I'd like some feedback on this scenario and it's potential advantages and pitfalls. I'm currently on track to fire in 10 yrs at the age of 45. My stache will be about 1.5 M at that time and with a 4% withdrawal rate throwing off 60k a year my basic expenses will be covered. I also have a rental property that will be paid off at that time that will cash flow 20k annually, all of which will be above and beyond my basic expenses.
I'm considering purchasing another rental property. To purchase that property my stache will decrease by 100k today, thus causing the ending balance of my stache to decrease to 1.25 M at the time of FIRE. At a 4% withdrawal rate I'd be pulling in 50k off of that, but the additional rental property can make up most of that annual 10k shortfall (net of expenses) even if it's not paid off. Thus leaving me with about the same income, just distributed differently with more in real estate.
I'm considering doing this for the purposes of taking advantage of depreciation deductions and mortgage interest deductions to reduce my AGI to lower my FIRE taxes and possibly qualify for health care subsidies in whatever form they exist at that time. I'd even consider doing a 1031 exchange on the 1st rental property to reset the depreciation with a new property.
Is there anything I'm missing that I should be considering? Thanks for your thoughts.