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Old 07-18-2020, 09:13 AM   #61
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Jeesh Reader, I didn't realize that this was a contest. I'm quite happy with my station in life and hope that you are too. As blessed as I feel, I rarely have to look far to find someone with more wealth and I like having wealthly friends.

I'm not sure what any of the first part has anything to do with holding rental real estate in retirement and the issues that I raised of time involved, being "on call" and lack of diversification.

My dad was very into real estate. He had a number of commercial rentals when I was young, many pieces of land, and later some residential rentals and another single tenant commercial rental. He came to view the residential rentals (an 10-unit apartment building as I recall and at least one SFH) as a PITA and sold them. I am eternally greatful to him that he sold out of pretty much everything other than the one single tenant commercial building.

While I doubt that I would have chosen that path it really wasn't an option for me because of the hours that I worked and the extensive travel that I had with my career.... I just would not have been around enough to invest in rental real estate.

I have no doubt that real estate is a great way to build wealth, both dad and uncle did very well with it.... it just wasn't for me. However, to rely on real estate in retirement becomes increasingly difficult if one want to travel a lot or does a lot of their own repairs and maintenance work.... even thought the cash flows are quite attractive.
I dunno, pb4uski, maybe it's your tone...

Your dad did a great job of setting your mom up for a secure retirement with the wealth he built in real estate. For THAT you should be eternally grateful. I don't know what he did for a living outside of the real estate, or what opportunities you had that he may not have had. That may have determined the path he took. Whatever the reason, the real estate probably improved your opportunities as well. It was a successful path for your family, and that's what matters.

I think most people here with long term experience with rentals are well aware of the issues around how to deal with fully depreciated assets that have dramatically increased in market value. The answers are different for everyone. Sell and take the hit, exchange into something less management intensive, or outsource and accept the frictional losses of letting someone less interested in maximizing revenue while minimizing losses take over. Those are pretty much the choices.

And the Flint Michigan example of which you are so fond? Astute people take the loss early and move on. In equities, you diversify to avoid the Enrons you can't foresee and hope the returns on the larger portfolio outweigh the losses. In real estate, you can spot the losers and cut your losses.

So, maybe take the edge off your tone, and recognize that people, many of whom may not have started where you did, have accomplished a lot. They are not stupid. Most of them are certainly smart enough to spot the Flints. Remember that for every Flint, there is a place with an appreciation rate well in excess of inflation. Add in astute use of leverage, and some people have done very well as a result.

Maybe include the pluses as well as the minuses of real estate when you offer your advice, especially to people starting out. They might be more inclined to listen to your advice if you did.

That is all.
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Old 07-18-2020, 09:23 AM   #62
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....So, maybe take the edge off your tone...
Look in the mirror...

You're the one who seems to be wanting to make it personal.
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Old 07-18-2020, 09:50 AM   #63
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....Astute people take the loss early and move on.....
This is a very flawed idea based on thinking that you are the smartest girl in the room. For one, for even a slowly evolving geographic decline, the real estate investor may not see it before it is too late. Also, many declines in value happen too fast for the investor to "take the loss early and move on"... floods in Houston, California wildfires, tornados and hurricanes, fires from rioting in Minneapolis, even the problems in Flint happened fast.

So, for example, if a retiree had 40% of their retirement portfolio in rental properties in Minneapolis and were in the wrong spot and ended up burnt to the ground at best they have the insurance proceeds and have to figure out what to do next.

On the other hand, if the retiree had a diversified portfolio of properties across the country and their property in Minneapolis burns to the ground but is 1% of their total... it is a hit, but not a calamity. And it is very hard for the individual real estate investor to create a portfolio that is diversified both geograpically and by property type.
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Sell apartment buildings or keep forever?
Old 07-18-2020, 09:56 AM   #64
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Sell apartment buildings or keep forever?

I would turn everything over to property managers and see if you think itís still OK a year later. I have rental properties that are managed and far away from where I live. Some have done great. Some just OK. But all worth it and Iíve never repaired anything. Just do the accounts and answer emails. I have Properties I have owned for 12 years and never seen them in real life.
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Keep -save tax forever
Old 07-21-2020, 04:09 PM   #65
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Keep -save tax forever

Keep em Forever if you can. Investment real estate Will go to your heirs tax free. If you sell you pay huge capital gains on depreciation and profit.
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Old 07-21-2020, 04:43 PM   #66
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We plan to keep our ten rental units to hand down to our kids. As others have observed, they seriously outperform the market and since they're 100% paid for, they provide month after month of cash flow that allowed my DH to retire at 60. Even during this time of the virus, we've only had to forgive 1/2 of one tenant's rent for one month. Most of our people are in essential jobs. The DH will take SS this year and I'll file for my spousal benefits. After that, we'll only need a fraction of what our rentals generate, so if we want to hire a manager (or hopefully train one of the kids to take over those duties. I'd rather pay one of them!) we can step back from active involvement without taking a hit to our lifestyle. The money we have in the stock market (about 60% of our portfolio) is gravy. We just let it ride and don't worry about ups and downs.

If you're taking a poll, OP, I vote for keeping them! Good luck!
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Old 07-21-2020, 04:53 PM   #67
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Every body seems to think leaving property to heirs and let them get the stepped up basis is always going to be there I am not counting on that being around to much longer so I am going to sell and take the tax hit.
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Old 07-21-2020, 04:58 PM   #68
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Every body seems to think leaving property to heirs and let them get the stepped up basis is always going to be there I am not counting on that being around to much longer so I am going to sell and take the tax hit.


Why do you think this is going to change?
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Old 07-21-2020, 05:50 PM   #69
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Yes, this is me/us. We started investing in residential real estate in 2003 and it makes up about 2/3rds of our investable assets, after selling costs and potential tax hit. We had as many as 34 units (combo of small apartments, SFHs, and individual condos) and are now down to 20, all in the Seattle area. All sold units were sold at nice profits and paying all taxes. The properties have greatly juiced our net worth and supplied a steady stream of income to us, allowing us to both be semi-retired at 49.

The remaining units we have only require about 10-15 hours/month unless we have a vacancy or emergency. (We're in the middle of one of those emergencies right now, so I certainly don't want to gloss over the major that headaches they can be.). These properties provide us with plenty of income to live on pretty comfortably and pay for college for our kids. I turn 57 next week and my lovely bride is 56. We have one child about to enter college and another that will be a sophomore in high school.

We currently get about a 5% return on the market rate equity, but overall our returns are closer to 20% annually on what we invested, including appreciation. We have enjoyed fantastic appreciation and rent growth on the properties, thanks to living and investing in a market like Seattle. I used to think that we would sell everything and pay all taxes owed after our daughter graduates from high school, and then just be totally retired. However, I now go back and forth between hiring a property manager and selling and doing 1031 exchanges into DSTs.

Would I do it all over again? Absolutely. My only regret is we didn't start investing in real estate earlier in life (started at 39). In fact, we cashed out 2 401k's, paid the taxes and penalties to invest in real estate, which turned out much better than if the dollars were just left in the 401ks. Now, what to do, what to do...
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Old 07-21-2020, 07:56 PM   #70
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Could you sell sone and go with a property management company? We only have one rental but it represents 25% of our net worth ( thank you San Diego appreciation). We have a management company which helps a lot. At first Iím 2013 it was break even but with the new refinance itís ~1,000 cash flow positive. Weíll keep it forever and leave it to our three kiddos.
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Old 07-22-2020, 09:16 AM   #71
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Not a factor... OP is only 54.... but definitely a factor to consider if on or near Medicare but usually the IRMAA premium isn't significant in the whole scheme of things.

I'm in the same boat about wondering whether to sell properties. I'm 61, single, and on ACA. So if I sell one property it kicks me over the cliff of $48k. I have 6 now and was thinking of selling 2 of them when I reach 65 when I'm on Medicare and paying off the four remaining. I didn't even know about Medicare also being a higher cost if your income goes up. But doesn't sound like it's as significant as ACA. I sold 3 properties this year (from 9 to 6 properties) and will pay $10k for ACA since I'll have to pay back subsidies.
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Old 07-22-2020, 10:10 AM   #72
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There are plenty that feel like you, here on this forum and IRL. I didn't do the fix up plan, didn't renovate anything. In 28 years I have only had one eviction. I certainly didn't buy a job (if I had 10 duplexes, then I would agree with you). And I'm very unhandy. I pay people once in a while.

Perhaps tenant selection is the difference. My landlord life has been a wonderful one.

You're one of the lucky ones. My tenants under 9 properties have been basically good for the last 15 years but upkeep to the houses and mostly condos has been a major PITA. It's just dumb luck. Have had so many water issues of all sorts I can't even count how many. Some minor, some major. Very stressful. I'm very handy but I still don't like worrying about all of these issues. Although I do like the income. It's a hard decision for me but the thought of being free from the burden is very enticing.
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Old 07-22-2020, 10:21 AM   #73
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Jeesh Reader, I didn't realize that this was a contest. I'm quite happy with my station in life and hope that you are too. As blessed as I feel, I rarely have to look far to find someone with more wealth and I like having wealthly friends.

I'm not sure what any of the first part has anything to do with holding rental real estate in retirement and the issues that I raised of time involved, being "on call" and lack of diversification.

My dad was very into real estate. He had a number of commercial rentals when I was young, many pieces of land, and later some residential rentals and another single tenant commercial rental. He came to view the residential rentals (an 10-unit apartment building as I recall and at least one SFH) as a PITA and sold them. I am eternally greatful to him that he sold out of pretty much everything other than the one single tenant commercial building.

While I doubt that I would have chosen that path it really wasn't an option for me because of the hours that I worked and the extensive travel that I had with my career.... I just would not have been around enough to invest in rental real estate.

I have no doubt that real estate is a great way to build wealth, both dad and uncle did very well with it.... it just wasn't for me. However, to rely on real estate in retirement becomes increasingly difficult if one want to travel a lot or does a lot of their own repairs and maintenance work.... even thought the cash flows are quite attractive.
These are very good points. It comes down to risk tolerance and desire to be a landlord and put put up with the drawbacks. I had no idea it would be as time consuming and stressful as it has. I want to travel extensively in the future and having properties is a big hurdle to doing that. Property manager may or may not help with all of that but I don't really want to find out. I like the income but don't like being 'on call'. Hard decision.
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Old 07-22-2020, 10:27 AM   #74
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Every body seems to think leaving property to heirs and let them get the stepped up basis is always going to be there I am not counting on that being around to much longer so I am going to sell and take the tax hit.

Congratulations. Freedom.
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Old 07-22-2020, 10:34 AM   #75
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Wow, as a landlord of several single family homes I am amazed by some of the posts that say their rentals have been "no trouble." Seems incredibly lucky. We've been landlords for 45 years and have put on new roofs, A/C systems, water line replacements in homes built in the 80's, etc, a new sewer line on a home built in the fifties, as well as the usual carpet, flooring, water heater, appliance replacements. And used gallons and gallons of paint. My husband is extremely handy and has saved us thousands in repair costs, and I have definitely put in my share of the work also, as well as doing the bookkeeping.



We had a condo unit (won't go that route again) where the tenant accidentally set the place on fire and we were so lucky it didn't hurt anyone or hurt any adjacent units. We had a single family home that also caught fire and luckily no one was hurt there either. Now we are at retirement age and are thinking of selling one per year going forward, but have also considered just keeping them til we die to pass on to the children for them to sell. However, we would definitely need to start spending big bucks on cleaning, repairs, etc that we have been doing ourselves, so maybe it would be better to sell, pay the taxes, and invest elsewhere.



Repairs and liability is what I would be concerned about, going forward, if I were the OP. We are in our upper sixties and what you can do at 60 is very different from what you can do, or feel like doing, when you are close to 70. Just because you have had few repairs in the past doesn't mean you won't have more going forward as the building ages. That said, we traveled 75 days last year (not consecutive) pre-Covid and were able to manage the properties by phone. This year of course we haven't had the opportunity and not sure when that will happen again! Have been spending a lot of time on one property that is run down, getting it ready to sell. Not sure how much more of that we want to do.



I would be fine getting a property manager to manage, but if we have to pay for all the cleaning and repairs I wonder if it wouldn't be better to sell a home per year and pay the taxes. It's a conundrum. Have also looked into DSTs, though there are definitely fees associated with those, and quite a few DSTs are retail. Retail has taken a bit hit this year.
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Old 07-22-2020, 10:46 AM   #76
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I have two rental properties myself. My goal is keep them in retirement, honestly just to keep me busy with something to do. If they get to a point where it takes too much time or too much headache, I would sell. Also, if I get old to actively manage, I would sell (maybe sell to my son).
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Old 07-22-2020, 10:47 AM   #77
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Wow, as a landlord of several single family homes I am amazed by some of the posts that say their rentals have been "no trouble." Seems incredibly lucky. We've been landlords for 45 years and have put on new roofs, A/C systems, water line replacements in homes built in the 80's, etc, a new sewer line on a home built in the fifties, as well as the usual carpet, flooring, water heater, appliance replacements. And used gallons and gallons of paint. My husband is extremely handy and has saved us thousands in repair costs, and I have definitely put in my share of the work also, as well as doing the bookkeeping.



We had a condo unit (won't go that route again) where the tenant accidentally set the place on fire and we were so lucky it didn't hurt anyone or hurt any adjacent units. We had a single family home that also caught fire and luckily no one was hurt there either. Now we are at retirement age and are thinking of selling one per year going forward, but have also considered just keeping them til we die to pass on to the children for them to sell. However, we would definitely need to start spending big bucks on cleaning, repairs, etc that we have been doing ourselves, so maybe it would be better to sell, pay the taxes, and invest elsewhere.



Repairs and liability is what I would be concerned about, going forward, if I were the OP. We are in our upper sixties and [B]what you can do at 60 is very different from what you can do, or feel like doing, when you are close to 70.[/B] Just because you have had few repairs in the past doesn't mean you won't have more going forward as the building ages. That said, we traveled 75 days last year (not consecutive) pre-Covid and were able to manage the properties by phone. This year of course we haven't had the opportunity and not sure when that will happen again! Have been spending a lot of time on one property that is run down, getting it ready to sell. Not sure how much more of that we want to do.



I would be fine getting a property manager to manage, but if we have to pay for all the cleaning and repairs I wonder if it wouldn't be better to sell a home per year and pay the taxes. It's a conundrum. Have also looked into DSTs, though there are definitely fees associated with those, and quite a few DSTs are retail. Retail has taken a bit hit this year.
Of course all the stuff in your first paragraph is just normal. It's the odd stuff that is fun - we had a tenant call me because "somehow" the shutoff valve for the toilet just broke off at the wall. 1/2" water line shooting water across the bathroom. At 11:30 at night. Really don't know how he managed to step(?) on it and snap it off.

DSTs you are finding or have recommendations on please?
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Old 07-22-2020, 11:15 AM   #78
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I suppose some luck is involved. I remember a streak where I went a year and had about 14 plumber visits. I haven't had a plumber come out in the last 3 years though.

The biggest factor in how happy/miserable your life is as a landlord is who you pick as a tenant. Pick wrong and you will suffer.

I'll disclose something else: I've never ran a credit check, asked them to bring a copy of it, verified their income, etc. I ask pertinent questions, observe their responses, and decide amongst the candidates who gets the keys. Again, only one eviction in 28 years. I wouldn't recommend this method to others unless you are confident in your assessment skills. I think it would be a recipe for disaster for most individuals.
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Old 07-22-2020, 11:49 AM   #79
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I suppose some luck is involved. I remember a streak where I went a year and had about 14 plumber visits. I haven't had a plumber come out in the last 3 years though.

The biggest factor in how happy/miserable your life is as a landlord is who you pick as a tenant. Pick wrong and you will suffer.

I'll disclose something else: I've never ran a credit check, asked them to bring a copy of it, verified their income, etc. I ask pertinent questions, observe their responses, and decide amongst the candidates who gets the keys. Again, only one eviction in 28 years. I wouldn't recommend this method to others unless you are confident in your assessment skills. I think it would be a recipe for disaster for most individuals.
So you're just smarter than everyone else that has had problems. Got it.
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Old 07-22-2020, 12:12 PM   #80
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I suppose some luck is involved. I remember a streak where I went a year and had about 14 plumber visits. I haven't had a plumber come out in the last 3 years though.

The biggest factor in how happy/miserable your life is as a landlord is who you pick as a tenant. Pick wrong and you will suffer.

I'll disclose something else: I've never ran a credit check, asked them to bring a copy of it, verified their income, etc. I ask pertinent questions, observe their responses, and decide amongst the candidates who gets the keys. Again, only one eviction in 28 years. I wouldn't recommend this method to others unless you are confident in your assessment skills. I think it would be a recipe for disaster for most individuals.
I'm very good at picking tenants. But the constant house issues are the biggest pain. And that is just what it is. The biggest luck factor. No way to know any of this up front. All in good neighborhoods. Who would have known.
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