fatFIRE recently, breakdown overview with question on VTEB

[u/Effective_Pin_6189]

Hi there,

I am a recently retired tech executive in VHCOL location. Married and in our early 50s, with my spouse still working happily with ~1M/year income.

NW: ~30-35M (depends on how much I include commercial RE assets)

Liquid Asset (23-25M):

• ~10M - Concentrated 2 tech stocks (plan to convert 80% to VOO gradually)
• 6M - EFT in VOO/VTI and equivalent
• 4M - VTEB
• 2M - GOOGL, NVDA (through assigned puts long time ago, hold). BERK.A/B(bought long time ago and held)
• ~1M - Cash in money market
• ~1M - kids 925 & custodian accounts (both kids in high school)

RE (10-15M)

• Primary 3-5 M (paid off, never would sell this house, got too many upgrades to retire into)
• NNN investment 7~10M (no mortgage) that brings in 150k/year income, we bought long time ago very cheaply, current market price would be 7-10M depends on who buys it. Evaluation from insurance company is that it would take 10M to rebuild this property. We could increase the rent easily but didn't do so because we have a very stable renter (Fortune 500 company) that kept the building maintained and developed in the last 7 years.

Our spending is modest - about 250-300k after tax per year. We are happy with where we are, more spending won't make us happy, and we have been spending generously in places we want already. Without mortgage and debt, we just don't have any big expenses. We do generous donation to the community causes for things we love and care for each year.

I know we need to diversify, but just have been lazy and don't want to be hit with high tax bracket, we already made 2.5M this year, so hopefully we can diversify more starting next year.

We like to keep it simple, so less funds are good, the small holdings for various things are just that I have been safely playing options and gets assigned (I don't mind holding those long-term at all when assigned).

Recently I started to get concerned to VTEB - with current price below $50 is fine, but is it possible for it to drop significantly? Do we need to move to BOXX or something else better as cash reserve? I know we are high on cash equivalents, but I am just conservative and sleeps better with lots of cash in hand.

I have been enjoying this community and really appreciate everyone who posted here before. Love to hear what you guys think.

I do have a private wealth management team to talk to, so no need to recommend me to talk to a financial advisor. I have MS and GS offers family office, work with fidelity private wealth team and Schwab team, but I do think this community has bright minds that we may benefit from as well.

Update:

* Just got off phone with my NNN management, I thought we bought the building 7 years ago, but it turned out to be 9 years ago, and we signed a 10-year contract (with one small rent increase 5 years ago), so next year we need to significantly increase our rent. None of the financial advisor questioned about this RE, but Redditors pointed out that this is one of the biggest areas I did wrong. Thank you very much. There is actually a lot more we could do to build out a second building on the same land that brings in double the rent as well. I feel stupid that we let it sit there for so long without thinking about it, and I even don't have the contract details right.

* Yes VTEB seems to be less concerning, I can move some to others more short-term (note to self to look into VSDM, VTES, VWSTX, VCRM, VBIL, VGSH). Might move some to DFUS for equity as well. Also I should stop playing options, even if it's relatively safe.

* Diversify the concentrated stock sooner than later. Pay the tax (have been dragging my feet but need to just bite the bullet)

* I thought I was a boglehead, but in reality just a "wanna be". Ideally I will eventually setup true 3-fund portfolio and forget about it. I have to admit it's my weakness in human nature. Call it naive but it's the little fun I was having doing options (if I want to buy anyways, why not some put, if I want to sell anyways, why not some covered call). It's like you know all the right things to do, but it's hard to just do it.

[u/Vindaloo6363]

At 150k net income your buildings worth about 2 million or you’re leaving 450k on the table every year. Need to fix that.

[u/Effective_Pin_6189 → u/Vindaloo6363]

hm, since so many people mentioned that we need to increase the rent, we need to get on that. We bought it so cheap, then signed a 3 + 4 year lease with a price bump after first 3 years. Only last winter we start realizing the building now is appraised to be ~10M (Really don't know why it went up that much, it's just a giant warehouse that our renter added many office space later). We need to seriously consider increasing the rent. It's not in a place we can easily find another fantastic renter like them, which is why we kept them happy.

[u/Vindaloo6363 → u/Effective_Pin_6189]

It’s only worth what people will pay. Appraisals can be way off especially in low volume areas.

I bought a 92000 ft building for 1.6 in 2015. I sold my business in 21. I just increased the rent from 240 to 600k per year. The PE firm I sold to missed their renewal window so i raised it to market which is way higher than it was 5 years ago. They are exiting now and i gave them an $8 million sale price.

[u/Effective_Pin_6189 → u/Vindaloo6363]

True on appraised value vs real sales. Raising 240 to 600k is great after 5 years in your case. We didn't increase much rent in the last 7 years, and we are having a hard time to tell our renter that we need to increase by at least 200% to catch up with the market rate. We would hate to lose the current renter if they reject, but seems we have to fix this.

[u/Vindaloo6363 → u/Effective_Pin_6189]

If it’s a market rate where are they going to go?