Would you stop contracting if Plan B paid off?

[WTFH]

It depends. When someone quotes "net income", I wonder what they mean. If all the properties are mortgaged to the hilt and the gross income is £250k, but net is £100k, then it only takes an interest rate rise and a couple of months of empty properties for the net income to fall away.
If the gross income is £150k, mortgage-free, then the risk is far lower.

So, retirement/Plan B needs to be low risk if I want to jack it all in. If I was to stay ticking over with work, I'd try to do 8 weeks work October - Christmas and then 2 weeks a month Jan/Feb, 1 week a month the rest of the year.

[achilles]

It depends. When someone quotes "net income", I wonder what they mean. If all the properties are mortgaged to the hilt and the gross income is £250k, but net is £100k, then it only takes an interest rate rise and a couple of months of empty properties for the net income to fall away.
If the gross income is £150k, mortgage-free, then the risk is far lower.

So, retirement/Plan B needs to be low risk if I want to jack it all in. If I was to stay ticking over with work, I'd try to do 8 weeks work October - Christmas and then 2 weeks a month Jan/Feb, 1 week a month the rest of the year.

Sounds sensible, so go part-time in terms of contracting while Plan B matures even further. By the way, a property-based Plan B is just like any other business so it is your job to make sure you switch to the best mortgage deals and that your properties are nearly always rented out.

[d000hg]

If I had 100k stable residual income I would see very little reason to take on traditional paid work. Perhaps I would use the time to work on my own projects such as software or writing.

[achilles]

If I had 100k stable residual income I would see very little reason to take on traditional paid work. Perhaps I would use the time to work on my own projects such as software or writing.

Yes, I agree with you. But then there is the temptation of getting a better house, a fancier car, etc. So when enough is really enough is down to each individual I guess.

[WTFH]

By the way, a property-based Plan B is just like any other business so it is your job to make sure you switch to the best mortgage deals and that your properties are nearly always rented out.

Or you use some of the £100k to pay off the mortgages, then you don't need to waste your time shopping for deals, worrying about interest rate rises or being as concerned about them all being rented out all the time.

Let's say you have 5 rental properties, each with a £200k mortgage on them. That's £1million in debt, which you are servicing with interest.
Each one might (on paper) be worth £300k in the current market, but their theoretical current value does not change your debt + interest.

I'd prefer my income to be coming with minimal debt. It might mean lower risk/lower reward but it is greater flexibility for me.

[achilles]

I'd prefer my income to be coming with minimal debt. It might mean lower risk/lower reward but it is greater flexibility for me.

That depends on how risk averse you are. You could use the 100K to increase your portfolio if you are comfortable with the risk.

[northernladuk]

That depends on how risk averse you are. You could use the 100K to increase your portfolio if you are comfortable with the risk.

But it's so hypothetical it's not really worth discussing.

[d000hg]

I'd prefer my income to be coming with minimal debt. It might mean lower risk/lower reward but it is greater flexibility for me.

I agree. It's not the most efficient way to do things but I think I would sleep a bit easier.

[WTFH]

But it's so hypothetical it's not really worth discussing.

Hypothetical is the size of the numbers.
Discussing the principle of long term financial planning is valid. Some of us have a similar attitude:

I agree. It's not the most efficient way to do things but I think I would sleep a bit easier.

Whereas, there's a calculation somewhere that will show that most of us *could* theoretically get an income of £100k a year from property, but the amount of borrowing to get that return would be very high, as would the risk.

[tinroof]

I don't think I have posted on this forum despite contracting for 10 years in Software and reading threads on a regular basis. I dropped by to offer words of encouragement for going the way of your Plan B.

Fundamentally, exchanging your time for money limits your earning capacity even if you earn £2000 a day. Combine that with the repetitive nature of watching clients' projects burn with the perpetual cycle of outsourcing, insourcing, management interference and incompetence as well as all the headwinds such as the Off Payroll rules and the Conservatives apparent stance of being anti small business, I decided to make a change.

I'm now down to working 20 hours per week with my current client who will be my last when I finish up in August.

With many more contractors now working from home, there is an opportunity to dedicate some of your time each week to Plan B and building up multiple streams of income which is somewhat easier now commutes and a lot of office presenteeism has been banished.

However it is challenging and you must be prepared in the short term to cut expenses to the bone, be frugal and constantly upskill and push yourself out of the comfort zone (tricky for us introverted geeks).

If you can do that, the feeling of earning whether or not you you choose to work that day is unbeatable and I heartily recommend it.