Author Topic: RE vs SM safe withdrawls  (Read 512 times)

aajack

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RE vs SM safe withdrawls
« on: March 25, 2018, 03:47:48 PM »
Hi all,

First of all, I am sure this question has already been asked and answered, so sorry to post on this, but after looking around this forum for 3 hours I am giving up:) If someone knows where this has already been addressed, I would love to see a link!! (thanks!!).

That said, I have a question regarding safe withdrawals across different asset classes.

Here is my question. Let's assume you find a 1% deal on a 100 k house. This should give you a cash on cash of 6% (I'm keeping very general numbers here, just using the 50% rule).

Of course, if you follow the "conventional" SWR for index funds, you can only take 4% at most.

I'm sure everyone sees where my question is going. Does RE give you an extra 2% withdrawal? To RE investors out there already doing this - especially if you've been doing this for a while - do you feel confident living off of your 6% post expense&mortgage rental income?

I did find the "Real Estate Returns vs Stock Market Returns: the maths" forum started by ARebelSpy and that was interesting. I suppose that over long time horizons the market might end with a higher total value, but if I can have a 50% (4% to 6%) increase in my safe withdrawal rate TODAY I will gladly trade that for the potentially larger balances in 50 years.

Input and links to where this has already been discussed ad nauseam (as I'm sure it has) are very appreciated!!!!! Thanks!!!

Allie


SeattleCPA

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Re: RE vs SM safe withdrawls
« Reply #2 on: March 25, 2018, 05:24:05 PM »
This theoretical (but data based) comment from someone who always emphasized economical stock mutual funds (so not a real estate fanatic by any means):

I think you can use a higher withdrawal with real estate once you have multiple properties.

The rationale: You should be able to get just as good a return with real estate... but with less volatility.

We discussed this subject quite a bit in this thread:

https://forum.mrmoneymustache.com/real-estate-and-landlording/rate-of-return-on-everything-a-150-year-history/50/