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Discuss Latest POF Blog Post: FIRE Crossroads 022: Giving Up $700,000 a Year

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  • Discuss Latest POF Blog Post: FIRE Crossroads 022: Giving Up $700,000 a Year

    In his late thirties, he’s about to leave a lucrative business he’s built up and start anew. He and his ... Read more

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  • #2
    Well he certainly has no shortage of confidence. Seems like a ton of big changes happening at once (family addition, new careers, steep active income drop, building a new home, moving to a completely different part of the country). Wish them luck. Wouldn’t be my path but it sounds like they will find their way, even if there could be some detours.

    Still looking for that interview that I can relate to pre-FIRE. Ultimately, it might be POF himself, although our post-FIRE lives would be extremely different.

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    • #3
      I'd caution with buying such a large property/custom house and as he said tie up a large amount of net worth into this illiquid, difficult to tap into equity.

      If they really do want to do this, I'd almost not even include it in net worth calculations for calculations of FIRE/withdrawals. If they have the business that still brings in $200k a year then that's different of course, but such a purchase/investment changes plans for sure.

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      • #4
        I am too conservative to follow this path, but fortune favors the bold. Although a lot of changes at once, I think the type of business he wants to build has a demonstrated track record of success. And no time like the present. He seems willing to work for it, and understands real estate.

        What is less clear is that there is a need for his business near where he plans to buy his 50 acres and set down his dream house. Also, it would be interesting to see him lay down a five year cash flow projection. The family will bleed money for several years with big purchases and low income. All can be overcome as the business grows and he acquires properties. But that depends on buying right and building the portfolio.

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        • #5
          I am way too conservative for this. I spent years to become a physician (I know he is not a physician ), and earn a good living. Why would I want to totally disrupt my life and my family's life to make a change which could possibly be less financially productive than now. I am older , and my numbers are a little bigger, but to go from $700,000 to an unknown even with 5 million in the bank, he may not feel better off.

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          • #6
            The biggest issue is cultural shock from Southern California to the boondocks of Tennessee.

            Another issue is in RE you really can't be hands off and advising without being physically present in the location most of the time. Otherwise he might not get the 200K passive income he is hoping for. So his aim of being the 5% work lifestyle might not be realistic.

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            • #7
              “ If they have the business that still brings in $200k a year then that's different of course,”
              • The couple have skills in what I call Gathers. Short version, sales and marketing. In DelMar is the success due to skill or luck? Just a needed self assessment. Revenues.
              • I detect in the past and in their “toolbox” they have always relied on others to “do the work” . I see no transferable skills in running a business. Loan officer and real estate is commission based on sales only.
                Property management is an operational function. Short version is: Starting from ground zero with no idea if either has the temperament and skill sets needed. Just a needs self assessment whether they need skills or luck. Costs.
              Revenues - costs = profits
              Not many actually succeed in building a business in five years that they can leverage others to yield passive income of $200k.
              The combination of geographic, starting a new business and no income is a huge risk. Not one I would take. Seems more like a hope than a plan.

              I wish them luck and I hope they develop the skills and a business plan. Short version, luck is better than skill. They need to be lucky in Tennessee.

              Comment


              • #8
                I think the OP may find living on 50 acres with horses will be a lot of work. Most farms that actually make money are much larger than this. 50 acres qualifies as a "hobby farm". There are large "estate" type homes in Nashville that have horses even buffalo in the yards. FWIW I used to own 20 acres with 8 horses in Northern Alabama.

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                • #9
                  Originally posted by Hatton View Post
                  I think the OP may find living on 50 acres with horses will be a lot of work. Most farms that actually make money are much larger than this. 50 acres qualifies as a "hobby farm". There are large "estate" type homes in Nashville that have horses even buffalo in the yards. FWIW I used to own 20 acres with 8 horses in Northern Alabama.
                  I have grown up around horses since "birth". The care and feeding is similar to a responsibility of caring for a child or pet. They are completely depend on you for daily needs. 365 days per year you are on call. Of course it is not 24/7, but it is a responsibility. They are a cash drain. The same as a family pet which eventually becomes a family pet. Grandpa had over 120 at one time. My brother and a niece are Vets. They made a vocation of their passion. Horses are a commitment and expensive if you outsource their care.

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