How do I set a realistic goal to retire on rental income?

[Justin S.]

I am 38 years old

My goal for the past two years has been to retire on my rental income

I am having a huge struggle as to how to obtain this goal.  I own another business where I am the main draw of the business so I need to make sure I can cover 100% of the income I make from that business and then some.  (estimated 90k/yr)   I don't believe working there less or not at all and keeping the business is an option.   

I am fighting between two options 

1. Buy as many units as possible to be able to make that 90k even while the properties still have mortgages on them.

2. Stop buying and pay off what I have now as quickly as possible and that will bring me anywhere from 89-110k per year.  This doesn't sound like fun to me but I love the feeling I get when I think of all of my properties free and clear,(I'm smiling as I type that)

I feel as if option 1 will take longer but when the mortgages are eventually paid off, Ill be lovin' life! 

I feel as if option 2 could happen sooner but then all I have is 89-110k/yr.  Of course, I could start buying again after all of my existing properties are paid off in 5-8yrs

This needs to be 80% financial decision,20% emotional/mental decision.

Thoughts?

[Galen Herbst de Cortina]

Have you done the math on whether 90k works long term? The first thing I'd suggest is making sure you're aiming for the right target- it's a big number but make sure you're accounting for large expenses like college, disability, etc.

Otherwise, I'd say you need to pick between what you enjoy (wheeling and dealing it sounds like) or early retirement. One thing I've heard a lot is to make sure to have something to retire to. Maybe get some free and clear and then look for more as your retirement endeavour.

[Justin S.]

Originally posted by @Galen Herbst de Cortina:

Have you done the math on whether 90k works long term? The first thing I'd suggest is making sure you're aiming for the right target- it's a big number but make sure you're accounting for large expenses like college, disability, etc.

Otherwise, I'd say you need to pick between what you enjoy (wheeling and dealing it sounds like) or early retirement. One thing I've heard a lot is to make sure to have something to retire to. Maybe get some free and clear and then look for more as your retirement endeavour.

I am hoping that rents will continue to rise....to a certain degree of course. 

 I live in Buffalo, NY . Real estate is pretty steady out here. 

 I am leaning towards the second option.  Pay off what I have and then start buying again.

I agree on having something to retire to.  I would not do well if I had the option of staying in bed all day!

[Galen Herbst de Cortina]

I've had some time to myself between jobs and structure is way better. No real experience but I'd say build a workable base and then give yourself the freedom to chase greater returns.

[John Carpo]

I am 37.  I will buying them and racking up manageable debt. Debt is a part of business and life, for me anyways. It will eventually be paid down. By then you will likely want more than the $90k a year!!!

[Justin S.]

Great point John!  I definitely want more than 90k  

[Franklin Romine]

@Justin S.

 I like the saying.... What you owe today, you are worth tomorrow.  I try to accumulate all the good debt possible, without being over leverage.

Surround yourself with more like minded people.  Once I started doing that my yearly goals have been easier achieved. 

Frank

[Matthew Cole]

All good businesses have debt. Good debt helps you scale faster. You shouldn't be concerned with having mortgages if you have rents supporting the debt. Leverage your other business income as long as possible.

[Adrian Smude]

@Justin S.

I like option 1 assuming your current rates are good.  Also remember if you're retired you have more time on your hands which usually means you're spending more on entertainment/travel/toys.