Slow progress & delayed gratification to Financial freedom

[Sam Huang]

Happy Thanksgiving to the BiggerPockets community!

I am looking for feedback on what to do next with my real-estate portfolio.

Current situation: 

- We have 5 rentals properties spread across Tulsa & Florida (9 doors)

- Equity is probably around ~600K and cash-flows ~2K/month.

- We have busy but well paying jobs and don't like to spend time in building sweat equity (BRRR, flip), so will take a slightly low maintenance approach and buy relatively newer properties in B class neighborhoods and use property management for day-to-day operations.

Goal:

- To get to $10K/month net profits with real-estate (today's currency) in 15 years when we plan to retire. We like being aggressive in stock market investing but more conservative in real-estate given that we plan to use that for cash-flow eventually.

The options are:
We expect to have $200K/year in taxable savings the next 5 years (barring a job loss)

- Pump all savings to the stock market & keep the current rental properties as-is and payoff the properties over the next 15 years using cash-flow for snowballing. If I assume a 2% rate of rental increase for 15 years and 50% rule for expense, we will have $7.5K/month net-profits in 15 years.

- Split 50:50 between real-estate & stock market. In the next 5 years, we can buy one property per year with 25% down (~100K), and perform the same operation of using cash-flow for paying off properties next 15 years and we will have $15K/month net-profit which hits our goal adjusted for inflation (assumed at 3%). We also don't like to be too heavily indexed in real-estate in our total net-worth.

What would you do? Feedback appreciated.

[John McKee]

IF you took your 600K today and put it into mortgage notes at 12% you will have $72,000 a year or 6K a month in cash flow right NOW!  You don't have to use all 600K, but I wanted to give you another option of what it possible. 12% returns with no headaches should be a part of everyone's portfolio.  Yes you have to pay capital gains on selling your properties, but you will recover that quickly with the high returns. If I would have known about these earlier I would have bought less personal real estate, but again it depends on your goals of leverage, building wealth, risk, and your overall perception on how to handle your money.