Author Topic: hyperspeed FIRE by moving to cheaper city/country and live off rental income.  (Read 1707 times)

bronxchickenman

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I am sure people here have done this, just wanted to hear some first stories.


My question:


Is anyone on this board currently living solely off rental income in another (cheaper) city or country? I feel like this could work even in a cheaper city in the US.  Would love to hear first hand stories of this working, not working, what I am missing, what I should plan for, etc.

My story:

My wife and I are both 32 years old.   I graduated undergrad in 2008 with 130K in student loans (oops), got lucky and bought a house in the Bronx while things were still cheap in 2013, and have been basement living and renting out the top 2 units for the past 5 years.  I am about 4 months away from paying off the final dollars on the loans.  We are paying for my wife's school at a cheaper city college in cash as we go along to avoid that mistake again (she has 1 year left). Next step is to finish 2 more years at my job so that I am vested in medical benefits for me and my wife when we turn 55. We will also GTFO the basement apartment because regardless of how much it saves, 5 years of cave dwelling takes its toll on sanity.

By October 2020 I will be vested in med benefits (and paltry pension), my wife will have worked for a full year, and we will have around $75,000 socked away in cash (which will be either a down payment for another rental property, or cash pillow).  When we move out of our apartment for good, our monthly income from the house will be about $2500 after mortgage, property management, insurance, expenses, etc. 

My plan:

Move to Central America (my wife is from there and we both have lived there before), live on the beach for $500 a month rent (buying doesn't seem smart in a country with unstable gov't etc), spend another $1000 a month to live very well, and save $1000 a month.  Use that savings to invest in real estate, stocks, whatever.



mozar

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Are you going to hire a property manager?

Freedomin5

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If $2500/month is your net income after all expenses and taxes, then it sounds doable. We are expats and while not currently living off our rental income in our home country, it hypothetically is feasible for us. A few things that you may also want to consider are:

Cost of International/expat health insurance

Plans for repatriation - would you have enough to live in the US if you suddenly had to return? The worst thing is to be able to FIRE via geographic arbitrage, and then get stuck in your host country because you don’t have enough money to come back and live in your more expensive country of origin.

Are you planning to have kids and if so, would you put them in the local (free) public school or in an expensive (English-speaking) international school? If you want them in an English-speaking school so that they can eventually come back and study in the states, do you have enough to pay tuition?

Pension/retirement - if you plan to return to the US for retirement how much SS would you qualify for, given your limited work history in the US? What plans do you have to fund your retirement? I know you could probably continue to live off of rental income, but you may want to consider having more than one income stream.
« Last Edit: November 03, 2018, 07:23:51 AM by Freedomin5 »

FiftyIsTheNewTwenty

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Pretend you're in Costa Rica or wherever right now.  There's a problem with your house or tenant and you have to get there immediately, maybe for several days.  Look up the price of a plane ticket, leaving tomorrow...  and the cost of staying somewhere other than your house, which isn't yours to use right now...  and to eat...  and rent a car...


genesismachine

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Pretend you're in Costa Rica or wherever right now.  There's a problem with your house or tenant and you have to get there immediately, maybe for several days.  Look up the price of a plane ticket, leaving tomorrow...  and the cost of staying somewhere other than your house, which isn't yours to use right now...  and to eat...  and rent a car...

There is virtually nothing that cannot be resolved via e-signing forms and hiring someone.

$2500/mo is doable but make sure that you can save a significant portion of that per month to re-invest and increase your additional cash flow. Much of the developing world is just that - developing. So I would plan for cost of living to rise much faster than in developed countries. The growth in many of these countries can be staggering over a few decades. Just think of cost of living in Shanghai or something 30 years ago vs today as an extreme example.

expatartist

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Pretend you're in Costa Rica or wherever right now.  There's a problem with your house or tenant and you have to get there immediately, maybe for several days.  Look up the price of a plane ticket, leaving tomorrow...  and the cost of staying somewhere other than your house, which isn't yours to use right now...  and to eat...  and rent a car...

There is virtually nothing that cannot be resolved via e-signing forms and hiring someone.

$2500/mo is doable but make sure that you can save a significant portion of that per month to re-invest and increase your additional cash flow. Much of the developing world is just that - developing. So I would plan for cost of living to rise much faster than in developed countries. The growth in many of these countries can be staggering over a few decades. Just think of cost of living in Shanghai or something 30 years ago vs today as an extreme example.

Good points above, you'd want to ensure a property manager's fees don't eat too much into your profit. If one is moving for geographic arbitrage rather than permanent residency you're not tied to a single location, there should be plenty of options in the region for the next few decades at least.

If you have kids, homeschooling is probably an option (check with local laws) but many parents in your situation would probably do a combination of local school for socializing/Spanish immersion and tutoring at home.

 

Wow, a phone plan for fifteen bucks!