If I had to choose: six figure job or 6 mill dollar rental portfolio?

[Bengal]

Early 40's, male, 4 mil net worth. I expanded my rental portfolio a few years ago by cash out refinance and tripled my holdings. I'm in a very HCOL area, these are equity properties. During the boom years, I was gaining 500-800K a year in appreciation, cash flow and principal paydown. Now it's maybe 300K a year until rates drop again. I just started investing in stocks a couple years ago too and am starting small before I put in 7 figures into the market, so there is other investment income too.

I've slowly scaled back my career, from well over 300K to about 170K. I'm getting tired and wondering, if I had to choose between my rentals or my career, which should I choose?

My thoughts: keep the rentals longer. I have cash and can turn it into cash flow while rentals build me wealth tax free, and eliminate any income so that I qualify for ACA subsidies. I figure the rentals make me more, do it tax free, and are part time vs the full time job. I also can't be fired from my rentals...long term, they are the better play IMO.

[achvfi]

Its reads like you already won. Now, honestly you should only do what you really want to be doing going forward. I mean you should start getting rid of work you don't like, it doesn't matter if it is rentals or your job.

You seem to be thinking in right direction diversifying your portfolio into stocks (Hopefully diversified portfolio of funds with major portion of portfolios) and other investments.

I figure it is hard for some of us not to optimize every aspect of finances, but at some point you can afford to pay taxes or not get subsidies. and not let them impact what you want to do with life.

[Bengal]

Its reads like you already won. Now, honestly you should only do what you really want to be doing going forward. I mean you should start getting rid of work you don't like, it doesn't matter if it is rentals or your job.

You seem to be thinking in right direction diversifying your portfolio into stocks (Hopefully diversified portfolio of funds with major portion of portfolios) and other investments.

I figure it is hard for some of us not to optimize every aspect of finances, but at some point you can afford to pay taxes or not get subsidies. and not let them impact what you want to do with life.

Right, but as I noted, the rentals pay WAY more than the job now, and are very part time compared to the job. I'm trying to coast, but between the BS and just not caring about dealing with ridiculous stuff I don't have any interest in anymore. I went through a background investigation withi a 6 hour interrogation by a woman who made $22 an hour...she asked me if I'm financially stable. This was the person investigating me....

[Archipelago]

Dude, you have $4 million dollars. At this point, money doesn't matter. Go and get your best life.

[Bengal]

It's not quite that simple. I have another post on here as to why. I will only have enough cash flow if I pay off my house or put money into JEPQ. Plus real estate has seemingly never ending expenses.

[achvfi]

I think you need to take a step back. Post the break down of assets, liabilities here or ideally in a case study format. That helps people understand your portfolio story and offer any feedback. 

The ETFs you are using are not diversified. They JEPQ and VGT are very close to same portfolio. Except JEPQ sells stock every month to give you cash dividend. Likely incurring taxes on the forced sales (dividends) every month.

Having a larger percentage of portfolio diversified in equities and bonds will give you liquidity you need. While maintaining rental portfolio. That likely depends on selling some of the rental portfolio.

Think hard before paying off low interest mortgages unless you are selling of rental portfolio. That is usually a bad idea.

[achvfi]

Here is the link on how to write a case study.

https://forum.mrmoneymustache.com/case-studies/how-to-write-a-'case-study'-topic/

[maizefolk]

It's not quite that simple. I have another post on here as to why. I will only have enough cash flow if I pay off my house or put money into JEPQ. Plus real estate has seemingly never ending expenses.

Perhaps you're asking not quite the correct question. You already know which of the two options you proposed is the one you want to do. The problem you're facing is how best to pursue that option (quit working and live off your real estate portfolio).

If you want advice on how to make it happen, I echo achvfi's advice to write up a full case study.

[Archipelago]

It's not quite that simple. I have another post on here as to why. I will only have enough cash flow if I pay off my house or put money into JEPQ. Plus real estate has seemingly never ending expenses.

You have $1.2 million in cash, $50k/year in cashflow, $62k/year in principal paydown, something like $3m in RE equity + stocks, and you're on a frugality forum asking whether you have enough money?

You don't have any reason to be concerned about money my man. That's why my first post was 'simple'.

Maybe take a trip somewhere, touch grass, come back and realize you could've quit your job years ago? Idk, that's what I would do. I'm not sure what other advice people here can offer.

[Laura33]

So it's not really either-or, is it?  You're not choosing between a job and a rental portfolio.  You are asking whether the latter is big enough to allow you to allow you to walk away from the former.

Which also means that you haven't told us enough to answer accurately.  It's great that your RE is generating tons of appreciation -- but that's not cash in your pocket.  It's great that your RE is throwing off more income than your salary -- but, again, until you account for expenses, there's no way to tell whether there is enough net income to cover your expenses.  A $6M RE portfolio is absolutely fantastic!  But if it's getting you only a 1% return, and your expenses are twice that, then it's still not enough to meet your needs.

If you want helpful advice, you need to do a full case study.

[TimCFJ40]

You need to lay out your life goals, lay out your assets and liabilities, and then decide how to make your large pool of assets work towards your goals. 

4 Mil net worth should allow you to do anything within reason with regards to FIRE with some restructuring.  Want to quit your job AND get rid of the hassle of the rentals?  You could probably do that unless your lifestyle spending is really high. 

I'm sure with more detail, many folks here could give you suggestions on what they would do in your situation, but they might not have the same goals as you.  What do YOU want to accomplish?