to work for another few years. You are in command of the ship now, enjoy the voyage.
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Old 05-01-2018, 03:42 AM   #9
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Full Plunge

Well that didnt last very long. Just added myself to the class of 2018.

After having a bite of the (sabbatical) apple, and getting back into seeing megacorp for what it is, i decided that life at megacorp wasnt for me after all. So here i am 10 months later and now officially part of the RE club!


Quote:
Originally Posted by BeachOrCity View Post
Just an update......
I REALLY enjoyed the one year leave from work. Was able to reset stress levels, connect w/ family in a way I felt the need to, and definitely had plenty to occupy my time. I decided to return to work. I don't know how long I will stay, as if I want to I can afford to leave, but its not like I would never have to worry about finances.
I guess the bottom line is I decided that I am fine being RE or not RE. As long as work is not too much BS I am fine making a nice income and doing it. The BS part so far has not been an issue, but at Megacorp that can change pretty quickly. I also get the benefit off seeing how I feel about work after having a taste of ER.

All in all I may decide to permanently RE soon, or a few years down the road. I guess it is nice to have the option.
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Old 05-01-2018, 05:39 AM   #10
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You broke through the mist and found out, as we all have, that the grass really IS greener on the other side, so why jump back! Congratulations. Where is your husband in all of this?

-BB
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Old 05-01-2018, 06:34 AM   #11
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You broke through the mist and found out, as we all have, that the grass really IS greener on the other side, so why jump back! Congratulations. Where is your husband in all of this?

-BB
Thanks Brian, my husband is a social worker for the elderly (mostly the not well off elderly who need help, but also the general population who need help with medical / medicare decisions etc). He does it contract style, so he sets his own schedule somewhat, and considers it very fulfilling as he clients tell him every week that "he changed their lives". He once called it "paid volunteerism". He probably won't do it forever, but for now he enjoys it, and they let him take off whenever we want to travel etc.

As for "Why jump back"? Actually, I am glad I did. I got a taste of things with a one year sabbatical, and then another comparison point by going back to the same firm. It kind of gave me the ability to hedge my bet in a low risk fashion. If I never went back after the time off I might have always wondered "what if".
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Old 05-01-2018, 11:51 AM   #12
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Congrats BorC! My experience was similar, but under a different situation. I really thought I'd do some project consulting after I retired. Retirement has been so great that I never want to see the inside of a conference room or a factory/warehouse/ dc, etc.

Just typing those last few words made me a little queasy.
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Old 05-01-2018, 02:47 PM   #13
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Congrats! You did the right thing. I havent once doubted my decision on leaving that toxic place!
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Old 05-01-2018, 04:40 PM   #14
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Congrats right behind ya
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Old 05-01-2018, 11:42 PM   #15
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Welcome back to retirement!

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Old 05-02-2018, 06:05 AM   #16
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Congrats! You did the right thing. I havent once doubted my decision on leaving that toxic place!


Glad to hear it is going great for you!
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