Life Situation: 33.5 years old, FIRE’d myself March 2018 for the second time (to be fair I got offered a 6 figure job to pay me to move to Hawaii). Girlfriend is in military and had to move back to MD in June so I quit when they wanted my work load to drastically increase and I was not going to work 10x harder while counting my last days down in Hawaii.
For those curious, this is a 4 year update to my original post – see post
https://forum.mrmoneymustache.com/ask-a-mustachian/reader-case-study-need-mustachians-critique-of-financial-picture/msg384882/#msg384882Gross Salary/Wages: Gross salary for 2018 for 3 months was $42,000, no plans on working the rest of the year
Pre-tax deductions: 401k - $2121
HSA – Will contribute max $3450
Other Ordinary Income: House 1 – Rent 1625 – All bills 1167 = 458
Market Value 225,000 - Outstanding balance 150,000 = Equity 75,000, LTV = 66.5%
House 2 – Rent 2950 – All bills 2377 = 573
Market Value 475,000 - Outstanding balance 327,000 = Equity 148,000, LTV = 68.4%
House 3 – Rent 1650 – All bills 1085 = 565
Market Value 225,000 - Outstanding balance 121,000 = Equity 104,000, LTV = 51.9%
House 4 – Rent 1650 – All bills 1077 = 573
Market Value 225,000 - Outstanding balance 110,000 = Equity 115,000, LTV = 46.8%
House 5 – Rent 1650 – All bills 1171 = 479
Market Value 225,000 - Outstanding balance 143,000 = Equity 82,000, LTV = 63.7%
Umbrella policy = $-39
Rental property take home = $2648
Equity = $524,000
VA disability = $417
Total take home = $3065
Portfolio: Traditional 401k - $180,000
Total invested - $160,000, Total earned - $20,000
Roth 401k - $20,000
Taxable account - $256,000
Total = $456,000
Expenses – Granted these have changed significant since moving from Hawaii to move back stateside (MD) but for simplistic sake, I appear to be spending no more than $3,000 a month since my checking account appear to be staying steady at a constant $20,000 (which I like to keep as a buffer). I do have an extremely detailed breakdown of my expenses but don’t think it’s relevant to the questions I’m about to pose to the group.
Adjusted Gross Income: Based on take home – expenses = basically zero, I am perfectly ok with that since I have about $1500 (Portfolio standing at $450,000+ / 300 using 4% rule = $1500 of rainy day fund). It’s been 6 months since I FIRE’d myself and have yet to make a single withdraw
Specific Question(s): 1) Thinking either part of this year and next year (depending on once my tax accountant and I figure out what my AGI is) OR only next year (if I continue to stay FIRE’d), is there any reason I shouldn’t do a Tradtional 401k to Roth 401k conversion? I read once I do it, I have to wait 5 years (be around 39 years old) and then I will be able to withdraw from it tax/penalty free? Is all that correct?
2) Looking at house #4, my LTV is somewhere around 46.8%. Should I look into doing a refinance and pulling out some of that equity to “make me whole” and buying another investment property? I’ve read a few places they usually do a 70% LTV. What I’m unsure of is it typically 70% the new appraisal (probably somewhere around $225k) or the 70% of the original loan amount (Purchase price $160k, put 25% down so loan is for $120k, outstanding balance of $110k, loan started Oct 2013 so I know I hit the 6 month waiting period). Knowing the details of this will then allow me to run the numbers against house #3
3) Is there something I am drastically missing or screwing up on? I don’t need to be hand held, just need to be told about keywords and I can do the research but I won’t turn down solid, free advice :)
Any additional details I can easily provide.
