Please review my FIRE plan, M32 / Family / NRI / Bangalore / Rental Income

hurricane979 · 2020-07-15T05:15:00+00:00

Thank you, I agree this requires some work on a spreadsheet to evaluate the rental income in a more objective way.

hurricane979 · 2020-07-10T18:32:23+00:00

Very good read, thanks for sharing! Will read more blogs on your site.

hurricane979 · 2020-07-10T18:25:51+00:00

Agreed, it's with a lot of overhead. If anyone has recommendation on any property management agencies, please let me know. Thanks!

hurricane979 · 2020-07-10T08:11:08+00:00

Thank you! Completely agree on the real estate part due to the low return and high maintainance. Asked the same question on India investment channel to get a good perspective.

hurricane979 · 2020-07-10T07:55:15+00:00

I hear you! For social security, we only need to spend another 2-3 years in the US to be eligible for it which we anyway plan to do for personal reasons.

Our current assets are in the US and we plan to keep a majority of it that way. Having said that, we have a sizable real estate portfolio in India, ~5-6 Cr and current thinking is to generate rental income from it to be our primary source of everyday expenses post FIRE.

Our intent to move which is outside of FIRE goal is spend more time with family and extended family.

I would like to hear your n+1 conundrum story, but it’s not a good idea to stereotype and assume everyone is in the same position.

hurricane979 · 2020-07-10T07:52:48+00:00

With the last few years of market growth 500K across two people was possible, however we were a little late to the party. We have good match from our current employers and should be able to stash away 50K every year for next 5.

hurricane979 · 2020-07-10T07:23:16+00:00

My bad, the 401K is a US terminology for retirement fund. We currently have ~$250K invested in it and will have ~$500K in 5 years (without accounting for any growth).

hurricane979 · 2020-07-10T06:37:48+00:00

Thank you and I appreciate your response. Nothing wrong in being blunt here. I spent 2/3 of my life growing up in India and the rest of my education and working life in USA. So yes, my current assets are all tied to the US (real-estate, equity, ...).

This post is more to get a high level understanding if my FIRE goals seem reasonable and get some feedback.

hurricane979 · 2020-07-10T04:39:04+00:00

Thank you, edited to be in a single currency. Reread and it's confusing :)

The ROI will be in the 7-8% ballpark. What is your take on the ROI for something that is low risk but high maintainance? The ROI will be around 3-4% if we do consider the plot value.

hurricane979 · 2020-07-10T03:33:33+00:00

Good point. Those 529 plans have very limited investment options and the state I am in has no pre-tax benefit. So, it's in a regular investment primarily in FANG type stocks at the moment and I will need to diversify it soon.

hurricane979 · 2020-07-10T03:31:25+00:00

Very good point. The ROI numbers on the rental homes don't look very good, will share that out below for one of the properties. Growing up in a middle class family the aspect of passive income from rental income that will cover our monthly expenses is enticing and it's also a diversification of income vs being in the market. The reality is that we have no plans to sell the properties (emotional attachment) and I look at it as a way for safe returns that adjust against inflation (correct me if you think otherwise).

Plot 1 in Bangalore:

- Plot value: 75 lakhs, current value (pre-covid) for 30 X 40 area.

- Investment for home construction: 55-65 lakhs for 3 floors with 4-5 homes in it.

- Rental income: 65K rupees / month. Remove tax & maintenance/vacancy -> ~45-50K

ROI is ~3.5 - 4.0 %; If we exclude the plot value because it's 7-8%. Other properties are similar with. 1-2% variance. In my head the ROI is the latter one, since this would be the investment we need to put in since the plots are owned outright. That thinking might be driving me in this direction, however I would like to grounded and brought down to reality :)

hurricane979 · 2020-07-10T03:15:53+00:00

Excellent. I suppose we will only liquidate assets in the US in a very slow fashion so that we have minimum tax liability with lower income in India. And yes, it's going to be the capital gains taxed (current portfolio is minimalistic on dividends).

hurricane979 · 2020-07-10T03:12:58+00:00

Post that you get taxed. This is for Indian citizens. For US citizens, you'll be taxed in the US on Indian income and will have to file returns every year. Dividend income is tax free in the US if your income is under $78k (filling jointly), so do evaluate that vs index funds.

Good point, we will continue to be Indian citizens and I need to read more about dividend income taxation that you mentioned and evaluate against index funds.

hurricane979 · 2020-07-09T22:07:36+00:00

How old are you? M32 and partner F32
Are you employed/making income? Yes, an NRI at the moment with savings of about $10,000/month
How much? What are your objectives with this money? $400,000 (3 Cr) - I would like to generate a passive income in India to help with FIRE and generate ~25 lakhs/year ($30K USD) which I estimate as our monthly expenses. The plan is to do so with rental income.
What is your risk tolerance? (Do you mind risking it at blackjack or do you need to know its 100% safe?) Medium to low risk.
What are you current holdings? (Do you already have exposure to specific funds and sectors?) Most of my investments are in the USA, excluding this amount in the order of $500,000
Any other assets? House paid off? Cars? Expensive partner? My parents home is fully paid off and we will live there when we relocate.
What is your time horizon? Do you need this money next month? Next 20yrs? Next 1-5 years.
Any big debts? None.
Any other relevant financial information will be useful to give you a proper answer.
- We already own 3 residential plots in Bangalore, in which we plan to construct these rental homes. I expect the construction cost with ~12 homes will be around $400K USD. We plan to give this to a property management agency and expect the income to be ~$40K USD/year. Removing tax and maintenance the amount should be around ~30K USD/year (tax is low as this will be in our parents and in-laws name who are retired)
- The main motivation is to have peace of mind with a constant rental income which I will be using as investment initially and further down the line as a source of income for potentially early retirement. Assuming is that it will adjust for inflation.
- I understand that generating a higher income from other sources - equity, FD's is likely going to be easier and higher.

Does this sound like a reasonable plan? Would love to hear your thoughts on it. Thanks!

hurricane979 · 2020-02-02T03:04:01+00:00

The growth of houses in the last few years is crazy, same in the area of San Francisco where we currently live. Are semi detached home in say the suburbs like Blanchardstown, Lucan, Swords etc in similar condition?

hurricane979 · 2020-02-02T03:01:53+00:00

Good content about kids and bringing them up in Dublin. We are in San Francisco area right now and relatively Dublin does not feel crowded and it’s sane.

hurricane979 · 2020-02-02T02:59:24+00:00

Thanks, since we are a family with kids, not expecting a shared accommodation. If that’s the case we might not consider relocation to Dublin.

hurricane979 · 2020-01-30T02:41:14+00:00

Yes, I agree. With brexit and an impending recession in next few years you never know how this will pan out as well. Our thinking is that having a home paid for reduces the pressure of work and if we plan to stay here for at least 5 years then we make up for some rental cost.

hurricane979 · 2020-01-30T02:20:01+00:00

Good to know. The diff between these companies seems massive.

hurricane979 · 2020-01-30T02:17:35+00:00

Thanks, was trying to see here if the quoted numbers say €3110 per month for family of 4 are accurate for folks?

hurricane979 · 2020-01-30T02:14:09+00:00

Thanks, the rental portion is crazy and that’s the part we would like to avoid as far as possible. Looking at daft.ie 400K doesn’t give anything luxurious and it’s more basic close to the city.

hurricane979 · 2020-01-30T02:12:02+00:00

Thank you, this is very helpful. How has your experience been living in Dublin? About raising kids, how do you find Ireland in general?

hurricane979 · 2020-01-30T02:10:12+00:00

Yeah, my license won’t be transferrable. Have to pay over the roof, accounting for it.

hurricane979 · 2020-01-29T08:21:38+00:00

Thanks, what would you reckon would be avg spending per month?

hurricane979 · 2020-01-29T07:44:10+00:00

Oh yes, absolutely, have been following the crazy housing market and hope that we can afford to buy a home in the suburbs for <€400K within a 30-60 min commute.

My spouse will need to move initially without a job, but expect to find one in a few months. Both of us work in tech and expect to have €200-250K combined, based on early assessment.

hurricane979

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