Selling options advice needed
Own a duplex. FMV about 375-395k. Owe 50k. Goal - sell and be done with landlording. Been a landlord for 25 yrs. Now retired and want to remove myself from it. No 1031exch, just sell.
Got SS and IRA funds for retirement. Would like to stay diversified and not put sale proceeds in the stock market. I'm thinking maybe seller finance. Use the down pymt in two years, then I owe 35k, to pay it off. Or not and wrap. Perhaps 5 or 10 yr balloon. Spreads out the cap gain/depr recap. 64 yrs old now, figure I can deal with the lump sum payoff decision when it comes.
Current tenant very interested in buying. Not sure if they will be able to when the times comes, spring of 2025 or so. Very good market, add seller finance and I won't have any issue finding a buyer.
Any advice if my goal is to stay diversified but out of the landlord game completely? Ruling out property mgmt.
#2 General Landlording & Rental Properties Contributor
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#2 General Landlording & Rental Properties Contributor
Seller financing sounds like a good option and if you aren't planning on selling for 2 years, your current tenant has lots of time to get their ducks in a row.
What about investing in a REIT? Still in real estate, but someone else is doing all of the work.
I would sell it with Land contract and get 10% down at 9% interest and balloon it in 7 to 10 years. You will get upfront money, cash flow and a big pay day in the not so distance future.
I'd recommend speaking with @Jeff Nash about your options here. You'll want your exit strategy to be tax efficient as possible while looking into diversified options for future growth/income. He's a CFP and CPA and had plenty of experience with situations like this.
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Financial Advisor Texas (#7319835)
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#1 Personal Finance Contributor
- Rental Property Investor
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@Bruce Reeves. I sold 7 units in 2020 and another 18 last year with SF and am happy as a pretty tax efficient permanent exit.
Be mindful of your down payment size. I had such a low DP on one complex I had to bring money to close to pay off the mortgage. I wouldn't recommend wrapping and being #2 behind and complicating with a loan as small as yours. I'd pay it off a month prior or at closing.
I also use a contract servicer. They hold all the original docs and do the monthly e-payments and amort, annual interest reporting, enforcing late payment fee if any, etc. But it does cost me $9/mo ($18 split between me and buyer) plus $145 or so per year per contract.