If I’ve mathed it up correctly...
We need about $30k per year in FIRE.
We have a rental throwing off $12k per year.
We also have $200k in investments with a 4% withdrawal rate, so $8k per year.
So we are at 66.67%.
Definitely solid progress, but it's cutting it pretty close for me.
An empty rental, a big repair needed, and a really down market is a triple whammy that could easily happen.
Are you going to go with more rentals or focus on stock?
Yes. Both. Probably one more rental and beefing up on ETFs - likely stopping when we reach around $600k in our investment funds.
The way we chose our rental is not like the typical Bigger Pockets folk - the ROI is lower, but our rental pool is a lot more stable. We have a relatively new luxury condo in a very high demand building right on top of the subway station. We have never had one month empty in the six years that we’ve owned it and rent only to solid working professionals who have never been late on rent. This means that our rent to purchase price is not 1% - it’s lower, but it also generates a reliable income. We have also never had a big repair come up, probably because of the newness of the unit. So far, it’s been a very hands-off, stress free kind of investment. The only negative is that our tenants tend to like our unit so much they stay for a few years, and rental increases are capped at inflation, so we are charging slightly less than market rates.
We are thinking of switching it up - splitting the equity we have in this unit into two newer units - because this unit is getting older and that means management fees are only going to increase in the future. We just need to find good units in good locations.
This idea of living off of passive income is kind of a theoretical exercise for us at this point, since we don’t really have any intention to retire at this point of time, or even in the next five years. Too many interesting projects going on, and most of them are paid (not well paid, but paid). Currently, our current passive income just gets rolled back into growing the ‘stache.