In your opinion & experience should I retire early?
Hi Folks,
This is my first actual post on BP in 2 years even though I read other posts daily.
With two year anniversary of my first rental purchase coming up I'm reaching out to BP community regarding your experience/recommendation on next chapter in my journey.
Let me give you some color about myself, financials and rentals units:
- Prior to US as a family of five we were renting 200 square feet storage since that was the only thing we could afford. I dropped out of middle school because my family needed financial help. I did "child labor jobs" minimum of 12 hours a day 7 days a week for 5 cents per hour. I did loading/unloading big trucks, iron clothes in 120 degree room, and paint furniture without proper tools like mask which made me sick everyday.
- Moved to US as a Refugee with just $50, zero English, and didn't know anyone here zero friends/relatives.
- Worked my butt off at all kinds of job clean bathrooms, fast food, manufacturing carpet plant and finally got a part time sales job which led to six figure income with multiple leadership roles.
- Finally got my BA degree which was paid by my W2 employer. Took me 10 years going part time, but finally got it done.
- I been doing sales/management job for 14 years now and 3-4 years ago I decided I needed additional income on top of my W2 which would allow me to retire early and that's where my journey with rental units started.
- Today I have 8 total rentals all purchased with traditional Conventional 30 year fixed loan with 15% or 20% down.
- Four purchased in 2017 and four in 2018.
- Seven of them have mortgage today. Property values have increased min 5% to maximum 25% since purchase.
- One of the initial purchase in 2017 is paid off already I was able to use credit card balance transfers to pay off a 30 year mortgage in 2 years.
- I have 50+ credit cards with total credit line of $380k which helps me keep my utilization below 30% and still take advantage of balance transfer benefits. I do not pay any interest only fee I pay is initial 2%-4% one time fee.
- I have a positive cash flow of $4,222 ($527 per door average) a month after mortgage payment (including insurance and tax).
- I'm not including $1,056 a month in mortgage principal balance decrease with each payment.
- All mortgage payments are 4 months prepaid in advance for just in case something major comes up.
- I do have a W2 job with annual income little over six figures and most recently got my Realtor license last year for extra part time income. Back to working 7 days a week, but love what I do now!
Now you have some color about me I'm stuck on deciding which route to take from here and I really need your honest recommendation please!
- Here is the deal I just got $150k in cash after selling company stock I had saved for years. With that cash amount so far I have came up with couple options if I'm missing any please let me know.
- Option A:
- I could pay off 2 of the loans for $145k and increase my cash flow to $5,611 a month after mortgage payment (including insurance and tax). This would leave me with 5 rentals on mortgage and 3 mortgage free for total value of $370k that's mortgage free.
- Option B:
- Purchase 3 more homes with 20% down again estimating $35k down per unit for total of $105k. Using $500 per door average cash flow that will increase my monthly cash flow to $5,722 extra $111 per month compare to option A. Plus I would have 3 more units to manage.
- Ultimate goal with both options or any other you recommend:
- I initially started in Real Estate two years ago so I could retire early at 45 that was the game plan. Today, I'm in mid 30's and after reviewing our expenses for the last 12 months we are averaging $2,250-$2,750 a month for everything. Even if we moved that number to $3,500 a month in spending that would leave $2,111 positive cash flow each month/$25k a year. I have traveled to many different countries and with technology growth now I have stayed a month using Airbnb for $1,000 month including all utilities. I do have $95k saved up in cash that could be used if necessary. I can always work part time to bring additional income and worst case I travel for several years and return back to full time job plus rental income.
I don't know what or why and maybe priorities get shifted when people hit mid 30's closer to 40, but my gut and heart keeps telling me everything will be okay if I decide to retire early........ However, little dang voice in my head keeps telling me don't do it you are going to fail and regret it.
I ask you now... You are in my spot what would you do? Go for it or No? If this is a crazy idea and I'm crazy to leave a six figure job please let me know. When I talk to people close to me including family/relatives about this the hate meter is off the charts I have never witnessed anything like this before. Not a single person has said Go for it and that's why I'm reaching out to BP Community to get your feedback since we share a similar goal for the most part. Thank You for your time and God Bless.