How to Determine Enough

2 Reply

Greg Kasmer

Rental Property Investor · Philadelphia, PA · Member since 2021 · 774 posts · 500 votes

10mo

@Paul Novak - I like the metrics you are tracking... but would suggest one more. Track your overall equity in the properties. Reason is that if you could sell all of them at once what would be your total cash at take home? Then, if you invested that at 4 or 5% interest would that be enough to live off of comfortably for you? So, if you had $2M in equity that could potentially kick off 100k a year at a 5% interest rate. Would that be "enough"? Everyone is different, but this is an exercise I recently considered.... Good Luck!

7 Reply

Paul Novak
OP
Rental Property Investor · WI · Member since 2023 · 192 posts · 143 votes
10mo
Quote from @Greg Kasmer:

@Paul Novak - I like the metrics you are tracking... but would suggest one more. Track your overall equity in the properties. Reason is that if you could sell all of them at once what would be your total cash at take home? Then, if you invested that at 4 or 5% interest would that be enough to live off of comfortably for you? So, if you had $2M in equity that could potentially kick off 100k a year at a 5% interest rate. Would that be "enough"? Everyone is different, but this is an exercise I recently considered.... Good Luck!

Thanks for the feedback. I agree with you that would be an interesting proposition. I am 40 now and do have a portfolio with our 401k's, roth IRA's, and HSA's at around 650K. My thought is that those would grow to around $2.5M by the time we hit 59 1/2 and that my rental income could not only sustain me in early retirement but that income would act almost like bonds to protect from market volatility while I am in retirement. This way I could leave my index fund accounts in the market to maximize growth while living from mostly rental income. If I only use my retirement accounts as a buffer to cover major repairs with rentals or vacations, etc.... I could probably draw on them at 2% to 3% vs. the traditional 4% rule. If the market dropped, which no doubt it will again at some point, my rental income wouldn't drop with it by an equal amount. I think your point is very valid but that is part of the reason why my thoughts were to keep the rental portfolio vs. sell it.

Also, and I am sure I could find this on the internet, do you have a calculator or formula to determine how much you would actually profit from the sale of a property? I know that you have to factor in selling fees, realtor fees, walk back depreciation, and factor in capital gains taxes just to name a few of the costs.
1 Reply
G. Brian DavisPro Member
Investor · Hatboro, PA · Member since 2016 · 2k+ posts · 846 votes
10mo
Quote from @Greg Kasmer:

@Paul Novak - I like the metrics you are tracking... but would suggest one more. Track your overall equity in the properties. Reason is that if you could sell all of them at once what would be your total cash at take home? Then, if you invested that at 4 or 5% interest would that be enough to live off of comfortably for you? So, if you had $2M in equity that could potentially kick off 100k a year at a 5% interest rate. Would that be "enough"? Everyone is different, but this is an exercise I recently considered.... Good Luck!

Great suggestion @Greg Kasmer

0 Reply

Jules Aton

MD/DC · Member since 2024 · 1k+ posts · 1k+ votes

10mo

This is a great question and people may minimize but I have seen far too many old RE folks who kept their properties long after they could actually manage them appropriately and left a mess for their heirs. I'm cashing out at or near retirement and will not be turning myself inside out worrying about tax optimization at that point either. To find my retirement number I multiple my yearly expenses by 25 years and that is the amount less my primary home that I need to retire at 65yo.

2 Reply

Paul Novak
OP
Rental Property Investor · WI · Member since 2023 · 192 posts · 143 votes
10mo
Quote from @Jules Aton:

This is a great question and people may minimize but I have seen far too many old RE folks who kept their properties long after they could actually manage them appropriately and left a mess for their heirs. I'm cashing out at or near retirement and will not be turning myself inside out worrying about tax optimization at that point either. To find my retirement number I multiple my yearly expenses by 25 years and that is the amount less my primary home that I need to retire at 65yo.

Thanks for the perspective and taking the time to reply. This is something good to keep in mind that I am not thinking of at 40 but could impact me when I get older.
0 Reply

Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

10mo

Quote from @Paul Novak:

I am curious how other people have come to determine when enough is enough on purchasing more real estate and if/when to pay off their properties?

For many years now I have been tracking my personal expenses and know how much money I want to make to sustain the lifestyle I want. I have then tracked two main metrics around my rental portfolio, current monthly cashflow and what my cashflow would be if they were paid off in full. Once the paid off in full metric reached my goal, which it has with my last rental purchase, my idea is to pivot my strategy from acquisition mode to debt paydown mode. The goal is once my properties are paid off work will become optional.

What I have found with my friends that are in real estate is that no one has an end point. They have found something that works so the goal is buy a property, stabilize, build your cash back up, repeat. Not that there is anything wrong with that but I think there must be an end point at some time.

I also find that many people don’t want to pay off their debt because it lowers their cash-on-cash return and it reduces the tax deductions with mortgage interest.

I am looking at it this way. I currently have 6 properties, 8 doors. If I was to repurchase the same properties, at the same price, with the same loan terms and same rents I would need to go from 6 properties to 13 properties to generate the same cash flow. Knowing the deals I would be purchasing today wouldn’t be as good out of the gates as when I started 4 years ago, I would probably need more like 15 properties. Yes, my tax deductions would increase, and my wealth would be growing much faster having appreciation on 13-15 properties vs. 6 but if it’s generating wealth that I don’t need what’s the point?

Are you guys on the path of never stop growing or do you have an end point? If you have an end point how did you calculate it? Does your end point include paying off your debt or do you plan to let the mortgage payments pay off your properties naturally over time? No right or wrong answers here just curious about other investors’ thoughts on this topic.

>What I have found with my friends that are in real estate is that no one has an end point… Are you guys on the path of never stop growing or do you have an end point?

I am in this group of not stopping but it is because I enjoy it. I find I enjoy making money. I especially enjoy identifying what sometimes seems to be obvious “opportunities” to make money and making use of those opportunities. There is little that I find more fun when one of these obvious opportunities produces incredible returns.

I used to have net worth as the score card, but the last 3 years I have given away more than my income, so net worth is not the scorecard. I do not want the scorecard to be how much I give away (I am not that generous 😊).

I am my own boss with most days able to decide what I desire to do. I have a good family and friends. I have various toys (tomorrow taking one of the boats out with my son just to cruise around).

>Does your end point include paying off your debt or do you plan to let the mortgage payments pay off your properties naturally over time?

neither. Best return is achieved by having leverage. Before the rates increased, I actively worked to maintain high leverage. Even with the rates being much higher today than my rates, at some point it will make sense to refinance at the higher rate to maintain a high level of leverage.

wishing everyone the best

Paul Novak
OP
Rental Property Investor · WI · Member since 2023 · 192 posts · 143 votes
10mo
@Dan H. I do understand where you are coming from. I am a bit of a personal finance junky myself and love investing. I also don't know if I'll stop once I get to my goal. I think for me I want to get to that stable base to be able to retire as quickly as possible with the least amount of headache/stress. To me this is my 6 paid off properties. Once I get to that point I won't have to work and then I can decide what's next. If I want to add at that point I could, if I wanted to fix and flip because I'm handy I could, if I just wanted to invest in the market I could, if I wanted to do private lending I could, or I could focus on some business ideas. Thanks for sharing.
0 Reply

Kevin PolitePro Member

Investor · Decatur Atlanta, GA · Member since 2011 · 610 posts · 232 votes

10mo

@Paul Novak Great question — and you’re right, there’s no single right answer here. Congrats on your success and on actually defining your endpoint; most investors never do.

When I started back in 2011 at 49, I assumed I’d eventually retire and live off the rental income. But about three years ago, after getting tenant calls on Christmas Day and again the day after, I did a lifestyle check. I realized I was tracking every metric except quality of life.

At the time I had 10 properties and was self-managing. That constant stress made me rethink what "financial freedom" actually meant. I decided to start slowly selling off most, if not all, of my portfolio. I down to 5 with one due to close next one another on the market. I didn't want to 1031 into commercial or multifamily. Thinking possibly occassionally JV or private lending.

Sure, you take the hit on capital gains and depreciation recapture, but I planned for that. Because I’m nearing 65, I’ve also had to pay attention to things like IRMAA surcharges for Medicare — they look back two years at your income — and how Social Security timing and spousal retirement affect the overall plan.

Whether you’re close to retirement or not, I highly recommend The Retirement Planning Guidebook by Wade Pfau. It really helps connect the dots between income, taxes, healthcare, and lifestyle goals.

For me, “enough” wasn’t a number — it was when the portfolio started taking more from my life than it was giving back.

6 Reply

Paul Novak
OP
Rental Property Investor · WI · Member since 2023 · 192 posts · 143 votes
10mo
@Kevin Polite thanks for taking the time to respond and provide your perspective. I will definitely check out that book.
0 Reply

Kenneth GarrettPro Member

Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes

10mo

@Paul Novak

That’s a great question. I self manage my portfolio. I don’t get calls in the middle of the night. I do my best to keep up on the maintenance of my properties. I don’t really feel managing is stressful. I won’t say I haven’t had some challenges; tenant caused $150K fire damage, tenant didn’t pay rent during COVID and similar hiccups. I think as I am reaching retirement age, I will slow down, but I probably won’t stop. At this point it’s generational wealth for my family.

The great answer to the question is there is no one answer that fits all. I’ve seen investors still in their 80’s continue to purchase properties, while others stopped in their 40’s and younger. It’s all about what makes you fulfilled.

Best of Luck.

Marcus Auerbach

Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes

10mo

It's tempting to pay off a few rentals, but the math does not support it: really low ROI as you have mentioned. Equity is really the metric to track. Real estate in the Milwaukee area has a little more than doubled in the last ten years. I believe it will double again in the next ten years (I'll talk about why I believe that at the REIA meeting on Jan 13th). While you may only pay down your debt by maybe 20% or so, your equity position explodes.

Your annual income is a percentage of your equity, usually between 5% and 7%. So, you can do the math backwards. How much is enough is a great question and the answer is personal and different for everyone. How would a "life by design" look for you? How much do you want to ake on, do you enjoy working, how much free time do you want to have etc... Financial freedom has levels. Level 1 is to cover your living expenses. Level 2 is to travel several times a year and not worry too much about the cost. Level 3 is to buy your mom a house and not really see a difference in your net worth. And thats all long before before you get into yachts and jets.

There are a few good strategies to retire as a landlord. You can refinance the equivalent of rent increase and value appraciation every year and keep your portfolio leverage flat, while getting tax free cash. Or you 1031 exchange at some point into DSTs (Delaware Statutory Trust) and just live of mailbox money.

Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

10mo

@Marcus Auerbach

hello! We've talked about this before - that RE is 1. a great way to build up equity, and then 2. equity can be turned into cash.

i do think the refinancing thing has gotten tougher - would you agree? i have properties where I could refinance to tap the equity, but because of both prices and rates being where they are, the rent (even after robust increases) wouldn't support the jump.

Taylor CampbellPro Member

Investor · Edgewater, NJ · Member since 2019 · 17 posts · 6 votes

10mo

Very good question. From my own experience when I first started investing in real estate 5 years ago, I was more focused on growth as opposed to loan pay down. However, over the last few months or so, I started wondering if I want to change my approach at some point in the future. I am still not sure if I do, but just giving it more thought as I did in the past. Curious if anybody has ever paid off their properties or at least started to pay off properties and have regretted it? I know it doesn't make sense from roi standpoint, more piece of mind and less risk standpoint.

[email protected]267-767-0111

Alan AsriantsBusiness Member

Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes

10mo

Quote from @Paul Novak:

I am curious how other people have come to determine when enough is enough on purchasing more real estate and if/when to pay off their properties?

For many years now I have been tracking my personal expenses and know how much money I want to make to sustain the lifestyle I want. I have then tracked two main metrics around my rental portfolio, current monthly cashflow and what my cashflow would be if they were paid off in full. Once the paid off in full metric reached my goal, which it has with my last rental purchase, my idea is to pivot my strategy from acquisition mode to debt paydown mode. The goal is once my properties are paid off work will become optional.

What I have found with my friends that are in real estate is that no one has an end point. They have found something that works so the goal is buy a property, stabilize, build your cash back up, repeat. Not that there is anything wrong with that but I think there must be an end point at some time.

I also find that many people don’t want to pay off their debt because it lowers their cash-on-cash return and it reduces the tax deductions with mortgage interest.

I am looking at it this way. I currently have 6 properties, 8 doors. If I was to repurchase the same properties, at the same price, with the same loan terms and same rents I would need to go from 6 properties to 13 properties to generate the same cash flow. Knowing the deals I would be purchasing today wouldn’t be as good out of the gates as when I started 4 years ago, I would probably need more like 15 properties. Yes, my tax deductions would increase, and my wealth would be growing much faster having appreciation on 13-15 properties vs. 6 but if it’s generating wealth that I don’t need what’s the point?

Are you guys on the path of never stop growing or do you have an end point? If you have an end point how did you calculate it? Does your end point include paying off your debt or do you plan to let the mortgage payments pay off your properties naturally over time? No right or wrong answers here just curious about other investors’ thoughts on this topic.

The answer is - it depends who you ask. It also depends on how much you like rental property investing and how well tailored your rental property set up is.

Personally I think I will keep adding properties to my portfolio as long as I can. Eventually outsourcing some of the management as I am still developing my Real Estate sales business - which takes up a lot of time.

Like you I also understand the value of paid off RE and once at that point - with todays numbers/economic conditions/value of the dollar - work would be optional. Of course it all depends what your expenses are. I like the idea of having no debt - but I think this makes more sense for personal things you own and liabilities - your car, house, etc.

having debt on rental properties gives you the ability to leverage returns and since you are generating income its not necessary to pay it off. That being said - people underestimate the power of 3-5 paid off properties and their cash flow potential. Of course with that - your wealth is "locked"

As you can tell I am flip flopping because there really isnt a best answer - its what is best for you. Good luck

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Daniel Suarez

Fairfax, VA · Member since 2017 · 183 posts · 58 votes

10mo

@Paul Novak, I'm in a very similar situation to where you are. I have 10 properties, about 17 doors and I'm pondering the same. The cashflow is good but not good enough to replace my w-2 income, I like vacations, restaurants and enjoing life. I feel like any move from my current setup will decrease my cashflow given interest rates and will only improve my wealth, but yeah I feel pretty happy with my current net worth.

Would love to connect and discuss ideas.

Paul Novak
OP
Rental Property Investor · WI · Member since 2023 · 192 posts · 143 votes
10mo
Quote from @Daniel Suarez:

@Paul Novak, I'm in a very similar situation to where you are. I have 10 properties, about 17 doors and I'm pondering the same. The cashflow is good but not good enough to replace my w-2 income, I like vacations, restaurants and enjoing life. I feel like any move from my current setup will decrease my cashflow given interest rates and will only improve my wealth, but yeah I feel pretty happy with my current net worth.

Would love to connect and discuss ideas.
I am in anytime. I love talking personal finance and investing with others. If you are serious about connecting DM me and we can figure out a time to connect.
0 Reply

Peter W.

Member since 2020 · 351 posts · 329 votes

10mo

To me question is 1.) How much income do I need so I no longer need to work. 2.) How much equity do I need to achieve that income from investments.

Right now, I find the answer t (1) is my current income plus 20k per year (to cover benefits e.g., health insurance, currently covered by my W2 plus 10% as a buffer.

I think real estate can give about 5-6% cash flow when paid off before appreciation, so this is about 3M in today's money. About 6M by the time I actually have enough to retire with inflation.

Allison Park

Member since 2024 · 158 posts · 87 votes

10mo

In a similar boat. I was thinking of using a hybrid strategy to generate more cash flow by paying off one property. I have 5 properties including my primary. I want them all paid off by the time I retired at 60, currently 47. The rentals are 7 year ARMs all in the low-mid 4s. This is the first year I have had them so I am also going to going to see how much it is actually saving me in taxes and incorporate that into my strategy.

Kevin PolitePro Member

Investor · Decatur Atlanta, GA · Member since 2011 · 610 posts · 232 votes

10mo

Capex expenses on properties 10, 15, 20 years old is something to keep in mind when you're talking paid off properties. You need reserves because as your properties get older there will be more maintenance involved, roofs last 20 years and now some insurance companies are dinging you when they hit 10 years & HVAC systems last maybe 10-15 years sometimes sooner depending on the climate your in, etc.

Bob Ritner

Specialist · San Clemente, CA · Member since 2014 · 50 posts · 75 votes

10mo

My goal was to pay off my properties and retire from my Architecture business in my early 50s to pursue other personal interests, travel, and to continue to dabble in real estate when I had the itch. I accomplished this goal at 52 with 6 paid off beach close doors in South OC Calif. Those doors provide enough for reserves and to live the lifestyle I want but without leverage they net about 4% on market value. The the catch-22 is that after all the depreciation i pay almost no tax, which is great, but the flip side is that this means it is very challenging to obtain new debt if I find a purchase I like. Thus, my only regret is be paying off all of my 3% mortgage debt. I still have some large equity lines on the properties and could also do DSCR loans but that debt is expensive compared to the cap rates in the area I invest, so it would be negative leverage. So...if you think you may want to stay active in real estate after retirement, I would keep some of the fixed rate leverage and put the cash in more liquid investments for possible use at a later date.

3 Reply

Paul Novak
OP
Rental Property Investor · WI · Member since 2023 · 192 posts · 143 votes
10mo
Quote from @Bob Ritner:

My goal was to pay off my properties and retire from my Architecture business in my early 50s to pursue other personal interests, travel, and to continue to dabble in real estate when I had the itch. I accomplished this goal at 52 with 6 paid off beach close doors in South OC Calif. Those doors provide enough for reserves and to live the lifestyle I want but without leverage they net about 4% on market value. The the catch-22 is that after all the depreciation i pay almost no tax, which is great, but the flip side is that this means it is very challenging to obtain new debt if I find a purchase I like. Thus, my only regret is be paying off all of my 3% mortgage debt. I still have some large equity lines on the properties and could also do DSCR loans but that debt is expensive compared to the cap rates in the area I invest, so it would be negative leverage. So...if you think you may want to stay active in real estate after retirement, I would keep some of the fixed rate leverage and put the cash in more liquid investments for possible use at a later date.

Great perspective, thanks for taking the time to reply.
0 Reply

Henry ClarkPro Member

Developer · Member since 2020 · 4k+ posts · 4k+ votes

10mo

OP

we went thru this exercise about 3 years ago.

1. If you’re an avid investor, really enjoy it and have learned the Secret Sauce you measure enough in terms of the next deal or “hunt”. Not dollars.

In terms of dollars break your investments into short, near and long term.

Short- how much living expense in cash equivalent forms or monthly cashflow you want to keep around? My wife wanted 5 years. This is a bad financial investment, but you don’t care about the ups and downs in the world.

Near- This could be certain types of stocks or selling off units. Either headache units or selling at extreme profit. Or your personal residence using the 2/5 $250,000 capital gain exclusion.

Longterm- Stocks or other, we do Teak Plantations and stocks. I actually think Longterm debt is your best “investment” tied with inflation. Say your rate is 7%, inflation is 3%. The 7% doesn’t compound the 3% does. $1 of debt today might only be worth $.30 in 20 years.

Your investments should
outlive you so don’t go all conservative or inflation will eat your wealth. A portion of your wealth needs to be aggressive to beat inflation.

If you do the above exercise you will know how much is enough for your situation.

Insurance- the worst thing you can do to your family is to be mid stream in a deal and die. Have insurance so they can sale the project even at $.10 on the dollar. Dont do one large policy. Look at your exposure size and duration. We have 3 policies. As our exposure drops we can drop a policy and don’t have to qualify when we are older or have an ailment.

Couple of points noted above. If you’re doing rentals buy your peace of mind. Hvac have on a planned replacement and maintenance schedule. Plumbing scope the pipes, pump the tank, leave a Snake on site.
Out an alarm or shutoff system on the water.

World view- depending on your world view. Gold silver, Prepper assets- things money can’t buy, assets overseas if you think the U.S. dollar will devalue,

Health. Last but most important.

Read my post. “What happens when you die?” Take those steps. Then relax and enjoy life.

Shout out to Drovers Hotel last night at the Ft Worth Stockyards. Wedding venue for my cousins daughter. My wife and son. Retired since 55. Didn’t have to worry about a job.

Henry ClarkPro Member

Developer · Member since 2020 · 4k+ posts · 4k+ votes

10mo

Wedding at Drovers in Ft Worth. REI is great.

Tax deduction traveling to Belize to plant 89 acres in Teak. REI is great.

From Croatia. REI is great. Get started sooner than later to enjoy.

Daniel Suarez

Fairfax, VA · Member since 2017 · 183 posts · 58 votes

10mo

@Bob Ritner To hijack the post would love to hear a bit more about your jounrey. Did you start with financing the 6 and paying them off? When did you start your journey? Would love to know what type of properties are they and also what is your longer term plan.

Thank you for sharing

Bob Ritner
Specialist · San Clemente, CA · Member since 2014 · 50 posts · 75 votes
10mo
Quote from @Daniel Suarez:

@Bob Ritner To hijack the post would love to hear a bit more about your jounrey. Did you start with financing the 6 and paying them off? When did you start your journey? Would love to know what type of properties are they and also what is your longer term plan.

Thank you for sharing

Daniel, for me, real estate has been about playing the long game. All properties were done as BRRRs. Bought first duplex in 1999, bought a condo a year for 5 years following the GFC. I had great finance rates in the 3 and 4 percent range but paid off early one by one. Saw the writing on the wall with the issues currently affecting older condos and did a 1031 iwith some of them into another beach duplex. I always focused in solid class B SoCal areas i was familiar with, that has strong demand and solid tenant base. They were all high entry cost compared to other areas of the country and lower ROI but my operational costs were very low due to quality tenant base. No evictions in 26 years since buying my first rental, no trashed units, and I self managed the whole time.
Very conservative approach but worked for me. As I mentioned, my only regret is locking up all of my equity by paying everything off. In much of California, unlike many other areas the cap rate is lower than the mortgage rate so it is now a game for all cash buyers and with virtually everything paid off, It will take me years to build enough cash to buy. I did recently add an ADU to one duplex because it made financial sense and was a fun project. I dont need more units to support my lifestyle to but I do still enjoy the hunt.
0 Reply
Daniel Suarez
Fairfax, VA · Member since 2017 · 183 posts · 58 votes
10mo
Quote from @Bob Ritner:

Quote from @Daniel Suarez:

@Bob Ritner To hijack the post would love to hear a bit more about your jounrey. Did you start with financing the 6 and paying them off? When did you start your journey? Would love to know what type of properties are they and also what is your longer term plan.

Thank you for sharing

Daniel, for me, real estate has been about playing the long game. All properties were done as BRRRs. Bought first duplex in 1999, bought a condo a year for 5 years following the GFC. I had great finance rates in the 3 and 4 percent range but paid off early one by one. Saw the writing on the wall with the issues currently affecting older condos and did a 1031 iwith some of them into another beach duplex. I always focused in solid class B SoCal areas i was familiar with, that has strong demand and solid tenant base. They were all high entry cost compared to other areas of the country and lower ROI but my operational costs were very low due to quality tenant base. No evictions in 26 years since buying my first rental, no trashed units, and I self managed the whole time.
Very conservative approach but worked for me. As I mentioned, my only regret is locking up all of my equity by paying everything off. In much of California, unlike many other areas the cap rate is lower than the mortgage rate so it is now a game for all cash buyers and with virtually everything paid off, It will take me years to build enough cash to buy. I did recently add an ADU to one duplex because it made financial sense and was a fun project. I dont need more units to support my lifestyle to but I do still enjoy the hunt.

Than you for sharing Bob that's inspiring. It's always interesting to see somebody else's journey. I've been investing since 2018, sometime I feel I'm stuck
0 Reply

Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

10mo

Great question. Answer is each person is very different. I know some people who get to $1 million in equity then quit, some target 5 million some target even more. There is no right or wrong answer - it’s based on individual goals and and what someone wants to do with their life For me personally - I continue to pay down the debt which is at very low rates and once paid off I doubt I will refinance against, having zero debt for me =less problems.

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Bob E.

Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes

10mo

We have several properties with debt that are starting to pay off. We started doing a debt snowball on everything this year. and over time our income will double. I expect we will continue to add properties but at a slower pace to hedge against inflation and future needs.

Given your young age I would recommend that you continue to look for cash flowing properties that you can add to the end of the debt chain, use a property manager if you don't want to spend a lot of time on it and If you can finance it for 20 years it will be fully paid off when you retire. Otherwise just do 30 years and add it to the snowball. Once you start paying these off you will be surprised at how fast it happens.

A few random thoughts on IRAs. I just turned 59 1/2 and am taking some distributions from my ROTH. When I had slow years or was between corporate jobs I would transferred my regular IRA savings to Roth accounts. Once I finished My wife started, she actually would move 1/2 of a house in December and another half in January spreading the income over two years so we didn't get hit to hard on taxes.

When you are talking about retirement remember you can't eat equity.

[email protected]941-914-7779

Ashish AcharyaBusiness Member

CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes

10mo

@Paul Novak,

Wow, that’s a great post, and I love how clearly you’ve thought this through. Most investors never pause long enough to define their “enough” or plan an exit strategy, so the fact that you’ve tied your goals to lifestyle and real numbers is probably a big reason why you’re in the position you’re in today.

From a tax perspective, you’re spot on, paying off debt does reduce deductible interest, which can raise your taxable income, but that’s not always a bad thing if your passive income covers your needs. At that point, the focus often shifts from maximizing write-offs to simplifying and preserving what you’ve built. One way to do that is by using trusts or holding entities to protect your assets and make them easier to transfer.

I like what Bob said about keeping some properties for leverage while holding others in more liquid investments to give yourself flexibility. You could turn some into cash or easier-to-access assets in a tax-smart way, like through strategic sales, 1031 exchanges, or borrowing against equity. For the ones you want to keep, since you love investing, putting some into a trust can be a smart move, it lets you stay in control, make transfers easier, reduce potential estate tax issues, and keep wealth in the family if that’s important to you. It’s all about finding the right balance between growing (if you still enjoy it), making sure your investments support the lifestyle and legacy you want, and managing taxes through sales and transitions.

I don’t think there’s a strictly right or wrong decision here, as long as you keep taxes and transfers front and center in your planning. Good luck as you move into that next stage, and happy to connect.

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Charles ClarkBusiness Member

Real Estate Broker · Milwaukee, WI · Member since 2020 · 306 posts · 209 votes

10mo

@Paul Novak

I totally relate. I’ve found it helpful to define a clear financial goal first—what monthly cash flow I need to sustain my lifestyle. Once my paid-off cash flow meets that target, I shift from acquiring to debt paydown. For me, it’s about freedom, not maximizing growth. I agree, many investors never stop, chasing bigger portfolios and tax perks, but if it’s more wealth than you actually need, it makes sense to pivot. My “end point” includes paying off properties, not just letting mortgages run.

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Ryan SpathBusiness Member

Real Estate Agent · Boise, ID · Member since 2017 · 557 posts · 376 votes

9mo

@Paul Novak

Great topic. This isn’t discussed nearly enough, and I think the answer genuinely varies by person and by season of life. My own “end point” has changed multiple times over the course of my investing journey.

When I first started, my goal was simple: 10 properties cash-flowing about $500 per month each. I planned to use my active income to slowly acquire over time and let patience do the heavy lifting.

Then life happened. We lost a lease tied to a business that materially impacted our family’s financial security. That forced us to get much more intentional and aggressive. We applied everything we had learned, pulled equity through cash-out refinances, relocated across the country, and acquired additional properties. That shift ultimately gave us financial freedom.

Fast forward a few years. We’re back in Idaho, things are stable, and I’m now a licensed Realtor. With that stability, my priorities have shifted again. My current goal is to pay off our primary residence in roughly three years, by my 45th birthday. An older mentor challenged me on this recently and framed it around long-term stability for my family, especially with young kids. That really stuck with me.

I’m fully aware of the opportunity cost. I know paying off debt isn’t the most “optimized” move on paper, and I may change course again down the road. But at this stage, peace of mind, flexibility, and reduced fixed expenses matter more to me than squeezing every last bit of leverage.

Once the primary is paid off, we’ll reassess the portfolio as a whole and decide what makes the most sense for our lifestyle at that time. For me, investing isn’t about never stopping—it’s about aligning the strategy with the life you’re trying to live.

There’s no right or wrong answer here. Just different end points for different people

[email protected]208-600-2814

Ryan SpathBusiness Member

Real Estate Agent · Boise, ID · Member since 2017 · 557 posts · 376 votes

9mo

@Charles Clark

I love this…..Freedom is the goal for sure. It takes wisdom to know when to pull the parachute in my opinion. I’ve had several people tell me life doesn’t change much over 150k annually, sure you can buy nicer things, take better trips, but the expense is your time. We are only the age we are now for a year and then time happens and the physical ability to do certain things escapes us…..