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FIRE Crossroads 004: Messing with fatFIRE in Texas

With a FI number that has increased as time has gone on, this Texan and his family have moved the goalposts from FIRE to fatFIRE.

Now in their mid-to-late 30s, they could probably coast to a comfortable retirement, but he’s got numerous side hustles with no plans to slow down anytime soon. He’s also got investments in alternatives with a sliver of cryptocurrency and a substantial proportion of their net worth in physical real estate and real estate syndications.

Should he keep his remaining rental properties? Or sell high while the getting is good? If you’ve got an opinion, please weigh in below in the comments section.

If you’re interested in participating in one of three interview series, please download the most appropriate form for your life situation: FIRE Starter, FIRE Crossroads, or Post-FI Notes.



Getting to Know You


Where are you on your financial independence journey? Have you crossed the halfway point in terms of net worth and/or passive income?

Our goal is fatFIRE, which for us means having at least $150,000 in passive income a year to pay our expenses and leave a comfortable buffer.

By that metric, we have crossed the halfway point, for sure. Depending on how much we would rely on our semi-passive income from online businesses and rental properties, I would roughly estimate we are 70-75% of the way to our goal.

We crossed the $1M net worth threshold in 2017, and just earlier this year (2021) crossed $2M. A lot of that is due to the extended bull market in both stocks and real estate, which obviously won’t last forever. At some point I expect the forward momentum to slow down.


Tell us about your household. How many people and at what ages? Are you supporting anyone outside of your home? Where do you live?

I am 37 and my beautiful (and younger, as she reminds me) wife is 35. We have two kids, ages 6 and 4. We live in Dallas, TX – land of opportunity and extraordinarily high property taxes.

We aren’t currently supporting anyone outside of our household, but in the future I anticipate needing to provide some kind of support to my parents.


In what field are you working? How is your career going? What do you like best and least about your chosen profession?

I work in finance for a large corporation. I have been with said corporation my entire 15-year career, which is somewhat unique for my generation.

I have an engineering degree and worked as an engineer for all of 6 months before I decided I liked the business side better than engineering, and I haven’t looked back since. My company has given me a lot of opportunities and I’ve held 7 or 8 different positions over my time there.

For the most part, I enjoy my job. I am on the cusp of being forced into management in order to advance any further, which I am not particularly interested in. I make a low-six-figure salary, and at this point in my career have decided to boost my income through side hustles rather than climbing the corporate ladder (more on that later).

During the pandemic, my job transitioned to remote like many others. As of now, I will be full-time remote even after the pandemic is over. I think being able to work from home has brought about many of the benefits of FI while still holding a full-time job – less time commuting, more time with my family, and more flexibility in my hours.


Do you feel you’ve come to a crossroads of sorts? If so, tell us about it. What options are you contemplating?

My wife and I got married 9 years ago, and I discovered FI around that time. Ever since, we have been pushing hard to grow our side hustle income and assets. It began with just trying to figure out how to make an extra $1,000 a month in order be able to juice our investments, and grew from there.

We started investing in real estate in 2013. One rental grew into ten, and we got into flipping and wholesaling, as well. None of this was particularly passive as we targeted properties that needed a lot of work that we could buy for a significant discounts, but it provided a huge boost to our net worth over the years.

Now, we have two young kids at home, and have hit a net worth level I affectionately call “if-I-have-to” FI. As in, if I lost my job tomorrow, we probably have enough assets and passive income for me to not have to work.

We have taken steps to significantly scale back our real estate business, and we are even contemplating selling off all of our single family rental properties. With two young kids at home, and other side businesses going (I can’t turn off the entrepreneur in me), it no longer seems worth it to keep pushing as hard as we can.

I don’t see myself leaving my job anytime soon, but our nest egg has grown to a point where it feels like we could transition into much more passive investing and just let it grow organically instead of aggressively feeding the beast with extra income and savings every year.




How is your nest egg invested? Approximately what percentage is allocated to stocks, bonds, real estate, and alternatives?

Of our approximately $2,000,000 net worth, here is how it breaks down:

  • Real estate (physical) – $550,000
  • Real estate (syndications) – $530,000
  • Stocks and bonds – $550,000
  • Business assets – $100,000
  • Cash/other – $300,000

We built up our rental portfolio to 10 properties, but have started slowly selling them off and moving the gains over to other more passive real estate investments as limited partners in larger commercial deals.

The business assets line is for a set of lead generation websites I purchased as a semi-passive income stream. I also have a blog that generates additional passive income, but I started it from nothing so I don’t have it as an asset on my balance sheet.

Cash/other includes a little bit of crypto. I do not claim to be an expert in the subject, but I do believe it is worth having 2-3% of my assets invested there. If it goes to zero, it won’t materially impact my finances, but the potential is there for asymmetric upside returns.

I’ve been tracking my net worth since I started my career in 2007. It took about 11 years to hit the $1M mark, and another 4 years to hit $2M. You can see an inflection point around 2013 when we started investing in real estate, which really helped our net worth take off.


Are your investments primarily in tax-deferred, Roth, or “taxable” post-tax accounts?

About a quarter of our investments are in tax-deferred and Roth accounts, heavily leaning toward tax-deferred. Everything else is post-tax.

I wish I had learned earlier the value of Roth accounts, especially when my income (and thus tax rate) was much lower.

That said, we did forego contributing the max to our retirement accounts for several years as we dumped all of that money into real estate. In the end, it allowed us to grow our rental portfolio much faster, so I think the trade-off was worth it.

Just last year we set up a Solo-401k for my wife who has her real estate license so we could start putting additional money away in our tax-deferred accounts.


Do you have investments in an HSA? How about 529 Plans?

We have about $40k in our HSA, mostly invested in an S&P 500 index fund. The HSA is one of my favorite accounts – tax free going in, and tax free coming out.

We pay all of our medical expenses out of pocket with the intention of letting our HSA grow for the next 10-20 years at least. With the cost of healthcare continuing to skyrocket, I have no worries that we won’t be able to spend the money as we get older.

We currently don’t have any 529 plans for our kids, and I’m kind of ambivalent as to whether we will set them up or not. There are a lot of ways to go about funding college (if that’s the route our kids choose to go), but I honestly haven’t put a lot of thought into it yet.


What has been your best investment?

My best investment has been in marrying my wife and partner in life, and then in my family. I’m sure the question is about my best financial investment, but there is a tie-in. I most definitely wouldn’t be in the financial position I’m in without my wife. And without my family, what is the purpose of even pursuing FIRE?

But if you’re talking my best purely financial investment, it would probably be an absolute disaster of a house I paid $30k for in 2015. We put about $50k into the rehab, and were able to refinance and pull all of our money out plus an extra $5k. It’s been rented out to the same tenants for the last 5 years, and it is now conservatively worth about $200k. Technically with my zero dollar investment after refinancing, I am making an infinite return!


Your worst investment?

Our real estate journey hasn’t been all fun and games. We have made some bad decisions and just had bad luck many times along the way.

From a monetary loss standpoint, my worst investment has been in a real estate syndication deal that I invested $55k into and lost 100% of my money. It was the very first syndication deal I ever invested in, and I admit I didn’t know what I didn’t know. I didn’t vet the sponsor like I should have, and it was a much riskier project than I realized at the time. The pandemic put the final nail in the coffin and completely wiped out all of the limited partner investors.

I am now much more careful which sponsors I invest with, and I do a lot more due diligence on the risks involved in any individual project.



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Into the FIRE


Numerically, what is your FI goal?

I don’t have an exact number in mind. It’s funny, when I started down the path to FI, my goal was $1.5M. The number has grown as my family and expenses have grown, and also as my risk tolerance has declined.

Currently, our FI goal is $3M in investable assets outside of retirement accounts, which puts us about halfway there. However, I do have some semi-passive side hustles that bring in a few thousand dollars a month which could offset some of our asset needs.


When do you suspect you will achieve financial independence? Will you retire from your career once you’re comfortably FI?

I can’t help but feel we are due for a major market correction in the next few years, and the next 10 years won’t be as prosperous for my investment accounts as the last.

My fuzzy crystal ball notwithstanding, I think we should be able to easily hit our FI number in the next 5-7 years. I currently enjoy my day job, so if I had the option to quit right now I probably wouldn’t. However, things can change quickly, so it will be nice to have the option (isn’t that the whole idea of FI?)


What are your post-FI plans? How will your life change? What do you look forward to the most?

I honestly don’t think my post-FI life will look a whole lot different than it does now. I am always tinkering with various side projects, so it will be nice to be able to dedicate more of my time to those.

I don’t see retirement as an end to working, just the freedom to be able to work on what I want and when I want.

Post-FI, we may do more slow traveling, or visiting family for weeks or months at a time, instead of quick trips for holidays.


Have you made any major changes in your lifestyle or investments to accelerate your FI path?

As I mentioned before, my wife and I went all in on real estate early in our marriage, and that really was the catalyst for accelerating our path to FI.

There were a few years where we made more money in our real estate business than I did at my day job. However, now that we have young kids we don’t have as much time as we used to, and we have dialed back the business significantly.

In the last few years, I started gravitating toward online businesses that allowed me to be my own boss and work on them as much or as little as I wanted. This has been another lifestyle shift to begin to build semi-passive income without the time and stress of dealing with buyers, sellers, contractors, and tenants.

On the spending side, I have been lucky that my wife and I share a natural bent toward frugality. We spend on things we care about, but for the most part keep the budget under pretty tight control and haven’t succumbed to lifestyle inflation.


Are you facing any unique challenges making FI or RE more difficult?

I do have some health issues that western medicine hasn’t been able to solve (and insurance doesn’t cover any other kind of medicine!) So we have a healthy line item in the budget for extra healthcare expenses that I don’t think will go away any time soon.

I can’t complain too much – this doesn’t preclude us from FIRE, it just means we have to save a little more than we otherwise would for the additional expenses.


What advice do you have for others who are seeking financial independence?

Amassing $1M, $5M, or $10M seems like an impossible feat when you are first starting out. By all means, lay out your long-term goals, but also set short-term ones that you can accomplish and get you heading in the right direction.

Make a goal to pay off the student loans, get that promotion, or invest in your first rental property. In the beginning, your nest egg will grow mostly through how much money you are able to put aside for investing. So make a goal to make more money or cut your spending to increase your savings rate.

Also, the longer I’ve been on the FI journey, I’ve realized that FI should be a goal you are reaching toward for the options it opens up, not as an escape from something about your life you don’t like.

For example, if you are unhappy in your job, find a new job! Don’t put your entire life on hold or let your focus be entirely driven in achieving some dollar figure in the bank account. You will miss out on life along the way.


Finally, is there anything under the sun that you’d like some help with? The hive mind would be happy to weigh in.

We’ve been investing in and managing rental properties for the last 8 or 9 years, and it’s starting to wear me down. We’ve sold several properties as tenants have moved out, mostly in the last year or two in this crazy market.

I like the idea of owning physical real estate and the diversity it brings to my portfolio (and so far outsized returns), but I am also ready to be done with “tenants, toilet, and termites” and dream of the sweet bliss of being a completely passive investor.

We’ve toyed with the idea of turning everything over to a property manager, but my, umm…control issues…have prevented that so far (still working on that).

What would you do in my situation? We’ve got a pretty good start to our nest egg, and we want to continue making our investing more passive as our kids get older. We’ve got 5 rental properties left. Would you sell them all? Turn them over to a property manager? Just tough it out and keep the properties because they are great investments?

Would love to hear from others who have been in real estate and gotten to the Coast-FI level – did you get out at some point or stay in for the long haul?



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I’ve shared my feedback privately with today’s guest. I wouldn’t want my opinions to influence yours. Please give your take in the space below!

Again, if you’d like to partake in a future Q&A, please download a FIRE Starter, FIRE Crossroads, or Post-FI Notes interview form.


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9 thoughts on “FIRE Crossroads 004: Messing with fatFIRE in Texas”

  1. Slowly sell the rentals off like you are doing and invest the difference in RE syndications. Unless you or spouse are planning to qualify as a RE professional which requires active ownership. If looking to become more passive than look at syndications and plan to diversify across sponsor, asset class, and geography. Devote time and energy to better understanding how to vet syndication deals and build on that. Then in 5 years you may not need to touch that nest egg and just live off of the passive income they give off. Congrats so far, keep up the god work and best the rest of way.

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  3. Thanks all for the advice! Seems like everyone has had different experiences in real estate and the suggestions range from “keep them all, lever up, and buy even more” to “sell them all and invest passively”.

    I am definitely leaning toward the latter. We only have a handful of properties left and have decided to sell another that recently became vacant. I still love real estate and plan to invest heavily in passive syndications with an emphasis on cash flow.

    I think if I kept my properties I could certainly get better returns. My IRRs are in the 30-40% range for the properties we’ve sold, but a big chunk of that was the outsized appreciation over the last 5-6 years.

    However, the headaches of owning rentals are about the same whether you own 3 properties or 10. Like others have mentioned, finding a GOOD property manager is difficult, and I don’t necessarily trust them to keep me informed of proactive maintenance and major capital projects until the place is falling apart. That said, we may at least try this route with one or two properties to see how it goes.

  4. Sounds like the better deal would be to sell off you real estate to get into more passive income opportunities. Doesn’t seem like it is generating that much income compared to the hassle. OR do 1031 towards better properties for better cashflow.

  5. If you are in a big city with lots of prop managers find a good one and keep the rentals. It is very passive with a good prop manager. If not, then sell them and put the proceeds into value add syndications with good sponsors

  6. I would keep 2-3 properties. I felt the same way as you pre-covid, that owning real estate wasn’t worth the extra effort in comparison to the stock market. But when the stock market went down during covid (briefly), it showed me that it’s worth owning some real estate for diversity and to balance out possible stock market crashes in the future.

  7. With interest rates low, I’d refinance to low cost high LTV loans. As interest rates rise, owning leveraged assets at a low fixed rate will benefit in the long run. I expect home prices and rent values to rise. With the money you pull out, invest in additional distressed units.

  8. Finding an excellent property manager is tough but definitely worthwhile if you decide to hang onto some of your rentals. I also have control issues and have had horrible experiences with PMs; however, a good PM is worth their weight in gold.

  9. I would sell some rental properties (one at a time) until I reach a comfort level. I wouldn’t hand them over to a property manager. I understand your point on control. I had a bad experience with property managers. Felt they were more work than the tenant itself. All the best pursuing fatfire. Enjoy the journey


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