Money Flamingo FIRE FAQ #3 – Housing Special

It’s time for another FIRE FAQ post where I answer some of the most common questions I receive from readers.

This time we’ll tackle three housing-related questions. As you might be aware Mr. Flamingo and I are currently in the early stages of the house-hunting process and hope to buy our semi-retirement home soon. I get a lot of questions from readers about housing and the role of one’s home in the FIRE equation. So expect some more posts about this topic over the next few months.

Here are today’s reader questions:

  • Should I sell my apartment to reach Flamingo FI?
  • Do I need a paid-off house before I semi-retire?
  • Should I include my home in my FIRE number?

If you have a question feel free to send me a message via the contact form. I will answer the most common questions I receive here on the blog.

Let’s get started.

Nothing written below is financial advice. Before making any financial decision, you must do your own research and/or seek advice from a qualified financial adviser.

Should I sell my apartment to reach Flamingo FI?

Hi Mr & Mrs Flamingo,

My name is Sammie, I’m 38 and live in Sydney. I love your blog and stumbled across it after searching for ways to fast-track to semi-retirement. 

I wanted to ask your thoughts about property. Obviously, Sydney prices are insane, as I’m sure you’re well aware.

* I own a shoebox of a 1-bedroom apartment in Sydney valued at $900k and I have about $200k left on my mortgage. This is my PPOR [primary place of residence]; however, a few years ago, I decided to rent it out. I moved back in with my parents to save as much as I could. I am happy to keep rentvesting in the future.

* It is renting for $480 per week and after all of my expenses and the mortgage isn’t exactly a big cash cow!

* I have about $100k in investments

I am super driven (and impatient) to get to Flamingo FI so I can semi-retire.

  1. Would I be correct in saying if I sold my apartment (it is still is my PPOR – so no capital gains) and made a $600k profit to invest, I would be at Flamingo FIRE (my expenses are around $40k)?
  2. Do you think this is a smart move to sell and just get to Flamingo FI, then keep working from there but part-time?
  3. Do you count your own property’s value, or its rental income, when you calculate your FIRE progress?


Hi Sammie,

There is a bit to unpack here. It’s good to hear you are excited about your goal, but make sure you don’t rush things.

Question 1:
The math is simple. If your expenses are $40k per year your FI number (using the 4% rule) is $1 Million. Your Flamingo FI number is half of your FI number (so 12.5x your annual expenses) – $500k in your case. So a profit of $600k plus the $100k you already have invested would get you over the line.

HOWEVER, this only checks out if you a) really are happy to keep renting long-term AND b) if your rent is included in the $40k per year. It sounds to me like you didn’t include the rent (or you intend to live with your parents forever??!!).

If you didn’t factor in rent when you came up with your $40k per year number, you’d have to add it to get your actual FI number.

Question 2:
I don’t know you, so I can only talk about what I would do in this situation.

I would first take a big step back and think about my longer-term plans. Do you want to start a family? Are you really happy to rent (and sure that such cheap rent is sustainable)?

I definitely would not sell a property just so that the numbers in my spreadsheet check out.

You could also just see your property as an investment property. An IP doesn’t need to be a cash cow to be a good investment.

If you are sure you’ll never want to live in the property again, I think it makes sense to assess it from an investment point of view and then go from there.

Question 3:
We include the equity (IP value minus the mortgage) in our FIRE net worth calculations. The rental income is irrelevant in the context of our calculations because we plan to sell the property eventually and invest the proceeds in other income-producing assets.

Do I need a paid-off house before I semi-retire?

Dear Mrs. F.,

My partner and I just reached Coast FI after years of working hard!! Thanks for the awesome calculator, it made things so much clearer for us. We used conservative numbers – 3% after inflation – to ensure it’s all above board.

A little background: We are 37 and 39 and live in Victoria. We have a 3-year old daughter and another baby on the way. We really really want to both work part-time after we have our second baby.

Here is the problem: We still have $250,000 left on our mortgage, and our numbers are based on our current living expenses, excluding the mortgage. Is it still ok for us to semi-retire now? Or should we pay off the mortgage first?

Thanks for all the amazing content you put out there!

Dave and Lisa

P.S.: We are happy to keep working part-time until much later in life, we are not the early retirement types.

Hi Dave,

Congratulations on reaching Coast FI! That’s a great achievement and probably came just at the right time for your family!

We hit our goal just before our second child was born and were able to semi-retire at that point. It has definitely been good to be able to work part-time and generally stress less about money during this phase with young kids. It’s exhausting enough even without a full-time job! 😉

Yes, according to the math you can absolutely semi-retire now. All you need to do is pay off the house before you fully retire. This means that until your mortgage is gone, you will need to earn enough to make the monthly repayments plus pay for your family’s ongoing expenses. So you will have to work a little more than someone who already has their home paid off.

If you had a decent savings rate during your accumulation phase (and it definitely sounds like you did), you would still be able to work part-time. Once the mortgage is paid off you can reduce your hours even more.

Congratulations again and all the best!

Should I include my home in my FIRE number?

Hi Mrs Flamingo,

Firstly, thank you for building such a valuable resource for us regular folks. Semi-retirement sounds like the perfect lifestyle for us to pursue as we love the flexibility it offers.

There is something that I wanted to clarify in regards to your IP and plans to purchase your PPOR [primary place of residence] in the future. We purchased a unit in 2020, which we currently live in, but we plan to rent out the property this year and live as tenants in Sydney. This unit would likely remain an IP, but eventually, we would like to own our PPOR before we retire. 

Because we do not own a PPOR yet, I am unsure whether to include the IP in our FIRE number, in case we need to draw on this to purchase our home in the future. 

Thanks again for all that you do!

Hi Leah,

I get this question a lot.

If your goal is to own a home at some point, you will need two things to fully retire eventually: a nest egg that can pay for your living expenses and a paid-off house.

If you include your property in your FIRE calculations, you can’t treat it as your PPOR. On the other hand, if you treat it as your home, you can’t include it in your FIRE portfolio. It’s as simple as that.

If you keep it as an investment and then draw on the equity to buy a home, you would basically be “stealing” from your FIRE nest egg. I’d avoid this if at all possible by saving up a new deposit. If you are certain you will need to access the equity one day, I would just treat the house as my PPOR and continue saving towards FIRE.

I know that the role of property can be confusing when it comes to FIRE, but it’s important not to get things mixed up.

One exception is the popular downsizer strategy. With this strategy, you’d buy a larger home that you live in. When you are ready to retire, you downsize, releasing some equity (which you could then add to your investments). So while you hold the larger property, part of it is technically part of your FIRE nest egg.

This strategy can get a bit messy and really depends on market performance, so personally, I would not count the home I live in towards my FIRE number. If I end up downsizing one day, I’d just see the added funds as a bonus.

Do you have any ideas or tips regarding any of the three questions? Please share them in the comments below!

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4 thoughts on “Money Flamingo FIRE FAQ #3 – Housing Special”

  1. Great questions and answers. I agree it is important not to rush it – re: question 1 – selling your home to buy index funds makes no difference to your bottom line.

    • I agree, it’s not good to rush things, but I can 100% relate to the impatience. It’s also good to explore the different options and see if there are easy ways to speed things up. In this case it wouldn’t make much sense to sell just to reach Flamingo FI though, I agree with what you said.

  2. The 3% assumption in Dave and Lisa’s question seems extremely conservative. You have such a long time to go and grow your wealth. Enjoy the time with your babies, you can always top your savings up when they are in school.

    • We have also based our numbers on 3% returns to make sure we get there by the time we reach traditional retirment age. We definitely expect higher returns and a much earlier retirement date, but we will still be ok if all we achieve is 3%. So I think it’s conservative but prudent to work with low return numbers when it comes to Coast FI. I agree with your comment about spending time with the baby, it’s such a precious period in one’s life.


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