Sell when iron is hot
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Sell when iron is hot (by Hoosier [IN]) Jul 22, 2024 10:27 PM
       Sell when iron is hot (by Sean [OR]) Jul 23, 2024 3:05 AM
       Sell when iron is hot (by Bonanza [NC]) Jul 23, 2024 6:28 AM
       Sell when iron is hot (by Ray-N-Pa [PA]) Jul 23, 2024 6:56 AM
       Sell when iron is hot (by MMIT [VA]) Jul 23, 2024 7:39 AM
       Sell when iron is hot (by Hoosier [IN]) Jul 23, 2024 8:21 AM
       Sell when iron is hot (by Pat [VA]) Jul 23, 2024 9:34 AM
       Sell when iron is hot (by Amy [FL]) Jul 23, 2024 10:10 AM
       Sell when iron is hot (by Ray-N-Pa [PA]) Jul 23, 2024 10:36 AM
       Sell when iron is hot (by Dodge [PA]) Jul 23, 2024 11:24 AM
       Sell when iron is hot (by 6x6 [TN]) Jul 23, 2024 1:32 PM
       Sell when iron is hot (by GKARL [PA]) Jul 23, 2024 3:38 PM
       Sell when iron is hot (by LOLA [OH]) Jul 24, 2024 12:47 AM
       Sell when iron is hot (by LOLA [OH]) Jul 24, 2024 12:47 AM
       Sell when iron is hot (by LOLA [OH]) Jul 24, 2024 12:47 AM
       Sell when iron is hot (by Hoosier [IN]) Jul 24, 2024 9:45 PM
       Sell when iron is hot (by BRAD 20,000 [IN]) Jul 28, 2024 3:50 PM
       Sell when iron is hot (by Hoosier [IN]) Jul 28, 2024 5:06 PM


Sell when iron is hot (by Hoosier [IN]) Posted on: Jul 22, 2024 10:27 PM
Message:

When we sold our units (sold 5 of them over a 3 year period), a few people we know said they would hold out longer as the market was still increasing and we could "get another $5k".

The average of the units we sold was about $160k. Of the 5 we listed, 3 of them had accepted offers within 24 hours. Of those 3, two were bought by investors with no inspection or financing contingencies and we closed within 9 days. The third closed in 30 days. The other two went through a more "normal" process and we got the money in about 60-70 days after listing (on one we had an offer in 10 days, the other took about 23 days).

With interest rates at the time nearly 4.5% on fully guaranteed CDs, we put that money to work IMMEDIATELY. So let's do some math...

Option 1 - Wait 6 more months to get an extra $5k

Option 2 - Sell and reap the below benefits...

1) $160k in bank @ 4.5% for 6 months = $3,600

2) Avoided paying another prop tax payment = $1,200

3) Avoided paying utility bills while the unit vacant = $300

4) Avoid property insurance for 6 months = $300

5) Avoid the risk of theft/damage to house from vandals/thieves = ??

6) Peace of mind - PRICELESS

7) Not having to go to the vacant house 1-2x a month to pick up junk mail or look for trash thrown in the yard, etc. - NICE

8) Avoid additional commission to realtor on higher price = $2.5k x 5% = $125

Total for option 2 = $5,525

Which option looks better now?

Always think about the TOTAL cost of things along with the work and thought that has to go into a decision. We are happy with our decision.

And if you are thinking "why would you pay utilities if no one is living there?", then think about winters freezing pipes, burglars that break in when no lights are on, etc.

--64.38.xxx.xxx




Sell when iron is hot (by Sean [OR]) Posted on: Jul 23, 2024 3:05 AM
Message:

It looks like you came out ahead. Great job and thanks for sharing the insight!

Were you just trimming a few properties off the portfolio or hanging up the LL shoes?

--34.100.xx.xxx




Sell when iron is hot (by Bonanza [NC]) Posted on: Jul 23, 2024 6:28 AM
Message:

There is a time and place for buying and selling. Your needs dictate the actions you need to take. Congratulations on having a plan and successfully carrying it out --98.142.xxx.xx




Sell when iron is hot (by Ray-N-Pa [PA]) Posted on: Jul 23, 2024 6:56 AM
Message:

As long that you are pleased, and you are financially ahead - you won.

Was that your best path? Well maybe for you.

Nationally since 2020, real estate values are up 47%. So that $160K unit would be worth $75,000 each assuming that they were in normal condition and Indiana is a normal market place. Let say they were not and things are slower in the Cross road state - What is five times let say $60,000?

You are absolutely right about knowing when to throttle up and when to throttle downward. It is my hope that others are shifting assets more into safe havens/niches and nicer units now a days. The market is humming around and that is a good thing, but all good things will come to an end. --24.101.xxx.xxx




Sell when iron is hot (by MMIT [VA]) Posted on: Jul 23, 2024 7:39 AM
Message:

Hoosier,

Why did you sell?

Do you still have rentals or is everything liquidated?

Why didn’t you do a 1031?

How bad was the tax hit?

My places have increased in value 4x in 10 years but rents have only doubled during that same time. So, my ROE (return on equity) percentage has dropped in half. The low return has me thinking it might be time for me to sell.

Thanks and good luck!

--184.187.xx.xxx




Sell when iron is hot (by Hoosier [IN]) Posted on: Jul 23, 2024 8:21 AM
Message:

We got out completely. To answer some of the questions...

1) Our plan when we got in was to be completely out by the time I was 65. I'm not 65 yet, but the timing was right for various reasons (see below)

2) I had been having knee problems and needed a total knee replacement in 2023. Two of our units had tenants move out just before I was scheduled to have the surgery. I do most of the work on our units, and this was not going to be possible with my knee...so the timing was right to sell those two

3) As for a 1031, we were getting out...not trading up...we did not want any more properties

4) We do not have children, and my wife wanted nothing to do with managing rentals...she was not involved...so I did not want to leave them to her when I passed...we discussed this at length

5) We had two friends pass in the past 6 years who had multiple rentals where the spouse was not involved. This caused a lot of stress on the remaining spouse as they were trying to grieve while responding to complaining tenants, picking up rent, and trying to figure out the accounting and how the places were run...it was sad to watch this. We did not want this to happen and thus the reason for me agreeing to sell all no later than age 65

6) The main reason we got into rentals was to diversify our savings (I have an MBA in Finance and manage our investments). Prior to, most of our assets were in the stock market. I had set a goal to have a certain % in real estate, and when we reached that goal we stopped acquiring properties. We bought the first unit using a partial loan, paid that off within 3 years, and bought all the rest with cash...so we had no debt. Now that we've liquidated, I use REITs and other investments to diversify...not as lucrative as the rentals but good enough for our goals.

7) Getting rid of the units has allowed us to make our income extremely low for 2024 and 2025. We have no SS, wife is retired, I do about $10k/year in handyman work, and we have a tiny pension. Why is this a good thing? Because that allows us to do large Roth conversions up to the IRMAA limit which will lower our tax bracket for the future. As I stated above, most of our savings were in stocks, and within a TIRA...which will be taxed at normal rates when taking out. But the tax laws currently are favorable...so we plan these large conversions for the next two years (at least...if the tax cuts are extended we can do more). After that, the bulk of our savings will be in a "never-again-taxed" situation.

Bonanza thank you. Ray yes we got most of the appreciation since 2020. We probably left a small amount of appreciation on the table due to my knee injury, but there are no guarantees going forward. MMIT I think your answers can be found above. The tax hit was high, but we spread the sales over 3 years to ease the pain and did pro-formas so that we knew what we'd be paying and had the money set aside. The only year that was really high was 2022 when we sold three units.

The money we got from selling all the rentals is now in a brokerage account on which taxes have been paid. We only pay taxes on the growth now, and we have some of that money in state-specific muni bonds for which the income is untaxed at both the state and federal level.

Every person will have different goals and reasons for doing what they do, but for us this was the right thing and we were successful in the end...I was able to do a "phased" retirement starting at age 51 (see below).

Phased retirement:

Age 50 - Was working 70 hours/week as a corporate executive

Age 51 - Became a licensed home inspector and worked 40 hours/week

Age 53 - Took my hours down to 30 hours/week by simply doing fewer inspections

Age 55 - Reduced my inspections more, worked 20 hours/week

Age 56 - Quit home inspecting and opened my own handyman business...I have 10-12 repeating customers I like working with and limit my hours to 250 a year. This is very easy to manage and I can pick and choose the jobs I want to do. I will do this for another couple years and then probably hang it up also.

Gotta go now, on my way to a handyman job where I'm painting a bath vanity LOL.

P.S. We have already taken 2 vacations this year, and have 4 more planned for later this year. I also just ordered a brand new Corvette Z06 and it should be ready for pickup in about 6 weeks...real estate has been a big part of making this possible...so you people are doing the right thing...keep it up! FREEDOM!

--64.38.xxx.xxx




Sell when iron is hot (by Pat [VA]) Posted on: Jul 23, 2024 9:34 AM
Message:

They must have fixed that knee better than new! Otherwise, you wouldn't be able to get in and out of that Corvette! (Speaking as someone that was much younger when I had one back in the early 90's. Fun car, but too much $$ to lose in depreciation. I had bought a used one. Our Honda Civic gets us 46 mpg, because we just use it going back and forth to the beach condo, and it is really too low for us now. Thinking about getting a Chevy Equinox or a Ford Escape. --216.126.xx.xxx




Sell when iron is hot (by Amy [FL]) Posted on: Jul 23, 2024 10:10 AM
Message:

Way to go Hoosier!!! Very cool how everything has worked out.Have a great retirement.Amy --104.53.xxx.xxx




Sell when iron is hot (by Ray-N-Pa [PA]) Posted on: Jul 23, 2024 10:36 AM
Message:

Sounds like you are doing what you want now a days and that is important. There is a point where that is of huge value. --24.101.xxx.xxx




Sell when iron is hot (by Dodge [PA]) Posted on: Jul 23, 2024 11:24 AM
Message:

Inspiring actions! Thanks for sharing. Hope you enjoy the next chapter! --174.198.xx.xxx




Sell when iron is hot (by 6x6 [TN]) Posted on: Jul 23, 2024 1:32 PM
Message:

Thank you for sharing this, Hoosier.

I really appreciate the details. We share some similarities. I enjoy learning from you, and I love learning about your cars. I wish you well in your best years and look forward to learning more from you.

Enjoy the ride! --76.129.xxx.xx




Sell when iron is hot (by GKARL [PA]) Posted on: Jul 23, 2024 3:38 PM
Message:

Nothing wrong with cashing out and if one going to do that, now is the time. Sounds like you really planned this out very well. Enjoy your retirement! --209.122.xx.xxx




Sell when iron is hot (by LOLA [OH]) Posted on: Jul 24, 2024 12:47 AM
Message:

Thank you for sharing this, enjoy retirement.

5 vacays this year sound lovely.

You have certainly earned and planned favorably!

Any particularly interesting destinations? --65.60.xxx.xxx




Sell when iron is hot (by LOLA [OH]) Posted on: Jul 24, 2024 12:47 AM
Message:

Thank you for sharing this, enjoy retirement.

5 vacays this year sound lovely.

You have certainly earned and planned favorably!

Any particularly interesting destinations? --65.60.xxx.xxx




Sell when iron is hot (by LOLA [OH]) Posted on: Jul 24, 2024 12:47 AM
Message:

Thank you for sharing this, enjoy retirement.

5 vacays this year sound lovely.

You have certainly earned and planned favorably!

Any particularly interesting destinations? --65.60.xxx.xxx




Sell when iron is hot (by Hoosier [IN]) Posted on: Jul 24, 2024 9:45 PM
Message:

Lola,

We are going to three comedy shows out of state, I love comedy. We are also going to New Bern NC...a coastal town. And lastly....St. Augustine/Tampa...let me explain.

I've been a Raiders NFL fan for life. Many years ago I had an idea for a bucket list item to see the Raiders play in every NFL city. We started attending one game a year, then expanded it to two games once we could afford it. We have now seen them play in 27 cities with only 4 more to go. For some cities it's easy...as they play there every year. However, for teams in the NFC, they only play at that city once every 8 years. Unfortunately, COVID hit when they played Atlanta...and the Falcons were not allowing fans in the stadium...so that will be our last stadium/city approximately 4 years from now. This year is Tampa...and we're going to spend 4 days in St. Augustine while in Florida.

Tampa - 2024

Las Vegas - We can go any year

Los Angeles - We can go any year

Atlanta - 2028 I think --64.38.xxx.xxx




Sell when iron is hot (by BRAD 20,000 [IN]) Posted on: Jul 28, 2024 3:50 PM
Message:

Hoosier,

Congrats! Good post.

It was fun watching you grow.

I giggled when you said "no inspections" suggesting a faster and easier sale:)

You had a good ROF - Return On Freedom!!!

I have watched several local LLs develop health problems which led to the properties sliding downhill, eventually passing away and leaving a big mess for heirs.

Years ago I bought a book with a title like "What they never tell you in business school". The last chapter was "When to Get Out".

We LLs like to hoard houses without a thought about an exit plan. We learn to buy, fix, and rent. Not how to sell.

BRAD

--73.103.xxx.xxx




Sell when iron is hot (by Hoosier [IN]) Posted on: Jul 28, 2024 5:06 PM
Message:

Thx Brad --64.38.xxx.xxx





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