[USER]

After joining this FORUM, I have really been second guessing my retirement strategy. I am heavily invested in Real estate. If I were to sell my portfolio, I would have approx 2 mil (after taxes) to invest. Selling would allow me to leave my high income tax state. My monthly expenses are approx 6k/ month.

I only have 1 401k and sep IRA totaling 350k. What would you do and where would you put 2 million?

FYI my rentals give me 7500/ mo.after expenses. Already in semi retirement mode, hoping to fully retire in 5 years. 51 years old.

Thank you!

[Jeff]

Keep the real estate!

[M Alice]

FL here. I sold stock to pay off fully my RE. Keeps mortgage interest out. However, in my area property taxes are crazy, so is property insurance. On one property I pay 5k prop tax and almost 6k in property insurance! Do your math. But, it seems in general, property is still a good investment. Not like it was, but still seems ok. Managing it is a whole nother thing!

Don’t miss: I have a real estate question for all you smart people

[David]

If I were you I would totally keep the rentals and use them as the primary income generating asset. On top of that I would build some stock portfolio too for a little diversity over the next 5 years pre retirement. Don’t fix things that are not broke it sounds like your plan is working well for you.

[Steven]

Selling would allow me to leave my high income tax state.

What about the real estate tethers you to the state? Many people own rental properties in another state.

Explore these too: For anyone that has experience with it: Tell me about multifamily real estate investing

[Ian]

Don’t second guess yourself too deeply. The ideas of “financial independence” and “invest wisely and build wealth” are wholly separate and not always compatible. This group is skewed heavily towards a Dave Ramsey or strong libertarian school of thought that theoretically doesn’t want any dependencies on anyone or anything. It’s more of an “independence” group rather than a wise investment group. There is some overlap between those two circles on a venn diagram, but it’s not a huge overlap.

Real estate is a great place to be invested. Generating wealth is inherently dependent on other people, otherwise you are limited to the output of a single human with limited scope of expertise, experience, and resources. Generating real wealth relies on knowing how to bring multiple parties together so everyone can have a multiplicative effect on each others talents. You’re doing well being invested in real estate.

Also, check out: Saving for a home/real estate purchase

[Monique]

Why are you selling? Your cashflow covers your expenses. The 4% draw on $2M would be $80k (less if this doesn’t include taxes from the sale). Your cashflow would be $90k.

If you don’t have PMs and tired of managing, then maybe hire PMs or put the money into more passive RE like syndications, but I’m just confused here.

[Belvin]

Too many write-offs with real estate so if you sell, invest some into real estate in a cheaper state to still get some tax breaks. Schwab has brokerage accounts with CDs paying over 5% for a 5 year CD without the ups and downs of the stock market.

Good luck.

Would you also like to explore: Everyone always says: Investing in real estate is the best way to grow wealth

[Luciano]

I see it a bit differently. If you net 5% managing properties and risking possible bad tenants along with fixing stuff I would be fine with a draw of 4% and having time to do other things. Being a landlord these days is not easy. People are to intitled and won’t hesitate to screw you.

Just my opinion.

[Grant]

Hard to go wrong with S+P index funds or etfs. Yeah, it was down last year but it’s already up around 15% this year and nearly recovered. Average year return is 10-12%. Adjusted for inflation makes it a little lower of course, but the old 4-5% withdraw rate should leave you in a good spot with that. Makes up for down years because most years you’ll make more than you withdraw.

Some folks will scream bonds as you get older for the security. That’s fine, just know you’re leaving money on the table doing it. To each their own on that issue though. If well over 100 years of data on the s+p isn’t a decent history to judge from, idk what is. That includes the Great Depression and Great Recession too, and the returns are still that good.

You can definitely beat the S+P if you search well, but it’s easy and has done very well. My current retirement is 75% in s+p and it’s done very well.

[Author]

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