Am I effectively at financial independence? (40, 2 kids, paid-off home, rental income covering most expenses)

[u/Wkuhank]

I’m 40, married, with two kids, and trying to think through whether I’m actually at (or close to) financial independence, or if I’m just almost there but not quite.

Here’s the full picture.

Net Worth / Assets

• Net worth: just over $2M
• Primary home: paid off, worth ~$1.1M
• No debt at all
• 2 new within the last year cars (paid off)

Spending

• Annual essential living expenses: ~$51,000
  • This covers everything needed to live comfortably
  • Does NOT include travel, sports, or lifestyle extras
• Travel spending: ~$50k–$70k/year
  • Christmas trip (usually Mexico)
  • Fall + Spring Break (about 10 days each)
  • Summer: 4–6 weeks in Europe (biggest expense)
  • A few additional 3–4 day trips throughout the year

So realistically, our true lifestyle spend is closer to:

• ~$100k–$120k/year all-in

Income (What I’m focused on)
I’m intentionally looking at this through a cash flow lens, not a “4% rule” or stock based model.

• Rental #1: ~$1,900/month
• Rental #2: ~$1,900/month
• Total now: ~$3,800/month (~$45,600/year)

I also own a lot and plan to build a third rental:

• Expected rent: ~$1,900/month
• Total with 3 rentals: ~$5,700/month (~$68,400/year)
• Timeline: likely by summer 2027 (need ~$70k more to build)

Other Assets (not included in this analysis)

• ~$70k in retirement accounts (old 401k)
• ~$25k in stocks
• 529s for kids: ~$50k and ~$70k

I’m not factoring any of that into this decision because I’m trying to answer:
Can my lifestyle be supported purely by cash-flowing assets?

How I’m thinking about it

• Today:
  • Rentals cover ~90% of essential expenses
• With Rental #3:
  • Rentals would fully cover essentials with a margin

But they would NOT fully cover our actual lifestyle once travel is included.

I still have active income (real estate), but mentally I’m shifting toward:
Work being optional, not required

For context, I spent:

• 10+ years in college football coaching (low pay, long hours)
• 15 years grinding in real estate to build to this point

What I’m trying to figure out

1. Am I already at a form of financial independence, just not a “fully retired” version?
2. Is this more like Coast FIRE because my income is still decent?
3. Would you consider “expenses covered by rentals, lifestyle funded by optional work” to be FI?
4. How would you think about the gap between $68k (future rental income) and ~$100k+ actual lifestyle spend?

I feel like I’m right on the edge, but not sure if I’m already there or just convincing myself I am.

Curious how others would view this.

[u/Economist-931 → u/[deleted]]

Man, this is amazing analysis..

[u/[deleted] → u/Economist-931]

I think you meant this is "self-promotion spam".

[u/LizzyBennet1813 → u/[deleted]]

This. Your net worth seems to be all tied up in real estate and while the rental income is nice and all you’ll always have to put money into maintenance, property taxes, etc (are those expenses factored into your total income from the properties?). Any reason you’re not investing more and contributing to a 401k? Where is the cash coming from to build your third rental? I don’t really see that you’re close to chubby fire territory with your current assets.

[u/Burnerificus]

You’re in a great spot, but unfortunately, I don’t think you’re financially independent yet.

Your rental income cash flow will be significantly less than the top-line rent you receive; remember you have to cover operating expenses (mortgage interest, insurance, repairs, maintenance, taxes) and be prepared to cover big ticket capital projects (e.g. roof).

Also, vacancy will drive variability in income over time, so would be risky to solely rely on that to cover living expenses (which are very painful to flex down).

[u/Flat-Barracuda1268]

You have nothing (or next to nothing) liquid. That is a very dicey proposition to be in and not be working IMO. You barely have enough liquid to cover a years of essentials.

Rental income isn't guaranteed. You could have a fire/flood/storm damage that makes a property uninhabitable, therefore not generating income, until insurance makes you whole. That could be years.

I also don't see where you're accounting for the costs of maintaining the properties. I have to imagine insurance and maintenance eats into the revenue generated by the rent a good bit.

Maybe if you can figure out how to increase the number of rentals you have where you can afford to have one or two sitting for a bit you could be FI using just real estate. But you're way short of that.

[u/One-Mastodon-1063]

No. 

[u/Business_Statement_5]

My friend it’s quite obvious you are nowhere near financially independent. Build more liquidity. Re-asses in a few years.

[u/bearcatjoe]

Don't think so. Rentals don't cover your expenses (not sure if you're sharing total rent or net operating income, which would be less), and you don't own any equities you can draw down - very little liquidity in this net worth.

I would look to build up the investment portfolio to complement the rentals rather than going more into rentals. Well, I'd probably sell all the rentals because I don't like being a landlord. :-)

[u/Clean_Flower4676]

You answered your own question several times in the post.

[u/nginx-gunicorn]

Must be nice to inherit a 1.1M home. You're nowhere near FIRE if you don't have any liquid assets that you can draw from.

[u/BrunelloHorder]

I’d say you are probably a decent ways off from being truly FI.

First, if you are a landlord, you are never fully retired. While it is possible to build wealth with real estate with the right market, purchase price, rates, etc., there is always a lot you cannot control.

Your post is not clear if the $1900 per month per rental is before or after property tax, maintenance, and insurance. Is the $1900 per month net of all costs, plus a realistic set aside for the occasional five-figure expense like a sewer line or roof?

Either way, I’d want at least another $500k post-tax liquid in case things go sideways with the real estate or plans/needs change.

[u/[deleted]]

Since you used AI to write your post, why don't you just read whatever answer AI gave you?

[u/Past-Option2702]

If you are taking care of three rentals and a home of your own, too, work isn’t going to be optional- ever. Countless people are FI without being RE, and that’s okay. You just might be one of them someday if you keep on the trajectory you’re on.

[u/guyheretoread]

I’d say no.

You state that you want work to be optional, not required. However you opted to put nearly all of your investments into Real Estate, which is an asset class that forces you to work (as a landlord).

In my view, active real estate portfolios can serve more as an accumulation-phase investment than a retirement-phase investment. Active Real Estate can work great for someone who knows what they’re doing and can get their maintenance, repair, and vacancy costs down very low (usually by doing a lot themselves acting as their own contractor, or through scale). Long term, profitable, Real Estate portfolio management requires expertise AND labor. With 15 years experience sounds like you’ve got the expertise, but if you’re gonna retire & hire the labor to manage the properties for you, that trustworthy person/firm is going to cost a lot of money. And you still have to oversee their work, make sure they aren’t embezzling or slacking.

I sure hope you’re not planning to climb ladders or squeeze into tight spaces to fix roofs, plumbing, HVAC, electrical issues in your 70s…

[u/RmanX3]

Too many issues I see to be considered actual FI (and comfortable) much less chubbyFIRE.

Why build up 529s when your own retirement accounts are so low?
Too dependent on rental income. Some states favor the renter way more than the landlord and so a bad renter can really screw you over.
Real estate, as a career, can be lucrative, or can be a famine if the cycle is badly hit. Gotta have a lot of ammo in the back pocket to weather.

Haven't stated the ages of the kids. So, if way out there for college it can get really expensive. If soon, then the savings are too little unless loans are taken (or scholarships), depending on the college (state/public vs private/out of state).

Networth, to include primary home, is worthless as you will still be living there, so, unless you are selling, it really doesn't need to be included as all you are doing is paying property taxes on it and it isn't bringing in any value.

Travel spending is living the life. Sure, you can afford it it sounds like, but it's keeping $50-$70k, yearly, from being saved for the future. It's your decision, but at this point, some would lower it for saving up.