Selling all of my rentals

Contractor · Oklahoma, OK · Member since 2019 · 67 posts · 8 votes

Hello every one! I just wanted to see what you all thought about selling all of the rental properties that you guys own.

For example, says I had 15 or so properties and payed them all off in 30 years. They are all cash flowing a little bit, but I am ready to retire and cash in on all of the houses I own.

Would it be a bad idea to sell all of the houses and if so, what is the disadvantages and advantages of doing so?

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Nicole Heasley Beitenman

Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes

You sound like a great candidate for seller financing. Let someone else do all the leg work while you just sit back and collect rents until the balloon payment. You've got tons of options in front of you since your properties are all paid off.

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Aaron K.
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
6y
Wouldn't be for me as I'd like the income more than a lump sum, even if you pay a bit more for someone to manage them better. Even so 15 isn't so high of a number that it will take up all of your time.
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Nicole Heasley Beitenman
Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
6y
You sound like a great candidate for seller financing. Let someone else do all the leg work while you just sit back and collect rents until the balloon payment. You've got tons of options in front of you since your properties are all paid off.
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Mark Burlison
Member since 2018 · 83 posts · 51 votes
6y
I’m going to give them to my kids! I have enough cash!
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Brett Mason
OP
Contractor · Oklahoma, OK · Member since 2019 · 67 posts · 8 votes
6y
@Nicole Heasley great! I’ve been hearing people say that I would be paying a ton in taxes. How does that work if I sold the properties?
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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
6y
Certainly don’t sell more than 1 per year or you’ll be in a very high tax bracket. Make sure the cash can make as much or more rentals are, it probably can’t.

It’s easy to retire on $5,000/mo, not very easy to retire with just a million dollars. But the $5k is only 6%.
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Brett Mason
OP
Contractor · Oklahoma, OK · Member since 2019 · 67 posts · 8 votes
6y
@Bill Brandt great advice! So if you were me, you would just keep the property and get the cash flow instead of selling?
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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
6y
yes. Hire a good pm if you’re sick of it.
I get frustrated often here and threaten to sell a problem property. Then I fix the problem and don’t hear from them for a year or more.
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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
6y
There's really no good reason to sell unless you want to deploy all of the accrued gains somewhere else. Any other issue can be dealt with without selling. You can cash-out refinance to access most of the gains without taking a tax hit, you can hire a property manager to place and manage tenants, you can have contractors do repairs, etc.
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Mark Trebor
Investor · Minneapolis, MN · Member since 2017 · 103 posts · 53 votes
6y
Is this a hypothetical question or is this really your situation? Reason I ask is you say they are all paid off but only cash flowing a little bit. I'm trying to wrap my head around how a house could be paid off but only cash flowing a little bit.
So I am guessing that this is a hypothetical question. The other item I did not see mentioned is that when you sell a house you will need to give back the depreciation on the property. So holding a house for 30 years it will be fully depreciated which means you will basically be paying taxes on the full sale price of the house. All comes down to do you personally want the money or do you want to pass it on. If you die and pass it to your kids their bases gets moved to the day you die or some number of days after you die I don't recall the details. So allot of taxes get erased when you kick the bucket. At least this is my understanding of the situation please feel free to chime in.
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Bob Prisco
Specialist · Cleveland, OH · Member since 2018 · 1k+ posts · 666 votes
6y
@Brett Mason what are you asking ? If I want to cash out 1 mill vs dealing with rentals, what is wrong with that, its not right or wrong.... ?
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Michael G.
Member since 2018 · 52 posts · 31 votes
6y
There really isn't a right answer here it really depends on what you want to do and where you are in life.

With that said, i personally would follow @Nicole Heasley Beitenman's advice and hire a property manager: Easy money, no hassle.
If you do take the route and sell - I would take a look at the capital gains tax you will be subject to, that alone may "upset your stomach" and decide to keep them!

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Brett Mason
OP
Contractor · Oklahoma, OK · Member since 2019 · 67 posts · 8 votes
6y
@Michael Georgiadis Great advice Michael. So how would that work when I passed away. If I chose to pass the houses to the kids, and they wanted to sell would they be subject to the capital gains tax as well?
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Michael G.
Member since 2018 · 52 posts · 31 votes
6y
I am not entirely sure. I would recommend speaking with a tax lawyer or even your accountant - if he cannot answer your question, I'm confident he will know someone that can.
This may seem like a hassle, but we are talking about a lot of money here. If there is ever the time to seek professional advice, it's now.
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Dennis Fernandez
Investor · Dallas, TX · Member since 2017 · 71 posts · 44 votes
6y
Everyone has their reasons for selling but if you do end up selling then I would recommend you talk to your tax professional first, your accountant or estate planner.
I've been buying a few rent houses from an older gentleman in similar circumstances here in the Dallas. He has quite a few paid off rental homes that have appreciated and is ready to retire next year. Selling is his choice, not mine.
Last year he sold us 4 houses and this year he told me that the proceeds of the sales tripled his taxable income when combined with his job. This put him at a much higher tax bracket and ended up paying way more in taxes than he was expecting. What he's doing now is he is working with a tax planner and we're only buying 2, maybe 3 homes per year for the next few years.

Good luck!!
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y
Originally posted by @Mark Burlison:
I’m going to give them to my kids! I have enough cash!
do you think the kids will just sell them because they want the cash or are you going to deed restrict them for a certain amount of time
we ran into this in my Timber days.. Once the kids got their hands on the parents ranchs' and timber it was GONE once they realized the value and of course in this area all this timber land generally is free and clear.. So inherited timber was our nirvana from a logger stand point.

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Nicole Heasley Beitenman
Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
6y
@Michael G. I actually wasn't thinking about hiring a PM. He could work out a seller-financed deal where he holds a portion of the note for a period of time. He still collects income for a little while longer but doesn't have to worry about running the properties anymore. Of course, a PM is another great solution if he doesn't mind touching base with the PM periodically regarding day-to-day operations.
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