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Intro and Fired up for Fire
08-03-2017, 07:56 AM
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#1
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Dryer sheet wannabe
Join Date: Aug 2017
Posts: 20
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Intro and Fired up for Fire
I have been lurking for 2 years and finally decided I wanted to contribute.
- 41 years old and DW is 37
- 2 children 6 and 10
- I work in the Medical Field and my wife is a Teacher
- Combined we make $160,000
$28,000/yr in my retirement account
$4800/yr in my DW retirement acccount
- We own 15 Rental Homes and 13 have mortgages
Most of the remaining mortgages will be paid off in 12-15 years
- Personal Home is worth $415,000 and we owe $283,000
14 yrs left on mortgage
- We also co-own a condo at the beach with my FIL.
Worth about $220,000 and we owe $165,000
14 yrs left on mortgage
- $710,000 403b with Voya thru my work
$218,000 RSA-1
$19,000 IRA Smith Barney
$22,000 Roth IRA Smith Barney
$16,000 403b Tiaa Creff
$60,000 in 529 plans for College $1950/yr per kid
- Our expenses are about $80,000
I hope to FIRE in 2027 at 52. My wife will FIRE at that time also. She will receive a pension of about $24,000/yr. We are eligible to get Health Insurance thru her.
I have figured our expenses will be $65,000 upon Firing.
Let me know your thoughts. If you have any questions feel free to ask.
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08-03-2017, 09:31 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
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Every rental you pay off increases your cash flow by quite a bit. Focus on one at a time and you will see the cash flow grow exponentially.
I have 25 renters and only 3 mortgages. One more mortgage will be paid off within three months.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
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08-03-2017, 09:35 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Mar 2017
Location: New York City
Posts: 2,838
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Quote:
Originally Posted by ghh101
I have been lurking for 2 years and finally decided I wanted to contribute.
- Combined we make $160,000
- We own 15 Rental Homes and 13 have mortgages
- We also co-own a condo at the beach with my FIL.
- Our expenses are about $80,000
She will receive a pension of about $24,000/yr. We are eligible to get Health Insurance....
I have figured our expenses will be $65,000 upon Firing.
Let me know your thoughts. If you have any questions feel free to ask.
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I think your on a roll. I also think your in the top 10 % of the entire country. When those properties are paid up you will be in the top 5 % or more. Way to go man. Oh, and welcome to the forum.
__________________
Withdrawal Rate currently zero, Pension 137 % of our spending, Wasted 5 years of my prime working extra for a safe withdrawal rate. I can live like a King for a year, or a Prince for the rest of my life. I will stay on topic, I will stay on topic, I will stay on topic
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08-03-2017, 09:52 AM
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#4
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Dryer sheet wannabe
Join Date: Aug 2017
Posts: 20
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Quote:
Originally Posted by Senator
Every rental you pay off increases your cash flow by quite a bit. Focus on one at a time and you will see the cash flow grow exponentially.
I have 25 renters and only 3 mortgages. One more mortgage will be paid off within three months.
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I hope to be there one day. That was going to be my next question. Should I start paying down my rentals or my personal home?
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08-03-2017, 09:57 AM
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#5
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Moderator
Join Date: Jul 2010
Posts: 7,945
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Welcome! Looks like you are on a good path. I'll leave the rental mortgage question to others more experienced in that field. If your home mortgage interest rate is low, there's no rush to pay it off, IMHO - better to build up investments.
Remember that retiree health insurance (even for teachers) is not guaranteed and the costs may change, so keep that in mind given that you are 10 years out from your target date.
Have you run calculators such as FIREcalc?
Glad to have you join the posting crowd!
__________________
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute." William Feather
----------------------------------
ER'd Oct. 2010 at 53. Life is good.
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08-03-2017, 10:02 AM
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#6
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Dryer sheet wannabe
Join Date: Aug 2017
Posts: 20
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Quote:
Originally Posted by Blue Collar Guy
I think your on a roll. I also think your in the top 10 % of the entire country. When those properties are paid up you will be in the top 5 % or more. Way to go man. Oh, and welcome to the forum.
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I definitely don't feel in the top 10%. Between work and the rental homes I put in about 55 week. I have been maxing out my retirement account since I was 26. I bought my first rental at 27 and added the others by 32. I haven't purchased anymore after those. I have some poor financial decisions along the way and could have probably retired at 40 if I would have been smarter.
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08-03-2017, 10:14 AM
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#7
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Moderator
Join Date: Apr 2012
Location: San Diego
Posts: 14,212
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Welcome to the forum.
You're doing a great job on the savings... My only comment/critique would be that your IRA money is all at higher fee type places... Have you considered rolling the Smith Barney stuff over to one of the super low fee places like Schwab or Vanguard? My past experience with SB was that their expense ratios were pretty high.
__________________
Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 6%, rental income 20%
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08-03-2017, 10:15 AM
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#8
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Thinks s/he gets paid by the post
Join Date: Mar 2017
Location: New York City
Posts: 2,838
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Quote:
Originally Posted by ghh101
I have some poor financial decisions along the way and could have probably retired at 40 if I would have been smarter.
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Most of us have made a few boo-boos. I sure did. When you finally go, those 55 hour weeks are going to pay you sweet dividends. Best of luck you earned it.
__________________
Withdrawal Rate currently zero, Pension 137 % of our spending, Wasted 5 years of my prime working extra for a safe withdrawal rate. I can live like a King for a year, or a Prince for the rest of my life. I will stay on topic, I will stay on topic, I will stay on topic
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08-03-2017, 11:03 AM
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#9
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Dryer sheet wannabe
Join Date: Aug 2017
Posts: 20
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Quote:
Originally Posted by rodi
Welcome to the forum.
You're doing a great job on the savings... My only comment/critique would be that your IRA money is all at higher fee type places... Have you considered rolling the Smith Barney stuff over to one of the super low fee places like Schwab or Vanguard? My past experience with SB was that their expense ratios were pretty high.
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I will look at the SB account. I have had it since I was 18. I saved up $4000 and I started the account. It has done well for my over the years. I was adding to it up until I was about 22. Then I got my first real job and started contributing to my 403b.
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08-03-2017, 11:11 AM
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#10
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Dryer sheet wannabe
Join Date: Aug 2017
Posts: 20
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Quote:
Originally Posted by MBAustin
Welcome! Looks like you are on a good path. I'll leave the rental mortgage question to others more experienced in that field. If your home mortgage interest rate is low, there's no rush to pay it off, IMHO - better to build up investments.
Remember that retiree health insurance (even for teachers) is not guaranteed and the costs may change, so keep that in mind given that you are 10 years out from your target date.
Have you run calculators such as FIREcalc?
Glad to have you join the posting crowd!
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Yes my personal home 3.25%. And the rental homes range from 4.5-7%.
I agree about the health insurance costs will go up steadily to retirees.
Fire Calc shows 100%.
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08-04-2017, 04:27 AM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 17,930
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This is just personal preference on my part, but if I owned that many rentals IN retirement, I would think I was still w*rking. Do you use a property manager or do you field the 3AM calls for stopped up plumbing? If it were me, I would w*rk myself out of the "business" by the time I FIRE'd, but that's just me. YMMV
__________________
Ko'olau's Law -
Anything which can be used can be misused. Anything which can be misused will be.
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08-04-2017, 05:35 AM
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#12
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Dryer sheet wannabe
Join Date: Aug 2017
Posts: 20
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Quote:
Originally Posted by Koolau
This is just personal preference on my part, but if I owned that many rentals IN retirement, I would think I was still w*rking. Do you use a property manager or do you field the 3AM calls for stopped up plumbing? If it were me, I would w*rk myself out of the "business" by the time I FIRE'd, but that's just me. YMMV
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I manage them myself. I have a list of contractors that the tenant calls and the contractor sends me the bill.
I like knowing who I am putting in my houses.
I have worked since I was 15 so I will need to do something.
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08-04-2017, 05:51 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Jan 2013
Posts: 3,413
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Quote:
Originally Posted by Senator
Every rental you pay off increases your cash flow by quite a bit. Focus on one at a time and you will see the cash flow grow exponentially.
I have 25 renters and only 3 mortgages. One more mortgage will be paid off within three months.
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+1. Less risk, less stress, more cash flow.
ETA: Just saw the post on your interest rates. I aggressively paid off the ones that were over 6 percent. More than ten mortgages, so not able to refi using conventional loans. Given today's low yield environment. I would focus on the rental mortgages with the higher interest rates. Guaranteed return.
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08-04-2017, 06:13 AM
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#14
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Dryer sheet wannabe
Join Date: Aug 2017
Posts: 20
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Yes that is what I was thinking also of attacking the higher interest rates. My only thought process of attacking my home mortgage was that I could lower my expenses and in turn maybe FIRE quicker.
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08-04-2017, 06:37 AM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,374
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I'm going to be the contrarian here... I think that you have too much in real estate. I suspect that the real estate that you own is not geographically diversified nor diversified by type (probably all residential I would guess). This creates significant risk..what would happen to your real estate portfolio if there were a Flint, MI type event where they are located.... you would be up the creek... ditto for a slower decline like Detroit or certain parts of Chicago. By paying the real estate mortgages off faster you are effectively investing more in real estate... I'm not sure that is wise.
BTW, I'm not against real estate.... my mom has a commercial property that I manage that is very lucrative but it is probably 15% of her assets and that is enough.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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08-04-2017, 06:47 AM
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#16
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Thinks s/he gets paid by the post
Join Date: Jan 2013
Posts: 3,413
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Leverage is great until it's not. It's more important to me to reduce the risk to my rental income, especially if I am dependent on that income. It's also hard to beat a guaranteed return of 7 percent (ignoring the write off). Money rented at 3.25 percent is less of a worry if I have more than enough income. If all your rentals are paid off, my guess is you will be a lot less concerned about the mortgage payment on your house.
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08-04-2017, 06:49 AM
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#17
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Dryer sheet wannabe
Join Date: Aug 2017
Posts: 20
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I understand where you are coming from with it in regards to exposure. The income from my rental business far exceeds what we spend monthly. So if there is a downturn I can start taking a small draw on my retirement funds.
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08-04-2017, 06:55 AM
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#18
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Dryer sheet wannabe
Join Date: Aug 2017
Posts: 20
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Another Reader
I agree on the leverage is a great until it is not. I took to much risk when I was younger on the rental houses and grew to quickly. I should have done it slower but my income was able to offset my stupidity.
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08-04-2017, 06:55 AM
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#19
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Thinks s/he gets paid by the post
Join Date: Jan 2013
Posts: 3,413
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Quote:
Originally Posted by pb4uski
I'm going to be the contrarian here... I think that you have too much in real estate. I suspect that the real estate that you own is not geographically diversified nor diversified by type (probably all residential I would guess). This creates significant risk..what would happen to your real estate portfolio if there were a Flint, MI type event where they are located.... you would be up the creek... ditto for a slower decline like Detroit or certain parts of Chicago. By paying the real estate mortgages off faster you are effectively investing more in real estate... I'm not sure that is wise.
BTW, I'm not against real estate.... my mom has a commercial property that I manage that is very lucrative but it is probably 15% of her assets and that is enough.
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I would agree if the rentals were his only income source in retirement. Looks to me like the OP is well diversified and is saving a substantial amount of money in retirement accounts. Plus his wife will have a pension. He did not mention Social Security. His wife may not contribute because she's a teacher, but it's not clear if the OP does. Bonus income if he does.
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08-04-2017, 07:00 AM
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#20
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Dryer sheet wannabe
Join Date: Aug 2017
Posts: 20
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I am 41 and my wife is 37. SS will just be gravy for us both. I work in the medical field and she is a teacher. We have both been paying in since we were teenagers. I still am on the fence if I will take it as soon as I can or wait till 70. I have read about it till my eyes bleed. I probably think way too much about this all.
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