Anyone else seeing investors sell off rentals?

Question

I've been noticing more of my investor friends selling rentals or at least talking about downsizing their portfolios.

Some are tired of higher insurance, taxes, and maintenance costs. Some because of the headaches of managing. Others are cashing out after years of appreciation. A few are pivoting into different asset classes altogether.

I'm curious...is anyone else seeing this in their market?

If you're selling your rentals, what's driving that decision? If you're pivoting, what're you pivoting to? Or are you doing the exact opposite and seeing more opportunity today?

Bill B. · Answer

It might be a Florida thing? Insurance jumped about 5 years ago but has been really mellow lately few years, maybe 3-5% increases. Property taxes luckily are capped at 3 or 8% so maybe $80-$200/yr.

Maybe you’re just seeing the front end of 1031 exchanges? When I bought my properties 5-20 years ago I only bought properties less than 7 years old. Well, now some of those properties are 20+ years old and I’ve swapped a couple out. For the last couple years I keep pushing rents higher trying to make vacancies to do exchanges without forcing people out. But nobody wants to move.

Ps. Are you sure it’s the investor themselves willing and not their heirs? On a related noted could they be exchanging in to “rentals: their kids just happen to live in?

Amber Stout · Answer

@Mark Cruse Those are great points. It really comes down to each investor's goals and stage of life. I appreciate you sharing about your own portfolio.

I've been mainly hearing of my investor friends selling due to hardships (needing to sell), others just not wanting the headaches of tenants, others wanting to do private money lending instead. It's helpful hearing what other's are doing.

Amit Patel · Answer

Hey Amber,

We have seen a little of this with our investors this year, nothing out of the ordinary. In most cases they are simply cashing up so they can purchase better deals when the right ones appear. The majority are just repositioning capital rather than exiting real estate altogether.

At the same time we still see owners holding solid properties or adding selectively when the numbers work. The market feels more selective right now. Good, well maintained properties with strong tenants still move, while anything with deferred maintenance or weak cash flow sits longer.

Curious what you are seeing on the lending side in Florida. Maybe something only there? I am checking the other comments as well

Drew Sygit · Answer

Industry averages are around 20-25% of owners selling on an annual basis.

Mark Cruse · Answer

Its many reasons for this; too many to nail down. Some are getting old and selling it off, moving to easier stuff. Others are just reallocating assets. For me, I have great equity so buy and sell as things come upon me. One, I cashed in to help with my kid's college. Another just moved the gain into the stock market. One I just sold for an extra cash buffer, but when a great duplex emerged, I jumped on it. This is just a few scenarios, but there are so many more reasons. If a person has a million dollars in equity, putting that in high yield stocks is a lot less headache.

Caleb Brown · Answer

Not seeing anything abnormal in my market. I am seeing newer investors that got in during 2019-2023 selling off. Others are still holding tight. I think many are cashing out and not in it for the long game, they might have jumped in when it was trendy/popualar

Janice Carter · Answer

@Amber Stout Not in my market. I am actually seeing investors continuing to buy and hold but they are definitely being more selective.

Anyone else seeing investors sell off rentals?

Anyone else seeing investors sell off rentals?

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