Is this a wise or foolish MOVE financially? (Downsizing)

[HAL9000]

By move I mean the figuratively and literately. This thread is asking, is the following a wise financial plan?

I have developed what I think is an aggressive FIRE plan. It combines creating assets to fund retirement with rental properties and a stock portfolio.

I currently own a large house on a sizable piece of land, unfortunately the house also came with a large mortgage. We like the house and the features it provides, but on the scale, achieving FIRE weighs more. If we stay in the current home, even with significant additional principle payments each month, it will take 10 years to pay it off.

I have run the numbers and feel the following plan would be in my families best interest in the long term to achieve FIRE.

1. Sell the large current home.
2. Purchase 2 townhouses, rent one and move into the other.
3. Live in townhouse until its paid off. (3 years) (We are a family of 5, so the townhouse will be tight for us, but I have buy in from everyone due to the fixed living window of 3 years or less)
4. Move out of townhouse and purchase larger home, but smaller than original sold home. (In essence sacrifice living room for 3 years to jump start the FIRE plan)
5. Use income from 1st paid off townhouse to accelerate the payoff of 2nd townhouse. (5 years)
6. Live in new home and make additional principle payments to pay off mortgage. (6 years)

The mortgages I would be getting would be 15 years or less and I would be paying significant amounts on the principle each month.

The end state would be to have after 9 years, 2 fully paid off rentals and primary residence.

I have calculated that after the 9 years of executing on this plan, my stock portfolio, combined with the rental income, and a paid of primary residence, I would get to 85% of my income needs. Living expenses are $43k a year. I am Ok with the other 15% coming from misc sources (side jobs) including exploring creative ways to cut living expenses.

[deborah]

Firstly, how much does it cost to buy and sell where you live? It costs a significant part of the price here, which encourages people to buy and hold.

Secondly, in most places you can reduce your tax by including the costs of earning the income - in this case rent from the rental property, so it may make more sense to pay off the rented townhouse first, because the interest will still be deductible on the other townhouse when you cease to live in it.

Thirdly, you may not want to pay off the principle - if you have an offset account on the townhouse you live in, you put the money in that, and then take it out to buy the new house - your payments would still be smaller while you are living in it.

This is just one example how you might be better off with different strategies - it depends upon the sizes of the loans, your income, and the tax implications of different methods of payment in your country.

[HAL9000]

Firstly, how much does it cost to buy and sell where you live?
Phoenix, AZ
All % based on purchase price.
4-6% agents commission (neg.)
1% for closing costs
.5% for moving costs

Secondly, in most places you can reduce your tax by including the costs of earning the income - in this case rent from the rental property, so it may make more sense to pay off the rented townhouse first, because the interest will still be deductible on the other townhouse when you cease to live in it.
I am assuming you are referring to federal income tax? It is my understanding that all loan interest from any property you own, rental or primary is deductible in aggregate. Please forgive me, but I do not see your point.

Thirdly, you may not want to pay off the principle - if you have an offset account on the townhouse you live in, you put the money in that, and then take it out to buy the new house - your payments would still be smaller while you are living in it.
Offset account? As in put the money you would allocate to principle into a savings account. I could see doing that, but what is the advantage?

This is just one example how you might be better off with different strategies - it depends upon the sizes of the loans, your income, and the tax implications of different methods of payment in your country.

I have not thought to much about the tax strategies, I am more looking at this from a higher level in that, does the greater strategy of downsizing with an interim stay in a townhouse make sense.

Would it appropriate to share the financial details?

[shuffler]

This thread is asking, is the following a wise financial plan?

You haven't given us enough information to begin to analyze it.
You seem to think that buying townhouses is a better place for your money than other investments (like an index fund, for example) would be.  But is that really the case?  We can't tell, because you don't give any numbers or projections.