We're in our 60s and own 10 SFHs in Austin, 7 fully paid off. We're looking to free up some cash, lower our taxable income, and maybe reduce our already light level of landlording effort. The main driver is that my husband has a somewhat aggressive cancer, and while things have been going well lately re his treatment, it is always hanging over our heads that things might go south at any time, so we really want to make the most of life right now.

The obvious choice would be to sell off a few houses, but the Austin market isn't great right now; we had a hard time selling one property last year. Also the cap gains are a concern bc we've owned all our houses a long time.

Im starting to look into the "buy, borrow, die" strategy, ie refi some of the paid off properties to free up some cash and reduce our taxable income via the mortgage payments. I know interest rates aren't great right now but when I pencil it out and factor in quality of life, it seems to work on paper. With the grim possibility of a shorter lifespan for my husband, selling some or all of them on a step up basis after one or both of us kicks the bucket means our kids will still be in good shape estate wise.

I don't think your interest will be deductible unless the loan proceeds are used for a business purpose.

Lots of info to process. Seems to me a GOOD investment coach is in order as some methods may be deductible or not. One thing I'd look at is to move the properties into trusts (or a trust). Avoids probate, etc and maybe/likely gets a stepped up basis when you/he pass. Each person's situation is different so a good expert with all the details might be the best option.

Difficult situation, on a similar note my wife has a debilitating auto-immune disease, but doing better now.

"...when I pencil it out and factor in quality of life, it seems to work on paper."

Seems like you answered your own question.

Thinking out loud:

Do you have Medicare? How well is your health insurance handling this? Do you have enough medical expenses that you can deduct them from your federal income tax next year? How is your home and rentals and vehicles on upkeep and repairs? Can you raise rents? Can you re-negotiate your loans?

I favor JustTim's response.

I'm not sure how giving money to the bank is better than giving money to the government, seems the same to me. Also, it doesn't reduce the time investment. In fact, it may increase the burden a bit having to deal with more loans.

I understand the others might be saying enjoy what you earned, but the issue becomes how will Uncle Sam's bite impact your enjoyment.

Say you sell a mere million dollars in assets. That really isn't that much anymore to be truthful. Used to be that would be life changing. If you have had them for a few years that $1,000,000 might come you after taxes as less than $400.000. Is $400,000 life changing? It could be for some, but realistically - not so much.

So what strategies can you follow to reduce that unwelcome silent partner - the government?

1) Well doing an installment sale will reduce some of that bite by breaking it up to when you get the money instead of a huge burden at once.

2) You can 1031 into hands off assets that produce a lifetime worth of income and not pay any taxes. OGM rights on performing wells for example routinely pay me 12-18% but lately it has been closer to 27%. None of the wells haven't called me either.

3) 1031 into NN/NNN leased properties. These typically take seven figures each to purchase. Then again, these also pay out six figures routinely. You can perform huge value-added moves without bending nails but from reducing property taxes and negotiating lease extensions afterwards. In some NNN leases, you do almost nothing. With my Pizza Hut and Dollar Generals, I have been too them together less than five times. In my NN leases, I am on the hook for the roof for example - but do you think it is me doing commercial roof repairs?

4) 1031 into DSTs. If you are willing to pay the management fee and accept when that manager tells you when to do your next 1031, DST can buy smaller bites of larger projects that you would never ever buy before. Because there is a manager in place this might be a good choice for someone looking to park wealth. If you are looking to build it, these don't work that well

5) Attend the convention this year. They have a PHD presenting how to park your money and be more hands off. That sounds like what you are asking to do. You don't get much time with a PhD typically for a few hundred dollars. This a true bargain.

I am an exception to almost everyone on this forum. I have never directly managed my properties. I have the highest respect for all of you who do manage your properties. Even some envy.

I collected on loans in my young life and didn't want to deal with those personalities at this stage of my life.

Some of you have tried using a property manager and have been disappointed by the results.

Since 2005, I have used a property manager. Early experiences were suspect. I have had my present PM since 2012. His company is great and performance is great.

How to find a quality PM? Just like finding your tenants.

Define your criteria

Make a list of potential PMs

Arrange interviews

Seek references

You can be as successful at finding a PM as you can find your tenants. You already have the skills to sort PMs out.

Cathy, I'm sad to read about your husband - Cancer and chemo Sucks! Perhaps you are a planner and want to have a plan so you feel more prepared for an uncertain future. How involved are you in managing the SF homes? Could you continue to do the admin part like advertising and screening applicants on Zillow, collecting rent, etc and outsource just the more physical Maintenance? Or did your husband do leasing and admin?

I suggest investigate small-steps you could start interviewing Property Managers and a Local Company near your rentals and big enough to handle all the Maintenance just in case. 1 Handyman might not be enough coverage.

Legacy: Do any of your kids seem to have the INTEREST or skills to manage rentals or would they just sell them? If so then discuss with your lawyer if you can put a few of the easiest to keep rentals in a TRUST. Careful though cause it requires extra steps to sell a home that is in a Trust.

For 5 years I sold ONE remodeled-rental-house a year,all built in the 1960s and 1031-exchanged into newer townhomes and it simplified our workload.

You might talk with a few experienced, top-producing Realtor/Brokers, look to see who sells the most in your pricepoint and neighborhoods, who do full service but at a lower Commis$ion, and they suggest get a home pre-inspection so you can resolve issues prior to listing.

And begin planning which older property you could next sell and 1031 out of and into a newer Townhouse with newer electric and plumbing that a property manager could more easily manage.

Cathy, I'm sad to read about your husband - Cancer and chemo Sucks! Perhaps you are a planner and want to have a plan so you feel more prepared for an uncertain future. How involved are you in managing the SF homes? Could you continue to do the admin part like advertising and screening applicants on Zillow, collecting rent, etc and outsource just the more physical Maintenance? Or did your husband do leasing and admin?

I suggest investigate small-steps you could start interviewing Property Managers and a Local Company near your rentals and big enough to handle all the Maintenance just in case. 1 Handyman might not be enough coverage.

Legacy: Do any of your kids seem to have the INTEREST or skills to manage rentals or would they just sell them? If so then discuss with your lawyer if you can put a few of the easiest to keep rentals in a TRUST. Careful though cause it requires extra steps to sell a home that is in a Trust.

For 5 years I sold ONE remodeled-rental-house a year,all built in the 1960s and 1031-exchanged into newer townhomes and it simplified our workload.

You might talk with a few experienced, top-producing Realtor/Brokers, look to see who sells the most in your pricepoint and neighborhoods, who do full service but at a lower Commis$ion, and they suggest get a home pre-inspection so you can resolve issues prior to listing.

And begin planning which older property you could next sell and 1031 out of and into a newer Townhouse with newer electric and plumbing that a property manager could more easily manage.