How to retire off single family houses? A lot of equity...

[Jack B.]

I own about 6 million in real estate. There is three million net worth, most of that equity, some cash on hand (1 million). I cash out refinanced last year to buy more properties. So my cash flow was reduced of course and I knew it would. Prior to that, I would have made about 60K a year cash flow and another 40K principal pay down.

I could easily live off that if I relocate to a lower cost of living area like I plan to, because I live modestly, a used Toyota, no fancy stuff, cheap dinners out.

But recently I started considering the tax free strategy of cash out refinancing periodically to live off that equity tax free. I make about 1 million a year in an up market. That would last me about 15 years. Or I could live more spendy, take trips, etc. and cash out refinance more often. The only problem I have with that though is my cash flow never increases and the properties never get paid off.

My original plan was to let inflation raise the rents and retire off that, let the properties pay off and watch my cash flow spike, and also having my net worth explode over 30 years.

Another option I considered was cash out refinancing 2 million out in a few years, put it in index funds, and live off that while I let cash flow increase and equity  build up as the houses pay off. This way I'm not constantly living off equity in my houses via cash out refinancing. 

Yet another option is to cash out refinance, put some in index funds to live off of, put some in apartment complexes in the mid-west (Indiana) and keep building multiple buckets of wealth and income.

Ultimately, I'm about to turn 40. I don't want to work much longer. I had planned on retiring at 40 when I was 30, but I decided to reduce my cash flow and tap equity to buy more and more houses to build more net worth, since appreciation is about 100K a year on each house I own right now, about 1 million a year total. I figured I can always turn equity into cash flow. But this plan requires me to work a few more years to build it up again to where I can tap 2+ million and buy more investments. Either that or I wait for cash flow to increase via increased rents. I absolutely don't want to work past 45. I will say I make 10 times what my gf does in a  year and I still work. She's a full time investor despite having less money than me. Largely because she invests for income NOW rather than in the future, whereas I invest for income in the future rather than now.