Author Topic: How much rental cash flow is enough for you to FIRE?  (Read 11674 times)

savingstldad

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How much rental cash flow is enough for you to FIRE?
« on: August 24, 2015, 01:11:04 PM »
I was just wondering what my fellow rental property investors had as a target for net income from their properties.

There are plenty of threads on this forum about savings goals like getting to a million bucks in net worth, 4% SWR's, etc.  Since investing in rental units is a different kind of FIRE target, I was wondering what everyone here kept in the back of their heads as a viable target for FIRE on rental income.

I have my first 4-plex under contract that should bring me anywhere from 600-1000/mo in cash flow.  I think I will need 10 of these properties to live comfortably and not worry about the kids college funds or current mortgage or any of that.  At that point I might continue to buy more, or just stop working 9-5 and live off the income, I haven't decided yet.  Also, I expect to buy 10 properties over the next 7 or so years so things could change in the meantime, but currently that's my goal.

LadyStache in Baja

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #1 on: August 24, 2015, 01:41:35 PM »
Posting to follow! 

10 x 600 = 6000/month, $1500/week.  Seems like a lot?!  Equivalent to 72,000 a year.  I guess I'm shooting for 20,000/year, which would be 1666/month.  So for me it'd be 2-3 properties.  After that, I would put extra income into stocks and bonds.

But everyone's different. 

Papa bear

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #2 on: August 24, 2015, 02:03:12 PM »
Currently at 3500/ month after PITI.  Enough for me, but not for family. 

Would probably need double to make me comfortable and account for other expenses and funds for major capital improvements. 


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jooles

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #3 on: August 24, 2015, 02:46:35 PM »
My first goal is to learn how to live on $25,000/year.  I figure if MMM can do it, then so can I.  Working toward that first.  Simultaneously working on creating cash flow outside of the 9-5 job. 

So what is you monthly nut?  How much do you have to have today to pay your recurring expenses?  Are you working toward trimming those expenses?  Knowing what you spend to support your lifestyle answers your question. 

What other people spend is interesting.  What you spend is more salient.

CashFlowDiaries

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #4 on: August 24, 2015, 02:48:31 PM »
I never really set a hard number on it for but right now Im thinking ill be ready for FIRE when I hit 10k cash flow per month from my rentals.  I think im almost at 2k now per month so Im ways away but im aggressively pursuing my dream. 

As a matter of fact, I just started the hunt for another rental property yesterday.

Bearded Man

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #5 on: August 24, 2015, 03:40:02 PM »
Rather than the 25 x expenses or 4% rule, I go by net income after expenses for rental properties. My rentals, just with cash flow alone, make me FI. I factor the principal paydown, appreciation and tax benefits as bonuses, although once can consider principal paydown as adding to your asset colum since it is just as reliable as cashflow from paid rent, however; you can't really tap it without refinancing, selling, etc. As such I just consider it long term savings.

Anyways. My strategy is to have enough to retire off of rentals alone, but have enough to live off in index funds so that if something happens to the rentals, switch to stocks. I like having options and long term wealth. I don't want to be forced to go back to work after pulling the plug.

Real estate made me become FI with little money invested, but I am going to work longer so that I can pool more money and diversify, make my career woth while, and then pull the plug. Never know when a health issue, or some other problem rears its head. As such, the SWR argument is not really as important with RE since you don't really deplete your investment. Even if the house is gone in a hundred years, there is still value in the land...which is inflation adjusted.

SwordGuy

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #6 on: August 24, 2015, 03:53:35 PM »
Cash flow in rental properties is an ambiguous term unless we know how much you know about this.

Are you talking $600-1000 per month per property AFTER all expenses (taxes, property management, unplanned repairs, planned repairs like roofs, painting, carpets, hvac systems), mortgage, insurance, termite and pest control properties, alarm systems, hoa dues, etc?

Because if you aren't, the numbers you quoted are meaningless.

FYI, $120,000 gross income per year to live on is over 2 times the median family income in the USA.   It puts you in the top 13% of earners in the USA.

Feel free to set a goal that makes you happy, but really, you can live VERY WELL on a whole lot less.

expatartist

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #7 on: August 24, 2015, 07:53:09 PM »
Great discussion! Following.

cchrissyy

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #8 on: August 24, 2015, 10:42:45 PM »
when your rental income minus ALL expenses, and I truly mean all of them, is greater than what you require to live on.  It's that simple.  Don't forget taxes, vacancy, repairs...  but if your income is more than enough to live on, you are done.

lakemom

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #9 on: August 25, 2015, 11:13:04 AM »
Income-business expenses-income taxes is greater than your current monthly living expenses.  So the answer to this one is a moving target based on your unique family and spending patterns. 

savingstldad

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #10 on: August 25, 2015, 12:50:04 PM »
Right, the numbers I'm quoting are after all expenses, including 10% for management, 10% for vacancy, 10% for repairs, and all expenses like yard maintenance, water, etc.

My family of 4 with 2 "near teens" seems to spend a lot with expenses nearing 70k/yr.  We could live on less, no doubt, but I'd like to have enough RE income to offset spending at it's worst.

I was just curious what type of targets everyone aims for with rental income since I'm just getting started and about to close on property #1.

savingstldad

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #11 on: August 25, 2015, 12:56:14 PM »
I never really set a hard number on it for but right now Im thinking ill be ready for FIRE when I hit 10k cash flow per month from my rentals.  I think im almost at 2k now per month so Im ways away but im aggressively pursuing my dream. 

As a matter of fact, I just started the hunt for another rental property yesterday.

I think we have a lot in common!

savingstldad

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #12 on: August 25, 2015, 12:58:43 PM »
Rather than the 25 x expenses or 4% rule, I go by net income after expenses for rental properties. My rentals, just with cash flow alone, make me FI. I factor the principal paydown, appreciation and tax benefits as bonuses, although once can consider principal paydown as adding to your asset colum since it is just as reliable as cashflow from paid rent, however; you can't really tap it without refinancing, selling, etc. As such I just consider it long term savings.

Anyways. My strategy is to have enough to retire off of rentals alone, but have enough to live off in index funds so that if something happens to the rentals, switch to stocks. I like having options and long term wealth. I don't want to be forced to go back to work after pulling the plug.

Real estate made me become FI with little money invested, but I am going to work longer so that I can pool more money and diversify, make my career woth while, and then pull the plug. Never know when a health issue, or some other problem rears its head. As such, the SWR argument is not really as important with RE since you don't really deplete your investment. Even if the house is gone in a hundred years, there is still value in the land...which is inflation adjusted.

I like your plan, but I'm expecting to spend most of my non-401k savings on rental properties.  If I split it up into rentals and taxable brokerage type investing, I may never hit my rental income goals.

Bobberth

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #13 on: August 26, 2015, 02:52:26 PM »
My real estate goal right now is $10k/month in gross rents (2 or 3 more properties depending on what I buy).  Using the 50% rule, on average I should have $5k/month after expenses but before mortgage payments.  While I will still acquire more properties after that, I will slow down and focus more on paying off some of the debt used to purchase these properties and stashing more cash in the stock market instead of rentals. 

@savingstldad:  Does the STL stand for St. Louis?  That is where I am located if you have any questions or ever want to talk real estate.  All of my properties are in South City.


savingstldad

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #14 on: August 27, 2015, 11:24:34 AM »
Yes I'm in St. Louis.  I'm just getting started with rentals and it would be great to talk to someone that's been through it already.  Feel free to PM me if you'd like to chat.

I'm thinking the same thing, which is to get to somewhere in the 10k/month range.

Bearded Man

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #15 on: August 28, 2015, 10:40:02 AM »
To produce the kind of income I see a lot of people quoting (10K a month), aren't you essentially buying yourself a full time job? With paid off properties that's a lot of properties, and with leveraged ones, which is far more likely, it would require many more. Four properties is about the limit for management without help from what I've read on the blogs of professional real estate investors.


savingstldad

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #16 on: August 28, 2015, 12:51:43 PM »
I include the cost of a property manager in my estimates for cost.  I don't plan to be actively involved in managing the properties.

Bobberth

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #17 on: August 28, 2015, 02:25:38 PM »
I have never seen the 4 property number before.  I currently manage my 12 units by myself, 8 houses and 2 two families.  This is on top of my full time job, coaching my kids sports and training for a 340 mile kayak race.  It takes work when you first buy a rental and in between tenants to getting it rent ready.  It takes work in finding a new tenant and then maybe the first month afterward as they find things you overlooked in fixing it up.  But after that, I have rarely had to do anything that can't be done other than me making a phone call.  Most of my calls from tenants in the past 8 years have been due to HVAC concerns.  For those, I hang up, text my HVAC guy with their name, number and address and he takes care of it and sends me the bill.  And most of those are centered around the first heat and first cold of the year (turning AC or furnace on for the first time and it's not working properly).  Right now I can't imagine paying somebody $600-$850/month to mainly open envelopes with checks in them.  At some point, when we're retired and traveling, I could see it being worthwhile to pay somebody to manage them for peace of mind-and I have that built into my numbers-but right now I put that money to work buying me that traveling lifestyle.

If I control for the work that purchasing new properties bring, I could see managing around 20 units part time myself as being possible.

tonysemail

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #18 on: August 28, 2015, 02:37:52 PM »
i'm aiming for 50k/year.  that covers my core expenses, not including mortgage.
I would withdraw from my stash for expenses that expire such as mortgage or kids classes.




monarda

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #19 on: August 29, 2015, 12:45:37 PM »
I'm actively testing this out right know- I call it practice FIRE, because I currently don't have a day job. We've got 6 units and gross annual rent of 71K. Is that enough? Not sure yet. If we decided to "retire" and travel, renting out our primary residence would be another $1300-1400 per month.

It's enough so that I feel like I can be choosy looking for new work. Or maybe I don't need to work. We're on month #3 right now (my teaching job ended at the end of May), and haven't needed to dip into any savings yet. We've just had two units turn over, and put a couple thousand of supplies and labor (mostly for flooring, paint, and a couple of windows) on a 0%-for-a-year credit card. Hopefully cash flow will take care of that.

K-ice

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #20 on: August 29, 2015, 02:59:54 PM »
Posting to follow.

I find lots of investment strategies & asset allocation do not consider rental  income.

My idea is that once the net rental income (after expenses) is > cost of living expenses you could FIRE.

If the rental had a mortgage, once that is paid off that is a huge jump in net income.

But there is a greater chance for an emergency, new roof, furnace, vacancy etc. that one should also have a large emergency fund or investment cushion.

For a more balanced approach you could take:

spending - net rental income = passive income needed

Passive income needed * 25 = stash required.  (MMM calc)

So let's say I "spend" 30K. I have 12K net from rent = I need 18K

18K * 25 = 450K stash required.


I think Brad Lamb a condo developer out of Toronto (with a huge conflict of interest) suggests owning 5 high end rental condos.

But I am curious for more MMM advice.








NoNonsenseLandlord

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #21 on: September 06, 2015, 10:27:35 PM »
My 24 rentals cash flow like a madman.  Most are paid off.  I have three mortgages, and one of those will be paid off in a year. 

I manage and maintain the properties myself.  My vacancy is ~2.5% in the past few years.  They produce well over $10K a month.  By doing the managing and maintenance, I probably produce an additional $40K+ in income/cash flow/savings - call it what you want.

I need about 1/3 (or less) than they produce to live on.  Never forget, rental property income is subject to change.  A major bad tenant can cost > $10K, if you include vacancy and fix up costs.  Rents could go down, maybe even by 10%.  Adding an extra month of vacancy between tenants will lower rents by 10%.  A rental license that does not get renewed.  Or a crime next door could devastate you.

You need to have a solid financial cushion.  And never mistake deferred maintenance for profit.
« Last Edit: September 06, 2015, 10:33:59 PM by NoNonsenseLandlord »

AM43

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #22 on: September 08, 2015, 10:18:43 AM »
We have 3 income producing properties.
2 vacation rentals and 1 multifamily unit.
Total income little over 100K.
All 3 have mortgages and we've been trying to pay them down as much as possible.
We have not kept any of the profits so far and only keep reserves to pay taxes, utilities, repairs etc.
With all 3 paid off, they could generate close to 10K per month, but like others say it varies since  unexpected
expenses can come up any time.

SwordGuy

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #23 on: September 15, 2015, 07:17:49 PM »
My 24 rentals cash flow like a madman.  Most are paid off.  I have three mortgages, and one of those will be paid off in a year. 

I manage and maintain the properties myself.  My vacancy is ~2.5% in the past few years.  They produce well over $10K a month.  By doing the managing and maintenance, I probably produce an additional $40K+ in income/cash flow/savings - call it what you want.

I need about 1/3 (or less) than they produce to live on.  Never forget, rental property income is subject to change.  A major bad tenant can cost > $10K, if you include vacancy and fix up costs.  Rents could go down, maybe even by 10%.  Adding an extra month of vacancy between tenants will lower rents by 10%.  A rental license that does not get renewed.  Or a crime next door could devastate you.

You need to have a solid financial cushion.  And never mistake deferred maintenance for profit.

That's all very good advice!   

There are a lot of houses up for sale that used to be rental units that go for a song because the prior owners didn't maintain them properly.
I think that's a crazy option to intentionally choose, but a lot of people spend every penny as soon as they get it.  That means they don't set aside money to do the repairs when stuff is new and then get stuck when stuff breaks big time.

Then they don't do the repairs properly, drive out the good tenants, then take bad tenants at lower rent because their cash flow has dropped.   Then the bad tenants trash the place and the cycle continues downward.

savingstldad

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #24 on: September 16, 2015, 07:21:32 AM »
I closed on property #1 yesterday.  Very exciting day for me!

The previous owner replaced the roof, new furnaces, new plumbing, etc, in the last 2 years, so hopefully maintenance costs will be low for a while.  I plan on fixing things as they break.  The variable nature of rental income could make it harder to FIRE, because it's difficult to count on monthly rents due to repairs, vacancies, etc.

I wonder how much income I can actually count on to live off of when costs can vary so much due to property maintenance, vacancies, bad tenants, etc.

kathrynd

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #25 on: September 16, 2015, 08:24:09 AM »
When I was employed I made 30K gross.
My husband was the SAHP for 3  teenagers (4th child was now on her own)
We started buying properties in 2004, and now own 40 rental units.
I quit employed work in 2010, and we live solely on rent.

We still have a few mortgages, but in 10-15 years, they will be all paid off.

We have always lived on a small income very comfortably. Except for having all the bills paid off, there is nothing materialistic that we want for.
We look after the maintenance and everything else for our properties...and we enjoy it.

You can never be sure of the economy, so always have a buffer, or at least credit you have access to, if you decide to quit your employed job.
For us, we did a trial year before I quit work...where we didn't touch my paycheque.

shzm93

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #26 on: September 27, 2015, 03:33:18 PM »
This thread is very helpful!

My husband and I have one duplex that we make about $2,000 off of, but after the mortgage, property management fee (we only have this temporarily while we're living out of the country; we'll be managing our properties on our own once we come back), and maintenance we are able to put about $600 of that toward saving for more properties. We are in the process of buying a single-family home right now that we'll hopefully make about $1,500 off of (after the mortgage we'll profit around $400, I believe). Our goal right now is to work on paying down the mortgages, and to put ourselves in the position to buy another property in late 2016. Oh, and to save up money for repairs to the duplex, since it's sort of ghetto, haha. We could live on very little rental income since we don't have kids and we're both fine making sacrifices to save money...but it'd be nice to get to the point where we're profiting around $4,000 from our properties each month. We're working on that goal :)

NoNonsenseLandlord

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #27 on: September 28, 2015, 06:44:56 AM »
This thread is very helpful!

My husband and I have one duplex that we make about $2,000 off of, but after the mortgage, property management fee (we only have this temporarily while we're living out of the country; we'll be managing our properties on our own once we come back), and maintenance we are able to put about $600 of that toward saving for more properties. We are in the process of buying a single-family home right now that we'll hopefully make about $1,500 off of (after the mortgage we'll profit around $400, I believe). Our goal right now is to work on paying down the mortgages, and to put ourselves in the position to buy another property in late 2016. Oh, and to save up money for repairs to the duplex, since it's sort of ghetto, haha. We could live on very little rental income since we don't have kids and we're both fine making sacrifices to save money...but it'd be nice to get to the point where we're profiting around $4,000 from our properties each month. We're working on that goal :)

What is your rate of return?  It sounds like you make very little for what you have invested.  You are probably better off paying off a mortgage, than buying a new property.

savingstldad

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #28 on: September 28, 2015, 02:00:31 PM »
I think she's saying that with $2000 gross rents, she's taking 600/mo profit after all expenses.  I'm not sure how much was paid originally for the property, so couldn't say if the ROI is good or not.  But with 2000 gross rents, paying P&I on a mortgage, property managers, vacancy, maintenance costs, etc, 600 a month sounds about right.

Setters-r-Better

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #29 on: October 12, 2015, 01:13:12 PM »
I closed on property #1 yesterday.  Very exciting day for me!

The previous owner replaced the roof, new furnaces, new plumbing, etc, in the last 2 years, so hopefully maintenance costs will be low for a while.  I plan on fixing things as they break.  The variable nature of rental income could make it harder to FIRE, because it's difficult to count on monthly rents due to repairs, vacancies, etc.

I wonder how much income I can actually count on to live off of when costs can vary so much due to property maintenance, vacancies, bad tenants, etc.

We're not quite sure yet either since we're very early in the journey. Ironically, once we have enough real estate income to support a family, I'm pretty sure our family will be grown and moved out on their own! More realistically, we could probably get to replacing 50%-100% of one of our incomes and rely on that in case of job loss. Though our kids are pretty old...if you have no kids yet or very young kids this would be a different story.

The larger number of units you have, the more smoothed out vacancies will be. For example, if you have 3 units, one vacancy is a big deal, but if you have 20 or 40 units, probably at least one will be vacant all the time (or for some period of time) during a year.

My super super rough calculation that I do sometimes is to take a number (representing equity in leveraged properties or fully paid off properties), say $500,000 and multiply by 1% (amount of rents we will collect each month if we stick to 1% rule when buying properties) and multiply that by 50% (rule assuming 50% of rents will go towards expenses: taxes, insurance, repairs, maint), and that what is left is what we would keep.

So:
500,000x.01x.5 = $2500/month = 30,000 /yr (could go a long way toward supporting a family, easily support an individual)
$1,000,000x.01x.5=$5,000/month = $60,000 yr

The goal is to of course find properties renting for better than 1% if possible and to try and keep expenses low (without counting deferred maintenance as profit when it's not). I think the calculations above would be pretty conservative, and I'd be interested on hearing others thoughts on them. I think they would be a rough guide to the income you can "count on".

Then the question becomes how long will it take us to get to $500,000 in equity? (or whatever your goal is that you have backed into.)

concealed stache

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #30 on: October 15, 2015, 01:01:37 AM »
My 24 rentals cash flow like a madman.  Most are paid off.  I have three mortgages, and one of those will be paid off in a year. 

I manage and maintain the properties myself.  My vacancy is ~2.5% in the past few years.  They produce well over $10K a month.  By doing the managing and maintenance, I probably produce an additional $40K+ in income/cash flow/savings - call it what you want.

I need about 1/3 (or less) than they produce to live on.  Never forget, rental property income is subject to change.  A major bad tenant can cost > $10K, if you include vacancy and fix up costs.  Rents could go down, maybe even by 10%.  Adding an extra month of vacancy between tenants will lower rents by 10%.  A rental license that does not get renewed.  Or a crime next door could devastate you.

You need to have a solid financial cushion.  And never mistake deferred maintenance for profit.

All the things that keep me awake at night! I think the paid off element you have makes a big difference to the "quality" of numbers you can produce. I have ~3x as many units but my net monthly cashflow is slightly less than yours - so yes, I am running some pretty considerable leverage (making some wild assumption that the type of units we have are roughly comparable).

When you get the thin margins that naturally result from this kind of setup, a change in circumstance of the kind you mention above can be pretty serious. I used to worry every time a tenant moved out that I was going to be heading for negative yields, whereas someone with a paid off portfolio might have to just resign themselves to one or two less beers every now and then. Having said that, having a broader (diversified) portfolio does smooth the bumps and knocks of people moving in and out and the inevitable repairs (but not of course market-wide risks), so it's not all bad. And my general paranoia about the leevrage means I am even quicker than I'd otherwise be to identify and correct any kind of issue before it develops into a serious threat.

Because of the weakness of my leveraged rental cashflow relative to yours, despite the fairly similar nominal amounts, I don't consider it sufficient to retire on, though it comfortably covers my costs. Pushing the leverage down, and continuing to accumulate other, uncorrelated (or less correlated) assets including all the usual MMM favourites is the project that needs to be completed before I can feel secure.

TL;DR: in my view not all cashflows are equal - rental cashflow that relies on leverage is much more vulnerable to a change in circumstance.

sammybiker

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #31 on: October 15, 2015, 04:28:25 AM »
Solid post @concealed stache

bluestone

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #32 on: October 16, 2015, 08:22:15 AM »
I have been putting off systematically trying to answer this question myself. On the spreadsheet, I can FIRE, but past bumps in the road tell me otherwise. In addition to  NNL's concerns that I've duly noted, what keeps me working is that I can imagine major repairs, insurance deductibles, property tax increases might come up all at once.


zinethstache

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #33 on: October 20, 2015, 02:22:12 PM »
We have 3 multi's. The net (and I do mean official net) income covers all of our living expenses minus our current mortgage.

At the start, DH had that elusive 10k gross income in his head - we even put it on our business plan, front and center. We are getting close to that now at $8100. He still cannot believe how fast it was to get there. We made some fantastic purchases with huge leaps in rent as well as appreciation.

I do plan to use SEPP to have early access to my 401k because once these properties are paid off we will be making serious bank. We are in our late 40s.

For retirement, we plan to MAGI around 30k for tax purposes for ACA (hoping it wont change a bunch in the next few years... We will have a built in cushion of about 1k/mo. extra between rental and SEPP income. - I have a pretty serious side gig I am not including in these calculations, I might not do much of it since I will be retired after all.

Our big move is literally to move. We will sell our clown home, to buy one last multi. While I work we will live in one unit, with plans to rent out our unit when we hit the road in the RV. When we are done traveling we can decide where to live.

During RV time our expenses should be the lowest, we will save all we can. Our income will also be the highest. The RV will be sold upon return and perhaps we can purchase a small SFH for ourselves with a big down payment.

In today's $$ our RV traveling expenses will be $3k. Our net rental income will be around 4k and my SEPP around $1.2k. Savings planned to be at $75k - with rentals you need a large savings fund, we don't want to be caught in a bind with no cash. We will also likely Heloc our primary residence multi before we head out as back up, backup money just in case.

I believe our plans are sound. We both plan to keep our job skills current in the event we need to utilize them. Both our skills can be used for part time work as needed. DH keeps his journeyman commercial electrician license active and I am in IT doing enterprise websites with some side gig web clients. My side gig is not related to web work, it involves some very crafty skills I have that folks will pay good money for. I prefer doing crafty stuff only when I want to, not because I have to.

Great thread, am avidly reading all responses!

note: we bought our first rental in 2012.

We already have a PM in place, we have calculated the extra maintenance fees in our estimates. Currently DH does most of the maintenance.

I cannot stress enough that owning rentals is a money/time sink that cannot be avoided. It isn't time consuming but it IS time sensitive. We just had to forego camping last weekend because there was a backed up sewer line at a property. DH fixed it (in about 3 hours time) but wanted to stay home in case there was another call. We were relieved to NOT be called, but our time is not 100% our own. When we long term travel, we will pay for services and will stress about them of course. Watching the work eat up our living money, THUS our very large emergency fund.



arebelspy

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #34 on: November 01, 2015, 03:04:59 AM »
Quote
How much rental cash flow is enough for you to FIRE?

I ask myself this question every time I review my spending (a fair amount when first discovering FIRE, very little in the years right before FIRE, and a fair amount again now after FIRE).  :D

Total monthly gross rents of about $12,300.
Total monthly P&I (some free and clear properties, and on the others we are purposefully not paying down mortgages for the inflation hedge) of about $1,500.

Plus some note income.

FIRE'd earlier than planned, so we'll see if it's enough.

Net income, like everyone says, varies, so actual annual income is an unknown.  Our spending is unknown now (full time traveling the world + kid on the way).  If the net income is high enough, and spending low enough, we should be good.  If the former too low, or the latter too high, we'll make some more money doing stuff.  I'm not too worried either way.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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monarda

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #35 on: November 01, 2015, 07:48:32 PM »
Quote
How much rental cash flow is enough for you to FIRE?

I ask myself this question every time I review my spending (a fair amount when first discovering FIRE, very little in the years right before FIRE, and a fair amount again now after FIRE).  :D

Total monthly gross rents of about $12,300.
Total monthly P&I (some free and clear properties, and on the others we are purposefully not paying down mortgages for the inflation hedge) of about $1,500.

Plus some note income.

FIRE'd earlier than planned, so we'll see if it's enough.

Net income, like everyone says, varies, so actual annual income is an unknown.  Our spending is unknown now (full time traveling the world + kid on the way).  If the net income is high enough, and spending low enough, we should be good.  If the former too low, or the latter too high, we'll make some more money doing stuff.  I'm not too worried either way.

Great to hear ARS!! How long has it been for you since FIRE again?  And congrats on the kid! (must have missed the thread where you announced).

I did the 'practice FIRE' from June until last week. Didn't have to dip into savings... and took two nice vacations. So that's a good sign.  Got a fun new job that I just started a few days ago, so I can get back to my savings schedule (and health insurance is paid for once again!), but it seems that our rental income is really pretty much almost enough.

arebelspy

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #36 on: November 02, 2015, 04:47:29 AM »
Great to hear ARS!! How long has it been for you since FIRE again?  And congrats on the kid! (must have missed the thread where you announced).

Thanks!  FIRE'd in June (FIRE'd thread, baby thread).

Quote
I did the 'practice FIRE' from June until last week. Didn't have to dip into savings... and took two nice vacations. So that's a good sign.  Got a fun new job that I just started a few days ago, so I can get back to my savings schedule (and health insurance is paid for once again!), but it seems that our rental income is really pretty much almost enough.

Nice.  Three months is obviously a short time frame to tell anything from, but if your cash flow was covering your expenses, plus you were putting away all the necessary money for the lumpy bills (like property taxes and insurance) and putting away money towards long term capital repairs, and to cover vacancy months, etc., and you have healthy reserves, that should do it, I'd think.  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

zephyr911

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #37 on: November 02, 2015, 08:44:33 AM »
I'm planning on about $3K in rental income when I pull the plug. Assuming I've successfully reduced costs below that amount, the stock investments will just represent a fat safety margin.

The comments on cash reserves and overestimating costs are key points. Expensive surprises are inevitable; deadbeat tenants do occur with some frequency.

savingstldad

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #38 on: November 06, 2015, 02:02:50 PM »
You have achieved what I think my end game is, which is about 10k/mo in rental income (above and beyond expenses)

Quote
How much rental cash flow is enough for you to FIRE?

I ask myself this question every time I review my spending (a fair amount when first discovering FIRE, very little in the years right before FIRE, and a fair amount again now after FIRE).  :D

Total monthly gross rents of about $12,300.
Total monthly P&I (some free and clear properties, and on the others we are purposefully not paying down mortgages for the inflation hedge) of about $1,500.

Plus some note income.

FIRE'd earlier than planned, so we'll see if it's enough.

Net income, like everyone says, varies, so actual annual income is an unknown.  Our spending is unknown now (full time traveling the world + kid on the way).  If the net income is high enough, and spending low enough, we should be good.  If the former too low, or the latter too high, we'll make some more money doing stuff.  I'm not too worried either way.

arebelspy

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #39 on: November 06, 2015, 02:14:47 PM »
You have achieved what I think my end game is, which is about 10k/mo in rental income (above and beyond expenses)

That's gross I posted, not net, and thus doesn't take into account the many, many expenses real estate has.  :)

But it's enough for us, I hope.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

sammybiker

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #40 on: November 08, 2015, 03:44:24 AM »
Great update ARS and congrats on the upcoming little one!

arebelspy

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Re: How much rental cash flow is enough for you to FIRE?
« Reply #41 on: November 08, 2015, 08:50:38 AM »
Thanks!
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.