How to set myself up for retirement from my day job in 5 years at 65?

[Denise M. Tschida]

I am seeking suggestions on how to prepare for retirement effectively. My aim is to maximize my monthly income to supplement my retirement fund (CalSTRS) after 25 years in education, within the next five years. Additionally, I aspire to continue investing in properties post-retirement, as I find great enjoyment in this endeavor.

In 2009 and 2011, I acquired four properties in Southern California. Presently, I reside in one (built in 2003) and rent out the other three (two built in 2006 and one in 2003). The combined value of the three rentals is $1,500,000, with remaining mortgages totaling $290,000 (with 12 years left), leaving me with $1,210,000 in equity. These properties have the potential to generate a total rental income of $8,700 monthly. Currently, the principal, interest, taxes, and insurance (PITI) amount to $3,329 monthly. Other costs include $1,100 for taxes and insurance, $580 in HOA fees, and $200 for lawn care, totaling $1,880 per month.

These rental properties are situated in desirable locations, and I have enjoyed consistent long-term tenancy with minimal turnover. Upon retirement, I have the option to allocate a significant portion of my income to pay off all four properties.

My inquiry arises from an opportunity that recently presented itself: the chance to invest in new duplexes in Indiana. Upon analyzing the figures, with the prospect of a 1031 exchange involving the three California rentals to acquire five duplexes, along with additional cash investment, I could potentially generate $13,000 in monthly cash flow within five years (factoring in paying off the mortgages on the five duplexes). Conversely, if I choose to retain the three California rentals and pay off their mortgages, my estimated cash flow would be approximately $6,800 per month, albeit with properties that are 20-25 years old. This realization has prompted me to actively explore my options rather than procrastinate.

I eagerly anticipate your insights and suggestions on how best to proceed. Thank you.