I have been a landlord 25+ years and am considering retiring abroad. I would be leaving my job and thinking about selling the rentals.The thought of zero income does scare me even though I'm grateful to have a nice nest egg.

If I move abroad, not sure I can work. I'm a pharmacist. I plan on seeing if I can invest in an apartment building there but I don't have high hopes.

I'm looking for WFH jobs that I could do but in my field, it may be very hard to find.

I would keep the rentals but I hate risking my nest egg for a law suit. Someone falls or anything happens, you know that goes.

Agree that a quality property manager would be hard to find and agree that moving abroad and keeping them isn't a good idea.

What are the rules for the countries on your shortlist?

A friend of mine moved to Portugal. Portugal requires a foreigner to demonstrate sufficient passive income for their household size. (A little under 900 euros per month for a single person, additional income for a spouse or dependents.)

Another American-born friend of mine had the opportunity to claim Welsh citizenship through a parent. After he got his citizenship, he used that to get his wife residency.

Someone else I know was looking at pursuing Italian citizenship by descent. The rules have been tightened up to limit it to parents or grandparents.

Moving overseas would make service of lawsuit paperwork a challenge.

You can mitigate this further by placing the properties into a land trust with a trustee in a different state and you being overseas. Couple that naming a third state in the land trust and a simple slip and fall isn't going to get to you. If the building collapses because you failed to do maintenance - you still have a risk. Insurance does a great deal to help that

If you don't want the management hassles and you don't want to pay the taxes you still have some other paths. Perfuming oil or gas wells, DSTs (paying only 5% or so), or NNN/NN investments all over hands off opportunities to get a steady income that helps during those retirement years.

Move over, these tools help you diversify your real estate portfolio.

I'm planning on moving to Thailand. My GF is Thai and we have been before and understand how to retire there.

I have a robust 401k and other stocks in a brokerage but enjoy the steady passive income with my rentals. I feel that selling would be ideal but also reluctant at the same time. I'm sure many here have been through that thought process.

Do you have contractors, handymen, etc that you use consistently (that you know and trust) that have worked for you before?

I'm just thinking that if you WANTED to keep the rentals (or maybe sell them yearly or something so you don't take a huge hit all at once may be another option for you. You may be able to "manage" from a distance in the sense that the tenants could still contact you directly through email or whatever and then you can reach out to the "right people" to get the work done as needed.

Also, depending on when you are planning on doing this you may want to see if you can find someone that manages properties currently and hire them for one of the buildings (I'm assuming you have more than one by how you worded above) but if not, then maybe just hire them for the one and see. You'll still be here to "oversee" everything but you will also see how they respond, act and take care of things. If you feel comfortable enough with them then make the move to give them more. If not, then find someone else.

I think some people (owners) have "difficulty" letting go of the reigns and letting others do it. You have to let some things go and just see.

Sounds like a one way move.... I wouldn't be keeping rental property in another country. BTW rental property is not passive income .... we work for it.

Are you allowed to own over there. From what I recall, you were only able to sign a 99 year lease- but I haven't been over there since the Asian currency crisis in the mid 90s.

Unless you've got an amazing PM, I'd sell. Figure out a process that minimizes taxes.

There are plenty of income investments available. You might lose some of the growth potential but you can maintain most of your income with reasonable risk.

I appreciate everyone's input. I met with my CPA today. He said that I could do a DST with the gains to defer my tax or sell right after I retire bc I wouldn't owe any tax if my income is below 48k.

I'm going to look at this DST and see if I can sell, move the cash in there, then cash out once I retire to avoid federal tax. If that doesn't seem like a good vehicle, then I'll take the tax hit and invest in Asia.

It's my understanding that I can do a 1031 in a foreign property but its a ugly process.

In Thailand, you can own a home but you place the deed with an attorney firm that specializes and you lease the land for 30 years for only about $300/year and can renew. I doubt I live more than 30 years, so I'm not worried about the land issue.

Dennis,

The PMs in my city don't bother to attend our local LL Assoc training or MrLL Conventions and learn all the ways I increase our rental income.

(Did ya see the car??)

Here's what I am doing to retire from LLing...

Selling each home as they come open and listing it for a 1% commission, 2% commission to the buyer's agent, total 3%. (6% is dead, don't accept it)

Homes sales are HOT HOT HOT right now no matter what the media says. In my 48 years of RE I have never seen prices this high! Google each address and see what Zillow, etc think your props are worth. I was amazed!

There is a huge pent up demand of people done waiting for rates to drop or need to move no matter the rates, AND new YOUNG buyers who were too young to know about the 3% mortgages. Dave Ramsey is telling folks to buy now and refi later if the rates go down.

I just sold 3 at full full list price, higher than my agent suggested.

Now the retirement part...

1. Learn about 1031 exchange. It's what the pros do. I use APIexhange.com Good info on their website.

Because I HATE paying taxes and want total hands off, I am exchanging the sales into a

2. DST Delaware Statutory Trust. (think mutual fund owning real estate) They can take as little as $70K at a time so I can sell one prop and exchange it into a DST without paying a penny in tax of any kind.

The DST qualifies as "Like kind" real estate so again, no taxes.

In my first DST I own .094% of this $6.9mil group:

2 Dollar General Stores (which were paying only 6% with risk), a Dollar Tree, Tractor Supply, and a WaWa, each building 1-3 years old.

I'm getting 5.2% ROI, as a monthly cash flow check.

Real life: I sold 2 props - a junker needing $30K in rehab for $70k and a small pretty house for $156K = $226 total) x 5.2% = $11,752/year, paid monthly at $979 each month.

That's more than I was clearing with my effort and personal risk.

Real math: I know the rate seems low but do the real math.

Years ago I bought these for $23K + $60K = $83k plus a few thousand in rehab, let's say a total of $90K invested. I've received A LOT of rent over the years which totally recouped my investment, and taken all the depreciation.

I would have to pay 37% tax ($83,620) on a straight sale of $226K.

My $90K investment is now yielding 13.057%, without me lifting a finger.

And THEIR attorneys handle the slip and fall liability!

Or if I calculate I had already recouped my investment in the form of rents, my investment is ZERO, so my ROI is infinite or 11,752%.

If the DST sells for a profit, I share in that profit.

Overall, I SAVED $83,620 in taxes and turned it into $11,752 per year pure income. On just 2 houses!!

Happy to talk more about this.

I hope this helps others.

BRAD

I also used API recently for an exchange. I wasn’t quite ready to get out of the business but I also wanted properties that met specific criteria. If you have been doing this awhile. It’s not just the numbers, you know it when you see it.

Brad and all.

My CPA told me about DST. Question, If I paid 200k for a property and it sells for 350k. Do I get to keep the original funds I put in (200k) and the 150k profit goes into the DST?

I want to defer the Cap Gains until my income dips below the 48k mark, then I pay zero fed cap gains and only state.

This is my understanding.

You don’t get to keep any part of it. You would roll all of the funds including your original investment into your new investment or DST as it may be. If you have debt you would have to have the same amount of debt after your exchange.

Most of the DSTs that are on the market are already purchased and they are selling you a piece and pulling their money out. They collect fees and can reinvest into other projects. You can choose assets with no debt or some debt. Both are commonly available.

The amount of information available on each investment is like a college textbook(ppm). It’s massive but just by looking at some important details gives you a reasonable feel for the investment. The expected return , fees and debt level is clearly stated.

This is my understanding.

You don’t get to keep any part of it. You would roll all of the funds including your original investment into your new investment or DST as it may be. If you have debt you would have to have the same amount of debt after your exchange.

Most of the DSTs that are on the market are already purchased and they are selling you a piece and pulling their money out. They collect fees and can reinvest into other projects. You can choose assets with no debt or some debt. Both are commonly available.

The amount of information available on each investment is like a college textbook(ppm). It’s massive but just by looking at some important details gives you a reasonable feel for the investment. The expected return , fees and debt level is clearly stated.

Just wanted to add this.

JS,

Is there a particular DST (sponsor) you recommend? and/or types of DST? I have been researching this weekend.

I’m really hesitant to give specific financial advice but I will provide some general advice.

The types vary. They are like any other investment where the risk and return are correlated. Large multi family buildings in fast growing metro areas have lower returns. Business NNN that are solid pay around a percent more.

Question: If the total at closing goes to DST, wouldn't it be advantageous to pull out the equity up to what you paid for the property/ The you risk less and pay no taxes on what you pull out since you paid it down

You would have to maintain the same level of debt in your exchange. You cannot end up with less debt.

Dennis,

Call my guy Andres 626-773-3623.

His company does A TON of research and ranks the available DSTs. The good offerings sell out quickly.

The 1031 exchange is based on the SELLING PRICE, not your equity.

You can take some cash out of the sale without exchanging it into another property or DST. That's called BOOT and you will pay tax on it based on the the depreciated value of the prop. Too complicated for me to calculate!

My recent DST was into property group that has no mortgage debt.

I CAN choose a DST that has debt and transfer MY debt into their debt.

Ken,

Every investment has risk (and a 12 page disclaimer to sign!). There is risk but here's my position: They have more attys and accountants than me, and need to show a profit for their current and future investors and the SEC, they take the everyday liability risks (slip and fall, dog bites...) and Andres' company's due diligence is WAY more than I've ever done when buying. He needs to keep HIS clients (me) happy.

If the DST has debt it is non-recourse which means if they go under I might lose my investment but I am not held liable for THEIR debt.

MY goal is to keep the money *I* worked for, not give it to the IRS, and receive mailbox money.

Sure, I could play with it and make more but that means WORK and INVOLVEMENT which I am trying to eliminate.

Plus the car takes premium petrol!

BRAD

Brad:

I will contact him and go from there. After depreciation recapture, there's a lot of Cap Gain. I don't want to take that until i fully retire and am not making much.

Just one last thing to keep in mind on debt. Let me give you an example.

50% not 60%

JS,

Any good literature that I can read about this?

There was a lot of good information on 1031s but I wasn’t able to find a lot of good information on DSTs. The companies selling them often have done some research and that can be valuable but I made my own decisions after reviewing the PPMs.

I am wondering if the lack of information is due to the fact that people investing in these assets are generally not active contributors to forums.

I’ll add one more thing.

My fear with DSTs is that it is just a giant Ponzi scheme where the big wheels get rich and the little fish get the scraps. You give up all your control of your money. What happens if you need the money. Can you sell? How easy is it to sell? What happens upon your death?

I am not at the point in life where I want to cede control. Maybe someday.

I have some money invested in a private equity / venture capital group. What a scam that is. Invested in 2011 and still haven't gotten my initial investment back while the people running it keep opening new funds for new investors.

Gee, thanks for ruining it for me Bonanza.

I was (am?) still more than mildly interested in this. I don't have the big bucks but considering this as a little diversification.

I agree with you guys. I am also not at that point where I was ready to give up control but was running out of time and couldn’t find a property I really wanted. For some reason the number of new multi family listings dried up suddenly. It could be that the market suddenly weakened.

Many sponsor companies post their previous transactions over many years. That track record doesn’t guarantee anything but it can give you some comfort.

If you want your money immediately it is almost impossible to sell so that is a consideration. Most of them cash you out in 5-7 years but it can be shorter and longer.

I see the fee to set-up is 1 to 1.5% and the ongoing fees are 0.5$ annually which is fair

I have about 500k I want to defer cap gains, just place in a ETF for now until I retire.

Question: