We have mostly been all in, the Real estate market. But now we need to start cashing out. Spouse is 79 yrs old, I am younger. We have relatives but no children of our own.

How long do you plan to live?

You're earning nearly 10% on your equity now. You'd probably have to be moderately aggressive to get that same return in the market. Probably could do it with a 60/40 equity/bond portfolio.

A six month T-bill is paying nearly 4%. You'd have to earn 14% on the equity portion to average out to 10%. Personally, I'm cautious on the stock market and keep my target down to around 7 to 8% working with balanced situation.

After taxes, you'd be working with less than your current equity though.

Thank you for asking this question. Taxes will reduce your net proceeds so you will invest only AROUND 60%. And when you re-invest the money at your age, IT'S NOT ABOUT HOW MUCH YOU WILL MAKE, BUT WHAT YOU CAN LOOSE!

Example: Friend was selling his Duplex. He purchased that property from a 1031 exchange of one of Single Family Homes. This means it was all depreciated out and the loan was paid off.

His Basis carried over from the House to the Duplex was around $120,000.

So when he sold the Duplex for $750,000 and then paid $249,000 in Long Term Capitals GAINS tax, State and Health Care tax, He walked away with only $500,000 from a property listed for over $800,000.

He the invested the $500,000 in CD's and Bonds, earning him around 3.8% or Less than $1,600 per month.

Instead when I sold a similar property, I carried back the first mortgage and made it an installment sale. The taxes were paid over time so I got income off of my tax amount not going to be paid much over the first 10 years. I was making around $4,300 a month, almost Triple of my friend and his duplex.

"What is the best way to invest?"

You have to define "best" first. What's best for me will not be best for you and vice versa.

There's more to it than just return on money or equity. There is also a time and effort factor.

IMO, You should find a fee-only financial advisor and have a discussion with them. It does not mean you have to do what they say from now on, but they could assess your situation much better than we can on a public forum and give you some ideas.

Tim and JS are so correct - without knowing your objectives, it is tough to even give you alternatives.....and the various paths would be nearly impossible.

bet,

Good to see you back here!

Here's what Wifey and I am doing:

I don't have 10-20 years left to wait for the stock market. We want cash to live on NOW.

Sure talking heads like to say Wall Street has gone up 8-10% yearly ON AVERAGE OVER XX YEARS, but the part they leave out is when YOUR money goes down, that 8% is on the lower amount in YOUR account, not the S&P numbers.

I lost $150K when a company in England did a hostile take over.

I want CASH FLOW NOW, just like with my rentals

but without the daily management, headaches, bounces, inspectors, neighbors, trash...

Most of our homes are fully depreciated so if I sell and keep the money I have to give the IRS 37% of the sales price. (give them 1 out of every 3 homes I sell)

I bought them CHEAP and am selling HIGH in our amazingly top dollar market. I never dreamed these homes would be worth this much! Bought for $60 years ago, sold for $260.

Go to Zillow and make a list of what Z says your properties are worth. You will be amazed!

So I list them with a 1% realtor (1% is now NORMAL. 6% is dead) and 2-3% commission to the Buyer's Agent.

I do a 1031 tax free exchange with APIexchange.com ($1250 fee for the first property, then $250 for each additional property).

Rather than exchange to another property, I buy a "share" in a DST Delaware Statutory Trust which is a huge conglomerate like a hedge fund that owns property. By pushing a little paperwork I become a tiny partial owner in their $50Mill hospital or shopping center or apt complex or Home Depot or Hobby Lobby building. I just bought a tiny piece of a huge warehouse rented to Amazon. I think that's gonna be safe for a while!

I bought this with PRE-TAX dollars so right there I am 37% ahead than if I sold, paid 37% tax, and reinvested the remaining 63%. I would need to get 58% ROI to break even in year one. OR take 6 years to recoup the amount I paid the IRS and get me back to the starting point before what I consider making any money.

DST is owning commercial real estate, gives me an auto-deposit of spendable CASH every month, etc. I get a Returnon mu investment AND APPRECIATION. Their team of attys, CPAs, managers, and maintenance staff make it happen and deal with inspectors, zoning, dumpsters, mowing...

I am totally hands off with just money to spend!

The returns look lower than gambling on the stock market where my investment can disappear or go down if the president falls off his bike, or some country blocks a "straight".

When I calculate the ROI based on how I bought that home years ago, not adding in the THOUSAND$$$ I have collected all these years, I'm getting 15-18% ROI.

That's 18% CASH FLOW NOW, not an investment where I have to wait years, hope, and pay tax AGAIN when I cash some stock to pay my bills. Don't forget that 8-10% Wall Street ROI is BEFORE TAXES.

Call my DST guy Andres 626-629-0902 to see what's available.

BRAD

PS Your Medicare payments are based on your income which skyrockets when you sell a house without a 1031.

Great review of a investment plan Brad.

Are the monthly dividend checks treated like rent payments or interest income.

I don’t disagree about DST investments as I have started doing them myself. The real benefit is the tax avoidance. The return is okay but even relatively safe fixed income investments have returns that are the same or higher.

Brad, thanks for the welcome back. I need to be here more often. For those that I haven't met: 26 yrs as a full time landlord, over 30 units in two states. If I said I have seen it all, I would be lying because I know better.

Bet, you guys have worked long & hard to earn the assets that you've acquired, so please work just as hard to figure out the best way to maximizes the profits from you hard work. As you know we're both in a similar age bracket & have been at this a long time. I hate to have MA or the Feds reap a lot on tax revenue from our hard work so since none of out kids are even remotely interested in becoming LLs, we're doing something along the lines of what Brad suggests.

Brad, how long have you been doing DST's, what is the taxable dividend % on average(not the return on your basis)? How liquid are they? What is the sale process like?