Selling after 24 yrs
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Selling after 24 yrs (by zero [IN]) Jun 3, 2024 8:03 AM
       Selling after 24 yrs (by RB [TN]) Jun 3, 2024 8:20 AM
       Selling after 24 yrs (by GKARL [PA]) Jun 3, 2024 8:46 AM
       Selling after 24 yrs (by WMH [NC]) Jun 3, 2024 9:07 AM
       Selling after 24 yrs (by MikeA [TX]) Jun 3, 2024 10:33 AM
       Selling after 24 yrs (by Ray-N-Pa [PA]) Jun 3, 2024 12:01 PM
       Selling after 24 yrs (by zero [IN]) Jun 3, 2024 12:52 PM
       Selling after 24 yrs (by Phil [OR]) Jun 3, 2024 2:02 PM
       Selling after 24 yrs (by zero [IN]) Jun 3, 2024 4:02 PM
       Selling after 24 yrs (by Just Tim [AR]) Jun 3, 2024 6:23 PM
       Selling after 24 yrs (by Bonanza [NC]) Jun 3, 2024 7:03 PM
       Selling after 24 yrs (by Bonanza [NC]) Jun 3, 2024 7:06 PM
       Selling after 24 yrs (by gevans [SC]) Jun 3, 2024 7:39 PM
       Selling after 24 yrs (by Ray-N-Pa [PA]) Jun 3, 2024 9:08 PM
       Selling after 24 yrs (by BRAD 20,000 [IN]) Jun 3, 2024 11:50 PM
       Selling after 24 yrs (by zero [IN]) Jun 4, 2024 6:55 AM
       Selling after 24 yrs (by BRAD 20,000 [IN]) Jun 4, 2024 10:49 AM
       Selling after 24 yrs (by Ray-N-Pa [PA]) Jun 4, 2024 2:57 PM
       Selling after 24 yrs (by Chicago LL [IL]) Jun 5, 2024 8:34 AM
       Selling after 24 yrs (by Jim [CA]) Jun 5, 2024 11:35 AM
       Selling after 24 yrs (by Jim [CA]) Jun 5, 2024 11:46 AM

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Selling after 24 yrs (by zero [IN]) Posted on: Jun 3, 2024 8:03 AM
Message:

As anyone who has read my posts knows I am a newbie mom and pop operation.

I have a few places that I have reached 20 years in holding.

Ray-N-Pa has mentioned a few times lately about selling a place he has because he has owned it for 24 years.

It got me wondering if this was for taxes via depreciation or if it is just because the place is old. My newest purchase is older than maybe half of my holdings so I do not think that is it.

Does holding after the depreciation falls off make sense?

I know this should probably be Rentals 101, but depreciation schedules were one of the main reasons I never did my taxes after the first purchase.

--107.147.xx.xx




Selling after 24 yrs (by RB [TN]) Posted on: Jun 3, 2024 8:20 AM
Message:

There's a long list of potential reasons to sell.

You will know yours when ya get there.

Or you can continue to come here and complain

until death do you part.

Sound like anyone ya know ? --69.130.xxx.xxx




Selling after 24 yrs (by GKARL [PA]) Posted on: Jun 3, 2024 8:46 AM
Message:

I don't let taxes control whether I sell or not. I just figure my after tax gain and if it's acceptable and I have a greater purpose for the money, I sell. --209.122.xx.xxx




Selling after 24 yrs (by WMH [NC]) Posted on: Jun 3, 2024 9:07 AM
Message:

We are never selling - at least, that's the plan. Our properties provide us with our living income for retirement and DH prefers having a job to drifting.

If a property rehab becomes too much of a burden at some point we'll call on the kids to help, and/or hire what we need and keep going. --173.28.xx.xxx




Selling after 24 yrs (by MikeA [TX]) Posted on: Jun 3, 2024 10:33 AM
Message:

Like GKarl, I don't let taxes dictate, it's a financial decision. If it's a golden goose it's never a good idea to butcher it.

That said, I do have some doctor friends that trade out their properties every 20 years or so. Their thinking is they buy a property that is fixed up and by 20 years it will be dated and worn. They don't want the hassle of a remodel so they simply trade it in on a newer model and repeat the process. I guess that kind of makes sense to a degree, no one wants to bear the expense of replacing the sewer lines under a slab house when the cast iron fails. Most of mine are well past that having been replaced once but also pier and beam which is much easier to work on. --209.205.xxx.xx




Selling after 24 yrs (by Ray-N-Pa [PA]) Posted on: Jun 3, 2024 12:01 PM
Message:

Every year I sell and buy places. I do this via 1031's . This forces me to dollar cost average my purchases and my sales.

There are times to push harder on the commercial replacements and there are other times to push hard on residential replacements. It sure is harder to get residential replacements, so I shift so of them to another type of real estate. This reduces the risk that occurs from a market correction.

In the residential world you hear location, location, location........and where location is a concern in the commercial world - I focus on operator, operator and operator instead.

I bought a whole slew of properties in Pa when this area suffered the Y2K set back. I sold a bunch of them out in Southern California back in 2004-2006 time frame. So how do you know when to sell. Look at each place you have. This is your baby. If after taking a place out of phase maintenance, I ask myself, what can I do with this place over the next 5 or 10 years to improve it. If the answer isn't that clear, then maybe it is time to sell the place and pickup a replacement. If I sell a house, I typically try not to pick up the same asset class.

So all thongs considered, if you have a property that gives you depreciation and a second one where it doesn't, if all other things are equal, which one would you chase? I know there are plenty of folks out there that are chasing this market. I feel that is wrong approach. Around here if a place is move in ready, there will be multiple offers on the place. So don't go after them. I love my estate properties and my burned out landlord properties. These offer a value add opportunity still.

How do you avoid getting burned out? Turn over a property before burn out settles in.

My current 1031 exchange? I bought the place initially from the county as a condemned house with a four car garage. The place has three lots walking distance to the largest man made lake in the state. I bought them for $10,000. The house got torn down, a new metal roof on the garage and new electrical service......I am in the place for less than $30,000. I listed the place for sale with the broker I use and bam, I didn't get the $79,900 sales price, but I did get $72,500 in a few days. So the replacement for that house will probably be a 1949 Sears FSBO. I did get some income from renting out the garage to a local marina that stores boats during the snow months up here and that is about five months. So $1,500 for the year isn't a home run in the form of rent, but I did this to clean up the neighborhood that I invest in.

Early this year I sold a 2 BR 1 Bath on a double deep lot on the edge of town. I had that place for somewhere like 22 or so years. Now I am working on getting a 4 bedroom 2 bath place ready. Locally, I like buying commercial metal box properties in the fall so that will be target after I get the 4/2 sold. I expect multiple offers on it when I get that one sold. --24.101.xxx.xxx




Selling after 24 yrs (by zero [IN]) Posted on: Jun 3, 2024 12:52 PM
Message:

I was not talking about getting burned out. I went thru that phase already some time back.

I was merely asking if the depreciation on a residential property makes that much of a difference yearly in holding it. Again, I am not keen on the nuances of depreciation for a property. I know the time frame. I know more about depreciating capital expenses for the property.

From what I am reading here maybe I am just over thinking it. Ray seems to be dumping a place because he wants to move that money into a better place. It just happens to be that the places he spoke of were held for a long time. --107.147.xx.xx




Selling after 24 yrs (by Phil [OR]) Posted on: Jun 3, 2024 2:02 PM
Message:

If you sell and don't do the 1031 exchange you are going to pay taxes on capital gain AND recapture of any depreciation you claimed. OUCH

What is your plan?

I have thought about doing 1031 exchange just to get away from lead paint issues...... other than that it is cash flowing so no need to. --76.138.xxx.xxx




Selling after 24 yrs (by zero [IN]) Posted on: Jun 3, 2024 4:02 PM
Message:

So after the depreciation time limit runs out it doesn't affect the bottom line as much as I was thinking?

I understand that selling will trigger a recapture. I was just wondering aloud if it made more sense to sell before you stop the depreciation or if it really doesn't matter. --107.147.xx.xx




Selling after 24 yrs (by Just Tim [AR]) Posted on: Jun 3, 2024 6:23 PM
Message:

How much is your annual depreciation on this property?

Once it's fully depreciated, that's how much your annual taxable income will increase. --98.174.xxx.xxx




Selling after 24 yrs (by Bonanza [NC]) Posted on: Jun 3, 2024 7:03 PM
Message:

Ray said "So all thongs considered,"

snicker snicker

must be a new tenant requirement

LOL --65.188.xxx.xxx




Selling after 24 yrs (by Bonanza [NC]) Posted on: Jun 3, 2024 7:06 PM
Message:

I would think that if the depreciation changes your tax return significantly then it would make sense to sell and get some other property. If it doesn't change your tax return much why bother? --65.188.xxx.xxx




Selling after 24 yrs (by gevans [SC]) Posted on: Jun 3, 2024 7:39 PM
Message:

Some of our properties are depreciated out after 27.5 years. But they are still profitable... so we haven't yet sold any just to trade.

We MAY sell a few lower rent properties and put them together for one high rent property to simplify life as we get older. But we haven't done that yet.

--74.222.xx.xxx




Selling after 24 yrs (by Ray-N-Pa [PA]) Posted on: Jun 3, 2024 9:08 PM
Message:

I like to increase the quality of my units. I have the replacement property already under contract. I try to pick up places that are in need of work but are the newest 1/3 of all houses in the area. But if that goes astray there is always OGMs as an option to purchase.

Generally speaking if the crowd is moving one direction, I want to be going the other way. Today, the crowds are looking for move in ready units. --24.101.xxx.xxx




Selling after 24 yrs (by BRAD 20,000 [IN]) Posted on: Jun 3, 2024 11:50 PM
Message:

zero,

When the depreciation tax shelter runs out, often the mortgage disappears at roughly the same time.

We have props we bought 47 years ago, deprec long gone but the home I was renting out for $150/mo back then now brings in $900/mo debt free! (cha-ching!)

I believe taxes should ALWAYS be part of our decision making. Like realtor commissions too many LLs just follow the sheep in front of them. There are MANY ways to save on taxes.

I am currently bundling a few low end and project homes to investors and 1031ing that sale in to one really nice executive home. Cash flow will be the same but much less work and not a penny lost to the govt.

BRAD --73.103.xxx.xxx




Selling after 24 yrs (by zero [IN]) Posted on: Jun 4, 2024 6:55 AM
Message:

Thanks all!

This is the info I was curious about. Not so much selling because of burn-out or just because the market is hot for selling.

I honestly do not know what the numbers are as far as depreciation on my places. Maybe I should know that. Right now I let my tax guy handle that so I can do what I am better at. Things like drinking coffee and asking silly questions.

It is easy to understand selling to move up in quality and that is something I need to look into more.

But for this question knowing that people still hold after makes more sense than it did before. --107.147.xx.xx




Selling after 24 yrs (by BRAD 20,000 [IN]) Posted on: Jun 4, 2024 10:49 AM
Message:

zero,

An update on deprec is a simple question for your accountant. I don't plan on ever selling, just 1031ing into better props.

Years ago when values were different my atty said her goal was to 1031 all homes into farmland - no toilets, trash, roofs...

BRAD --73.103.xxx.xxx




Selling after 24 yrs (by Ray-N-Pa [PA]) Posted on: Jun 4, 2024 2:57 PM
Message:

Recommend you target burned out landlords for your next purchase. They might even carry a note for you as they understand cash flow --24.101.xxx.xxx




Selling after 24 yrs (by Chicago LL [IL]) Posted on: Jun 5, 2024 8:34 AM
Message:

Ray-N-Pa, how do you find those burned out landlords? I think landlord business has become popular. I've seen a number of white collar workers buying rental properties to build up passive income. So, they could quite their 9 to 5 jobs one day. --103.50.xx.xxx




Selling after 24 yrs (by Jim [CA]) Posted on: Jun 5, 2024 11:35 AM
Message:

We have had our properties for 45+ years. If we sell we will pay about 25% of the selling price in taxes. I will either Delaware Statutory exchange or sell when one of us departs to landlord heaven. --99.23.xxx.x




Selling after 24 yrs (by Jim [CA]) Posted on: Jun 5, 2024 11:46 AM
Message:

We have had our properties for 45+ years. If we sell we will pay about 25% of the selling price in taxes. I will either Delaware Statutory exchange or sell when one of us departs to landlord heaven. --99.23.xxx.x



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