New to BP but been investing for a while.
Member since 2026 · 13 posts · 12 votes
New to BP but been investing for a while.
Most Popular Reply
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2mo@John Johnson, my position is similar, BUT I have never considered what you are talking about. Here are a few thoughts:
1. The stock market is in scary bubble territory! If anything I am considering pulling more money OUT of stocks for a while.
2. If you are relying on rentals for income, why would you want to rock that boat?!? There are some things you may not want to screw with for security's sake especially since you do not yet qualify to claim your Social Security benefit.
3. Selling to buy stocks means you will pay taxes on the sale. Since you have been investing ~15 years that means when factoring in depreciation you would likely pay taxes on most of the proceeds from the sale!
Who wants to pay the tax man?!?
4. If your goal is passive investing, there are ways to do a 1031 exchange to sell a property and invest the proceeds in something more passive but still real estate related.
5. I personally intend to accumulate more real estate until I die! My heirs will inherit at the stepped up basis and avoid federal tax. I'd rather my heirs get more and Uncle Sam get less!
5. Having no debt on rentals is "ok" if you are retired and simply want to live on the cash flow and self manage.
It is secure and allows you to get the income you need while managing LESS properties. So, you don't have to
6. Maybe if you state what your goals/reasons are people could give some good responses.
7. If you are looking for passive/secure investing/savings I would consider precious metals as something worth owning even in modest amounts.
22 Replies
- Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes2mo
@John Johnson, my position is similar, BUT I have never considered what you are talking about. Here are a few thoughts:
1. The stock market is in scary bubble territory! If anything I am considering pulling more money OUT of stocks for a while.
2. If you are relying on rentals for income, why would you want to rock that boat?!? There are some things you may not want to screw with for security's sake especially since you do not yet qualify to claim your Social Security benefit.
3. Selling to buy stocks means you will pay taxes on the sale. Since you have been investing ~15 years that means when factoring in depreciation you would likely pay taxes on most of the proceeds from the sale!
Who wants to pay the tax man?!?
4. If your goal is passive investing, there are ways to do a 1031 exchange to sell a property and invest the proceeds in something more passive but still real estate related.
5. I personally intend to accumulate more real estate until I die! My heirs will inherit at the stepped up basis and avoid federal tax. I'd rather my heirs get more and Uncle Sam get less!
5. Having no debt on rentals is "ok" if you are retired and simply want to live on the cash flow and self manage.
It is secure and allows you to get the income you need while managing LESS properties. So, you don't have to
6. Maybe if you state what your goals/reasons are people could give some good responses.
7. If you are looking for passive/secure investing/savings I would consider precious metals as something worth owning even in modest amounts.- Member since 2026 · 13 posts · 12 votes2mo
Quote from @Kevin Sobilo:
@John Johnson, my position is similar, BUT I have never considered what you are talking about. Here are a few thoughts:
1. The stock market is in scary bubble territory! If anything I am considering pulling more money OUT of stocks for a while.
2. If you are relying on rentals for income, why would you want to rock that boat?!? There are some things you may not want to screw with for security's sake especially since you do not yet qualify to claim your Social Security benefit.
3. Selling to buy stocks means you will pay taxes on the sale. Since you have been investing ~15 years that means when factoring in depreciation you would likely pay taxes on most of the proceeds from the sale!
Who wants to pay the tax man?!?
4. If your goal is passive investing, there are ways to do a 1031 exchange to sell a property and invest the proceeds in something more passive but still real estate related.
5. I personally intend to accumulate more real estate until I die! My heirs will inherit at the stepped up basis and avoid federal tax. I'd rather my heirs get more and Uncle Sam get less!
5. Having no debt on rentals is "ok" if you are retired and simply want to live on the cash flow and self manage.
It is secure and allows you to get the income you need while managing LESS properties. So, you don't have to
6. Maybe if you state what your goals/reasons are people could give some good responses.
7. If you are looking for passive/secure investing/savings I would consider precious metals as something worth owning even in modest amounts.Thanks for the response you have many great points.
1 The stock market is scary as is the real estate market and life, I've kept most of my money in RE but it's time to be a little more diversified.
2. You have to know when enough is enough and we are in a comfortable spot, we would be fine with half (I say that and we did 2 flips in '24 and bought 2 long term rentals in '25).
4. I'm thinking about selling a previous 1031 doing another 1031 then turn it into our primary residence, selling our primary and buying stocks. No tax bill?
5. That's me.
6. My objective is to have a bit more freedom to travel. All our properties are stabilized and tenants are great but those calls often happen at the worst times so thinning out about half is a good way to maintain enough to live off with rentals, stocks or (when that time comes) SS.
- Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes2mo
Quote from @John Johnson:
Quote from @Kevin Sobilo:
@John Johnson, my position is similar, BUT I have never considered what you are talking about. Here are a few thoughts:
1. The stock market is in scary bubble territory! If anything I am considering pulling more money OUT of stocks for a while.
2. If you are relying on rentals for income, why would you want to rock that boat?!? There are some things you may not want to screw with for security's sake especially since you do not yet qualify to claim your Social Security benefit.
3. Selling to buy stocks means you will pay taxes on the sale. Since you have been investing ~15 years that means when factoring in depreciation you would likely pay taxes on most of the proceeds from the sale!
Who wants to pay the tax man?!?
4. If your goal is passive investing, there are ways to do a 1031 exchange to sell a property and invest the proceeds in something more passive but still real estate related.
5. I personally intend to accumulate more real estate until I die! My heirs will inherit at the stepped up basis and avoid federal tax. I'd rather my heirs get more and Uncle Sam get less!
5. Having no debt on rentals is "ok" if you are retired and simply want to live on the cash flow and self manage.
It is secure and allows you to get the income you need while managing LESS properties. So, you don't have to
6. Maybe if you state what your goals/reasons are people could give some good responses.
7. If you are looking for passive/secure investing/savings I would consider precious metals as something worth owning even in modest amounts.Thanks for the response you have many great points.
1 The stock market is scary as is the real estate market and life, I've kept most of my money in RE but it's time to be a little more diversified.
2. You have to know when enough is enough and we are in a comfortable spot, we would be fine with half (I say that and we did 2 flips in '24 and bought 2 long term rentals in '25).
4. I'm thinking about selling a previous 1031 doing another 1031 then turn it into our primary residence, selling our primary and buying stocks. No tax bill?
5. That's me.
6. My objective is to have a bit more freedom to travel. All our properties are stabilized and tenants are great but those calls often happen at the worst times so thinning out about half is a good way to maintain enough to live off with rentals, stocks or (when that time comes) SS.
1. Yes, if you have no stock investments then some can make sense.
2. I can understand cutting back on the effort there are many ways to do that though.
3. You skipped #3! Do you feel its an unlucky number like 13. Note: There are no 13th floors in buildings. lol
4. In order to convert to a primary would be a big pain in the butt because you need to rent it out for 2 years at market rent before you can move in and many times doing that doesn't make much sense and can be sort of painful and drawn out.
5.
6. I would investigate other ways to manage from afar, hire PMs, or invest in RE more passively. Partnerships, syndications, REITs, etc.
Managing from the road isn't as troublesome as it may seem. I realized this when I had a couple tenants I NEVER met until they moved out even though I AM LOCAL! They relocated here from out of state so we review the lease via zoom, used electronic document signing, electronic ACH payments, and when they came to town the electronic lock was already programmed with their PIN. So, I never met 2 different sets of tenants like this until they moved out and we did a walk through together. That's when I realized I could manage from a distance without an issue.
- Member since 2026 · 13 posts · 12 votes2mo
Quote from @Kevin Sobilo:
Quote from @John Johnson:
Quote from @Kevin Sobilo:
@John Johnson, my position is similar, BUT I have never considered what you are talking about. Here are a few thoughts:
1. The stock market is in scary bubble territory! If anything I am considering pulling more money OUT of stocks for a while.
2. If you are relying on rentals for income, why would you want to rock that boat?!? There are some things you may not want to screw with for security's sake especially since you do not yet qualify to claim your Social Security benefit.
3. Selling to buy stocks means you will pay taxes on the sale. Since you have been investing ~15 years that means when factoring in depreciation you would likely pay taxes on most of the proceeds from the sale!
Who wants to pay the tax man?!?
4. If your goal is passive investing, there are ways to do a 1031 exchange to sell a property and invest the proceeds in something more passive but still real estate related.
5. I personally intend to accumulate more real estate until I die! My heirs will inherit at the stepped up basis and avoid federal tax. I'd rather my heirs get more and Uncle Sam get less!
5. Having no debt on rentals is "ok" if you are retired and simply want to live on the cash flow and self manage.
It is secure and allows you to get the income you need while managing LESS properties. So, you don't have to
6. Maybe if you state what your goals/reasons are people could give some good responses.
7. If you are looking for passive/secure investing/savings I would consider precious metals as something worth owning even in modest amounts.Thanks for the response you have many great points.
1 The stock market is scary as is the real estate market and life, I've kept most of my money in RE but it's time to be a little more diversified.
2. You have to know when enough is enough and we are in a comfortable spot, we would be fine with half (I say that and we did 2 flips in '24 and bought 2 long term rentals in '25).
4. I'm thinking about selling a previous 1031 doing another 1031 then turn it into our primary residence, selling our primary and buying stocks. No tax bill?
5. That's me.
6. My objective is to have a bit more freedom to travel. All our properties are stabilized and tenants are great but those calls often happen at the worst times so thinning out about half is a good way to maintain enough to live off with rentals, stocks or (when that time comes) SS.
1. Yes, if you have no stock investments then some can make sense.
2. I can understand cutting back on the effort there are many ways to do that though.
3. You skipped #3! Do you feel its an unlucky number like 13. Note: There are no 13th floors in buildings. lol
4. In order to convert to a primary would be a big pain in the butt because you need to rent it out for 2 years at market rent before you can move in and many times doing that doesn't make much sense and can be sort of painful and drawn out.
5.
6. I would investigate other ways to manage from afar, hire PMs, or invest in RE more passively. Partnerships, syndications, REITs, etc.
Managing from the road isn't as troublesome as it may seem. I realized this when I had a couple tenants I NEVER met until they moved out even though I AM LOCAL! They relocated here from out of state so we review the lease via zoom, used electronic document signing, electronic ACH payments, and when they came to town the electronic lock was already programmed with their PIN. So, I never met 2 different sets of tenants like this until they moved out and we did a walk through together. That's when I realized I could manage from a distance without an issue.
We have about $700k in the stock market.
I'm not too superstitious ;) I know that there will be some or perhaps a lot of pain points in this process I try not to think too much about them. If I go this route it will be one house at a time so I'll have time to turnback before I do too much damage.
Are you sure about the 2 year window? I started another thread about this topic because this one is going in a bunch of directions I hope you can chime in. https://www.biggerpockets.com/forums/61/topics/1293743-1031-...
I have one tenant that's been in the home for 3 years I've never met but I spoke with him once and I live 20 minutes away.... My pain point is after a moveout, I don't do the work myself but I do like to stop in to make sure everything is being done and even though you'd think that's an easy task to delegate I have failed.
- Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes2mo
Quote from @John Johnson:
Quote from @Kevin Sobilo:
Quote from @John Johnson:
Quote from @Kevin Sobilo:
@John Johnson, my position is similar, BUT I have never considered what you are talking about. Here are a few thoughts:
1. The stock market is in scary bubble territory! If anything I am considering pulling more money OUT of stocks for a while.
2. If you are relying on rentals for income, why would you want to rock that boat?!? There are some things you may not want to screw with for security's sake especially since you do not yet qualify to claim your Social Security benefit.
3. Selling to buy stocks means you will pay taxes on the sale. Since you have been investing ~15 years that means when factoring in depreciation you would likely pay taxes on most of the proceeds from the sale!
Who wants to pay the tax man?!?
4. If your goal is passive investing, there are ways to do a 1031 exchange to sell a property and invest the proceeds in something more passive but still real estate related.
5. I personally intend to accumulate more real estate until I die! My heirs will inherit at the stepped up basis and avoid federal tax. I'd rather my heirs get more and Uncle Sam get less!
5. Having no debt on rentals is "ok" if you are retired and simply want to live on the cash flow and self manage.
It is secure and allows you to get the income you need while managing LESS properties. So, you don't have to
6. Maybe if you state what your goals/reasons are people could give some good responses.
7. If you are looking for passive/secure investing/savings I would consider precious metals as something worth owning even in modest amounts.Thanks for the response you have many great points.
1 The stock market is scary as is the real estate market and life, I've kept most of my money in RE but it's time to be a little more diversified.
2. You have to know when enough is enough and we are in a comfortable spot, we would be fine with half (I say that and we did 2 flips in '24 and bought 2 long term rentals in '25).
4. I'm thinking about selling a previous 1031 doing another 1031 then turn it into our primary residence, selling our primary and buying stocks. No tax bill?
5. That's me.
6. My objective is to have a bit more freedom to travel. All our properties are stabilized and tenants are great but those calls often happen at the worst times so thinning out about half is a good way to maintain enough to live off with rentals, stocks or (when that time comes) SS.
1. Yes, if you have no stock investments then some can make sense.
2. I can understand cutting back on the effort there are many ways to do that though.
3. You skipped #3! Do you feel its an unlucky number like 13. Note: There are no 13th floors in buildings. lol
4. In order to convert to a primary would be a big pain in the butt because you need to rent it out for 2 years at market rent before you can move in and many times doing that doesn't make much sense and can be sort of painful and drawn out.
5.
6. I would investigate other ways to manage from afar, hire PMs, or invest in RE more passively. Partnerships, syndications, REITs, etc.
Managing from the road isn't as troublesome as it may seem. I realized this when I had a couple tenants I NEVER met until they moved out even though I AM LOCAL! They relocated here from out of state so we review the lease via zoom, used electronic document signing, electronic ACH payments, and when they came to town the electronic lock was already programmed with their PIN. So, I never met 2 different sets of tenants like this until they moved out and we did a walk through together. That's when I realized I could manage from a distance without an issue.
We have about $700k in the stock market.
I'm not too superstitious ;) I know that there will be some or perhaps a lot of pain points in this process I try not to think too much about them. If I go this route it will be one house at a time so I'll have time to turnback before I do too much damage.
Are you sure about the 2 year window? I started another thread about this topic because this one is going in a bunch of directions I hope you can chime in. https://www.biggerpockets.com/forums/61/topics/1293743-1031-...
I have one tenant that's been in the home for 3 years I've never met but I spoke with him once and I live 20 minutes away.... My pain point is after a moveout, I don't do the work myself but I do like to stop in to make sure everything is being done and even though you'd think that's an easy task to delegate I have failed.
I think $700k in stocks is fine personally. If you are thinking of this as an "investment", do you think you would be buying stocks at a premium (HIGH) or at a bargain price (LOW) today??? Even if I was going to do as you are thinking, I might make the sale put the funds into something safe and then "dollar cost average" into stocks over a couple years.
Think of your move to stocks, if you choose that, just like if you were working a w2. You would put the same amount into your 401k every paycheck and that averages the cost you are purchasing at over a long time and that alone means you aren't accidentally buying it all at a high price.
There are real 1031 intermediaries on here who answer questions about things like that 2 year window. Realistically, did you think you could wave a wand and just move the equity and avoid paying income tax on it?!? There usually are not HUGE "loopholes" like that in the tax code especially not for something used so often.
If a real intermediary doesn't answer your questions, just call one and ask. You will need to use a licensed intermediary anyways to complete a 1031, so its good to talk to one ahead of time anyways.
If you think you have failed on being able to manage the turnover from a distance, work on it! Even though you CAN go to the property with a turnover now, DON'T!!! Do, the next one without going to the property. Make yourself develop some systems and processes to deal with it.
Perhaps, create some checklists for whomever works for you to check and sign off on. Maybe have them take certain specific pictures to document each item on the list and also each item repaired. Whatever you need to do to make your process work the way you want/need.
I like to be hands-on with my properties and I make enough on them that I don't stress the small stuff. So, if I am traveling when a turnover is to happen, I MAY choose to allow it to sit vacant until I return to do the work myself. A couple extra weeks of vacancy isn't the end of the world either!
Conversely, now that I am retired from my w2, when I am in town available to handle a turnover I may try to accelerate the turnover. When I worked a w2, I was still very hands-on and a turnover might take 6-8 weeks. Maybe I can lower that average by 1 week simply because I don't have a w2 anymore.
So, if some of my turnovers go FASTER when I'm in town and others go slower when I am not, my vacancy may end up being about the same and at some point like you I will choose to be less hands-on with some of these things. As long as I am in control steering the ship, it will work out fine as life evolves.
- 2moMichael K GallagherBusiness MemberReal Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
Quote from @John Johnson:
Hey All,
I'm in my 50's I've been investing for 15(ish) years I've recently retired via rental real estate. I'm contemplating a path towards decumulation by selling a few and putting a bit more into the stock market.
We currently have 14 and no debt, I'm looking for some advice from those that have done the same or have done the research.
Thanks for reading this,
John
Hey John, welcome to BP, and glad to have you. Hope you will stick around the forums and share some of your insights and stories from the years of investing. I'm not in your position so I can't speak to what I'd do, but you are certainly in a powerfull position and likely as long as the decision and outcome is right for your, regardless of what the numbers say on paper I'd be taking it as a win.
- Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes2mo
Welcome to the BP family, John! Glad you joined the best real estate investing website!
Check out BP Podcasts: https://www.biggerpockets.com/podcast
Best of luck!
- 2moMackaylee BeachPro MemberReal Estate Agent · Kansas City, MO · Member since 2020 · 1k+ posts · 492 votes
Consider evaluating the performance and potential appreciation of each property. Selling those with less potential for growth or higher maintenance costs might be a smart move. Additionally, diversifying into the stock market could offer you a broader range of opportunities for growth and income.
When moving funds into stocks, think about your risk tolerance and investment goals. A balanced portfolio with a mix of stocks, bonds, and perhaps even some dividend-paying options can provide stability and generate income.
It might also be beneficial to consult with a financial advisor who can offer personalized guidance based on your specific situation. They can help you navigate tax implications and create a strategy that aligns with your long-term financial goals.
- 2moJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
Quote from @John Johnson:
Hey All,
I'm in my 50's I've been investing for 15(ish) years I've recently retired via rental real estate. I'm contemplating a path towards decumulation by selling a few and putting a bit more into the stock market.
We currently have 14 and no debt, I'm looking for some advice from those that have done the same or have done the research.
Thanks for reading this,
John
Welcome to BP, John! First off, congratulations. Retiring through rental real estate is a huge accomplishment, especially with 14 properties and no debt. At that point, I'd look less at maximizing returns and more at simplifying life and reducing concentration risk. A lot of investors I know who have reached your stage start selling their lowest-performing or highest-maintenance properties and gradually move a portion into index funds. The stock market won't give you the same level of control, but it is incredibly passive compared to managing rentals, even with property managers in place. One thing I'd think through carefully is taxes. Depending on your gains, depreciation recapture and capital gains can take a bigger bite than expected, so it may make sense to sell over several years rather than all at once. I'd also compare your current portfolio cash flow to what the proceeds could realistically generate in dividend income and total return. Since you're already financially independent, the question may be less about which asset class performs better and more about which one gives you the lifestyle you want over the next 20 to 30 years. Happy to connect and answer any questions you have!
Jimmy Lieu, Red 1 Realty4.9120 Reviews - Investor · Hinton, WV · Member since 2026 · 80 posts · 22 votes2mo
Quote from @John Johnson:
Hey All,
I'm in my 50's I've been investing for 15(ish) years I've recently retired via rental real estate. I'm contemplating a path towards decumulation by selling a few and putting a bit more into the stock market.
We currently have 14 and no debt, I'm looking for some advice from those that have done the same or have done the research.
Thanks for reading this,
John
Hey, congratulations on reaching this milestone 14 properties, no debt, and retired through real estate! That's exactly what disciplined long-term investing looks like! 🙌
Before moving toward decumulation here are a few things worth considering:
Before selling, ask yourself:
- 1~ Have you explored a Cash-Out Refinance instead of selling? You access liquidity while keeping the asset and the cash flow.
- 2 ~ A 1031 Exchange could allow you to sell and reinvest into larger multifamily or a DST without triggering capital gains tax.
- 3 ~ Are the properties you're considering selling your lowest performing assets in terms of cash flow and appreciation potential?
On the stock market shift real estate with no debt generating passive income is already one of the most stable wealth-preservation vehicles available. The stock market introduces volatility that rental income simply doesn't have.
I'd strongly recommend speaking with a CPA and a financial advisor who specializes in real estate before making any moves the tax implications alone on 15 years of appreciated assets could be significant.
What's your primary motivation for the shift simplifying management, liquidity, or diversification? That changes the strategy completely! 🔥
- 2moJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
Congrats on your success. I'm 55 and have been investing for 11 years. I'm 50/50 with real estate and the stock market. The mailbox money is nice, but my returns in the stock market have been much better than real estate over the last decade. But then again, everyone has been crushing it in the stock market the last decade. lol. Right now, the stock market bubble could pop if AI stocks hit the ceiling. So I'd be careful jumping in the stock market now.
I've done 5 cash out refis on my rentals to use the tax free money to buy 14 additional houses to ramp up my cash flow. I'd consider doing that now while home prices have dipped and you don't have much competition right now from other investors. I have 39 properties and don't need anymore, but the cashflow is really good and it's easy tax free money, so I'll keep buying if deals keep falling in my lap. Good luck!
- 2moAaron ZimmermanBusiness MemberAccountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
John - have you considered private lending in first lien position notes?
Brick House CPAs53 Reviews - 2moAaron ZimmermanBusiness MemberAccountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
John - have you considered doing first lien position loans in addition to the stock market?
Brick House CPAs53 Reviews - 2moRobert EllisBusiness MemberDeveloper · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
Quote from @John Johnson:
Hey All,
I'm in my 50's I've been investing for 15(ish) years I've recently retired via rental real estate. I'm contemplating a path towards decumulation by selling a few and putting a bit more into the stock market.
We currently have 14 and no debt, I'm looking for some advice from those that have done the same or have done the research.
Thanks for reading this,
John
The sentence about knowing when enough is enough changed how I read your post. It doesn't sound like you're trying to squeeze out the highest possible return anymore. It sounds like you're trying to buy back more freedom without completely giving up the income that got you there.
I've noticed that's a very different decision than building a portfolio in the first place. At some point every additional property can start costing more in attention than it's adding in quality of life, even if it's a great investment on paper.
Was there a particular call or interruption while you were traveling that made you start thinking it was time to thin the portfolio out?
Section 8 Launch52 Reviews- Member since 2026 · 13 posts · 12 votes2mo
Quote from @Robert Ellis:
Quote from @John Johnson:
Hey All,
I'm in my 50's I've been investing for 15(ish) years I've recently retired via rental real estate. I'm contemplating a path towards decumulation by selling a few and putting a bit more into the stock market.
We currently have 14 and no debt, I'm looking for some advice from those that have done the same or have done the research.
Thanks for reading this,
John
The sentence about knowing when enough is enough changed how I read your post. It doesn't sound like you're trying to squeeze out the highest possible return anymore. It sounds like you're trying to buy back more freedom without completely giving up the income that got you there.
I've noticed that's a very different decision than building a portfolio in the first place. At some point every additional property can start costing more in attention than it's adding in quality of life, even if it's a great investment on paper.
Was there a particular call or interruption while you were traveling that made you start thinking it was time to thin the portfolio out?
You said that better than I did. It will be tough because I like to optimize almost everything.
Nothing in particular but a time or 10 I've worried about situations way more than I needed to (and we've never had a losing month). My bride is the one that keeps things in perspective even though she knows very little about these properties.
- Member since 2026 · 13 posts · 12 votes2mo
You guys are impressive I've read a number of your profiles I'm blown away at your knowledge and appreciative of your input.
- 2moRobert McGillBusiness MemberAccountant · Houston Tx · Member since 2026 · 12 posts · 4 votes
Quote from @John Johnson:
Hey All,
I'm in my 50's I've been investing for 15(ish) years I've recently retired via rental real estate. I'm contemplating a path towards decumulation by selling a few and putting a bit more into the stock market.
We currently have 14 and no debt, I'm looking for some advice from those that have done the same or have done the research.
Thanks for reading this,
John
Hey John! I'm new to the group too, checking in from Houston.
First off, congratulations that's an awesome milestone. Retiring through real estate with 14 paid-off rentals is something to be proud of.
I come at it from the tax side, and my only thought is to make sure you have a game plan before selling anything. There can be some great planning opportunities if you think through the tax side in advance.
Looking forward to following your journey and learning from everyone here!
- 2moDenise SuppleeBusiness MemberRealtor · Willow Grove, PA · Member since 2017 · 974 posts · 640 votes
Hello @John Johnson, I so get where you are at right now. I am in my 60's and spent over 40 years as a Realtor, investor and property manager. About 5 years ago, I sold all my investment properties except one. I co-founded a coinvesting club and now that's where and how I invest. I got so burnt out handling maintenance, tenant and accounting issues. I just wanted to be able to diversify my portfolio with stocks and real estate but did not want to deal with the work of being a landlord. Now, I invest in large apartment communities, trailer parks and so much more with other like-minded people. We vet the deals together, so I am not alone. And then I invest as a totally passive investor. AND learn so much! We are in the process of investing in an assisted living facility and I have been wanting in on something like that for a while. Anyway.... I wish you the best of luck!
Spark Rental Co-Investing Club577 Reviews - 2moDave FosterBusiness MemberQualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
@John Johnson, having a diverse portfolio is good, but @Kevin Sobilo raises some good points. It's not uncommon for investors to get to a point in their careers where they want to take a back seat on their investments and consolidate their properties.
If you're not entirely done with real estate, you could always do what we call a consolidation exchange. This is where you sell multiple smaller investment properties and reinvest into a larger investment property like multi-family or commercial. This way you start to edge away from active management, but you still get to defer all of the capital gains tax and depreciation recapture to increase your reinvestment goals. If you're leaning toward more passive opportunities, you can explore things like NNN leases or DSTs (Delaware statutory trusts). These are passive vehicles that do qualify for 1031 treatment, so you still get the tax advantages.
In the end, you achieve passive income, but if you decide to hold onto them as Kevin mentioned, you can leave some investments for your heirs to enjoy when you pass away, and all of the deferred tax goes away so they receive them at a stepped-up basis. I think the biggest logistical question I see experienced, successful investors like you make is beginning a process of commingling tax-deferred and taxable investments as you start to think about a pivot to retirement or more passive participation. Moving from Real estate to stocks loses every penny of tax benefit you've had from your real estate in one instant. While at the same time generating... maybe some, but maybe no better return. When you compare stocks and real estate, you can't just compare appreciation vs stock price. Your real estate also provides around 1-4% a year in tax benefits. Plus the cash flow (which you would compare against cash flow from dividend stocks. And the amortization of any loans. The IRR of real estate is almost always much greater than the appreciation only of equities. But I own both. I just don't commingle- real estate and real estate-like products stay in one pot. Equities stay in another. That way I don't lose the returns I've worked so hard to gain from my deferred tax over the years.
The 1031 Investor5137 Reviews - Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes2mo
@Dave Foster, Great points!
Since you are a 1031 Intermediary could you comment about the poster wanting to 1031 into another property and then convert it to a primary residence? I'm assuming it is not as simple as that because a 1031 requires you to buy "like-kind INVESTMENT properties" to replace what you are selling.
- 2moDave FosterBusiness MemberQualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
@Kevin Sobilo, Thanks for that shout out! What@John Johnson is looking at doing can be an integral part of retirement planning for 1031 investors. It's possible to daisy chain a series of retirement homes using 1031 exchanges of investment property. And then later converting those into your primary residence. When you do this the rules are slightly different to get some of the gain tax free.
1. Because you 1031d into it you must have owned it for at least 5 years before selling.
2. You must have lived in it for at least 2 out of the 5 years prior to selling.
3. You then get to take the amount of time you lived in it and apply that to the primary residence exclusion. If you 1031d and then used the new property for investment for 2 years. And then moved in for 3 years. You could take 3/5ths of the gain tax free. 60% of the gain becomes tax free. You do have to recapture depreciation. Rent if for 2 years and live in it for 8. And you get 8/10s or 80% of the gain tax free.
This is a very tax efficient way to free up cash needed to live in retirement. And it doesn't come with the cost of paying the tax so you can invest in the stock market. I rarely recommend selling real estate just to invest in the market. I like to keep my real estate separate from my equities. They're two totally different animals. If you want to invest in the stock market then do some prudent cash out refis. Those are tax free. And you won't have the tax consequences like a sale to invest in equities.The 1031 Investor5137 Reviews - Member since 2026 · 13 posts · 12 votes2mo
As far as selling real estate and buying in to the stock market I know it's not the most tax efficient or financially prudent way to go but if or when I bite the bullet it should make life a little simpler (not that my real estate life is complicated). It's probably as painful to hear as it is for me to say....Who knows if I pull the trigger.
Great insight from both of you on the 1031 to primary residence. My "plan" has been to list the home(s) for sale and rent (at the same time) at the top of the market and roll with what happens. I tried this 2 months ago now I'm getting $200 (17%) more than I was getting previously.
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