Light at the end of the tunnel, selling our rentals . Any advice ?

[fastfredracing]

My partner and I just had a good conversation. We are ready to roll. Real estate is smokin hot right now in Pitty B, and landlording is about to get harder .
I wonder if Ill miss it any?
No more evictions, rehabbing houses only to see them hammered again, needy tenants, chasing rent monies, broken furnaces, leaking roofs, finding dirty needles and burnt nickels, fixing bullet holes , and getting the beat down from s8.
Nah, I wont miss it much .
Im not 100% done with real estate for sure, but I have zero desire to be a residential landlord again . Way too up close an personal to people for me .
Any of you who got out have regrets ?
We found it pretty difficult to turn a profit and when we did, it was a full time not fun job, for not a large sum of money .
I really enjoyed, the purchasing and initial re habs . Those were fun years, I got to play contractor .

[LWJ]

I have been selling off since the early 2000's. Paid tax on every one. I have not done a 1031 but would love to do so in the right situation.

Here is my takeaway. And, for the record, I am VERY much still interested in real estate. I am just doing it differently.

1. I started in SFH and duplexes. I self managed and rehabbed. What a grind that was!

2. I moved to 4plexes and larger. The structure of the units is NOT conducive to traditional families. I prefer single people or couples. While I love my children, renting to families is super high maintenance. The yards, carpets, walls, everything gets destroyed. Singles and couples? They are very gentle. Larger, more institutional buildings have cheap, easy landscaping. Often, no grass.

3. I hired property managers. Yes. They are ungodly expensive. BUT, I have my life back! I have had a PM for 15+ years. And guess what? I have the luxury of being a parent. Gone are the 16 hour days that I used to put in. While this was acceptable when I had no children, I have zero interest in this life style now.

I am not some big time gazillionaire. I am a small property owner. I use leverage in a responsible manner and have increased my holdings nicely over the years. I believe that you can invest for capital appreciation (somewhat speculative) or cash flow. The unicorn is when you get both. Oregon has been in a unicorn market for a while. I only buy for cash flow now as the speculative part is just that.

Summary: I think you can do what you enjoy and jettison the crap part of property management / ownership. This is a long-cycle investment. I plan on doing this until I am dead. Because it is fun.

[rrental]

Try commercial real estate. I have a few commercial buildings with multiple tenants and I spend less than a few hours a month managing. All of them are on 5+5 year contracts. Triple net rents so there is an incentive for them to do most of the maintenance themselves.

Evictions or walkouts? Happened twice in the last 12 years. The first stopped paying rent. Was evicted within a month and as easy as one call to the bailiff. The second one walked away from his business. Literally gave me the keys in lieu of the balance of the rental agreement.

[McLovin]

Originally Posted by fastfredracing

I wonder if Ill miss it any?
No more evictions, rehabbing houses only to see them hammered again, needy tenants, chasing rent monies, broken furnaces, leaking roofs, finding dirty needles and burnt nickels, fixing bullet holes , and getting the beat down from s8.

Any of you who got out have regrets ?
We found it pretty difficult to turn a profit and when we did, it was a full time not fun job, for not a large sum of money .

Seems like a total no brainer.
All that headache, for “not a large sum of money?”
No thanks! How are you ever going to miss that?
I love real estate, but my model works the polar opposite of yours. Basically take your last sentence and change every word to the opposite. In your situation I’d sell in a heartbeat, esp. in today’s market.

[look 171]

Freddy, I am not sure if I am happy or sad for you? All that hard work and dealing with the sihtty renters will take its toll on your soul and eventually eats away at you personally. You think you may try again in some other area, a larger city?

You seem to like the building part of the equation. How about flipping them. Make a few bucks and move onto the next?

I wish you the best on the next chapter, man.

[ckelly78z]

I have considered residential rentals, but would really hate the personal contact/screening that would be needed for reliable renters, and not someone who would trash the place, and cause complaints.

I tend to agree, that I enjoy the buying/rehabbing/selling parts of it without the day-today maintenance, and monies collection of the deal.

This why I don't fix cars, or tractors for other people, I enjoy doing the restorations, but on my own time schedule, budget, and expectations.

Right now seems to be the ideal time to sell rental properties, most people have more spendable cash laying around because of having no entertainment options for the last 9 months, and being bored at home. I wouldn't want to be part of the chit storm coming if Biden wrecks the economy.

[Bugsinrugs]

Timely thread. Wife and I are in the middle of a remodel on the middle unit in our triplex in Reno. We are discussing selling as we are constantly solicited by investors. Thing is, the gal that just moved left the place in great shape. She was paying $1000 a month. After we finish we can get $1500 or more as Reno in exploding. I was dreading this remodel but as the transformation progresses I’m really enjoying it.

[1990C4S]

I agree with the commercial real estate suggestion, much less work, different kind of tenant.

[recycled sixtie]

As mentioned above it is essential to get the right kind of tenants. Wife and I have been very fortunate to have three sets of tenants over a period of twelve years. Our condo building is over 55 years of age for residents. Our tenants are in their seventies and look after the place.

Bought the condo unit in 2008 and the year after the property value dropped thirty percent. Having said that we have had virtually uninterrupted rent for twelve years.
I change the rent and modify lease conditions only when the old tenants have left.
Tenants like constancy and raising rent each year only make tenants look around at other places.

Perhaps you could get a property manager to rent out your properties Fred? Sorry to hear of your troubles Fred. You deserve better. Getting good tenants with good references has been key for us.

Cheers, Guy

[jhynesrockmtn]

I had single family rentals in Seattle for the good years. Early 90's up to 2013 when I moved to Eastern WA. The market in Spokane was still quiet when I got here. I bought my personal residence in 2013 and a 6 unit apt. building in 2016. I was getting tired of managing the rental and explored selling it this year but the offers I got were not great. They were looking for a "deal". My building is smack in the middle of a really nice area and I wasn't dealing with any bad tenant issues. I was just looking to be able to leave when I want and not worry about screwing up a tenant screening or other issue that would get legal. I have always avoided hiring a PM but finally did so a few months ago. She's still getting up to speed on things but I already feel a weight lifted. If I were dealing with your tenants I'd either sell or hire a PM and hold for the long term.

Some commercial can be great but with COVID, commercial office and retail will be impacted for years if not permanently. Amazon and the web are continuing to show their impact as well. Just yesterday, Amazon announced they were getting into the pharmacy business. CVS/Rite Aid/Walgreens anchor many retail areas. I am happy to be in residential vs commercial at this point.

[chrismorse]

Ive been doing residential rentals for 45 years. Carefull screening is critical.

To the OP's question, have a chat with your tax pro to get specifics on 1031 exhanges to minimize your taxes, especially if you've owned the property for many years. You may be able to move your equity into a nice -high end rental, manage it for a few years, then move in, as your personal residence, then a few years later sell, with a homeowners exemption on the gain.

Another option is to sell a property or two this year, then sell others next year and the following to spread out the long term capital gain/depreciation recapture - again run this by your tax people to minimize the bite.

I am a semi retired general contractor, my wife is a real estate agent and licensed appraiser.

If you are having difficulty screening for good tenants, you might talk to property managers and hire them to do the screening, while still doing the books and repairs, rather than paying 8-10% for them to do it all.

O step way back and hire a manager for a commercial rental.
chris

[fastfredracing]

With trembling hands, I hit the send button and informed my first tenant, that we are selling . She comes right back with wanting to purchase, but she is 5 months behind, has been historically late , and I know there is no way she is getting financed.
Im not holding any notes. I want a clean break .
Here we go, letters going out next week . I feel bad for a few of them, and there are a couple who can go live in a cardboard box for all I care ( not really, its kind of tearing at me ) .
This should be an interesting year or so . Ill be happy when I never have to drive there again .

[ted]

Agree owning rental property and being your own property manager is rather thankless.
So we have a property management company that handles most everything.
I don't know the renters and they don't know the homeowner.
Dealing with a property manager is much more tolerable than dealing with the renters.

[look 171]

Originally Posted by 1990C4S

I agree with the commercial real estate suggestion, much less work, different kind of tenant.

Also lots more money to buy in?

[fastfredracing]

I have a piece of property that would be a great long term investment, also beneficial to my auto repair biz , in my sights currently . No partner, no tenants. Just me. t is dual zoned, residential, and commercial, I can do anything I want there.
I think , this is where I will put my capital for now, but I need to meet with my tax specialist first ,. and hear her advice .
This is my short term goal for now.

[LWJ]

Fred.

I like the idea of owning where you work. There is very attractive financing for this sort of situation.

A buddy/customer has a big building that he runs his construction company out of. But, he has extra space and rents that to a mechanic.

His financing was for owner occupied commercial not investment commercial. He is killing it on this building.

A solid plan. Congrats!

[1990C4S]

Originally Posted by look 171

Also lots more money to buy in?

Significantly more. But better one big facility than ten houses.

[fastfredracing]

I already own my building, but an adjacent piece right smack across the street, has come up. Ive had my hooks in it for a while, but nothing is 100% .
Having the capital to pay cash for it makes it easily do able , and a total no brainer .
I have had this 25 year plan for how I would make it to retirement, and it is fun seeing it all come to fruition . I still personally , own my own home, my parents home, and my biz property.
A few more choice picks will set me up nicely for the future .
Plus, owning a few valuable pieces of land leverages me pretty good , if I decide to make further investments .
I wish I would have cashed out of the rentals 7-8 years ago, but the values, have gone up nicely . It is time

[tabs]

U boyz should take a long hard look at what is happening in commercial RE and in the Residential Rental markets.

The one thimg that strikes me is the complacent attitude that you have a future. Given all the mortoriums and forebearence programs the tsunami has not hit yet.

The Central Banks have printed 20T since March.debt has been climbing exponently in both tje public and private markets.. Apple, GE, Boeing, Exxon are all leveraged to the hilt.

The velocity of money is 1.2..which indicates almost no economic activity. It takes $12.67 of Stimulus to create $1 of GDP growth..which shows the dimenshing effectivness of Stimulus.

There is no real economy left, tje only thing keeping the lights on is printing and borrowing at ALL LEVELS.

In essence the economy is a fiction.

[fastfredracing]

I will use my little piece of land to stand my ground and fortify myself against all non friendly tribes, that may try to invade . I am located just off a busy highway that is a supply chain for two decent sized cites.
Like a pirate, I plan to intercept and steal shipments heading north from Pittsburgh to the city of Butler and other points north . Any shipments that I allow to pass, will have to pay me a dowry , or perform a task for me .
I will be warlord master supreme of Valencia . I am ready for the apocalypse
Once I lay claim to this new land, I will conquer neighboring tribes, and steal their land , pillage their farms, and steal their livestock. ( maybe their wimmenz also )
Tabs, Im not gonna roll over and die. Im going to keep pushing till I cannot push anymore . then Ill give it another push . Ill die trying .