All ModelsWisconsinWhen Nomading™ should you consider selling ALL your rentals if it means you'd be able to invest in stocks, bonds or something else and live off these investments using a Safe Withdrawal Rate instead of the cash flow from rentals?

When Nomading™ should you consider selling ALL your rentals if it means you'd be able to invest in stocks, bonds or something else and live off these investments using a Safe Withdrawal Rate instead of the cash flow from rentals?

You could acquire a portfolio of rentals utilizing the Nomad™ real estate investing strategy and wait for the cash flow to be great enough for you to be able to achieve financial independence from the cash flow.

But, what about the equity in your properties?

Would it be better for you to sell off all the rentals and take the net proceeds after all the expenses and invest that in something else. Then, live off these other investments using a Safe Withdrawal Rate?

Video

NOTE: The information in the video may differ from the numbers shown below because we may have changed our assumptions (like the mortgage interest rate, property prices and rents) between when the video was made and current assumptions.

Comparison Summary

Metric Baseline Nomad™ Sell All Properties if FI Difference % Better/Worse
Net Worth at 40 Years $11,285,107 $10,955,342 $329,765 2.9%
Short $ -$13,502 -$13,502 $0 0%
# Properties 9 8.1 0.9 10.3%
MTMIR Achieved 522.8 500.1 22.7 4.3%
Risks
Ave Total Rent Resiliency % 37.85% 19.7% 18.15% 48.0%
Ave Total Price Resiliency % 70.8% 40.41% 30.38% 42.9%
Ave Debt-To-Income 30.03% 16.99% 13.04% 43.4%
Ave Debt-To-Net-Worth 49.53% 48.04% 1.49% 3.0%
Ave Debt-To-Account-Balance 90.38% 85.66% 4.71% 5.2%
Ave Months Of Reserves 833.9 1020.5 -186.6 -22.4%
Metric Baseline Nomad™ Sell All Properties if FI Difference % Better/Worse
Net Worth at 40 Years $8,309,620 $7,853,265 $456,355 5.5%
Short $ $0 $0 $0
# Properties 10 8 2 2.0%
MTMIR Achieved 520 505 15 2.9%
Risks
Ave Total Rent Resiliency % 35% 4% 31% 88.6%
Ave Total Price Resiliency % 73% 30% 43% 58.9%
Ave Debt-To-Income 33% 17% 16% 48.5%
Ave Debt-To-Net-Worth 50% 49% 1% 2.0%
Ave Debt-To-Account-Balance 127% 122% 5% 3.9%
Ave Months Of Reserves 356 681 -325 -91.3%

For Risks, we are measuring the average of that risk for the entire Scenario for that city. The Average or Median option at the top of the table is whether we take the average of all the averages for all cities or the median of all averages for the cities. Average tends to skew values (high or low). Median tells us the middle most.

Achieving Financial Independence

Between Baseline Nomad™ Scenario (Baseline Nomad™ in the chart below) and Nomad™ and Sell ALL Rentals if SWR Achieves FI (Sell All Properties if FI), which one gets you to financial independence faster?

Let's look at Financial Independence first, then we'll move on to Net Worth.

  • In Baseline Nomad™, 0 never achieved financial independence.
  • In Sell All Properties if FI, 0 never achieved financial independence.

Financial Independence

How Much Faster to Financial Independence vs Property Value

Is the difference in how long it takes to be financially independent (Lean FIRE), really about how expensive the properties are in that market?

  • Is it generally faster to be financially independent in less expensive real estate markets with these two strategies?
  • Is it faster in more expensive markets?
  • Does it not really matter if the market has expensive or less expensive properties?

Mouse over each data point to see the city and state being plotted.

Net Worth

Now that we've covered and compared financial independence, let's next look at how they compare for net worth.

  • For Baseline Nomad™:
    • Average Net Worth at 40 Years: $11,285,107
    • Median Net Worth at 40 Years: $8,309,620
  • For Sell All Properties if FI:
    • Average Net Worth at 40 Years: $10,955,342
    • Median Net Worth at 40 Years: $7,853,265
  • Baseline Nomad™ has a $329,765 better Net Worth at year 40 on average. That's 2.92% better.
  • Baseline Nomad™ has a $456,355 better median Net Worth at year 40. That's 5.49% better.

IMPORTANT NOTE: The net worth numbers above are 40 years in the future, so they're in inflated, future dollars. If you assume a 3% inflation rate, they'd be about 1/3 of the values shown if we adjust back to today's, uninflated dollars.

How Much More Net Worth vs Property Value

Is the difference in how much more you have in net worth really about how expensive the properties are in that market?

  • Do you have higher net worth in less expensive real estate markets with these two strategies?
  • Or, is it higher in more expensive markets?
  • Does it not really matter in terms of net worth if the market has expensive or less expensive properties?

Mouse over each data point to see the city and state being plotted.

Negative Account Balance

In some cities, it is possible that by purchasing properties with negative cash flow, they run out of money (have a negative account balance). I might refer to this as being short on money to utilize that strategy.

  • For Baseline Nomad™:
    • Average Negative Balance: -$13,502.36
    • Median Negative Balance: $0
  • For Sell All Properties if FI:
    • Average Negative Balance: -$13,502.36
    • Median Negative Balance: $0
  • Same average negative balance.
  • Same median negative balance for both variations.

What's Better?

The following are special reports answering a specific comparison question of exactly TWO different  Models.

These special reports answer questions about what's better like: is Nomad™ better than putting 20% down? Or, how big of a difference does getting slightly better rent make?

Check out these what's better reports:

Single Strategy Special Reports

The following are special reports that show how a single specific  Model (Nomad™, buying 20% down rentals, buying properties as a real estate agent, etc) performed across all the different cities we modeled.

These special reports answer how does this strategy do questions like: does Nomad™ work only in certain markets? Which ones?

Check out these how does this strategy do reports:

  • 5% Lower Rents While Nomading™ - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except you are only able to get 5% lower rents.
  • 5% Higher Rents While Nomading™ - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except you are able to get 5% higher rents.
  • 10% Property Price Premium While Nomading™ - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except forced to buy properties at a 10% premium.
  • .5 Worse Interest Rate While Nomading™ - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except able to buy properties with a .5 worse/higher mortgage interest rate.
  • Nomad to Short-Term Rentals with 75% Higher Rents - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except you utilize a short-term rental strategy after moving out and are able to get 75% higher rents but with doubled maintenance expenses as well.
  • Nomad to Short-Term Rentals with 50% Higher Rents - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except you utilize a short-term rental strategy after moving out and are able to get 50% higher rents but with doubled maintenance expenses as well.
  • 10% Property Price Discount While Nomading™ - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except able to buy properties at a 10% discount.
  • 5% Property Price Premium While Nomading™ - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except forced to buy properties at a 5% premium.
  • 10% Less Job Income While Nomading™ - Buy up to 10 owner-occupant properties using the Nomad™ real estate investing strategy but model it with the investor earning 10% less income than in the Baseline Nomad™ Scenario.
  • .25 Better Interest Rate While Nomading™ - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except able to buy properties with a .25 better/lower mortgage interest rate.
  • 10% Higher Rents While Nomading™ - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except you are able to get 10% higher rents.
  • 25% Down Payment Non-Owner-Occupant - Buy 1 owner-occupant property with 5% down then up to 9 non-owner-occupant properties with 25% down payments.
  • 10% More Job Income While Nomading™ - Buy up to 10 owner-occupant properties using the Nomad™ real estate investing strategy but model it with the investor earning 10% more income than in the Baseline Nomad™ Scenario.
  • Nomad™ and Sell ALL Rentals if SWR Achieves FI - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except sell all the rental properties if by doing so you can invest the proceeds and achieve financial independence utilizing a Safe Withdrawal Rate of the money you have invested.
  • Nomad to Short-Term Rentals with 25% Higher Rents - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except you utilize a short-term rental strategy after moving out and are able to get 25% higher rents but with doubled maintenance expenses as well.
  • Baseline Nomad™ Scenario - Buy up to 10 owner-occupant properties using the Nomad™ real estate investing strategy.
  • Nomad™ Start with $0 - Do the traditional Nomad™ strategy except you start with $0 saved up.
  • 10% Property Manager While Nomading™ - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except hire a professional property manager costing 10% of gross rents.
  • 3% Property Price Discount While Nomading™ as Real Estate Agent - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except as a real estate agent you take your 3% commission as a discount off the purchase price.
  • Nomad™ and Payoff OO if Achieves FI - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except payoff your owner-occupant property if by doing so that means you achieve financial independence.
  • Buy Non-Owner-Occupant All Cash As Renter - Save up and buy up to 10 non-owner-occupant properties all cash (without any mortgage) while you remain a renter the entire time.
  • Buy Non-Owner-Occupant All Cash - Buy 1 owner-occupant property with 5% down then save up and buy up to 9 non-owner-occupant properties all cash (without any mortgage).
  • Nomad™ and Sell SOME Rentals to Payoff Others if FI - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except sell some rental properties if by doing so you can payoff the others and achieve financial independence primarily from free and clear cash flow.
  • .5 Better Interest Rate While Nomading™ - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except able to buy properties with a .5 better/lower mortgage interest rate.
  • 5% Property Price Discount While Nomading™ - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except able to buy properties at a 5% discount.
  • 3% Commission While Nomading™ as Real Estate Agent - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except as a real estate agent you earn a 3% commission with each property you purchase.
  • .25 Worse Interest Rate While Nomading™ - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except able to buy properties with a .25 worse/higher mortgage interest rate.
  • 20% Down Payment Non-Owner-Occupant - Buy 1 owner-occupant property with 5% down then up to 9 non-owner-occupant properties with 20% down payments.
  • 10% Lower Rents While Nomading™ - Buy up to 10 owner-occupant properties utilizing the Nomad™ real estate investing strategy like the Baseline Nomad™ Scenario except you are only able to get 10% lower rents.
  • No Real Estate, Invest in Stocks - Save up and invest in stocks while you remain a renter the entire time. Do not buy any real estate... owner-occupant or investment.
  • Pay off mortgages early when Nomading™ with any excess cash. - Do the traditional Nomad™ strategy except you pay off the lowest balance mortgage early with any excess cash.
  • 25% Down Payment Non-Owner-Occupant as Renter - Buy up to 10 non-owner-occupant properties with 25% down payments, but never buy an owner-occupant property. Remain a renter instead.
  • Pay off mortgages in full early when Nomading™. - Do the traditional Nomad™ strategy except you pay off the lowest balance mortgage early but only when you can pay off the entire balance in full.
  • 20% Down Payment Non-Owner-Occupant as Renter - Buy up to 10 non-owner-occupant properties with 20% down payments, but never buy an owner-occupant property. Remain a renter instead.