Lay out three scenarios from Eric's perspective only. One — sell the entire portfolio. Two — sell the buildings listed, keep Marseilles and Ladd. Three — keep everything, same workload, same income, same headaches. Brief three-bucket breakdown.
1 — Sell Everything
Cash out: ~$1M after tax · Income: $0 · Headaches: $0
2 — Sell 7, Keep Marseilles + Ladd
Equity: ~$963k · Cash: ~$90k · Passive income: $112,650/yr · 5 properties to manage
3 — Keep Everything
Equity: ~$1.25M · Income: ~$180k/yr net · Same workload as today
Eric is 38. Two kids in junior high. Married. House in Peru, Illinois half paid off. This is his only current revenue stream. Run multivariable simulations of all three buckets. Life variables. Stress test each scenario. What are all of his options? What can he do with the money? What are the possible risks and rewards?
Eric's monthly nut in Peru, IL: ~$80k/year. This is his only income. That's the lens everything gets viewed through.
Scenario 1 — Sell Everything (~$950k net)
At $80k/year burn: $950k lasts 12 years. He's 50 with nothing. Every investment option — 4% S&P withdrawal gives ~$3,300/month, dividend stocks ~$3,300/month, pay off house and invest $825k gives ~$2,750/month — none cover $80k/year without eating principal from day one.
Healthy risk appetite play: deploy $700k into a recession-priced income property in 2027. At 8% cap that's ~$56k/year gross, maybe $28–35k net after expenses. Still not enough alone — needs a second leg.
Life stress: medical emergency costs $30–100k out of pocket with no employer insurance. He has no income-producing skills outside real estate management — starting over at 38 with no cashflow is brutal.
Scenario 2 — Sell 7, Keep 5
$112k/year gross → ~$82k net after taxes. Covers the nut. $90k cash cushion for bad years. Orange buildings are free and clear — every rent dollar is pure cashflow with zero debt service. In 10 years those 5 buildings appreciate while he collects. Equity grows without touching it.
Scenario 3 — Keep Everything
~$180k/year net. Very comfortable for Peru, IL. Real wealth-building. But 12 buildings, $3M in debt, tight margins — any single bad year compresses that income hard. And Eric's doing it himself — that's a full-time job.
2026 recession risk: if vacancy spikes across 12 units simultaneously, income could drop 20–30%. He still has to make mortgage payments regardless.
Skip college — one kid won't go, the other will get a scholarship or the whole system falls apart in the next 5 years.
Reran without college. Variables: S&P returns, RE appreciation, recession cycles, vacancy swings, repair costs, medical emergencies.
| S1: Sell All | S2: Sell 7 | S3: Keep All | |
|---|---|---|---|
| Median yr 20 | $687k | $3.0M | $4.9M |
| Worst case (1%) | $44k | $705k | $1.1M |
| Goes broke | 35% | 0% | 0% |
| Hits $2M+ | 27% | 77% | 94% |
S1 median ends below where he started in real terms. 1 in 3 chance he's broke by 55.
What if he takes Scenario 1 and invests it wisely?
Ran it. $200k into a rental, $750k into 80/20 stocks. Median year 20: $375k. Broke rate: 77%.
Worse, not better. The problem isn't strategy — it's that $950k can't replace $80k/year of income without eating itself. Doesn't matter how smart the investments are.
What if Scenario 1 plus a part-time job?
| Job Income | Median yr 20 | Broke Rate |
|---|---|---|
| $20k/yr | $1.5M | 16% |
| $35k/yr | $2.1M | 9% |
| $50k/yr | $2.8M | 6% |
| S2 — no job needed | $3.0M | 0% |
Even working a $50k part-time job for 20 years, he still doesn't beat Scenario 2. In S2 he's not working — he's collecting. The whole point of the portfolio is so he doesn't have to.
Scenario 3 is working pretty hard because of all the headaches. The "doesn't have to work" bit doesn't actually sort.
Fair. So reframe it:
| S2 | S3 | |
|---|---|---|
| Median yr 20 | $3.0M | $4.9M |
| Monthly income | ~$6,800 net | ~$13,750 net |
| Properties | 5 | 12 |
| Headaches | Moderate | Full-time job |
The $1.9M gap over 20 years is essentially his wage for managing 7 extra buildings. Whether that's worth it depends on one thing: does he have a property manager, or is he doing it himself?
Himself.
Then Scenario 3 isn't passive income — it's a job. A $13,750/month job with no PTO, no benefits, and tenants calling at 11pm.
S2 is the move. 5 properties is manageable solo. $6,800/month covers the nut. Equity compounds to $3M. He gets his life back.