Frum.Finance

When calculating your FI number, how do you handle cashflowing real estate? Keep it out of your "asset" column, and deduct the cashflow from your retirement budget? Or keep it in, and use the same 3% safe withdrawal rate for the equity as well?

Take the steady profit of the real estate and subtract it from the annual expenses you need to live off before you multiply by 25

Option 1 I guess. But I would use a Monte Carlo for a complex scenario if you can without using the 25x number if you can avoid it. Unless your retirement is after your latest large known goal like simchos

at this rate, it is probably after haha

I know monte carlo is way more reliable, but its also way more annoying to get.  So for a simple generic target that I'm anyway nowhere near, just trying to come up with a simple calculation

(also, I'm planning on using a specific piece of real estate to fund weddings, and I'm not including the value of that in my porfolio)

wait, sorry, just saw you said 25x.  Do you use 4% as a safe withdrawal rate for early retirement too, or is that just because I said I'll probably not retire until my kids are married?

Yes 4% for early retirement also, with spending guardrails depending on market conditions.

So if market crashes, be able to do 3% for example.

In your Monte Carlo you can setup guardrails. But you can also just do it naturally by not walking off a cliff like a lemming when the market tanks.

how are you planning to use real estate to fund weddings? From the cashflow, or selling, or loan against the asset?

<@U057FCG9UCX> planning to sell.  I've probably got another 8-10 years before we start with weddings.  This specific property I'm forecasting to have about 400k ish in equity by then.  Figure 15% capital gains tax, %10 in concessions/commissions/closing costs. So about 300k to work with.  I have 5 kids, I'm thinking that will allow me to spend about 70 for the first two (who are very close in age), and dump the rest into a HYSA or money market to grow a little more for another 5ish years until I need it for my younger kids
Will 70 be enough to marry off kids/get them set up if 10 years? No idea.  But its the best plan I've got :woman-shrugging:

Although this conversation has made me do some math and I'm wondering if I should sell now and stick the money in the market.  Gonna post about it soon, probably in the <#C04E9R0MGK1|> channel