FI_by_2023
Dryer sheet aficionado
- Joined
- Jan 31, 2015
- Messages
- 27
I am owner of apartments as well and have similar debate....my worry is more on unknown liability (fire, flood, Covid, etc) putting a dent in cash flow. Cashing out would reduce risks, but cash flow reduction and diversification would be missed. Highly recommend a management company, which is my approach. They can earn their keep in increasing rents and being firmer on tenants. That might be stepping stone for you to determine whether to keep or sell.
If you do sell, evaluate return alternative based on net proceeds after tax (capital gains, depreciation recapture and ordinary income tax on personal property). You can reduce, or postpone, tax impact, remove mgmt headaches and keep cash flow by investing in a reputable DST. I don’t care for their structure as they don’t generally pay down principal or mortgage....there are some that are 100% equity.
Wish you luck. Keep us posted on the direction you go.
If you do sell, evaluate return alternative based on net proceeds after tax (capital gains, depreciation recapture and ordinary income tax on personal property). You can reduce, or postpone, tax impact, remove mgmt headaches and keep cash flow by investing in a reputable DST. I don’t care for their structure as they don’t generally pay down principal or mortgage....there are some that are 100% equity.
Wish you luck. Keep us posted on the direction you go.