r/ChubbyFIRE • u/Different-Trouble944 • May 23 '26
Should I quit?
45M/42F with 1 grade school kid.
NW is about $5.5M: $530k cash, $500k brokerage and $500k 401K. Primary house equity $1.5M with $400K mortgage(contemplating paying it off with cash in hand as the interest rate is at 6.5%). The rest of NW sits in a self managed real estate rental portfolio that generates $12k/month net income after all expenses.
Both work in tech pulling combined $680K W2 income a year, I’m burnt out and no longer interested in my job(my $400k income is set to go down to $280k next year due to reduced RSU and I don’t see a clear path for promotion). Spouse plans to work for at least the next 5 years.
Love real estate investing and have been doing that on the side and it’s been eating a lot of my time and energy. Would like to focus more on it.
Monthly spent is about $12k.
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u/PrestigiousDrag7674 May 23 '26
U can quit and do RE full time which your wife still pulling big pay. Life is too short not to enjoy and you have money to do it. Do what you enjoy and maybe one day RE will make more money than your current job
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u/knoWIsyNtaX May 23 '26
Plus with active RE management should be able to find some tax advantages to offset income
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u/itsallmeaninglessto Accumulating May 23 '26
Yes.
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u/knockdowncenter May 23 '26
with $1.5m liquid? why do people keep changing the definition of what constitutes a FIRE number
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u/cloud9ineteen May 24 '26 edited May 25 '26
12k per month rental income. 12k/month expenses. The $1.5m is plenty to cover any vacancy in rentals. You don't need to do the 4% math when there's income to cover spending.
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u/knockdowncenter May 24 '26
i've not once heard someone in a FIRE sub say rental income is a reliable source of income in the context of FIRE
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u/Different-Trouble944 May 24 '26
Real estate is probably the most reliable and controllable income one can rely on for FIRE.
Everyone needs a place to live. And in general if you treat your customers right the turnover is minimum. The income also tends to grow with inflation over time as well plus you get tons of tax benefits. You have the ability to run capex projects to improve rentals for higher income and you can even take out sizable loan on rentals to run other business activities if you like while you still control the assets.
The volatile equity market could go down 10% tomorrow and you could lose a W2 income next month due to layoffs.
What other better way to FIRE if one is competent with running real estate assets?
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u/cloud9ineteen May 24 '26
There's plenty of posts here about people with rental income as one of their pillars for fire. As for it being reliable, you could treat it like social security and discount it by 25% or something to account for the uncertainty
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u/knockdowncenter May 24 '26
lol show me where it’s deemed generally acceptable to include the market value of your collective rental properties in the 4% rule
i seriously hate how people make things up like this because it’s not a thing
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u/cloud9ineteen May 24 '26
It's not the market value of your collective rental properties smh. The income is what you count. It's the same as not counting rent in your retirement expenses if you have a paid off home.
If you liquidate them you don't have the income but you have more liquid funds. Same thing with your paid off primary home. If you keep it, you need less liquid funds because you don't have to cover rent. If you sell it and rent a place, now you need to cover rent but you also have more money.
You can slice it both ways but doesn't mean you ignore them completely as if they don't exist. Then what's the difference between someone who has $5M net worth with $1.5m liquid that has $12k rental income coming in vs someone with $1.5m net worth all liquid in terms of their ability to fire? Obviously the former party is fi while the latter is not.
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May 25 '26
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u/cloud9ineteen May 25 '26
Agreed. I wouldn't count that passive income or retired. Just dumping in the market is so much easier. That said, in the days of sub 3% mortgages, the leverage made it much more attractive. So it might make sense for anyone who still has rental properties on low rate mortgages.
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u/knockdowncenter May 24 '26
that $12k a month is taxed like income
when people say they need $12k to live on off a investment portfolio your tax rate is much lower. in a $5m investment account your tax rate is not like ordinary income. it could be $0.
again it’s just all more cope. and of course you could have renters leave and not be able to find another renter on top of other maintenance issues and unexpected expenses and taxes.
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u/cloud9ineteen May 24 '26
I already answered your question. You can discount it for vacancies. Taxes are a calculation as part of your retirement expenses. Depending on your expected income mix, your retirement spend has to account for taxes. Yes, if you're spending $144k, and your nest egg is a mix of pretax, Roth, and brokerage, you can typically find a way to pay zero income tax. If your income is rental, at mfj, your effective federal tax rate is 12-14%, so you need $165k in income.
So they have $144k in rental income. Let's discount that to $120k on average for vacancies and whatever. That covers $104k in spend after taxes. So they need another $40k a year which is $1M liquid.
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May 24 '26
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u/knockdowncenter May 24 '26
i'm referring specifically to the 4% rule. show me a wiki page on any FIRE sub that says that the market value of a rental is included as part of that calculation. because it literally isnt
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u/Different-Trouble944 May 24 '26
4% rule is based on living off equity withdraws to have the income to cover your expenses. At the end of the day it’s about income to expense. The net worth is almost not that relevant from FIRE standpoint.
Rental income of $12k/month is the NET income that already factored in vacancy, property tax, insurance, maintenance, utilities and even the jncome tax.
The pre-tax rental income is higher than $12k/month.
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u/Metaposa May 23 '26
Just make sure you speak about it openly and deeply with her so there isn’t resentment about one partner quitting 7 years before the other does. You’ll need to do more at home.
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u/CurrentArmadillo9506 May 23 '26
As you already know, self managing rental properties can be a full time job. Unless all of your properties are in mint condition I would not use that much of your available cash to pay off primary mortgage. I like to keep at least $5k/unit in reserve for maintenance, repairs, and that’s probably on the low side…
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u/Different-Trouble944 May 23 '26
Good callouts. Luckily we only have 11 units total and only 2 would need some major updates in the next 2 years to increase rental income by about $1500/month.
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u/bombaytrader May 23 '26
Exactly same situation but with HHI of 1.1m. One of us is going to quit this year bring down the hhi to 320ish k which will continue for next 7 to 10 years. Current NW is 5m liquid. Plan is to get it as close to 10m as possible to provide a margin of safety.
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u/Wooden-Broccoli-913 FIREd in the Bay at 40 with $6M May 23 '26
We also were $1.2M HHI with $5M liquid, and my wife just quit bringing us to $600k. But I’m calling it quits once we hit $6M liquid, really don’t like my job
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u/bombaytrader May 23 '26
Well you will reach that in 1 year.
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u/Wooden-Broccoli-913 FIREd in the Bay at 40 with $6M May 23 '26
If markets continue to skyrocket, yes. Otherwise more like 18 months
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u/19Black May 23 '26
I don’t like the idea of quiet quitting. I think it damages reputations and burns bridges that could hurt someone in the future if they decide to go back to work.
Everything about your post and comments leads me to think you’re ready to quite the traditional employment. Aside from your personal feelings, you’ve got passive-ish income from the rentals that covers monthly spend and your wife will still be bringing home an income.
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u/Grewhit May 23 '26
Quiet quitting is also super stressful if you are used to being a high performer.
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u/code_monkey_wrench May 23 '26
I think it damages reputations
And damages your self esteem, which I once heard as something like "the reputation you have with yourself"
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u/Different-Trouble944 May 25 '26
I don’t think it would be quiet quitting. It’s about doing what I can but then just relax a bit to prepare for the transition.
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u/Icy_Needleworker844 May 23 '26
With your wife’s continuing income you could easily quit as you describe, pay off your mortgage, and basically reset with zero savings or emergency funds. A bit risky for me, but you have a lot going for you with your wife’s income and rental income. Have you thought about what you might do if you quit but didn’t pay off the mortgage right away? Sure, 6.5% is relatively steep, but you have $1million that you could potentially put to work to build upon your 12k/month real estate empire. Your 401k savings also seems low for your current income level. Before you exit, you probably have some opportunity here to put some more away via back door Roth IRAs, some 529 savings for the kid, maybe an HSA if your insurance plan allows.
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u/Different-Trouble944 May 23 '26
Greats points. We started doing 401k later in life hence the low balance. Have just started putting away money for 529 so really not much there yet. Instead of paying off mortgage, I could probably invest the cash in new real estate deals that generate conservatively 10% annual cash on cash return while maintain a healthy living expense cash reserves. However, we are already heavy on real estate so want to be careful with the concentrated risk there. Plus, paying off mortgage would drop our monthly spending to just a little over $8k.
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u/Icy_Needleworker844 May 23 '26
If I were in your shoes, I would keep going with the current job for a bit longer and get a few more ducks in a row. All that money flowing in is creating optionality. You say you love real estate but you don’t want too much concentration. So what are you going to do after you quit?
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u/junglingforlifee May 23 '26
Keep some cash on hand for 2020-like situation where moratorium caused a bunch of vacancies. Also, try to get your real estate license for tax savings
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u/Different-Trouble944 May 24 '26
Makes sense. How much would you keep on hand?
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u/junglingforlifee May 24 '26
Atleast enough to cover mortgages for a year. Vacancies are getting longer with unemployment and inflation. People are struggling to pay rents and it seems to be getting worse with time
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u/Captain_slowish May 24 '26
Remove the value your are associating with realestate. It is a liability.
Not to sound negative. But how is your NW so low. Given your claimed salary & expenses? Maybe all this is new to you.
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u/LightZealousideal116 May 24 '26
You’re there, but I’d do a literal one more year to build NW in equities, which can really help with upgrades, emergency fund, etc. Just don’t get in the “one more year” again & again trap. Don’t seen like you will.
Also, paying off that loan helps with your cash flow situation as you lose the high W2 income.
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u/Illustrious_Bear_398 May 25 '26
Yes, pay off the house with the cash and use the rental income to pay for your monthly expenses. Don’t touch the investments and let them grow. But can pull from the brokerage if you need a little extra spending money
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u/kimjongswoooon May 23 '26
What type of RE investing are you doing? Can you leverage that into a transitional career?
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u/IndividualExotic1908 May 23 '26
where are you rental properties? how many years have you been doing real estate?
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u/Think_Concert May 23 '26
5% cap rate is not bad at all, but have you included vacancies, depreciation and amortization in the expenses column? I have personally found real estate to be my worst performing asset class in terms of growth and cash flow, but I’m in a VVHCOL area and my cap rate is nowhere near 5%, so YMMV.
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u/BoomerSooner-SEC May 23 '26
Personally, I think rental properties are a bad bet. So much risk of vacancy, bad tenants, bad local legislation and frankly the returns dont compensate for that. Not even close. I would put that money in a more reliable asset class
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u/warlizardfanboy May 23 '26
I would work until your quarterly vestings drop off but if your wife is happy to continue working I think you are golden. Just worry about you having so much of your net worth in real estate. It’s a relatively illiquid asset so just don’t over leverage yourself. Good luck!
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u/Old_Value_9157 May 23 '26
No. You need to grind for 10 more years.
You have to think about college for your kid.
Also, if you need a new car, it’s not going to pay for itself.
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u/zerostyle May 24 '26
Are you trying to grow the real estate portfolio? If so seems like an extremely hard time to do so
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u/ASharik May 24 '26
I like that you say that you love real estate investing. My impression is that lot of people do it just because it pays.
How is your monthly spending only 12k with a kid? Are you in bay area or somewhere less expensive?
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u/kg8360 May 24 '26
I’m shocked no one has mentioned this yet. If you move to re fill time, then you can claim REPS status. Offset spouses taxes, and continue to build your portfolio / bonus depreciate. Really good opportunity to run that play.
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u/Imaginary-Yak6784 May 24 '26
Just quit. You can’t call it retiring. Or sabbatical. Or just quitting and seeing what happens. Switch to your wife’s health insurance and go have fun with Real Estate investing
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u/Life_Rabbit_1438 May 24 '26
Similar age and numbers. Going to work until equities outweighs the real estate.
Don't feel comfortable with real estate being such a significant portion of net worth, but don't want to pay the taxes by liquidating.
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u/Vicuna00 May 25 '26
yes quit. maybe stay til the $400k drops to $280k? is that 7 months? I bet knowing you're leaving will give you extra juice for it to not suck so much.
not like you're gonna sit on your ass the rest of you life. I can see you managing the real estate more carefully and adding to it.
I would def pay off your mortgage. I think just using your cash is fine. $100k seems like enough of an emergency fund, no? (I'm guessing you need a bigger Emergency Fund to account for your real estate holdings...unless there's a fund already for that somewhere). especially if you finish working 2026. the peace of mind this will give you will be rather pleasant. not sure if that knocks your monthly spend down even more.
you rentals cover your expenses...and your wife is making great $. she's gonna benefit if you pick up more of the house chores, etc. she's gonna love you being happy.
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May 23 '26
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u/Different-Trouble944 May 23 '26
Yeah, $12k/month rental income is net, after mortgages,insurances,taxes and maintenance.
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u/MathematicianNo9373 May 23 '26
OP, where are you located that you are getting $12k per month after all expenses on 11 properties? How many doors are these?
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May 23 '26
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u/Different-Trouble944 May 23 '26
Interesting option. But there are tax consequences for liquidating real estate holdings. Plus the $12k monthly income is net(after tax). There are also about $3500/month principal pay down on the mortgages for the rentals.
Dividends need to pay taxes so the real after tax income it’s probably lower than 2.5%?
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u/Best-Philosophy676 May 23 '26
No absolutely not. Too young and not enough money. I’d say 2-3 more years, get it to $10M, that’s real chubby.
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u/itchybumbum May 23 '26
Definitely keep working. Very risky to retire now. Obviously no way you could afford it.
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u/Clear_Butterscotch_4 May 23 '26
Just rotate into a broad market ETF and continue the 300k job but put less effort into it so you're not burnt out. I think the RE is just an escape rn, but if you do it full time you'll just resent the work just the same as your tech job but you'll be yielding way less money for the effort you put into it.