Have to ask this question every so often!

[Kenneth LaVoie]

So...this is a question I need to ask because there's so much "noise" about apartment buildings soaring, "highest prices in a gazillion years, if you don't sell now you'll be left behind, blah blah blah!"

So we have four buildings left...two 7 units and two 4 units, within 2 miles of each other. NOI around 100-110K, no mortgages. SOME updates and upgrades needed but nothing hideous. 100+ year old buildings (that's all there is in Waterville Maine, besides what Colby College is building). Hard to say what we could get. On my sales page realestateme.com I've got them listed for 1.4 but it's possible they could only go for 1M when all is said and done. 

My gut tells me, Keep em' forever. We've already sold more than half our buildings, and have a nest egg that will give us 80% of our living expenses if we retired now, and our buildings give us 120% of our living expenses, (so 200% total needs met). That's a "normal" middle of the road lifestyle. Every dollar that is in our RE earns us about 10%. If we pull it out, where do we put it? We could 1031 into a DST like 1031exchange.com offers, OR just pay the tax and be done with it and plunk it into a 40/40/20 stock bond REIT/alternative portfolio.

I think the reason I hem and haw over it is because it really doesn't matter ... either way I go is pretty good. Love to hear somethign I haven't thought of though!! 

So..

1. Keep, enjoy, pass on to daughter, let her sell them or keep them

2. Sell, take the hit, put into market

3. Keep, cash out REFI, live "high on hog", pass on to daughter (sell, pay off mortgages, etc.)

4. Sell, do 1031X into ...? We want to live in warm climate but still have access here in Maine for family

Thanks all! first world problems!

[Dave Foster]

@Kenneth LaVoie, 1&3 carry some heavy costs for your daughter if she doesn't want to be a real estate owner or isn't up to the task.

You don't indicate the size of the tax hit.  But I'd calculate how long you'd have to leave property in the market to make up the amount you lose immediately going the route of #2.

#4 - DTS maybe - depends on comparisons or return vs risk and management.  For sure a move into DSTs would be passive.

But you also hint at something that should be intriguing.  Why not do a 1031 of these into several investment properties in a warmer climate - including one that is a really dope property.

After using it for investment for a year sell your current primary and move into the really nice investment and retire.  what just happened?

1. you got up to $500K tax free from the sale of your primary residence.

2. You did a tax deferred exchange into your new primary legally

3. You positioned the rest of your portfolio near you.

4. You got rid of a bunch of management and potential cap ex of 100 year old buildings.

Food for thought!