So, $5.1m of your $5.5 m NW is tied up in residential real estate, or in excess of 90%. Are these homes also in the same geographic area? If I were in your shoes, I would diversify. If you sell the $1.9 million, I would not plow it back into more real estate.
+1 on this - no way I would add even more real estate, even if it is geographically diverse. Just remember that each and every home you own is a mini-j*b. And you want to add in 3 more mini-j*bs to your early retirement schedule
After reading your initial post and then glancing over the others (pre-nups) I couldn't help but ask myself some questions (actually for you). You seem to have done very well for yourself in the business sense. Then you cautiously plan for a $500K house but fiance wants a $1M house.
+1,000,000!!! I find it hilariously sad that she is presumably not bringing anything to the marriage financially (You said earlier that you were "going to be taking care of her"), yet she wants a home that is TWICE as expensive as you suggested.
However, the bigger aspect is NOT the price of the home, but the value! How does she know that you 2 won't find your dream home with a $700k price tag? What variables are important? Area? School district? Condition of home? Views? Lot size? # bedrooms/baths? Home layout? A fixer-upper vs move-in just the way you want it? 50 year old vs 5 year old? etc. Why is it that she automatically knows she 'needs' a home that is $1MM? (especially when she apparently doesn't have a dime to her name?)
You may have already had that discussion on a home variable list, but just from the single sentence you say, it sounds like she simply wants to 'live it up' and wants as expensive of a house as she can get. And ask her - what makes her say she wants a $1MM house? Did she price them? Does she know what variables on her list drive the price up to $1MM? Or (as I fear) is she merely doubling what you said in an attempt to extract more from you?
I've been engaged before (twice), and have finally learned some critical lessons about relationships. Both engagements were to uber manipulative and controlling women, and just from a few comments you've made so far, my initial first glance does not give me a warm fuzzy feeling AT ALL. And I can relate a little bit to your uneasiness - my portfolio is a hair north of $2MM, and as a single guy in his late 30s, it's difficult trying to do the dating game when it seems most of our peers (men as well as women) can barely make their rent/mortgage payment, let alone have made sacrifices to save up and amass at least a small bit of a portfolio to start with.
And to add to the pre-nup comments: Just remember that ultimately, the JUDGE and the JUDGE alone determines what gets divided up in a divorce. You can have a judge make a reasonable decision - but from the anecdotal stories I hear, it's FAR more often than not that a judge rules in ways that leave your head scratching in wonder on how he/she could make a decision like that. And there is no court of appeals in family court - what the judge says, you live with.
Even if there is a pre-nup, there have been times a pre-nup is thrown out for errors/incorrect procedures (like if you present your fiance with the pre-up the night before the wedding). Also, even if you live in a state where you keep what you have before the marriage, it's not so clear-cut as it seems. Say you sell one of your rentals - what do you do with that money? Deposit it in the bank. Is that account a joint account? Suddenly, that could become marital property, and anyplace that goes afterwards is marital property. Or if you do as another poster suggested - live in a rental house for part of 2 years to get a pro-rated $500k tax-free capital gains. If you file jointly and use part of her exemption to get $500k in tax-free gains, a slick lawyer might argue that filing taxes as "married filing jointly" makes any gains declared on that tax form as marital property - and thus, the judge could then make the home sale proceeds marital property. (I don't have a story about this - just pointing out that judges can rule however, and it's a bit of a gamble without a prenup)
And with dividends/capital gains distributed from your investment accounts - whether you reinvest them or use it to buy new stocks, that could arguably become marital property since it was income earned during the marriage. Along with any stocks you sell after marriage and then buy something else.