Case Study: When can I retire or semi-retire?

[bkmnky72]

Topic Title: Reader Case Study - When can I retire?

Life Situation: IRS filing status MFJ, DINKS, CA, 40&45

Gross Salary/Wages: Me: $120k SO: $70k

Individual amounts of each Pre-tax deductions 401k $18k/year x 1 plus health insurance $150

Vacation Rental Income: Gross $16k minimum on vacation rental.  With PITI of $1100 + Utilities $200 = $1,300.  So net income is negligible.  We use the vacation rental 2x/month max.

Adjusted Gross Income: $172k

Taxes: Federal, state/local, and FICA.  $42k

Net monthly income: $5k/bi-weekly or $10,750 rounded.

Current Expenses:
Mortgage: PI $1900 TI $$750 = $2650

Expected ER expenses: $5k/month including PITI. 
Utilities: $300 (Electric, Alarm, Gas, Water)
Cell: $200
Home Repairs and Maintenance: $250
Car/Transportation: $250
Travel: $250
Donation: $150
Health: $150
Life: $150
Cable/Internet/Phone: $150
Groceries: $400
Restaurant: $400
Total: $5k/month. 

Assets:
Primary: $525k
Vacation Rental: $250k
Rental to be sold: On market $380k
Retirement: $185k
Other cash/savings: $15k
Other Assets: $10k
Total: $1,385k

Liabilities:
Primary: $390k, 29 years remaining
Vacation Rental: $150k.  Current PITI $1,100, 30 years remaining
Rental to be sold: $248k.  Current PITI $1,650
SL: $42k, $385 due monthly
Personal Loan: $3k, due $65 monthly
Total Liabilities: $833k

Question: Trying to figure out when I can retire or semi-retire.  Right now I take home $3,650/bi-weekly.  I want to work part-time and supplement SO's income.  SO's take home is $1,350 because of the 401k.  I can work as a consultant making $40 an hour minimum, PT.  That should bring in another $1,500 every two weeks.  New semi-retirement income: $6,175.

We have been using our efund and savings to cash flow the 3 mortgages.  Our plan. after selling rental currently on the market, is as follows:
Sell Rental 1, cash out $100k+
Fix up vacation rental +$25k, increasing its living space and earn an additional $5k/year minimum.  We may sell if the numbers make sense, but right now we want to keep it.
Save $25k to efund
Place $50k on another property to either cash flow $1k/month or flip if the numbers make sense.
The ultimate goal (in the next 5+ years) is to have 6 properties that are cash flowing $1k/month each. which will pay for our monthly expenses.  Then SO can retire as well (no real interest in retiring soon at 40yo).

The ideal is for me to semi-retire this year.
I can likely wait for another 5 years.
I definitely would want to fully-retire no later than age 60 (15 years)

[MDM]

Question: Trying to figure out when I can retire or semi-retire.

What say the simple calculation in the case study spreadsheet, and/or more detailed calculations such ones mentioned in Best and/or Recommended Retirement Calculator - Bogleheads.org?

[bkmnky72]

Question: Trying to figure out when I can retire or semi-retire.

What say the simple calculation in the case study spreadsheet, and/or more detailed calculations such ones mentioned in Best and/or Recommended Retirement Calculator - Bogleheads.org?

Thank you for this.  So I tried the cash flow scenario, to answer my question:

If I work PT and SO continues, we'll be making less than $100k in W2 which means we'll be at a lower tax rate.  We CAN do it, based on our current expenses once rental is sold.  But our stash is too small that one major setback can really hurt us.

If I am to wait for 5 years, we'll be in better shape, definitely.  We can also increase our real estate portfolio, and our stash will be over $1M

If we are to both wait to retire at 15 years, we'll be set for lyfe, but then we'll be too old to do much of the things we wanted to do (long travel, long distance hiking, etc.).

[oldladystache]

If your goal is to have more rentals, why are you selling the rental?

[MDM]

If I am to wait for 5 years, we'll be in better shape, definitely.  We can also increase our real estate portfolio, and our stash will be over $1M

You can re-evaluate every year or so.  The most likely scenario is that your current projections will be wrong - just don't know by how much and in what direction....

[bkmnky72]

If your goal is to have more rentals, why are you selling the rental?

That particular rental does not cash flow very well and we're better off selling it and cashing out at this time. 

[bkmnky72]

If I am to wait for 5 years, we'll be in better shape, definitely.  We can also increase our real estate portfolio, and our stash will be over $1M

You can re-evaluate every year or so.  The most likely scenario is that your current projections will be wrong - just don't know by how much and in what direction....

Good to know, since the $1M sounded too generous.