PT_Bear, do you have examples with numbers that you could share of investors selling down their property portfolios and reinvesting in shares? Will a carefully built up share portfolio be sustainable in the long term and be able to keep abreast of inflation etc?
For something truly specific in this arena, you've probably got to get a financial plan done by a financial planner. Even then it probably won't really help.
Let's assume some very basic numbers and work backwards...
Desired income is $40k pa. It's reasonable to assume that there are plenty of ways that all sorts of investments can give you a cashflow return of 3% fully franked (tax already paid). Thus the capital base to be invested is $40k / 3% = $1.333M (let's assume you need $1.4M).
Keep in mind this is just the cashflow from a well diversified portfolio. Overall the investments will likely out perform inflation as will the dividends. There will be times when you won't get the targeted returns, but there will also be times when those targets will be exceeded.
The next question is, to achieve funds to invest of $1.4M, how do you get it through property. The obvious answer is to look for capital growth and then pay down debt to leave you with that much cash available. Keep in mind that you would have to pay CGT to achieve this, so your equity would need to be $1.4M + CGT + sales costs.
CGT is not going to be more than 22.5% and sales costs is possibly about 3%. Fair to assume you won't loose more than about 25% of your capital base to all this - you could actually do a lot better if you plan the sales over several years to minimize the CGT events.
Thus you need a capital base of $1.4M / (1-0.25) = $1.4M / 75% = $1.86M.
To be generous to ourselves (or conservative with the figures), let's assume a $2M capital base.
As a result, you need about $2M in equity. With a modest dividend return of 3% you can achieve at least a net income of $40k pa, which rises with inflation and no erosion of the capital. I'd be willing to bet that if planned out properly, you'd probably end up with a net income of $50k-$60. I'm confident that all of the figures above err on the side of caution.
You could even achieve the same thing via low yielding property. The difference is that if your property has a 3% gross rental yield, you then have to take out holding costs (rates, maintenance, etc) and then you'll pay tax, so you probably only get about 75% of the gross figure (if you're lucky).
Another option might be to get together a portfolio that achieves rental income of $60k pa, then simply work towards paying down the debt over 20-30 years. This is probably a lot easier than it sounds given that you're probably only talking about 3-4 IPs, and even negative geared property becomes positive geared eventually.