Quote from @Steve K.:
Congrats on being able to look on the bright side because most people would be panicking in your situation (losing their job with 5 young kids and only 3 properties/ not much income).
I was in your position at around your age but with only one kid. We travelled for around 9 months doing the van life thing then I got bored and starting working again simply in order to have more of a sense of purpose. I also realized that life was a lot more expensive than I had budgeted for, and some big capex issues came up with our properties that would have been too expensive to deal with remotely, and traveling with even just one kid dirt-bag style was not nearly as much fun as it was when I had done it for a few years after college before kids.
A wise relative told me I should have at least $10M in the bank if I really wanted to fully retire that early (with one kid). I laughed at the time because that sounds like a lot of money to a young person who is frugal. But he was serious, and he was right.
Are you accounting for capex in your calculations? I see maintenance but no capex. Also don’t see any vacancy/ loss. These numbers look very optimistic honestly. Even if everything goes well, some years you will still be negative due to capex issues or vacancy/ loss issues that always seem to strike all at once. Budget accordingly! Money will not always flow out of these properties, sometimes it will have to flow in and you will need to draw on your cash reserves.
Also not sure how you’ll be able to live off of $120k/ yr. with a family of 7, especially while traveling. We are a family of 5, we take a few big trips a year but definitely not trying to travel full time, and our annual budget is A LOT more. Not just a little bit. A LOT.
Kids get more and more expensive as they get older, so do properties, and people tend to enjoy a higher-end lifestyle as they get older as well. You may not want to live as frugally as you are now forever. According to my math, you need to be budgeting around $2M bare minimum to get these kids to 18, then 5 college tuitions on top of that. That’s not including your own living expenses, or saving for retirement.
Honestly I wouldn’t quit working in your position unless you have about $10M bare minimum in the bank in a high-interest savings account or invested very conservatively in blue chip stocks/ bonds. $30M would be much more comfortable!
So we've done basically full renovations on each of the units over the last 10 years. Thats why my maintenance which includes capex is a little on the lower side. But I figure $280k over the next 10 years sounds reasonable.
I am not assuming my kids go to college, if they want to go, they can... but I am not doing 529's for them. They each have Roth-IRAs.
As we get older rents will increase, mortgages will start to go away one by one, and we will have access to better cash-flows.
No need to save for retirement, as we essentially are retired at this point, and living off the rental income without having to touch the retirement accounts, as was the point of this post... and we maxed out IRAs and 401k early on, so those have enough basis in them that they don't really need any future contributions to balloon into awesome assets by traditional retirement age.
I don't necessarily want to Die with Zero... but to keep the Golden Handcuffs of my W2 on till I reach $10M sounds like a very unnecessary waste of my life based on fear.
I appreciate your point of view, and I know there are risks involved, just yesterday I met with a roofer to put a new roof on one of my units, but I've checked my historic repair costs, future potential capex projects, and done my best due diligence to move forward towards a life of freedom on my terms.
Here is a closer look at our personal finances if anyone is curious, also we have access to $300k in HELOCs that are unused: