Wife and I are 40 with a 2 year old. We would like to retire as early as possible (this year ideally) but want to make sure our allocations are appropriate.
Current Expenses: $125k including estimated $1400/mo for healthcare costs through the ACA.
Allocation:
$750k pri residence w/ $160k mortgage at 3.3%.
$350k sec residence paid off.
$1.5m rental properties, paid off, generates $70k year after costs.
$450k taxable brokerage VTI/VXUS (75/25)
$100k cash
$1.35m retirement accounts VTI/VXUS (75/25)
Questions:
1) Do I need to add bonds to my portfolio considering the rental properties provide and have provided for the past 10 years consistent income with increase in asset value (live in a MCOL city).
2) The rental properties generate roughly 5%/year return on asset value. The asset value has gone up significantly in the past 10 years. Considering what I spent to purchase and rehab them, return is closer to 10%. Should I consider selling and putting into the market knowing that I would take a significant tax hit plus sale fees and would likely
Be left closer to $1.1m in after sale proceeds?
3) Can I just leave my brokerage/retirement accounts in equities and sell properties as needed in retirement at a lower cap gains tax rate in lieu of re-balancing my portfolio to hold bonds?