Thoughts about selling my rental and buying reits?

[Synergy]

I don't know much about reits in terms of the up and down cycles. Obviously real estate has seen major appreciation in the past 8 years or so. I've owned a duplex in Oregon for about 6-1/2 years and I really don't like being a landlord (the politicians*in Portland keep coming up with new laws that are increasing the likelihood*of landlords getting sued.* The latest*talk up there is to introduce legislation to provide free legal counsel to tenants wanting to sue their landlords). I've been thinking about selling the duplex and moving the money into Reits. I'd like to hear opinions about doing that now in the current market?
Thank you,RDW

 

[Sunset]

Markets are very local, so if your market is up, then it's a good time to sell.

 

[Spock]

You can't 1031b exchange then rentals into REITs so you'll have to pay depreciation recapture tax. Check with your tax preparer on what you can expect to net.

Even with the tax, I would seriously consider getting out of the rentals but then I've found out I'm not cut out to be a landlord.

 

[Freedom56]

I don't know much about reits in terms of the up and down cycles. Obviously real estate has seen major appreciation in the past 8 years or so. I've owned a duplex in Oregon for about 6-1/2 years and I really don't like being a landlord (the politicians*in Portland keep coming up with new laws that are increasing the likelihood*of landlords getting sued.* The latest*talk up there is to introduce legislation to provide free legal counsel to tenants wanting to sue their landlords). I've been thinking about selling the duplex and moving the money into Reits. I'd like to hear opinions about doing that now in the current market?
Thank you,RDW

It all depends on what type of REIT. The only one's that are suitable for investments are those that are in residential rentals (apartments). Many other REIT sectors are total disasters for investors. The problem with quality apartment REITS is that their yields are pretty paltry given their risk. We made our decision to sell our rental property back in 2003 after we were being accused by real estate agents of discriminating against potential tenants. All we were doing was refusing to rent to tenants with no source of income other than alimony which we believed was prudent given how difficult it can be to evict a deadbeat tenant. If you have good tenants, I would stick with the rental property and get supplemental insurance cover any risks. We ended up investing the proceeds of the sale of our rental property in corporate bonds which is a lot less headache. However yields are pretty low these days for quality corporate bonds.

 

[calmloki]

We've been Oregon landlords for over 35 years and it has been very lucrative and has done well in all times - stock or real estate crashes haven't kept people from needing to have a roof over their heads and if you aren't selling then property prices don't matter.

That said. The well meaning politicos are sure making me unhappy about renting one bedroom apartments to lower income folks. At 70 I'm trying to move away from the rentals. Sold a little house last fall and the tax bite was real substantial, but a 1031 into real estate in a lower tax state wasn't getting us out of RE, we couldn't 1031 into REITs, and that left Delaware trusts, which I'm ignorant about, or Opportunity Zone investing, which is a maybe, but I'm simple, so we just paid the tax and took the remaining money. Dunno where to make money these days.

 

[LRDave]

Reading somewhere recently, most REITs just track equities, so you are not diversifying like you think you are. BHs is a good place to investigate this. Either you are in real estate "for real" (a landlord) or it is just another equity position, with the small exception of TIAA Real Estate (QREARX) - which has limited participation and quirky movement options and is not totally transparent BUT has a performance history of diversifying differently than either fixed income or equities.

 

[wolf]

My experience with REIT. They behave like stocks. (which they are, I know.) So they just follow the market. They are promoted, as an alternative to being a landlord. Which I find not true. (no depreciation, no control, etc).

Do you want to sell because you do not like being a landlord? Or, because of local political interference?

My, case. Here in S.F. Bay Area, CA. Being a landlord, not to bad. Once you figure out
the ins/outs of management. Agree, I see the "winds" of change here too.

 

[BeachOrCity]

You can't 1031b exchange then rentals into REITs so you'll have to pay depreciation recapture tax. Check with your tax preparer on what you can expect to net.

Even with the tax, I would seriously consider getting out of the rentals but then I've found out I'm not cut out to be a landlord.

There are some private reits where you can do something like a 1031 but it has a different number

 

[BeachOrCity]

My experience with REIT. They behave like stocks. (which they are, I know.) So they just follow the market. They are promoted, as an alternative to being a landlord. Which I find not true. (no depreciation, no control, etc).

Do you want to sell because you do not like being a landlord? Or, because of local political interference?

My, case. Here in S.F. Bay Area, CA. Being a landlord, not to bad. Once you figure out
the ins/outs of management. Agree, I see the "winds" of change here too.

I own far fewer rentals than I used to. I just grew to not like it.

I agree with the above about reits being a different animal. They don’t track net asset value.

However there are private syndications you can join that behave more like real estate but underlying costs and management fees will add up! And you have NO control of exit timing Which is a huge minus.

 

[LRDave]

On a truly personal note, the thought of being a landlord makes me throw up in my mouth a little bit. I totally get "different courses for different horses." As Robert Zimmerman famously sang: "It ain't me babe".

 

[CaliKid]

You can't 1031b exchange then rentals into REITs so you'll have to pay depreciation recapture tax. Check with your tax preparer on what you can expect to net.

Even with the tax, I would seriously consider getting out of the rentals but then I've found out I'm not cut out to be a landlord.

Can't 1031 to REITs but can 1031 to DST (Delaware Statutory Trusts) which is not too significantly different than a REIT as far as I know. There are DSTs of all varieties (with debt or with no debt, commercial or residential, etc...). They are usually around the 5% return number, from what I have seen advertised, but no calls for a broken toilet at midnight!

 

[Souschef]

When I retired in 2009, the RE market was down, so I turned my condo into a rental. I used a management company to avoid those "broken toilet" calls.
The first tenant was there 3 years, but the next 2 were only there for a year.

By the time I got the place ready for the next tenant, I had a net cash flow of $400 for the year.
The market improved enough by 2014 for me to sell it. I never looked back

 

[Synergy]

Thanks everyone for your input

 

[Time2]

If you get serious about REITs, I am subscribed to a Seeking Alpha advisor.
He sends out buy and sell alerts on all types of REITs. All kinds of deep dive research goes into his write ups, has a busy chat of all his members.
I've been signed up for a few years, but it got to where a lot of it is trading, but you certainly can take in the info and buy Risk 1 or risk 2 REITs and sit on them.
He also has made people a lot of money at dividend time, I understand that dividend payout and price is normally a zero sum game, but there are often times where REITs don't act the same as most stocks. So he comes out with dividend plays about 4 times a year. I have made some 1 week to 1 month in and out on his recommendations and made money.
I got in early when the subscription price was lower, now you need to be serious, as the price is a little steep, but if you're trading several hundred thousand of houses for REITs it may be worth it.
Lots of info to act on.



Here's some stuff you can look at, you can probably find more without signing up.
I have no affiliation, just an impressed customer.


https://seekingalpha.com/instablog/...-how-to-evaluate-preferred-shares-spreadsheet


https://seekingalpha.com/checkout?service_id=mp_1060

 

[wolf]

Hmm...."Time2"...= market timer?....wish I had your luck.

 

[Time2]

Hmm...."Time2"...= market timer?....wish I had your luck.

I retired, now I have Time2, do whatever I want.
If you are referring to the links I gave as market timing, there is no timing involved, just plenty of research, comparison to other very similar companies, and why any price difference, or taking advantage and waiting for that company to catch up.
Like I said, I have been very impressed with his calls. I made made money. But, he sends out so much info, you have to want to be very involved to take it all in. But he has charts of buy/sell/hold, risk rating 1 thru 5, dividend rate and discounted/premium to dividend and so much more.
I got in when it was much cheaper, and made back the cost 20 times on my first in and out. I was buying $50k lots so, that's not very hard.


On the other hand, I did get Bob Brinkers "Marketimer" newsletter for years, but I think that was a poor name, he only timed the market once in the 30 years I got the newsletter.
btw, He sent a special alert to sell 29 days before the Nasdaq Mar 10, 2000 peak and subsequent slide. I did.