Can I retire like this? (3.2 million net worth)

Seattle, Washington
General Real Estate Investing
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Can I retire like this? (3.2 million net worth)

Jack B.
Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes

Background:

I just turned 40. My net worth is 3.2 million. 1 million liquid cash, the other 2 million is equity in my houses including primary residence and rental properties for a total of 8 properties. Cash flow is about 30K a year because I cash out refinanced a couple years ago to buy more properties with the equity rather than using cash on hand. Real estate has been my bread and butter, it's how I made my 3 million. At this point, I make 1 million a year off of it (appreciation, cash flow and principal pay down). Again, I make 1 million a year off appreciation and such when the market is good, which is most of the time...factor that in.

I was planning on buying two more houses with a total of 300K down to ride the appreciation wave long term, two more houses that will be paid off when I'm older, etc. I had planned on retiring at 40 with 1 million, this was the plan I made when I was 30. Now I have three times that but life is more expensive and complicated than it was 10 years ago. 

My living expenses:

Because I rent out part of my house, I mostly live for free housing wise. Outside of that my living expenses as far as base are 1K, but realistically 2K. That includes money to date, buy a trinket here and there, etc. To be really comfortable I'd like to have 4K a month passive income in retirement. With a paid off house, in a low property tax state, utilities, taxes, maintenance, insurance should round up to 1K. That leaves 1K for gas, car insurance, food, incidentals, internet, phone, etc. So that brings me up to 2K per month. But I'd like another 2K buffer as I have occasional rental expenses such as repairs, appliances, etc. plus I date a lot and when in a relationship we have a tendency to travel. I've been to Tampa and Orlando 4 times in 3 years with 3 different women (one of them twice). 

The why:

I'm tired of working and life. I've had many recent heart breaks and I don't want to work anymore. I haven't wanted to work for a long time but now I'm really done. I had two health scares and almost died at 29 and 34, I'm not promised another day. They say stress causes cancer. I've worked so hard, MBA, 18 career certifications that were hard to get, own and manage rentals, two full time tech management jobs, two part time jobs. I've been working so hard. To top it off I've had a series of failed relationships last few years. After having a long period of stability with one girl for 9 years, I'm an emotional mess, dating is getting harder as I get older, the women are not as good looking and all seem to have baggage/issues. After a recent life assessment I did, I realized everything in my life that I worked toward came to pass. But my relationships are rocky. I'd like to take time and heal, grow and find a life long forever girl. One that stays. Even through the bad.

How I'm thinking of doing it:

-Relocating from WA to a cheaper part of Texas, Tennessee or Florida. With the equity of my primary residence, I should be able to buy a paid off house for cash. That will drastically reduce my living expenses.-Take 1 million cash and put it in index funds or split between Apple, Tesla, Amazon, Google and Microsoft and live off 3% withdrawal rate of about 30K a year. Supplement that with rental income from properties as is, which is about 24K a year cash flow.

OR....

-Still relocate, but cash out refinance 1 million out of the houses before retiring. Between living off index funds and 1 million pulled out of the houses, that money should EASILY last me 10 years, realistically 15-20 years. By then the rents will have risen enough that they will cash flow enough I don't have to cash out refinance anymore for money to live off of. There are some people who do the cash out refinance thing every few years to live off of. Bonus is that it's tax free, it's a loan so not taxable income.

OR....

-Still relocated, use the 1 million to pay off 3 of the rentals, which should give me about 6K a month cash flow plus another 1K from the others that are still mortgaged. Move into a paid off house and retire. I like this because I've always lost my money in the stock market no matter what I've done. Options, swing trading, day trading, index funds, you name it. But real estate I've always made money. It's how I made my 3 million. At this point, I make 1 million a year off of it...so in a year I'll be worth 4 mil, in 2 years 5 mil, etc. At that point I could really retire without worrying. Maybe I hold off for now and grind a little longer. But two full time jobs, two part time ones, 8 houses and all the studying has really worn on me. Add to that endless heart ache from relationships last few years and I'm emotionally done. I want to destress and go live. 

Some problems with this:

If I move to FL, TX or TN, I'll be too far to manage the properties. My best friend will move with me but he said his parents could help out. So far I've been doing ok with video tours and hiring contractors lately. Not cheap but way cheaper than a PM. Liquidating them and moving them is risky as I may move somewhere else if I don't like it, or move back. But the properties make it very difficult to relocate since they are easier to manage locally. If I hire a PM, all my cash flow is basically gone.

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JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
4y

Thoughts:

1. If a PM kills your cash flow then I assume the bulk of your income is made from appreciation, with a smaller amount made from mortgage paydown.

2. I live in one of the cheapest states there is (TN) and it would be a tough road at 4k even with a paid-off house, if that 4k had to also account for the needs of the properties owned. Now if the 4k was just for your expenses, with a paid-off house, you could do that here. So you'd need to get the "business" to be self-sustaining first. 

3. While appreciation is where you make a lot of your worth, cash flow is what feeds you. Your portfolio sounds upside down for your ultimate goal of retiring early and living off the cash flow. A $3 million portfolio that only generates $30k in cash flow annually isn't even returning half a percent; if it was a single multi-family with that kind of cap rate you wouldn't be able to unload it on anyone. 

4. Here in TN the only health care is the federal marketplace outside of your job, if you're not so poor as to qualify for medicaid. The religious "health care" you're referring to is a health-sharing plan and independent studies of them generally rate them as garbage. So I wouldn't count on that for health care; you're best off going through the ACA marketplace.

It sounds like you've generally kicked ***, and nothing wrong with wanting to enjoy the fruits of victory. I recently retired myself, and I'm still a relatively young guy in my 50s. Based on what you have here and my limited knowledge of your situation, and that you don't mind moving, if it were me I would probably: sell everything but perhaps one of the strongest appreciating properties, pay that one off so you could hire a manager when you move, move to a cheaper state, 1031 most of the rest of it into better cash-flowing properties. $3 million worth of portfolio, even in today's ridiculous priced market, ought to be able to generate you $150-200k worth of cash flow a year, and that's certainly enough to retire more or less anywhere in the US. 

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  • Paul Marthaler
    Rental Property Investor · San Diego, CA · Member since 2015 · 21 posts · 46 votes
    4y

    Jack; the best advice I can give you is NEVER EVER put so much private information out on the web...ever!  Don't discuss your net worth nor your life situation with anybody you don't know and confide in. It's one thing to speak in generalities, but the universe should not be aware of your personal life.. you are setting yourself up for  scammers to prey upon your state of mind and there are plenty out there who will take advantage of you.  Last piece of advice, with your net worth, time to move on and quit renting your personal residence out to roommates.... especially if you are dipping into the dating scene... While you may attract a couple cougars, most women will run as fast as they can.

    4Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    4y

    I havent ever had a job , I have an adventure . Sure I work and invest . BUT I love what I do . ( I am a contractor )  . You have a good nest egg . But not enough to just sit back . You would get bored , fat and lazy .  Challenge yourself .  Learn something new , and run with it . 

    Take a break , take a 6 month road trip , check out other areas , you never know what you may find 

    I told my wife the day I hate my job , I will stop , but I wont quit . I will find something else to do . 

    2Reply
  • William Coet
    Lititz, PA · Member since 2013 · 595 posts · 272 votes
    4y

    If you think your net worth is going to increase by 1 million a year and it will be 5 million in two years, then where is the problem here?

    0Reply
  • Troy GandeeBusiness Member
    Real Estate Broker · Charleston, SC · Member since 2013 · 795 posts · 454 votes
    4y

    @Jack B. You're going to get a lot of silly opinions here and very little actual advice. I understand your dilemma. I'm super burned out from these last 2 years. I'm very grateful for the business, but these last 2 years were the first time I ever really thought about HOW or WHEN I would retire. I'm no way near that point yet, but it's put the gears in motion for certain goals so I won't have to stretch to reach those goals at the last minute. I'll never totally stop working, but I want to get to a place where my passive income completely eliminates financial worries.

    I personally would probably take the 3rd option that you seen preferential to. Relocate to a LOC area, but be very careful where you choose. You will want LOC but make sure it's a place you'll really LIKE living. It's already a big move, so make sure your anxieties are lessened by LOVING where you move.

    With a primary and couple of rentals paid off, you'll always have the ability to access cash or sell an asset if it's a really dire situation. You could even go ahead and get a HELOC on the primary so you have a safety net if any huge emergencies arise. I'm sure you won't be 100% out the door with active income opportunities because you're young. You'll probably get bored and maybe do some consulting, contracting, part time stuff, etc. That'll help with income and keep your mind occupied. You'll likely keep investing, as well, but maybe with less stress since you'll be in good shape financially. Almost more of a hobby and will continue to keep your balance sheet growing. I know a few guys who have done this. They're all set and don't need to keep investing, but they do it periodically just because they like it.

    I personally just dislike the stock market. I've never been much good in those waters. If you're like me, then I would avoid that route. The stakes are too high for you at this point to let the market erase your net worth.

    0Reply
  • Timothy BorgPro Member
    Member since 2018 · 85 posts · 24 votes
    4y

    You seem like a doer.  You keep moving all the time.  Before you make any big life decisions maybe take a leave of absence from work for 2 or 3 months and recharge your batteries.  You can always quit later and move across the country.

    0Reply
  • Michael Haynes
    Investor · Tampa, FL · Member since 2016 · 681 posts · 288 votes
    4y

    Hello Jack B. What a long post...I am in Macae, Rio de Janeiro, Brazil for the first time in 9 years after the 2008 Collapse of the US Economy, Hep C and the new cure, almost dying from the tumor on my liver that showed up four years later and was not discovered by all my Primary Physicians, my Oncologist sitting on my bed when they were pulling the tubes out of my throat to see if I was waking up as a vegetable...the only thing she said was, "you need to get your affairs in order...you have three years to live." Three years later and with Covid and one Resection of the liver and two small Ablations, I am back to my six paid off properties, getting everything in order to Sell. Down here they say, "you are crying with a full stomach." I need Time to get this done and my Surgeon is giving me Hope as we do an MRI or CTScan of the liver etc. every six months and because it is a slow growing type of Cancer, I can hopefully not have another spot start or Ablate it if it does like a Dermatologist treating skin cancers. I am 73. Your lucky to be young and almost have all your ducks in a row. What you are asking for is a Life Coach and since you are bigtime into Real Estate, you should look at all the free youtube videos by Del Walmsley. Start with "Story About Del Walmsley's Real Estate Mentor." I used to work in shipyards and ended up on Oil Tankers with a Union. Haven't had a JOB since 1999 as I learned how to make $100,000 with Mutual Funds when I was shipping, to buy Duplexes and Houses in S. Tampa 30 years ago. I also taught myself to trade Stocks, Options on Stocks and Futures which is what I do each morning on my laptop. I can make from $100 to $500 an hour scalping the ES Future for two hours and then go to lunch. I just tried it out with my friend Wifi in Macae and was making money right away. My Internet Security friend who retired from 35 years with Petrobras, called me last night and he wants me to sell my houses and farm in Macae and move outside of Joao Pessoa to raise shrimp and fish with him. "Anything you do in Brazil with Fish is Tax-free." Same with properties if you Sell today and invest in another property within 90 days, it is Tax-free. Every Country and State and town has their list of things you can invest in that are Tax-deferred or Tax-free. You can also get up to 12% a year with Monthly Dividend Covered Call ETFs. look at QYLDgang.com or go study with Average Joe Investor on youtube and get all of his lessons for free. Right now Real Estate is at the Top of the Cycle and you could Sell everything and consolidate after you do some studies with someone like Del. Remember, Real Estate is Location, Location and no one every says, "What about the view?" I used to surf in Santa Cruz, CA. My home in Macae is on a hill, across the highway from Praia do Pecado, or Sin Beach, the surf beach next to a three mile lake on the beach with three Islands offshore in the Petroleum Capital of Brazil. You can go to youtube and find really beautiful videos of anyplace you think to move to. Never buy anything that you would not live in and at this point find all the short cuts to free up the Time you have to live a good life. God bless. 

    0Reply
  • Kar Sun
    Member since 2021 · 402 posts · 277 votes
    4y

    1 million in liquid cash on hands is not a good thing. With the exiting inflation at about 20% or more (not 5% or 7% in official statistics) you are losing in purchasing power. Unless you are a business required to have cash reserves I would never recommend an individual to have this much cash, especially now. I have a few doubts about your story. Being 40 is not like being 20.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    4y
    Quote from @Michael Haynes:

    Hello Jack B. What a long post...I am in Macae, Rio de Janeiro, Brazil for the first time in 9 years after the 2008 Collapse of the US Economy, Hep C and the new cure, almost dying from the tumor on my liver that showed up four years later and was not discovered by all my Primary Physicians, my Oncologist sitting on my bed when they were pulling the tubes out of my throat to see if I was waking up as a vegetable...the only thing she said was, "you need to get your affairs in order...you have three years to live." Three years later and with Covid and one Resection of the liver and two small Ablations, I am back to my six paid off properties, getting everything in order to Sell. Down here they say, "you are crying with a full stomach." I need Time to get this done and my Surgeon is giving me Hope as we do an MRI or CTScan of the liver etc. every six months and because it is a slow growing type of Cancer, I can hopefully not have another spot start or Ablate it if it does like a Dermatologist treating skin cancers. I am 73. Your lucky to be young and almost have all your ducks in a row. What you are asking for is a Life Coach and since you are bigtime into Real Estate, you should look at all the free youtube videos by Del Walmsley. Start with "Story About Del Walmsley's Real Estate Mentor." I used to work in shipyards and ended up on Oil Tankers with a Union. Haven't had a JOB since 1999 as I learned how to make $100,000 with Mutual Funds when I was shipping, to buy Duplexes and Houses in S. Tampa 30 years ago. I also taught myself to trade Stocks, Options on Stocks and Futures which is what I do each morning on my laptop. I can make from $100 to $500 an hour scalping the ES Future for two hours and then go to lunch. I just tried it out with my friend Wifi in Macae and was making money right away. My Internet Security friend who retired from 35 years with Petrobras, called me last night and he wants me to sell my houses and farm in Macae and move outside of Joao Pessoa to raise shrimp and fish with him. "Anything you do in Brazil with Fish is Tax-free." Same with properties if you Sell today and invest in another property within 90 days, it is Tax-free. Every Country and State and town has their list of things you can invest in that are Tax-deferred or Tax-free. You can also get up to 12% a year with Monthly Dividend Covered Call ETFs. look at QYLDgang.com or go study with Average Joe Investor on youtube and get all of his lessons for free. Right now Real Estate is at the Top of the Cycle and you could Sell everything and consolidate after you do some studies with someone like Del. Remember, Real Estate is Location, Location and no one every says, "What about the view?" I used to surf in Santa Cruz, CA. My home in Macae is on a hill, across the highway from Praia do Pecado, or Sin Beach, the surf beach next to a three mile lake on the beach with three Islands offshore in the Petroleum Capital of Brazil. You can go to youtube and find really beautiful videos of anyplace you think to move to. Never buy anything that you would not live in and at this point find all the short cuts to free up the Time you have to live a good life. God bless. 


     good story  I grew up in Cupertino and Santa Cruz was are go to hangout.. !!  good luck with the shrimp farming. 

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  • Eric James
    Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
    4y
    Quote from @Jack B.:

    Background:

    I just turned 40. My net worth is 3.2 million. 1 million liquid cash, the other 2 million is equity in my houses including primary residence and rental properties for a total of 8 properties. Cash flow is about 30K a year because I cash out refinanced a couple years ago to buy more properties with the equity rather than using cash on hand. Real estate has been my bread and butter, it's how I made my 3 million. At this point, I make 1 million a year off of it (appreciation, cash flow and principal pay down). Again, I make 1 million a year off appreciation and such when the market is good, which is most of the time...factor that in.

    I was planning on buying two more houses with a total of 300K down to ride the appreciation wave long term, two more houses that will be paid off when I'm older, etc. I had planned on retiring at 40 with 1 million, this was the plan I made when I was 30. Now I have three times that but life is more expensive and complicated than it was 10 years ago. 

    My living expenses:

    Because I rent out part of my house, I mostly live for free housing wise. Outside of that my living expenses as far as base are 1K, but realistically 2K. That includes money to date, buy a trinket here and there, etc. To be really comfortable I'd like to have 4K a month passive income in retirement. With a paid off house, in a low property tax state, utilities, taxes, maintenance, insurance should round up to 1K. That leaves 1K for gas, car insurance, food, incidentals, internet, phone, etc. So that brings me up to 2K per month. But I'd like another 2K buffer as I have occasional rental expenses such as repairs, appliances, etc. plus I date a lot and when in a relationship we have a tendency to travel. I've been to Tampa and Orlando 4 times in 3 years with 3 different women (one of them twice). 

    The why:

    I'm tired of working and life. I've had many recent heart breaks and I don't want to work anymore. I haven't wanted to work for a long time but now I'm really done. I had two health scares and almost died at 29 and 34, I'm not promised another day. They say stress causes cancer. I've worked so hard, MBA, 18 career certifications that were hard to get, own and manage rentals, two full time tech management jobs, two part time jobs. I've been working so hard. To top it off I've had a series of failed relationships last few years. After having a long period of stability with one girl for 9 years, I'm an emotional mess, dating is getting harder as I get older, the women are not as good looking and all seem to have baggage/issues. After a recent life assessment I did, I realized everything in my life that I worked toward came to pass. But my relationships are rocky. I'd like to take time and heal, grow and find a life long forever girl. One that stays. Even through the bad.

    How I'm thinking of doing it:

    -Relocating from WA to a cheaper part of Texas, Tennessee or Florida. With the equity of my primary residence, I should be able to buy a paid off house for cash. That will drastically reduce my living expenses.-Take 1 million cash and put it in index funds or split between Apple, Tesla, Amazon, Google and Microsoft and live off 3% withdrawal rate of about 30K a year. Supplement that with rental income from properties as is, which is about 24K a year cash flow.

    OR....

    -Still relocate, but cash out refinance 1 million out of the houses before retiring. Between living off index funds and 1 million pulled out of the houses, that money should EASILY last me 10 years, realistically 15-20 years. By then the rents will have risen enough that they will cash flow enough I don't have to cash out refinance anymore for money to live off of. There are some people who do the cash out refinance thing every few years to live off of. Bonus is that it's tax free, it's a loan so not taxable income.

    OR....

    -Still relocated, use the 1 million to pay off 3 of the rentals, which should give me about 6K a month cash flow plus another 1K from the others that are still mortgaged. Move into a paid off house and retire. I like this because I've always lost my money in the stock market no matter what I've done. Options, swing trading, day trading, index funds, you name it. But real estate I've always made money. It's how I made my 3 million. At this point, I make 1 million a year off of it...so in a year I'll be worth 4 mil, in 2 years 5 mil, etc. At that point I could really retire without worrying. Maybe I hold off for now and grind a little longer. But two full time jobs, two part time ones, 8 houses and all the studying has really worn on me. Add to that endless heart ache from relationships last few years and I'm emotionally done. I want to destress and go live. 

    Some problems with this:

    If I move to FL, TX or TN, I'll be too far to manage the properties. My best friend will move with me but he said his parents could help out. So far I've been doing ok with video tours and hiring contractors lately. Not cheap but way cheaper than a PM. Liquidating them and moving them is risky as I may move somewhere else if I don't like it, or move back. But the properties make it very difficult to relocate since they are easier to manage locally. If I hire a PM, all my cash flow is basically gone.

    Sounds like your real issues relate to personal relationships and motivation.  These are what you need to change. A suggestion related to this is to check out entrepreneursincars.com 
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