Author Topic: Reader Case Study - Need some help with FIRE calculations...  (Read 5493 times)

boston swiss

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Reader Case Study - Need some help with FIRE calculations...
« on: February 16, 2016, 03:24:56 PM »
Hi All,

This is my first post and I'm writing it having moved to Switzerland from the United States in December of 2014.  My thanks in advance for your face punching comments.    I realize my family of three and I spend a great deal more money per month than most, and could use some motivation to push ahead.

A bit about me.  I'm 40 y/o, have a wife and 2 year old daughter, and work in a highly rewarding job that pays well, however my weight is beginning to become an issue and I need to spend more time focusing on health vs. being in the office 40-50 hours per week.  We plan to have one more child and return to the US to live in one of our two paid off homes in MA. 

I have to admit, moving to Europe had alot to do with being able to travel.   I was a bit burned out in my US job, but thought that in going one-two more years moving to Switzerland, I would be able to extend my working career, earn additional income, and travel Europe extensively.   This explains our very high travel budget last year.  I've done some thinking as to how that money could be spent differently, but then again when you are living in Europe and taking one to two trips per month, the cost rises quickly.  We do not have a car, we do not have a television, and in Switzerland you pay for your own medical insurance.  In addition, most people rent (harder for non-Swiss to own here), and we pay an additional 1,000 per month to taxes as we are unsure whether our current withholdings will be enough to cover the IRS taxes due to the US govt.

Total NW = 1.5 Million USD which is comprised of:

Two rental properties - 490k valuation and 570k  valuation (with 180k mortgage on 530k property and 570k property has no mortgage) 
275k in cash
350k in 401k funds


Income = Approx. 300k per year (one earner, head of household, one child and one wife dependent)

205k per year salary which after tax is about $10,500 per month
60k from 2 Massachusetts rentals per year which after tax/expenses is about $3,000 per month
Yearly bonus of about 20k after taxes per year
Company provides $18,900 into retirement account every year in Switzerland.
So in total, 182k post tax and 19k in pre-tax contributions.

Expenses = About 110,000 per year

Type of Expense                             Monthly Average Expenses:                                       Annual Expenses                                        Comments
                                                                                                                     
Rent                                                      $2,565                                                                         $30,780

Rent Insurance                                           $167                                                                         $2,004

Christmas/Holidays/Birthdays                    $188                                                                         $2,250

Clothing/Shoes                                   $267                                                                         $3,204

Dining (Lunch/Dinner/Etc.)         $144                                                                                  $1728

Entertainment                                            $89                                                                         $1,068

Financial Fees                                             $30                                                                         $360

Groceries                                                     $680                                                                         $8,160

Household                                             $232                                                                         $2,781

Internet                                                     $40                                                                          $480

Medical Insurance                                     $934                                                                          $11,208

Phone (cell)                                             $20                                                                           $240

Sports/Recreation                                     $294                                                                           $3,528

Tax paid extra to US govt per month         $1,031                                                                           $12,372

Travel/Vacation                                     $2,549                                                                           $30,588

Work/Professional/Business fees              $70                                                                            $840

 Total                                                        $9,300                                                                            $111,591

So, based on my calculations - and unsure how to account for paying $1,031 for extra tax per month to US govt. and about $934 per month for after tax medical insurance - I calculate my savings rate to be:  201k (income) - 111,591 (expense) = $89409 savings.  89409/201,000 = 45% savings rate.  Plugging these numbers into the retirement calculator , it show I have about 4.5-5.5 years of continuing to work with a 5% interest rate and 4% SWR.

Here's the big question:  If in Q2 2017, I decide to a) pay off the mortgage of 180k with my cash reserves on the 490k rental property, having added about another 100k to my NW by Q2 2017 (total NW =1.6 million by Q2 2017 with 5k per month in rental income), how long until I could FIRE with RE expenses of 78k per year (6500 per month)?

Also, any tips on how to better allocate my investments (I realize I am heavy in cash at the moment - but the CHF is weak and I'm very conservative, preferring to invest in RE at the moment, but know in my heart I need to diversify my investments (scared of a pending market crash!).

Also, if you're living in Switzerland, please let me know!  I'd love to meet some MMM followers here!
« Last Edit: February 16, 2016, 03:26:50 PM by boston swiss »

boston swiss

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #1 on: February 16, 2016, 10:36:22 PM »
My calculations are below:

Using the 4% rule, $78,000 per year x 25 = 1,950,000.

Current NW = 1,500,000. 

My NW increases by about 100k every year, so 4.5years away from FIRE.

One issue is that with a NW of 1,500,000, I'm seeing a return of 60k a year from my two rental properties (2k and 3k per month), which is about a 4% return.  After some repairs this year, the rent on the 2k property will move up to 3k, so 72k a year at that point from my two rental properties, which is about a 4.8% return.  I anticipate after tax and expenses from these 2 rentals, I will see $4500 per month take-home. 

I guess it's time to weigh these two options:   A) See if I can find a place back in MA next year with a good school system where we can live on $4500 per month. B) Continue to live in Switzerland, working for 4.5 more years but having $6500 per month to live on moving forward.  With another child on the way, thinking that option B might be the better road as it may be hard to find this high paying job again if I left it next year. 

Also will be reducing travel budget to about 15k per year in 2016.  I know, still very high, but this year our family of three will travel to the UK (1 week), Italian Riviera ( 1 week) Thailand (for 2 weeks), and the United States (2 weeks) from Switzerland.
« Last Edit: February 16, 2016, 10:43:41 PM by boston swiss »

PhysicianOnFIRE

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #2 on: February 17, 2016, 09:08:24 PM »
Congrats on your success, BostonSwiss.  The  opportunity in Switzerland sounds amazing! 

You'll probably get some gruff for your spending, but you're saving nearly as much as you spend, and you no doubt pay a boatload in taxes.  I'm not much of a face puncher; I'll give you a pass here.

I don't know all that much about real estate, but I think most real estate investors would expect more than $5000 a month for nearly $1 million invested.  A much cheaper quadplex might generate just as much in rent.  Not at all my area of expertise, but perhaps others could chime in here.  https://www.biggerpockets.com/ might be a good resource to investigate that further.

Best of luck to you and your family.  I'd say you're on the right track to FIRE within 5 years, and I'll bet you could structure the RE portion of your portfolio to improve the rental income (or sell the properties and buy stock & bond funds). 


Able was I ERE

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #3 on: February 18, 2016, 08:05:35 AM »
Congrats on moving overseas for personal reasons.  I've done the same with my family recently by moving to Austria.

Also, if you're living in Switzerland, please let me know!  I'd love to meet some MMM followers here!

Post a thread in the Meetups section.  It looks like there are a few Swiss Mustachians (per the Mustachian Map).

Or, if you come visit us in Graz, Austria, we'll hold a meetup for you.
« Last Edit: February 18, 2016, 08:09:03 AM by Able was I ERE »

ooeei

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #4 on: February 18, 2016, 09:05:28 AM »
Keep in mind that the 4% rule was specifically calculated using stocks and bonds as investments, not real estate.  The 4% rule doesn't seem applicable to your situation as you're almost all in real estate.

I'm also confused about the 60k RE income, is that before or after expenses?  In the OP it looks like it's before expenses, as you put ($3000/month after expenses), but then you calculate it out as 4% return in the next post. 

In that same vein, you should calculate return of your different assets separately. There's no reason to calculate the income from your RE vs your entire net worth like you did.  If you get 60k from RE after expenses, that's a 5.7% return on your real estate.

boston swiss

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #5 on: February 18, 2016, 11:43:32 AM »
Congrats on your success, BostonSwiss.  The  opportunity in Switzerland sounds amazing! 

You'll probably get some gruff for your spending, but you're saving nearly as much as you spend, and you no doubt pay a boatload in taxes.  I'm not much of a face puncher; I'll give you a pass here.

I don't know all that much about real estate, but I think most real estate investors would expect more than $5000 a month for nearly $1 million invested.  A much cheaper quadplex might generate just as much in rent.  Not at all my area of expertise, but perhaps others could chime in here.  https://www.biggerpockets.com/ might be a good resource to investigate that further.

Best of luck to you and your family.  I'd say you're on the right track to FIRE within 5 years, and I'll bet you could structure the RE portion of your portfolio to improve the rental income (or sell the properties and buy stock & bond funds).

Thank POF, appreciate the encouragement.   I enjoy your blog and think it speaks a bit more to me in terms of my current station in life, particularly with my current expenses being what they are today.  Appreciate the feedback and will take a look at biggerpockets.com.   I also look forward to utilizing the estimated tax calculator you link to on your blog.  Very valuable for planning purposes - hard to calculate what my current real estate investments will truly provide me with post FIRE while I'm currently in such a high tax bracket and after FIRE would be in a much lower tax bracket. 




boston swiss

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #6 on: February 18, 2016, 11:48:02 AM »
Congrats on moving overseas for personal reasons.  I've done the same with my family recently by moving to Austria.

Also, if you're living in Switzerland, please let me know!  I'd love to meet some MMM followers here!

Post a thread in the Meetups section.  It looks like there are a few Swiss Mustachians (per the Mustachian Map).

Or, if you come visit us in Graz, Austria, we'll hold a meetup for you.

Thanks!  I will look into the Swiss meet-ups.  I may be in Vienna later this year and will see if schedules align for a meet-up in or around Graz.  Enjoy Europe and good luck to you and your family post-move!

boston swiss

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #7 on: February 18, 2016, 12:20:02 PM »
Keep in mind that the 4% rule was specifically calculated using stocks and bonds as investments, not real estate.  The 4% rule doesn't seem applicable to your situation as you're almost all in real estate.

I'm also confused about the 60k RE income, is that before or after expenses?  In the OP it looks like it's before expenses, as you put ($3000/month after expenses), but then you calculate it out as 4% return in the next post. 

In that same vein, you should calculate return of your different assets separately. There's no reason to calculate the income from your RE vs your entire net worth like you did.  If you get 60k from RE after expenses, that's a 5.7% return on your real estate.

Thanks ooeei!  To be clear, the 60k is before expenses.  It's closer to 36k after expenses.  So a lower return.  Thanks for the tip on calculating return on different assets separately.  For my real estate assets, I believe the current after expense return would be 36,000/1,060,000 = 3.4%.  Not great but pretty consistent.  Next year I expect to add another 6,000 after expenses (renting out downstairs of one home for another $1,000 per month, and estimate 50% will go to to expenses) annually to the return, so should push me up to 42,000/1,060,000 = 4.0%. 

Since I'm looking to FIRE on $6500 per month or $78,000 per year for a family of three (hoping to become four), I still have to find a way to make up the balance (78,000-42,000) = 36,000. 

The quickest route to bridging this gap would be to reduce expenses below 6500 per month.  I see that MMM had a paid off home and then had expense of about 30k or so with a home in a part of the country with low property taxes.  Part of me is thinking to focus on paying off a third home in MA (where my family lives) and then I'd be in a similar position to MMM.  Or perhaps look at other investment options that provide me with a better return - at least getting the remaining 440,000 of my 1.5 million NW working for me.  350k  is currently in a very conservative 401k bond/money market fund and the other 90k is in a post-tax money market fund. 

arebelspy

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #8 on: February 18, 2016, 12:30:55 PM »
Due to the real estate, a more fitting calculation might be:

(Annual expenses - RE income) x 25 = portfolio amount needed (I.e. Not counting equity).

So 78k expenses - 42k real estate income (make sure your numbers are conservative, take potential repairs, vacancies, taxes, etc. into account) = 36k/yr. you need your stache to cover.

36kx25= 900k invested. You have 625 (though that cash needs to get invested).

Sounds like, at your income 182k post tax and 19k pretax contributions) and expenses (110k, leaving you saving 90k annually), you're about three years away.
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
If you want to know more about me, this Business Insider profile tells the story pretty well.
I (rarely) blog at AdventuringAlong.com. Check out the Now page to see what I'm up to currently.

boston swiss

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #9 on: February 18, 2016, 02:17:37 PM »
Due to the real estate, a more fitting calculation might be:

(Annual expenses - RE income) x 25 = portfolio amount needed (I.e. Not counting equity).

So 78k expenses - 42k real estate income (make sure your numbers are conservative, take potential repairs, vacancies, taxes, etc. into account) = 36k/yr. you need your stache to cover.

36kx25= 900k invested. You have 625 (though that cash needs to get invested).

Sounds like, at your income 182k post tax and 19k pretax contributions) and expenses (110k, leaving you saving 90k annually), you're about three years away.

Thanks rebel spy!  I will be reviewing my real estate income a bit more closely this upcoming weekend and will likely calculate with the rental properties rented 11 months out of 12 every year to err on the side of being conservative.

With re: to the 900k invested, I have 440k that needs to be invested (unless you are calculating this amount in another way) and then another 460k to go!  I'm fortunately going to see a bonus and some stock rights vesting shortly that should cut about 50k off that amount, taking me down to 410k left to go or a bit over four years left to FIRE at about 45.

After writing that last sentence, it's becoming apparent that I'm in need of some strategic action.  Considering how much money it takes to put away enough for a FIRE of 78k per year, and how long it took me to get to this income level, this puts the value proposition of some of the jobs with pensions in perspective.  That being said, you generally can't pass a pension on to your offspring, so these next 4 years will be about me putting in the time for the kids/family future. 

Thanks for the feedback!

PhysicianOnFIRE

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #10 on: February 18, 2016, 07:15:56 PM »
For the investment side, being in a market money fund hasn't been bad over the last year or more, so you kind of lucked out.  Going forward, I would look into a lazy 3 or 4 fund portfolio.  It's an easy DIY and is used and trusted by some brilliant minds in the investment world.

https://www.bogleheads.org/wiki/Lazy_portfolios

Stashing Swiss-style

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #11 on: March 31, 2016, 09:43:20 AM »
I live in Switzerland - in the   area between Lausanne and Geneva.  I would welcome the chance to meet up and discuss the challenges of mustachianism in one of the world's most expensive countries!

boston swiss

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #12 on: November 01, 2016, 05:20:31 PM »
This is an update on where I am today on this activity.  I may be overtired, but I think I may have figured out a way to use my real estate more efficiently to pull in my FIRE date?  I would appreciate someone pointing out if my thoughts below are incorrect or don't follow logic.

First, I've taken arebelspy's advice on how to treat real estate and applied it to my calculations for FIRE, i.e. (Annual Expense - RE income)X25 = portfolio amount needed. 

Looking back at my old e-mails from February of this year , my initial calculations showed that I needed $6500 per month for my family to FIRE or 78k per year.   When I remove the cost of rent/mortgage/property tax/home insurance from this figure, I've been able to calculate that my family's spending budget would be about $4200 per month for post-FIRE (as opposed to $6500 per month in my last post, a $2300 per month difference for housing).  So annual expense is now $4200X12 =50,400 USD per year  and I will live in one of my rental properties (both in very nice neighborhoods with great school systems).

So, would it be better in terms of FIRE date to live in one of the two rentals vs. renting both?  By living in one of my rental,  I would reduce my rental income that was at 42k per year to about 24k per year (keeping the rental that has had less expenses and higher rent).  So the calculation with arebelspy's formula becomes ($50,400-$24000)X25 = 660,000 USD needed.

As my net worth is now about 1.7M, of which 1.1M generates the rental income and provides the place for my family to live, I'm left with about 600k.  The 660,000 needed will be reached much sooner than 3 or 4 years as outlined below (likely by Q2 or Q3 next year).   Would this slight change of strategy re: how to best leverage my real estate allow me to pull in my FIRE date by about 3 years?  Or have I missed something?


 I'm still employed in Switzerland and saving about 90k per year.  My NW estimate by end of 2017 is closer to 1.75M than 1.6M, partially because I used a 1031 exchange to sell one of my investment properties last year and buy the investment property that  provides the 24k above.  Tax deferred about 84k which brought my tax rate down to about 15% (best tax year yet!).




arebelspy

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #13 on: November 01, 2016, 05:43:45 PM »
So, would it be better in terms of FIRE date to live in one of the two rentals vs. renting both?

Will you save more by living in one than by renting it out?

Let's look.  Current housing:
Quote
When I remove the cost of rent/mortgage/property tax/home insurance from this figure, I've been able to calculate that my family's spending budget would be about $4200 per month for post-FIRE (as opposed to $6500 per month in my last post, a $2300 per month difference for housing).

$2300/mo = 27,600/yr.

Current rent on that property:
Quote
I would reduce my rental income that was at 42k per year to about 24k per year (keeping the rental that has had less expenses and higher rent).

42k-24k= about 18k that rental is bringing in.

So yes, it appears you'd save about 10k/yr by living in it, and reducing your living expenses by 27.6k and your rental income by 18k.

However, you, for some reason, took out property tax and insurance, two things you will need.  I'd suspect you may save closer to 5k/yr with this plan.

5k/yr x 25 = $125k less needed to be saved up.  So it maybe pulls in your FIRE date by a year or so versus not moving into the rental.

Probably not worth it, to me.. may be, to you.
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
If you want to know more about me, this Business Insider profile tells the story pretty well.
I (rarely) blog at AdventuringAlong.com. Check out the Now page to see what I'm up to currently.

SwordGuy

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #14 on: November 01, 2016, 06:07:07 PM »
First of all, congrats on your awesome progress.

I have to agree with you on the travel, if I were working for a few years in Europe I would be traveling every chance I got!

Other folks have already given you some good advice on calculating the numbers.

Here's my concern:

A huge percentage of your income comes from 2 houses.   Your risk isn't spread out over 5 or 10 houses, it's all concentrated in two of them.  If one of them does not rent for awhile you will have a major hit in your expected income.  If both go unrented for awhile, you'll really feel the pinch.   

I would plan for that happening, along with a major repair expense or two at the same time, just to stress test the plan.

Best of luck!


arebelspy

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #15 on: November 01, 2016, 06:28:19 PM »
A huge percentage of your income comes from 2 houses.   Your risk isn't spread out over 5 or 10 houses, it's all concentrated in two of them.  If one of them does not rent for awhile you will have a major hit in your expected income.  If both go unrented for awhile, you'll really feel the pinch.   

That's a good point, and doubly so if you move into one.

A single rental providing 24k of your FIRE income adds a lot of risk versus something more diversified. I'd want a buffer in income, personally (along with healthy cash reserves).
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
If you want to know more about me, this Business Insider profile tells the story pretty well.
I (rarely) blog at AdventuringAlong.com. Check out the Now page to see what I'm up to currently.

boston swiss

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #16 on: November 05, 2016, 06:00:10 AM »
So, would it be better in terms of FIRE date to live in one of the two rentals vs. renting both?

Will you save more by living in one than by renting it out?

Let's look.  Current housing:
Quote
When I remove the cost of rent/mortgage/property tax/home insurance from this figure, I've been able to calculate that my family's spending budget would be about $4200 per month for post-FIRE (as opposed to $6500 per month in my last post, a $2300 per month difference for housing).

$2300/mo = 27,600/yr.

Current rent on that property:
Quote
I would reduce my rental income that was at 42k per year to about 24k per year (keeping the rental that has had less expenses and higher rent).

42k-24k= about 18k that rental is bringing in.

So yes, it appears you'd save about 10k/yr by living in it, and reducing your living expenses by 27.6k and your rental income by 18k.

However, you, for some reason, took out property tax and insurance, two things you will need.  I'd suspect you may save closer to 5k/yr with this plan.

5k/yr x 25 = $125k less needed to be saved up.  So it maybe pulls in your FIRE date by a year or so versus not moving into the rental.

Probably not worth it, to me.. may be, to you.

Thanks arebelspy!

I think I probably was not clear in my OP - property tax and insurance are included in the figure and I agree with the 10k per year result you ended up with, which X25 brings down the FIRE amount by 250k.

I also looked back at my original posts in Q1 2016 and noted my NW was 1.5 million at that time.  Today it is 1.7million, so an increase of 200k this year, largely driven by the sale of an investment property under a 1031 exchange after some appreciation in my RE (major driver), obtaining a lower tax bill than we had anticipated (major driver), selling of some stock that had appreciated,  plus my annual 45% savings rate. 

If I were to put this all together, I think the calculation would go something like this as of today:

Expenses per year = (4200 per month*12) = 50,400
RE income (take home after property tax and insurance) = 2,000 per month*2= 24000
Applying the Calculation (Expenses-RE income)*25 = amount needed for FIRE = (50,400-24000)*25= 660,000

It takes 1.1 million to provide the home to live in and the $24,000 per month RE income.  I have 600,000 left over and need 660,000.  Given my savings rate, bonus and stock coming at the end of Q1, I believe I could be in the FIRE category living in one of my rentals by this summer.

 I'm not an expert at putting this reduction in time to FIRE in mathematical terms re: what has happened.  If only I had my 10th grade algebra teacher with me today, this would have been a great mathematical word problem, and I think the equation it would present could be a meaningful way to look at the trade-off with using a house as a rental vs. primary in terms of FIRE.    My thoughts are, that I started out with an annual spend estimate in February of this year of $6500 per month or 78k per year, and multiplied by 25 to get a total FIRE amount of 1.95M and had 1.5M NW, a 450k gap.  Two major items have shifted since February along with using the new calculation you had proposed (thank you!).  First my NW increased by 200k in one year.  Second, I am now looking at using one of my two rental homes as a primary residence and changing my calculation to reflect this in the formula (Annual Expenses-RE income)X25 = FIRE amount.  Within this calculation, I reduced annual expenses by about 28k and lowered RE income by 18k, with a net savings of 10k per year, which reduced the FIRE amount (using the X25) by 250k.   

I wonder if there is an algebraic formula to show the relationship of the paragraph above?

Also, thanks for the comments about having a single rental providing 24k of your FIRE income.  Re: this, I'm in a rent to own contract on a piece of property with a married couple with two kids, with an anticipated buy-out date in 2018.  If there are no issues, I believe I will become liquid on the asset producing this 24k to the tune of about 560k. My hope is that at that time, I will be in a better position to redistribute the funds into a more diverse portfolio,hopefully in a better overall market, but one never can tell.  I thought this was a conservative position and took it as I had a 1031 exchange at the end of 2015 that I needed to invest in within the required time period.

Thank you for the feedback and I think next steps for me will be to a) build the buffer in income 2) along with healthy cash reserves and 3)diversify when I can with the 24k annual income property.  Is there a post that shows how people have gone about achieving 1,2, and 3 above?

Like many in the workplace, I rely too heavily on my own income as counting towards diversity of income.  I guess these Saturday morning post are some evidence of my efforts towards evolving beyond this point.   I may need to change my avatar (do they still call it an avatar) to a caveman. 

I am beginning to look into some interesting diversity of income strategies in Europe as an American living abroad.  More to come on that topic after some further investigation.


boston swiss

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #17 on: November 05, 2016, 07:32:38 AM »
First of all, congrats on your awesome progress.

I have to agree with you on the travel, if I were working for a few years in Europe I would be traveling every chance I got!

Other folks have already given you some good advice on calculating the numbers.

Here's my concern:

A huge percentage of your income comes from 2 houses.   Your risk isn't spread out over 5 or 10 houses, it's all concentrated in two of them.  If one of them does not rent for awhile you will have a major hit in your expected income.  If both go unrented for awhile, you'll really feel the pinch.   

I would plan for that happening, along with a major repair expense or two at the same time, just to stress test the plan.

Best of luck!

Thanks swordguy!  I will look into diversifying.  Some folks, like PoF, had provided me some ideas of looking at quadplex homes for rent.  Given the home valuations in the areas I've bought in thus far, I may need to look at items like quadplexes, cheaper areas for RE with comparable of better returns or other modes of investing as I have at most owned two rentals at any one time (and that was a challenge at times).    The return of 24k after expense annually on the $570k investment  on the one house I would keep renting would provide for about 50% of my expenses per year ($50,400).  Is there an optimal amount of income to get from one passive income stream? 

I understand the general framing of the issue.  I have work to do here, and would love to hear from others who are owning and renting real estate to hear how their investments compare to mine, which is producing about 4.2% annually after expenses on 570k.  I probably need to expand my comfort zone and if there are any posts that you could suggest to help educate me on how others are doing this with more homes, I'd be very appreciative.

boston swiss

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Re: Reader Case Study - Need some help with FIRE calculations...
« Reply #18 on: November 05, 2016, 08:59:22 AM »
I have gone back and done a deeper dive into the RE investing forum and will follow-up on this post.  I'm investigating some European RE investments and comparing them to some stateside RE investments.  Given my geography, partnering may be an option I need to evaluate under some secured transaction notes rulings in different states with their Secretary of State/Commonwealth's offices and getting in touch with some lawyers versed in local Article 9 regulations. 

I'll be back in this forum after the New Year to give an update on diversification.  Nov. 8th is right around the corner and all eyes are on the US.  From my own financial perspective,  it will be interesting to see where USD goes relative to the CHF.