BeanCounter62
Dryer sheet aficionado
- Joined
- Apr 29, 2016
- Messages
- 42
My long term plan has always been to keep my rental properties (8 apartments in one 32 unit complex) until I was 70 or 80 (cashing out so my kids don't have to).
Real Estate Net Income is 57k per year (gone up the past 2 years after several years stagnation). Nice, steady income.
I have a property manager to deal with the tenants and I am active in the HOA. Mildly frustrated with the hassle of dealing with the HOA.
Purchased 1st 4-plex 15 years ago with a 1031 exchange
Purchased 2nd 4-plex 14 years ago.
No mortgages on either. At 15 years old, maintenance might start increasing.
Currently both are valued a little bit below what I paid (the joys of the real estate crash). Very little appreciation in recent years.
ROI is about 6% per year (which I thought was good, but maybe it's not)
The unknown is if appreciation will finally kick in .... I certainly didn't think I would be underwater after 15 years.
Now I'm wondering if I should
1) stick to my plan. Keep this as a steady income stream ...Sell one or both if/when needed. Best case I never need to sell and my kids inherit at a stepped up market value.
2) Sell the 2nd building for $450k, match the net loss against the recaptured depreciation.
3) Sell both for $900k and be done with them. Gains in the 1st building would be offset by the loss in the 2nd building. Likely taxes (state & fed) on the 1031 exchange about 100k, still take home $300k to invest elsewhere.
4) Do another 1031 exchange at some point in the future (to get into a newer building) and keep it going.
This rental income, Wellington dividends and a CRT provide sufficient income to cover my annual expenses. I will have additional income from 401k/IRA funds when I reach that age. I'm 56 now. <Went off the ACA cliff this year thanks to the unexpectedly strong dividends. >
I want to find a way to better manage the taxable income in my portfolio. Would look at that carefully if I have $$ to invest from the sale of the rental properties.
I am wondering if I really can replace this income stream with investments that are less hassle, tax efficient, and similar (or better) risk these properties?
Real Estate Net Income is 57k per year (gone up the past 2 years after several years stagnation). Nice, steady income.
I have a property manager to deal with the tenants and I am active in the HOA. Mildly frustrated with the hassle of dealing with the HOA.
Purchased 1st 4-plex 15 years ago with a 1031 exchange
Purchased 2nd 4-plex 14 years ago.
No mortgages on either. At 15 years old, maintenance might start increasing.
Currently both are valued a little bit below what I paid (the joys of the real estate crash). Very little appreciation in recent years.
ROI is about 6% per year (which I thought was good, but maybe it's not)
The unknown is if appreciation will finally kick in .... I certainly didn't think I would be underwater after 15 years.
Now I'm wondering if I should
1) stick to my plan. Keep this as a steady income stream ...Sell one or both if/when needed. Best case I never need to sell and my kids inherit at a stepped up market value.
2) Sell the 2nd building for $450k, match the net loss against the recaptured depreciation.
3) Sell both for $900k and be done with them. Gains in the 1st building would be offset by the loss in the 2nd building. Likely taxes (state & fed) on the 1031 exchange about 100k, still take home $300k to invest elsewhere.
4) Do another 1031 exchange at some point in the future (to get into a newer building) and keep it going.
This rental income, Wellington dividends and a CRT provide sufficient income to cover my annual expenses. I will have additional income from 401k/IRA funds when I reach that age. I'm 56 now. <Went off the ACA cliff this year thanks to the unexpectedly strong dividends. >
I want to find a way to better manage the taxable income in my portfolio. Would look at that carefully if I have $$ to invest from the sale of the rental properties.
I am wondering if I really can replace this income stream with investments that are less hassle, tax efficient, and similar (or better) risk these properties?