What age are you planning to sell rentals if at all?

[BreathFree]

I am age 45 and currently own 4 rentals (11 units). I planned to keep my rentals until age 60 and then start selling them off, one a year, over the following five years. I plan to take SS at 65 so I will use that income to offset the loss of the rental income. If interest rates are better at that time, I was thinking of purchasing an immediate annuity with the proceeds from the rental sales around 65. I may keep one rental after 65, it depends on how I feel about it at that time. I was just curious about others exit strategy.

 

[traineeinvestor]

Never.

Why would I want to dispose of my cash flow? Where would I invest the money that would produce equivalent cash flows over a multi-decade time period?

 

[Dash man]

I'm 60 and ready to sell our rental. The tenants include a woman in her mid eighties that wants to live out her life there with two of her kids helping her (or her helping them). So we've agreed to hang onto the place until she can no longer live there or passes. The kids can't afford the place on their own, so they'll have to move within a couple of months after she's no longer there. They've been good tenants and always pay early and keep the place clean.

 

[Souschef]

I got married in late 2007, and moved to my wife's place in Ventura County. I stayed in my condo weekdays because of the short commute until I retired in January 2009.
I put my condo up for rent because the housing market had tanked.
I had my first tenant for 3 years, and the next 2 for about a year each.
The fix up expenses after each one left killed me.
I sold it in 2014 and was glad to get rid of it. Depreciation recapture is an interesting concept!

 

[Cobra9777]

We're both 56 and own 2 rental houses that we manage ourselves. We're in the process of selling one right now. Since retiring, it just feels too much like work. I don't want phone calls while I'm on a cruise ship. They've both appreciated significantly over the last 5 years, and it feels like a 'top' to me. We might sell the other next year, but it's closer to us and much less hassle, so we might hang on a bit longer if the market stays strong. Plan is to use the cash to beef up our international allocation, which lags the conventional wisdom.

 

[nun]

I own a two family and rent out the ground floor so I have no intention to sell. The rental income is good and I'm getting capital appreciation as well. If I needed the capital I suppose I could turn the apartments into condos and sell the ground floor one.


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[W2R]

I don't have any rentals because to me (as opposed to the landlords here), managing property is work and I want to be retired. So, I don't have to sell anything. If I had been given property at some point, I would surely have sold it at least 3 years before retiring since I got everything else in place for retirement at about that time.

Back in the 1960's, I had a landlord who must have been 80 years old. So I guess some people enjoy property management even in old age. He didn't fix much but was a dirty old man who liked hanging out at his apartments and flirting with the co-eds. I doubt anyone HERE is like that, but it might be worth listing the plusses and minuses of property management from your point of view, to help you in your decision making process.

 

[calmloki]

In 2002 we'd hit an arbitrary goal of as many rental units as I had years. Our plan involved selling the rentals out in a group and taking up cigar smoking so we could light them with hundred dollar bills. Sold a couple houses in 2004 and in 12/2006 we were offered cash out on a couple other little houses on a really large lot - buyer had plans to develop the lot. We accepted, then decided - new plan! - we should sell a place per year - the capital gain/depreciation recapture stung a bunch. Then 2007-8 happened. I spent a year maintaining and showing a single vacant house before giving up and having a Realtor get it sold. The price on 6/2009 was dramatically less than the houses we sold at the end of 2006. Decided we had no need to sell places at giveaway prices.

Plan #3 was to just keep taking that rent money while watching the stock market burn - I was only 60 and could still deal with tenant issues - the armor was good and my sword while not keen was still sharp.
Sold a 5-plex 6/13, gave away a place on 6/14 (counted toward our lifetime gift exclusion), and sold another scrappy little house 12/2016. Only five rentals left - 37 doors. At 67 that armor is getting pretty heavy and the blade is dull.

Plans are one thing, what happens another. Rentals and real estate loans have been very good to us, but the whole divesting thing can be a chore.

 

[Fedup]

Never, probably pass down to the kids. I have other houses that I'm willing to sell, too old for up keep, the house is old, not us, just to clarify.

 

[97guns]

I don't think age should be a determining factor for selling investment property, gains or losses should be. Right now my investment properties have almost quadrupled up from my 80k purchase price to around $275 now, I turn 47 next month and have given thought of liquidating. There also has to be a game plan of where to park the funds

 

[BreathFree]

Back in the 1960's, I had a landlord who must have been 80 years old. So I guess some people enjoy property management even in old age. He didn't fix much but was a dirty old man who liked hanging out at his apartments and flirting with the co-eds. I doubt anyone HERE is like that, but it might be worth listing the plusses and minuses of property management from your point of view, to help you in your decision making process.

LOL!! I'm exact opposite, I have a property manager to stand between me and tenants. I'm not a social person by nature and would rather avoid conversation.

The main reason I would keep at least one rental is diversification of my retirement income. I have no pension and I would like to mitigate sequence of return risk with other income. Of course at some point I wouldn't want to mess with it any longer.

 

[MissGina]

I'm 60 and ready to sell our rental. The tenants include a woman in her mid eighties that wants to live out her life there with two of her kids helping her (or her helping them). So we've agreed to hang onto the place until she can no longer live there or passes. The kids can't afford the place on their own, so they'll have to move within a couple of months after she's no longer there. They've been good tenants and always pay early and keep the place clean.

This was the situation I faced when buying my first rental property last year. Owner was 65 and had been renting the property to a lady in her 70s with her two adult children for 24 years. My parents lived across the street for 25 years and told me the lady wanted to sell the property for retirement money. Of course the older lady who lived in the home did not want to move. Owner sold the property to me ( no banks involved) and now I got good responsible tenants and hopefully will make back my investment in just a few years.

Check around with neighbors to see if anyone wants to buy it, you never know.

 

[BreathFree]

I don't think age should be a determining factor for selling investment property, gains or losses should be. Right now my investment properties have almost quadrupled up from my 80k purchase price to around $275 now, I turn 47 next month and have given thought of liquidating. There also has to be a game plan of where to park the funds

Wow!!! That's an impressive gain.

I have no idea where to invest the proceeds to receive the same income I receive from the rentals. Also, the taxes and recapture will reduce the proceeds from the sale making it even more difficult. I am looking at age, but I would hold on a few years if the market was not cooperative. I don't plan to give them away just because I hit a certain age, but at some point who knows. If they provided income for 25 years they served my original purpose.

 

[calmloki]

....
I have no idea where to invest the proceeds to receive the same income I receive from the rentals. Also, the taxes and recapture will reduce the proceeds from the sale making it even more difficult. I am looking at age, but I would hold on a few years if the market was not cooperative. I don't plan to give them away just because I hit a certain age,.....

There's the rub. Sell a place and after closing costs, real estate commission, state and federal taxes and depreciation recapture your $100 is now $70-75. Where you going to put that money to earn what the $100 of rental property did? We started making property loans on commercial properties - NOT to homeowners (Dodd-Frank), but to house flippers. Keeps the hand in, but requires learning some new tricks.

 

[jetpack]

Hopefully, this year. Buying it was a mistake in the first place.

 

[GrayHare]

Be aware that if you sell those rentals at decent profit during your early/mid 60s, those gains could push you into Medicare's IRMAA brackets where you'll pay a surcharge for Medicare coverage.

 

[97guns]

Wow!!! That's an impressive gain.

If they provided income for 25 years they served my original purpose.

That's my quandary , if I sell I need to either 1)replace the income 2)live off the principal or 3)go back to work and #3 ain't happening

I could dump it all to dividend holdings but paper assets really get me queezy

 

[zekeboz]

We have 3 units that bring in a pretty good return - bought it at the right number.
Originally we were going to wait until the wife retires but..... the market is red hot right now and quite frankly over priced. We are due for a correction, the numbers just don't work out for the smart investor. A lot of newbies jumping in and not working the numbers correctly and driving up the over all market. So we may sell to cash in... we'll see.

 

[nwsteve]

We are selling one of our 4 properties this month. This is the last year before RMDs and we will have a little room to deal with the depreciation recapture (12 year rental) without pushing us to next bracket (above 175K jt) for Medicare premiums.
Short of dying or a 1031 exchange almost no way to extract from a rental without getting hammered by recapture and Medicare premium escalation.

 

[SJ1_]

I am age 45 and currently own 4 rentals (11 units). I planned to keep my rentals until age 60 and then start selling them off, one a year, over the following five years. I plan to take SS at 65 so I will use that income to offset the loss of the rental income. If interest rates are better at that time, I was thinking of purchasing an immediate annuity with the proceeds from the rental sales around 65. I may keep one rental after 65, it depends on how I feel about it at that time. I was just curious about others exit strategy.

we started selling them during the prior boom (before the last crash) as tenants left. Mainly the expenses kept going up and rents did not.
we now have 2 left one tenant 12 years other 13 years.
I wanted to sell as they left but the 13 year tenant just gave notice and
I make about 5,000 on each house. so we were ready to sell but realized there was nothing close to matching the 5k we make now. Also we should be able
to get another $4800 per year since rents are way up in the past 13 years
selling we prob. net 125,000 after taxes re fees etc.
so to answer you question we pretty much let the market decide vs our age
Ill be 65 in a few weeks

 

[W2R]

Be aware that if you sell those rentals at decent profit during your early/mid 60s, those gains could push you into Medicare's IRMAA brackets where you'll pay a surcharge for Medicare coverage.

I got pushed over like that for this year, due to my greater income in 2015 (due to selling funds to buy my dream home). So, I am paying more for Medicare Part B than I did last year. My understanding is that next year it goes back down to whatever the lower amount is these days. All in all my annual Part B cost for 2017 is a total of $991.20 more than the same for 2016.

Perhaps in comparison with profit on the rental, that might not be much but you're right, it is something to consider.

 

[calico1597]

We had three rental homes for nearly 20 years. They paid for themselves, but we found after retirement we didn't want to mess with the cleanup, painting, etc between renters and sold them...glad we did.

 

[Debinnov a]

Retired at 57 and bought a villa nearby our home (in a sought after 55+ community) for diversification. We plan on selling just as I start collecting social security - Age 66.

So far, it has not been much work and we have a good long term tenant. If it becomes too much work, we will sell sooner. We don't love being landlords, but are conservative investors and saw it as a way to diversify, while having some additional income before social security becomes available.



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[Winemaker]

I currently own 3 units, 7 doors. Cashflow is wonderful, but currently scouring the country to do a 1031 exchange in a snowbird/warmer area. We have a few years before depreciation allowance runs out. Suggestions anyone?


While we do run the rentals as a profitable business, it is very rewarding to help those who would not normally afford a quality place to live.

 

[Scuba]

We don't own rentals but if we did and if they were in strong real estate markets, I wouldn't sell unless (1) we needed the proceeds to fund our lifestyle, or (2) major maintenance expenses were on the horizon that would substantially decrease ROI. If it were a matter or not wanting to be an active landlord any more, I'd hire a good property management firm rather than selling, assuming I could still get decent cash flow net of the PM fees.

If we had large pensions, I might feel differently, but without those, if I already owned rentals, I'd keep them for the stable cash flow.