Do you plan on eventually cashing out and moving away from real estate?
Most Popular Reply
Investor · Richmond, VA · Member since 2023 · 459 posts · 474 votes
2yI will be retiring from my w2 job in a few years and plan on using the SFH rentals as a way to stay busy without being too busy. My wife and I love real estate and I enjoy the maintenance since I like working with my hands,
We realize that we are going to have to do something to shed assets eventually simply because I am not interested in dying with a super high net worth but we won't be selling because we want to.
After 20 years of landlording I can honestly say that I love providing good homes to good people. I love how we help families, I love the game of buying houses, I love fixing them up and seeing the results....why sell?
152 Replies
- Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes2y
Why? Here’s my position 15 years after I retired.
A dozen SFR worth maybe $5million that brings in $20k/mo. I spend MAYBE 2 hours a month including 1 hour on bookkeeping. When I did I can leave it to anyone tax free and then they will get $20k/mo plus annual increases for the rest of their life. If they don't want to spend both hours per month they can pay a bookkeeper. If they need some cash they borrow about $4million tax free.
I can’t see the upside to a dst, paying fees so that win or lose you have to find another one when someone else decides to sell the investment or pay a boatload of taxes. A 1031 means staying in real estate. Obviously you’d never sell, pay the taxes and invest in stocks. Something that has to be sold to provide cash flow until it eventually runs out.
I think anyone that has as much today as they will when they retire and want to sell then might as well sell now. Maybe they’ll solve inflation and rents and real estate prices will finally stop their 200 year march to the heavens. Until then the tax advantages combined with the control of your own real assets can’t be beat.
- Professional · San Francisco, CA · Member since 2014 · 876 posts · 301 votes2y
Quote from @Jack B.:
Or have you?
A woman I recently dated also has a rental portfolio and retired in her 30's. She met a lady in California who told her as you get older you won't want to deal with the hassle of tenants and rentals or PM's, and you'll want to sell like I did. I agreed with her and so did the girl I was dating for a few months at that time.
So that begs the question, do any of you have an exit plan? Opportunity zones? 1031 into DST? What?
Hi Jack,
Here's a post I made about helping a client "exit" the landlord stage of his life. I've worked with many investors who sought a life style change and wanted to take a more passive role in their real estate.
https://www.biggerpockets.com/member-blogs/7993/48729-are-yo...
- Investor · Richmond, VA · Member since 2023 · 459 posts · 474 votes2y
I will be retiring from my w2 job in a few years and plan on using the SFH rentals as a way to stay busy without being too busy. My wife and I love real estate and I enjoy the maintenance since I like working with my hands,
We realize that we are going to have to do something to shed assets eventually simply because I am not interested in dying with a super high net worth but we won't be selling because we want to.
After 20 years of landlording I can honestly say that I love providing good homes to good people. I love how we help families, I love the game of buying houses, I love fixing them up and seeing the results....why sell?
- 2yJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
I'm 52 and don't really have an exit strategy with my 24 SFR. I told my kids when my wife and I die they can sell them all off tax free right away and do whatever they want with the money. Right now they cash flow 16k/month after all expenses and they're easy to manage. I just text people to go fix them when they break. They're super easy to manage and I enjoy the tax free cash flow. I'm not getting rich off them, but the cash flow was enough to allow my wife to retire as a nurse two years ago. I probably have almost 3 million in equity now with them. I guess I'd roll the money into the stock market if I wanted to get out. But I feel like I have more control with my money in real estate vs the stock market. Especially in bear markets. I'd rather diversify and have a 50/50 split between the stock market and real estate in case the economy has a recession. People always need a place to live and I invest in C+ class SFR where the demand is highest in good times and bad. People are always looking for an affordable place to live.
- 2yCorby GoadeBusiness MemberInvestor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
Absolutely not. Real estate creates generational wealth and the long term game is all about trading up and exchanging properties to offset your gains.
Anyone concerned about managing tenants in retirement does not have an abundance mindset. As you learn, grow and scale, you should be hiring excellent property managers who will make your investment truly passive. Self managing once you have a profitable portfolio is stepping over dollars to pick up dimes. Additinally, most self managers actually lose money through lack of market knowledge and poor management practices.
- 2yJack B.Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votesOP
Quote from @Leslie Pappas:
Quote from @Jack B.:
Or have you?
A woman I recently dated also has a rental portfolio and retired in her 30's. She met a lady in California who told her as you get older you won't want to deal with the hassle of tenants and rentals or PM's, and you'll want to sell like I did. I agreed with her and so did the girl I was dating for a few months at that time.
So that begs the question, do any of you have an exit plan? Opportunity zones? 1031 into DST? What?
Hi Jack,
Here's a post I made about helping a client "exit" the landlord stage of his life. I've worked with many investors who sought a life style change and wanted to take a more passive role in their real estate.
https://www.biggerpockets.com/member-blogs/7993/48729-are-yo...
A very convenient advertisement for your business, not actually adding to the thread in any way.
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes2y
Your 10 year plan and what you’re in the business for should dictate your exit strategy. Everyone has their own motivations.
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes2y
I exited last year with i/o seller financing. I previously 1031'd smalls into 2 bigs by design.
My 'cash-flow' is up (but taxed as interest🥺), 'perpetual' and hassle-free, but eventually I'll have to manage the waterfalls and tax situation when the balloons pay out.
Happy divesting more into paper equities for now. I'll probably get more RE as opportunities arise, but don’t miss it at all yet.
- 2yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
I think it depends on the person. For me, I plan on retiring early and slowly selling off my rentals over the next 20 years.
- 2yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
No, I intend to trade the equity of it but I doubt a mass sell-off. As someone who is likely going to step out of the grind in 3-5 years, I will likely sell my businesses and keep my real estate. I don't think I can ever be inactive entirely-- I tried that and failed. But being casually active in real estate, infrastructure projects, private credit, and equities is my long term future but a lot more time focused on my kids. I think my kids will want all these investment projects, too.
- Member since 2019 · 7k+ posts · 4k+ votes2y
Quote from @Jack B.:
Or have you?
A woman I recently dated also has a rental portfolio and retired in her 30's. She met a lady in California who told her as you get older you won't want to deal with the hassle of tenants and rentals or PM's, and you'll want to sell like I did. I agreed with her and so did the girl I was dating for a few months at that time.
So that begs the question, do any of you have an exit plan? Opportunity zones? 1031 into DST? What?
my exit strategy is to give free housing to my kids and some STRs in Hawaii, basically I donot need house that I would never live in it when I am nearing retirement age.
DST is not an exit plan as the return is only 3-4% lol
- Rental Property Investor · Somewhere over the Rainbow · Member since 2021 · 1k+ posts · 1k+ votes2y
I'm not sure I would end up selling - I actually think they become more beneficial as you age. Especially once they are paid off. Even 10 homes at 1k/month comes out to 10k a month. Combine that with SS income (maybe?), 401k, roth IRA and you are set up golden. If you have kids, even better. They get the cost step up basis and now they can sell or even better keep the company going and expanding and potentially have a much more comfortable life
The nice thing about RE is you can do it for as long as you want - it's not a physically demanding job. Probably take a few hours a month as far as book keeping etc. Self employed buy cheap, rehab and rent
I think I'll eventually retire a little early from my W2 and go into real estate even more - this way my time is freed up and it'd be more of a fun job as opposed to a somewhat stressful side hustle
- Member since 2021 · 401 posts · 254 votes2y
Quote from @Bill B.:
Why? Here’s my position 15 years after I retired.
A dozen SFR worth maybe $5million that brings in $20k/mo. I spend MAYBE 2 hours a month including 1 hour on bookkeeping. When I did I can leave it to anyone tax free and then they will get $20k/mo plus annual increases for the rest of their life. If they don't want to spend both hours per month they can pay a bookkeeper. If they need some cash they borrow about $4million tax free.
I can’t see the upside to a dst, paying fees so that win or lose you have to find another one when someone else decides to sell the investment or pay a boatload of taxes. A 1031 means staying in real estate. Obviously you’d never sell, pay the taxes and invest in stocks. Something that has to be sold to provide cash flow until it eventually runs out.
I think anyone that has as much today as they will when they retire and want to sell then might as well sell now. Maybe they’ll solve inflation and rents and real estate prices will finally stop their 200 year march to the heavens. Until then the tax advantages combined with the control of your own real assets can’t be beat.
Since 20k is not going to exceed your expenses and the equity is illiquid since you're never selling, then what's the point?. To make your kids rich?
I assume you have at least 1-2 million in equity which could net you 50k-100k/year but instead you'd rather take the 20k? If you retired 15 years ago then I'm assuming you're ~65. If your plan is to wait until they are paid off to really start cash flowing then you may not be around to benefit.
- Member since 2021 · 401 posts · 254 votes2y
Quote from @Jack B.:
Or have you?
A woman I recently dated also has a rental portfolio and retired in her 30's. She met a lady in California who told her as you get older you won't want to deal with the hassle of tenants and rentals or PM's, and you'll want to sell like I did. I agreed with her and so did the girl I was dating for a few months at that time.
So that begs the question, do any of you have an exit plan? Opportunity zones? 1031 into DST? What?
I like the idea of living off cashflow from free and clear properties or 120k/year with as few properties as possible. One of my free and clear condos alone cashflows as much as people with 12-24 financed properties. Why have a huge net worth in retirement when your cashflow is so little and you're not selling? To make your kids rich lol.
In my opinion Jack, I would pay off enough properties to cashflow enough to match or exceed your expenses and invest the rest in 401k, the S&P 500, Immediate Annuities, dividens or whatever. Too many mortgages into retirement means your multiplying your risk and headaches for what a tiny cashflow?. One poster just claimed 5 million in net worth generating only 20k net income into retirement. I would sell at that point and pay off the newer homes so I can cashflow from my equity instead of dying with debt.
Consider a SFH alone only lasts 50-100 years. My 40 year old SFH already had 30k-50k in renovation costs just to get the rents to market value because homes age. I purchased in 2006 but the home still returns the same despite the rents doubling due to the age, property taxes and maintenance. You'll also need to rotate all 24 properties at some point (27 years) in order to restart your depreciation. With changing times, you might find C neighborhoods become ghetto. No sense in rotating them for newer homes so I can die with a bunch of 30 year mortgages and little cashflow. Maybe this makes sense to those posters above but not for me.
Treat DST like the new timeshare lol. One would have to describe why it's safer than a CD, Bond, Annuity (which is federally insured) or just the S&P 500. They can't, which is why they just post a link and disappear.
- Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes2y
After 40+years we are selling off a number of properties (4 this month) to younger investors & hold most of the notes (9.75-12%) with 5 year balloons. However, several of our properties that have great tenants are tough to let go, so we prevail. Then again, every time we resolve to downsize we seem to grab yet another opportunity. The latest is a surprise 4bed 2bath ranch that we are gutting with the intent to flip. BUT our daughters Physician Assistant friend (just
moved backescaped from NYC) needs a rental & loves the area so it maybe yet another addition to the portfolio.In retrospect our EXIT strategy has been to 'hand off' to others, (& their kids), properties that were becoming too much work. By doing so, we have made several of our investor friends financially secure & some also opted to retire early. Consequently, by holding the notes we have 'EXITED' passive rental income in lieu of quasi passive income RE annuities.
At this stage of our lives it's interesting to meet others socially who are now trying to justify their unenviable EXIT from the W-2 world. Some are facing age/health related mandated retirement, then the decision to take social security early, then accepting the need to find a PT JOB all while commiserating the current balance of their 401(k)'s/IRA's that they left to the 'expertise' of their company's investment officers/advisors.
- 2yShiloh LundahlPro MemberRental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
For me real estate is fun, but it is a means to an end. I like really estate because it gets me the things that I really like and enjoy such as my own home, my cabins in the Mountains in Lakeside, Arizona and the 3 large, super properties that I have in Costa Rica that I rent out as vacation rentals. I used real estate as a vehicle to acquire these things.
- Member since 2019 · 7k+ posts · 4k+ votes2y
Quote from @Shiloh Lundahl:
For me real estate is fun, but it is a means to an end. I like really estate because it gets me the things that I really like and enjoy such as my own home, my cabins in the Mountains in Lakeside, Arizona and the 3 large, super properties that I have in Costa Rica that I rent out as vacation rentals. I used real estate as a vehicle to acquire these things.
same idea, at the end of cycle real estate is very useful for lifestyle and retirement. No matter how small it is.
Also folks around me when nearing retirement age they just re-switch their old properties into "holiday vacation" place where asset price is still going up, we just need to plan it properly.
I do not need to worry about payoff mortgage in my primary, I can always restart primary with 80% LTV continuously , as long as the primary house that I have is having multiple tenant and DSCR is above one. So even when I'm 84 and house not paid-off, I'm safe. Since currently I have "excess income" from my w2 because I do not need to pay primary mortgage, I could re-invest the money to property that gives "lifestyle benefit", just like you building cabin in AZ/lakeside/etc with minimal risk. - Rental Property Investor · Member since 2020 · 1k+ posts · 1k+ votes2y
I never intend to sell but instead transition from self managing to more passive management to buy my time back when I retire. I have 6 SFH rentals now and would like to get to 10. As I am nearing or into retirement I plan on paying down mortgages so that I can own them free and clear, benefit from the cashflow, and leave my kids with paid off houses when I die. I'm split and will see when I get there but part of me says I am dead at that point who cares what the kids do with them. They can sell with the stepped up basis and follow their passions or continue being landlords to follow in my footsteps. I have also toyed with the idea of building true generational wealth and ruling from the grave where I scale to a larger amount of houses in a family trust and pass the income to my heirs in perpetuity. I had considered maintaining a certain dollar amount in reserves and semi annually diverting 75% of the income to the beneficiaries and the other 25% into a separate account designed for expansion so that the pool does not get too watered down as the family grows. We'll see how things are when I get there but I have a long way to go but real estate has certainly boosted my net worth and should help me retire early.
- Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes2y
$20k/mo far exceeds my expenses already. Maybe $240k year is peanuts to you but it’s more than I need. With modest rent increases next year should be $24k/mo. $288k/year. But it won’t make any difference in my lifestyle. With a paid off primary and no state income taxes I could easily live on $5k/mo, $10k/mo almost tax free is living high on the hog. But appreciation probably exceeds the cash flow. I’ve already have more money than I can spend in one lifetime without being wasteful. I’m 55, and I retired at 40 after investing in real estate for about 7 or 8 years. I probably could have done it faster but I did it on my own. There weren’t any cool websites and I didn’t know anyone that owned 2 houses, much less a rental property. I had to be my own teacher.
The question was why would you ever sell? My answer was there’s no point to ever selling. The corollary is I think anyone can do it, especially today with all the free help available. Our schools train people to be employees not to be successful. I worked hard when I worked, but it was so I could stop working. Even when I was the boss I had places I had to be at times I didn’t want to be there. Age 40 was late compared to what the “kids” are doing today, but it’s sure better than working to 50 or 55. That’s why I spend time on BP helping people like you with your 1031 question. I want to see people succeed.
- Member since 2019 · 7k+ posts · 4k+ votes2y
Quote from @Bill B.:
$20k/mo far exceeds my expenses already. Maybe $240k year is peanuts to you but it’s more than I need. With modest rent increases next year should be $24k/mo. $288k/year. But it won’t make any difference in my lifestyle. With a paid off primary and no state income taxes I could easily live on $5k/mo, $10k/mo almost tax free is living high on the hog. But appreciation probably exceeds the cash flow. I’ve already have more money than I can spend in one lifetime without being wasteful. I’m 55, and I retired at 40 after investing in real estate for about 7 or 8 years. I probably could have done it faster but I did it on my own. There weren’t any cool websites and I didn’t know anyone that owned 2 houses, much less a rental property. I had to be my own teacher.
The question was why would you ever sell? My answer was there’s no point to ever selling. The corollary is I think anyone can do it, especially today with all the free help available. Our schools train people to be employees not to be successful. I worked hard when I worked, but it was so I could stop working. Even when I was the boss I had places I had to be at times I didn’t want to be there. Age 40 was late compared to what the “kids” are doing today, but it’s sure better than working to 50 or 55. That’s why I spend time on BP helping people like you with your 1031 question. I want to see people succeed.
when did you make your first purchase ? KS and Bill ?
- 2yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Be the bank full stop.. having rental property has been good for the depreciation benefits during our high income years when we are building new construction and no other way to shelter large annual revenues. we are like @K S. paid for rentals so one of our rentals cash flows like 10 or more of other peoples rentals that have max leverage and they are 27 years into a 30 year mortgage. Plus A class so really passive and location of rentals to me is important Tax's weather tenant base etc.
But once I am done building and my annual revenue lowers Be the bank is our play. Fund all these young up and coming RE entrepreneurs and help them build their business's I get more satisfaction from that than providing housing to tenants who many times dont appreciate us landlords.
- Member since 2023 · 158 posts · 96 votes2y
I'm cashing out and moving more INTO real estate. Fix and flip for fun and SFR, multi-family and commercial for the long term.
After a certain point, we'll liquidate our single family as it's a headache to scale compared to MF and commercial but we see a part of our assets remaining in real estate for the long haul.
Cheers,
- Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes2y
I bought one property in 1999 but then nothing until I bought 7 from April 2009 to April 2012. (I bought a new primary and a rental each year plus a deal I wanted for a future retirement home.)Then a couple more in 2015. This year I exchanged the 1999 property for a new build. Which could always become my new primary if it doesn’t work out as a rental.
- Member since 2019 · 7k+ posts · 4k+ votes2y
Quote from @Jack B.:
Or have you?
A woman I recently dated also has a rental portfolio and retired in her 30's. She met a lady in California who told her as you get older you won't want to deal with the hassle of tenants and rentals or PM's, and you'll want to sell like I did. I agreed with her and so did the girl I was dating for a few months at that time.
So that begs the question, do any of you have an exit plan? Opportunity zones? 1031 into DST? What?
btw i want to bring another point, but the conclusion is the reverse, and this is especially true for Californian.
once we pass certain age, we no longer having w2 but we want to maintain certain lifestyle, correct ? to do that it seems the answer is having to keep the property and make sure DSCR is above one so everything is covered by tenant. Other alternative is to move to cheaper area (CA->TX or bay area->sacramento/vegas) ; but that would reduce my cash position!
If I am 82 with main SF still in CA, I could still live here if I maintain the same DSCR. If I have to buy cash in vegas and retired there, that's great too, but why move if asset is still appreciating and everything is still covered by tenant. Lets say I have half mil now, If I move to vegas I purchased 300k, now my cash position is 200k. But if I keep primary in CA with DSCR 1, I can keep my half million intact. And that half million is producing at least 5%.So it seems mathmatically speaking, consolidating and maintain property locally is the key here. If I have DSCR>1 I dont have to move/sell. It seems the older we are we have to maintain (never sell) certain property because it creates an indirect saving...
- 2yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Carlos Ptriawan:
Quote from @Jack B.:
Or have you?
A woman I recently dated also has a rental portfolio and retired in her 30's. She met a lady in California who told her as you get older you won't want to deal with the hassle of tenants and rentals or PM's, and you'll want to sell like I did. I agreed with her and so did the girl I was dating for a few months at that time.
So that begs the question, do any of you have an exit plan? Opportunity zones? 1031 into DST? What?
btw i want to bring another point, but the conclusion is the reverse, and this is especially true for Californian.
once we pass certain age, we no longer having w2 but we want to maintain certain lifestyle, correct ? to do that it seems the answer is having to keep the property and make sure DSCR is above one so everything is covered by tenant. Other alternative is to move to cheaper area (CA->TX or bay area->sacramento/vegas) ; but that would reduce my cash position!
If I am 82 with main SF still in CA, I could still live here if I maintain the same DSCR. If I have to buy cash in vegas and retired there, that's great too, but why move if asset is still appreciating and everything is still covered by tenant. Lets say I have half mil now, If I move to vegas I purchased 300k, now my cash position is 200k. But if I keep primary in CA with DSCR 1, I can keep my half million intact. And that half million is producing at least 5%.So it seems mathmatically speaking, consolidating and maintain property locally is the key here. If I have DSCR>1 I dont have to move/sell. It seems the older we are we have to maintain (never sell) certain property because it creates an indirect saving...
vegas is not that cheap anymore.. 300k is OK but in my mind not the greatest I think more like 500k to 750k is what you need to find a decent place in vegas.
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