Author Topic: Unsupportive SO  (Read 17606 times)

genesismachine

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Unsupportive SO
« on: May 04, 2016, 01:25:47 PM »
I am posting this partially to vent, but also to seek advice.

We currently own 3 rentals and if we sell them and leverage the profits into down payments on other properties, we could retire early immediately. If we continue working along the traditional MMM tax deferred stock savings plan, we'd be looking at something like an 7-8 year working career, which is completely unbearable to think of (for me). The real estate plan needs to happen quickly before rates rise. It may still be possible afterwards, but a lot of uncertainty gets introduced the more we push out the timeline (for the real estate option).

Whenever I bring up the topic, my SO will just freeze. I ask if she wants to retire early, no answer. I ask if she wants to continue working, no answer. I am not sure where this is coming from, but after months of trying to work past it, I have been unsuccessful. I decided yesterday that time is of the essence, and I can't devote any more time to this unless I have something new to try. It sounds harsh, but I really am at my wit's end, and just thinking about having that talk again gives me headaches.

The main problem I have is that it will be significant work and sacrifice to accomplish all this in one year. While I certainly can do all this myself, it would be far easier if she could help out. She is fully capable of helping, but just doesn't do anything to help. I am literally making phone calls on a daily basis, trying to read and educate myself as much as possible, getting super stressed because I have to do it all alone while holding down an already stressful full time job.

I feel as though I am doing all the sacrificing and hard work (for the last year or two, I've been doing 95+% easily), but when we FIRE, she will be reaping the rewards as if she contributed equally. It has been like this with financial matters pretty much after the first year or two of marriage. I worry that over time, this feeling of inequality will eat away at me. Advice?
« Last Edit: May 04, 2016, 01:31:36 PM by genesismachine »

MrsDinero

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Re: Unsupportive SO
« Reply #1 on: May 04, 2016, 01:46:40 PM »
What was the original FIRE timeline? 

If the original timeline was to do it in 7-8 years your sudden desire to move it up to now might be scaring your wife. 

It sounds like you have single handedly decided that you have to FIRE now and are upset at her for not helping, even though she was not part of the decision making process.  If this happened to me, I too would be thrown for a loop.

BFGirl

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Re: Unsupportive SO
« Reply #2 on: May 04, 2016, 01:51:07 PM »
Are the properties you want to sell paid off?  Are they earning $$?  If you are wanting to sell paid off income producing property to buy more expensive property with debt with the hopes of more rental income then I would be hesitant about that without more information.

Does your wife ignore you when you are talking to her?  Does she have enough information on the financial transactions to answer?  Is the real estate stuff something you both agreed to pursue or is this more your idea?

I think perhaps we need some more information about this and your overall situation before we can answer.

farmerj

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Re: Unsupportive SO
« Reply #3 on: May 04, 2016, 01:52:07 PM »
"We currently own 3 rentals and if we sell them and leverage the profits into down payments on other properties, we could retire early immediately...."

You may be talking retirement, but she may be hearing that you want to take up a second career in property management?

nobody123

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Re: Unsupportive SO
« Reply #4 on: May 04, 2016, 01:54:53 PM »
The main problem I have is that it will be significant work and sacrifice to accomplish all this in one year. While I certainly can do all this myself, it would be far easier if she could help out. She is fully capable of helping, but just doesn't do anything to help. I am literally making phone calls on a daily basis, trying to read and educate myself as much as possible, getting super stressed because I have to do it all alone while holding down an already stressful full time job.

I feel as though I am doing all the sacrificing and hard work (for the last year or two, I've been doing 95+% easily), but when we FIRE, she will be reaping the rewards as if she contributed equally.

So, you had a plan that was presumably agreed to many years ago and you were both working toward.  You have now unilaterally decided you don't like the plan and have a new one, and are complaining that your SO isn't spending time helping you research the new plan that they haven't agreed to?  On top of that, you're upset that she will benefit from your hard work without having contributed?  WTF. 

dinkhelpneeded

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Re: Unsupportive SO
« Reply #5 on: May 04, 2016, 02:07:36 PM »
You could be my husband. Once in a while he gets all resentful that I am not doing "enough". In your wife's mind she is probably doing "enough" to keep the family going, even if that might not be in $.

At some level I get it, but I always tell him to not pass his desperation onto me, because in my mind I am contributing and I can FIRE on my own if I want to, in my own time-line. A better solution would be to discuss your desperation to quit, and figure out if she is in for a new timeline.

If you are unhappy, then fix that first, because FIRE is not going to fix that.
Even if you did FIRE in a year, you would be scared as shit, trust me, and you would take that fear out on your family.
SO who are dependent, and like it that way, may not know "how" to change.
SO who are independent, and like their jobs, may see no reason to accelerate FIRE in one year.

Another thing I tell my husband when he gets frantic like this, is to quit. I tell him if you are so unhappy then please for gods sake, quit. I am happy to bear your burden if needed, because I don't feel that level of "needing to quit". I know how to manage money, maybe it wont make super high returns like if you were to do RE, but it will return modest returns (and you better be ok with that, because you are the one who wanted to quit in the first place!)
« Last Edit: May 04, 2016, 02:13:56 PM by dinkhelpneeded »

zinethstache

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Re: Unsupportive SO
« Reply #6 on: May 04, 2016, 02:35:22 PM »
I am the FIRE person of the family. It was a very slow and steady process to bring along my SO in a way that would not terrify him.

The largest hurdle was his RE from a very bad job. It was the only job he'd ever known. And he'd worked that job for 28 years. I am telling you this to give you an idea of the battle I had ahead of me.

Our FIRE goals after we'd made it past the "quit your life sucking day job to work towards an alternative income source" included me working until 55. - at that time it was 12 years out.

Time has gone by with many, many life changes to maneuver through. He has slowly, slowly drank the Kool-aid. I had to spoon feed it to him at times. In the last year (5 years post his FIRE) we've finally seen eye to eye and I plan to FIRE early in 2017.

It will not work if you do everything yourself. There will be bad feelings all around. Take a deep breath and slow down (can't believe I'm saying this since I move at mach speed) and keep chipping away with her (as opposed to at her). For me, slow and steady wins the race and our initial RE goals went from 12 years to 6 years. We are now in the finally major changes to prep for me to RE.

Note: I too am the plotter/schemer/phone caller/organizer, my SO is more the worker bee and is happy to do that. It HAS meant I work more than 60 hours some weeks since I have my own day job that takes up 50 hours a week. I did expect to have to do some of that leg work to keep the skids greased etc.

I don't really know what to tell you to do in the event she doesn't budge. I can tell you that my husband knows me to be an overachiever and when I say something he believes it to be true and that I WILL make it happen. I think that is very important for the MMM person of the family. They need to be achievers, not just a talker who never sees something through to completion. If you feel she isn't taking you seriously, work on that trust, make her believe what you say really does happen. The best of luck to you!
« Last Edit: May 04, 2016, 02:38:09 PM by zinethstache »

genesismachine

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Re: Unsupportive SO
« Reply #7 on: May 04, 2016, 02:38:55 PM »
The original timeline was 'asap', but the numbers kept saying 7-8 years or so.

One property is paid off, and the other two have significant equity. The rent vs the property value is very low. So we'd be looking at both leveraging up, as well as buying multifamily properties with better rent vs value. Both of my parents are both heavily (independently) involved in real estate, as is her dad, so we would be going into this with eyes wide open and lots of knowledge/support.

I don't necessarily hate my job, but I HATE the schedule. With my personality, I'd rather work 50 hours one week and 20 hours on another as I please, but I have to work 40.0 hours per week. I also basically can't take vacations. I make way more than my wife, so me quitting would not be far off from early retirement.

EDIT: The problem here is that if rates go up, a lot more uncertainty gets thrown into the mix. I can't afford to wait around for 3 years before she changes her mind, which is what makes this particularly difficult.

The trigger was that we inherited one of the houses we own in April (paid off), so that poured gas onto the 'FIRE' out of nowhere.
« Last Edit: May 04, 2016, 02:46:09 PM by genesismachine »

genesismachine

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Re: Unsupportive SO
« Reply #8 on: May 04, 2016, 02:48:18 PM »
I would also love to quit my job, which from the responses seems to be exactly what I need, but I need to keep my income high in order for me to qualify for all these mortgages on the investment properties. That, plus the one year timeframe I mentioned really limits my options...

Mr. Green

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Re: Unsupportive SO
« Reply #9 on: May 04, 2016, 03:13:27 PM »
I think you have two separate issues here. Doing the real estate deal you propose doesn't have to mean FIRE. Why couldn't you approach it like it's just being smart to improve your position financially and leave the notion of FIRE out of it? I think you're off base for using rising rates as the excuse though. You know how many years they'd been saying that same tired saying? "You better do it now before rates go up!" At least five and guess what? Rates haven't gone anywhere and they're no going to overnight. The Fed is already backtracking on their "four rate hikes in 2016" plan because of weaker than desired data. If the idea of selling the properties and investing in new ones passes muster on its own then a quarter of a percentage point on the rate shouldn't matter.
« Last Edit: May 04, 2016, 03:16:01 PM by Mr. Green »

Bobberth

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Re: Unsupportive SO
« Reply #10 on: May 04, 2016, 03:22:05 PM »
In my opinion you shouldn't worry so much and add stress to this situation by worrying about rates going up. I know the financial press is saying the Fed is going to raise rates but it really can't happen. Bill Gross came out today talking about "Helicopter Money" next year. He's closer to the truth than the Fed members talking about 2 or more raises this year and more next year.

Leave your thoughts on interest rate timelines behind and focus on the situation with your wife first. Find out her real concerns and work from there. If you work out proceeding with this immediate, 1 year plan, I think you will be happy with where rates are.

Jesstache

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Re: Unsupportive SO
« Reply #11 on: May 04, 2016, 04:02:02 PM »
If I were your wife I'd be concerned about jumping into this too soon.  You just inherited this one property less than a month ago and you're already talking about selling it using the equity and purchasing multiple more properties with presumably acquiring more debt while simultaneously quitting your job?  I might not know what to say either.  Maybe she just doesn't know how she exactly feels about it and it trying to formulate her own feelings internally before expressing them out loud.  I don't know your wife but this is how I operate. 

Was the property inherited from a family member of hers?  Yours?  She may just be thinking that all you're thinking about is $ and not taking into account her/your  feelings about the death of one of her/your family members.  If my mother/uncle/grandparent died and left us their house and my husband immediately started talking about how we should sell it and buy a bunch of other rental properties so we could retire, my only thought would be, "Gee could you at least let me process everything that happened before you start throwing stacks of cash in the air in celebration?"  I don't know if that's the case here or not as you don't go into much detail about the inheritance or how it came to be but just a possibility that popped into my head.

genesismachine

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Re: Unsupportive SO
« Reply #12 on: May 05, 2016, 03:04:47 PM »
No death, it's my dad's investment house that he's giving me so that I can really get my ball rolling a lot faster since we don't have quite enough equity in our houses to make the moves we want to make. I have 2 rentals for 5-10 years now, and this would be #3, so I am pretty well versed on real estate already.

I took a coworkers' advice yesterday and just asked my wife what she would want to do without interjecting my own opinion. After an hour of her talking it over, she basically came to the same conclusion, so we're both on the same page now. I think before I was maybe trying to do all the thinking for her and jumping from step 1 to like step 20 without any explanation in between.

genesismachine

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Re: Unsupportive SO
« Reply #13 on: May 05, 2016, 03:10:29 PM »
I also want to mention that although I think I'm pretty well versed in real estate, I am reading at a very fast rate to learn as much as I can. I've read like 15-20 books in the last 3 months to help me really understand every aspect from financing to buying to land lording.

If I do succeed in making this happen, I will be operating at a far higher level than I've been used to, so it is a little scary to say the least. I'd be going from 2 units to something like 20-24 units in the span of a year.

dandarc

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Re: Unsupportive SO
« Reply #14 on: May 05, 2016, 03:17:58 PM »
I think before I was maybe trying to do all the thinking for her and jumping from step 1 to like step 20 without any explanation in between.
I do this all the damn time, particularly when it comes to our finances.  Need to work on it.

galliver

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Re: Unsupportive SO
« Reply #15 on: May 05, 2016, 03:58:57 PM »
I took a coworkers' advice yesterday and just asked my wife what she would want to do without interjecting my own opinion. After an hour of her talking it over, she basically came to the same conclusion, so we're both on the same page now. I think before I was maybe trying to do all the thinking for her and jumping from step 1 to like step 20 without any explanation in between.

Glad you figured it out; I wanted to suggest something similar to your coworker. But I still wanted to point out that your communication issue wasn't unique. My bf and I react differently to emotional stress in conversation; in a nutshell, he goes faster, I go slower. I don't speak impulsively for fear of saying something I'll regret, and I mull over every answer at great length. Whereas he (from my perspective) wants an answer 5 seconds before he starts asking the question. He also sometimes gets frustrated I don't "give him a straight answer," although from my perspective even simple questions don't always have straightforward answers. Like he will ask "Do you want to do A or B?" and if I don't have a strong opinion, I might come back with "well, A has these benefits and B has these benefits but this downside, which I don't really think is a big deal," (i.e. I don't know, but this is what I'm thinking about in order to make my decision, have you anything to add?) or "I was going to do A but I hadn't actually considered B...that's not a bad idea, I think I'm down for either." Mind you, this doesn't happen all the time, either. Usually someone is tired/hungry/stressed when these get blown out of proportion. I think you went the right way about solving your communication issue; ask an open ended question and let the person respond, fully, without constraining them to your way of thinking. And once you've heard them out, figure out how it fits in with your thoughts, concerns, and ultimate decisions. Which in your case, sounds like "perfectly."

CowboyAndIndian

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Re: Unsupportive SO
« Reply #16 on: May 06, 2016, 06:14:27 AM »
I think before I was maybe trying to do all the thinking for her and jumping from step 1 to like step 20 without any explanation in between.
I do this all the damn time, particularly when it comes to our finances.  Need to work on it.

Me too. Must remember this good advice when talking to DW about finances and retiring....

DeltaBond

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Re: Unsupportive SO
« Reply #17 on: May 06, 2016, 12:19:26 PM »
This may sound harsh, but instead of asking her... just tell her what you're going to do, as if its final.  As if you're telling her, "I'm taking out the trash, be right back."... Either she'll start talking or you can go do what you need to do in order to carry out the plan you agreed upon.

galliver

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Re: Unsupportive SO
« Reply #18 on: May 06, 2016, 02:09:01 PM »
This may sound harsh, but instead of asking her... just tell her what you're going to do, as if its final.  As if you're telling her, "I'm taking out the trash, be right back."... Either she'll start talking or you can go do what you need to do in order to carry out the plan you agreed upon.

Absolutely the right approach to start a massive fight :)

ThunderCats

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Re: Unsupportive SO
« Reply #19 on: May 08, 2016, 09:13:59 PM »
I feel as though I am doing all the sacrificing and hard work (for the last year or two, I've been doing 95+% easily), but when we FIRE, she will be reaping the rewards as if she contributed equally. It has been like this with financial matters pretty much after the first year or two of marriage. I worry that over time, this feeling of inequality will eat away at me. Advice?

I'm glad that you've figured things out for the current real estate issue with your wife.  But this line right here is very concerning, as it implies that regardless of this specific issue, you feel as though you're in an unequal situation.  For this, it's really important to remember that in a marriage both partners don't contribute the same amounts in the same ways.  I don't know your situation, but she's likely in charge of (or contributing to) some combination of childcare, cleaning, cooking, general running the house, yardwork, providing emotional support, planning family events, etc.  All of these things contribute to a happy home, marriage, and lifestyle.  Try to appreciate all of the contributions she makes which contribute to your overall happiness and lifestyle, hopefully that will help ease any feelings of inequality.

Dicey

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Re: Unsupportive SO
« Reply #20 on: May 08, 2016, 09:29:00 PM »
He has slowly, slowly drank the Kool-aid. I had to spoon feed it to him at times.
Sorry for the hijack/rant, but you do realize that the people who "drank the Kool-aid" died?

https://en.wikipedia.org/wiki/Jonestown

patchyfacialhair

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Re: Unsupportive SO
« Reply #21 on: May 09, 2016, 07:22:17 AM »
Am I correct in assuming you haven't found the replacement properties yet?

If that's correct, take it one step at a time. Reading books is great, and having "supportive family" is also great, but if you don't have something tangible to show her, then at this point you're all talk.

I'm willing to bet that if you say something like: "Hey, 123 Duplex Street is on the market. If we sell the rentals, which only make us $X per month, and put it into the Duplex Street property, we'll clear $2X each month," your results will be different. Don't even mention retiring early. Let the transaction speak for itself, then a month or two later you can point out, "Hey! Looks like our passive income exceeds our expenses. Let's talk early retirement."

As opposed to "Hey we should sell our rentals cause maybe we can make more money buying different properties. No, honey, I haven't found the property yet, but TRUST ME, I've read books like I'm Hermione, yo"
« Last Edit: May 09, 2016, 07:25:55 AM by patchyfacialhair »

Jim2001

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Re: Unsupportive SO
« Reply #22 on: May 09, 2016, 08:15:28 PM »
I also want to mention that although I think I'm pretty well versed in real estate, I am reading at a very fast rate to learn as much as I can. I've read like 15-20 books in the last 3 months to help me really understand every aspect from financing to buying to land lording.

If I do succeed in making this happen, I will be operating at a far higher level than I've been used to, so it is a little scary to say the least. I'd be going from 2 units to something like 20-24 units in the span of a year.

I'd really like to see the numbers that get you from two unit to 20 and the assumptions that go with it.  I'm not saying it can't be done, I just think everyone here could provide a sounding board for the plan.

dandarc

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Re: Unsupportive SO
« Reply #23 on: May 10, 2016, 08:40:43 AM »
I'd really like to see the numbers that get you from two unit to 20 and the assumptions that go with it.  I'm not saying it can't be done, I just think everyone here could provide a sounding board for the plan.
The OP is leveraging up and switching from single-family homes to multi-family.  Depending on the relative prices in OP's area, could be very doable. 

For example, say you could buy a quad for the same price as you'll get from selling that paid-off home (depending on the home and the quad, I could do this in my city.  Why am I not investing in real estate again?).  That's turning 1 unit into 4 already.  Then you leverage to 75%, so now you can buy 4 quads and you've got 16 units.  Maybe there is enough equity in the other rental to get another one with a mortgage, and now we're up to 20 units.  Assuming you can get the loans to pull it off.

genesismachine

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Re: Unsupportive SO
« Reply #24 on: May 12, 2016, 08:31:13 PM »
The math is fairly straightforward. I'll use rough numbers. Right now, I have $500,000 in equity in 3 houses. I sell, then, I buy 5 4-plexes for $400,000 each with a down payment of $100,000 each (so 25% down payment).

That takes me from the 2 units (and the recently inherited one) up to 20 units.

They're just rough numbers, I'll probably be getting way more than $500k from the sales, and I will be keeping something like $200k on the side to deal with 'unknown unknowns'.

Cyaphas

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Re: Unsupportive SO
« Reply #25 on: May 12, 2016, 09:21:33 PM »
Before you read what I have to say: I'm a Realtor (not full time.) I've bought/sold both rentals and flips. I've lost my entire net worth to the real estate bubble in '08 and slowly bounced back to currently a very comfortable position. My next investment will be paying cash for a single rental. Not paying 20% down on 5 rentals.

On paper, taking every dime in equity out of your current properties and spreading them out among new/more rentals or a larger rental is a very enticing proposition. It's also extremely dangerous. It's how a LOT of wealthy people became insolvent quickly in the financial crisis of 2009. Don't fall into the same trap. "It's different this time!"

Jim2001

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Re: Unsupportive SO
« Reply #26 on: May 14, 2016, 10:55:41 AM »
The math is fairly straightforward. I'll use rough numbers. Right now, I have $500,000 in equity in 3 houses. I sell, then, I buy 5 4-plexes for $400,000 each with a down payment of $100,000 each (so 25% down payment).

That takes me from the 2 units (and the recently inherited one) up to 20 units.

They're just rough numbers, I'll probably be getting way more than $500k from the sales, and I will be keeping something like $200k on the side to deal with 'unknown unknowns'.

Genesis,
 
  Thanks for the update.  Is it safe to assume you're in the US and planning to do a series of 1031 tax deferred exchanges?  Something to remember on those is the fairly limited time frame you have to identify, then execute the transactions on the replacement properties.  I'm curious, have you identified any candidate 4-plexes and how well will they cash flow after expenses with 25% down?  Also, if you hold any cash out, you'll owe capital gains and depreciation recapture, whether you took the depreciation or not.

I second Cyahpas's sentiment on leverage.  It can enhance returns, but it can also break the bank. So, I took a look at my spreadsheet and found that I'm currently sitting on an average 63% LTV for all my RE holdings, excluding the primary residence.

Keeps us updated.

genesismachine

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Re: Unsupportive SO
« Reply #27 on: May 19, 2016, 08:30:58 PM »
Leverage is definitely interesting. Fortunately, our family spending is really quite low, so we cash flow ~$100k/year. We are planning to work an additional 2 years (maybe more if either we decide to, or our rentals aren't doing so hot). One of the properties will be a 1031 exchange. One has minimal capital gains/depreciation recapture. The third property, we lived in for 2 of the past 5 years, so our gains would be untaxed.

For rough numbers, after we invest everything, we would have ~1.6M in debt with ~400k in equity if things go as planned. We'd have ~$100k in 'just in case' money, which would grow to something like $200-300k at the end of our working careers 2 years from now.

Assuming maintenance and vacancy costs at 20% of gross rent (very very conservative in my area where vacancies are more like 0-1%), we would be getting something like $6-8k/month net depending on specifics of properties we buy. I have found and visited properties that meet this criteria with good rental history and financial documentation. Our expenses are around $5-6k. I expect many expenses (like having multiple vehicles, eating out, etc...) to be either eliminated or greatly reduced upon retirement. Our expenses would probably be in the ~4k range, especially if we spend extended periods in low cost of living areas. This gives us ~2-4k of buffer/additional savings. Worth noting is that I am not counting the principal portion of our mortgage payments, which would be another ~1-2k/month of 'savings'. After 2 years of 3-5% rent increases, our net income should increase significantly.

In order for our plan to fail, vacancy/maintenance would first have to chew through 20% of rent (and also not be covered whatsoever by insurance), then we'd have to chew through our budget buffer, then we'd have to chew through another 200-300k in cash. I can't think of any reasonable scenario where that would happen. The only scenarios would involve something like 50% statewide vacancy that just aren't realistic. Perhaps I'm not seeing something? How did people lose everything in the crash?

For my rental that I had during the cash, I actually raised my rents 20% and had less vacancy. Things actually improved for me during the recession as far as my rentals went... I know not all recessions are the same, but this one was actually great for rentals...

EDIT: I did a number of simulations of 'what if' scenarios. What I found is that if the property values tanked, I would be pretty insulated since I would just choose not to sell (and I am getting 30 year fixed rate mortgages for all my properties).

Inflation also was not a concern because if rents go up 5%, my net income after expenses actually goes up 10%. So yes, some of my expenses would go up by 5% (my home mortgages and rental mortgages would be fixed), but the increase in my income would more than make that up. Runaway inflation would actually be the best case scenario for me.

However, if rents started going down and we had a very prolonged deflationary period for rent, but inflation in the rest of the economy for 10+ years, then that could be a real problem. That was the only scenario I identified where I'd be in trouble. Then again, I'm no historian, but I'm not aware of anytime that has ever happened. I would have to make some tough choices, like whether I would move to a lower cost of living country, rent out rooms in my current house, or perhaps even go back to work.

Another scenario would be world war 3, but I think in that case, having to go back to a day job would be the least of my problems.

I'm actually really curious about people's take on this. I'm an engineer and I always try to think of the worst case scenarios for everything. So far, I can't think of a realistic scenario where this wouldn't work.

EDIT 2: Wow this was a long post.
« Last Edit: May 19, 2016, 08:46:31 PM by genesismachine »