Sell investment property?

[raeoflyte]

Drive by post, sorry.

We kept our last home as a rental and use a property manager so its very low hassle and we make about $3-6k a year from it. With the market though I'm really thinking of selling. It looks like we'd net $90-$130k after taking 10% for closing costs and 15% for capital gains. I'd divide the proceeds 3 ways to payoff dh's student loans and set the rest aside for the kids college accounts.

Tenants lease is up 8/31. What else do I need to consider?

[Knee Deep in Water Chloe]

I'd sell, but I, as we all know, did not have a lovely landlording time. 

[Lizard Queen]

It looks like it's sort of a wash between what you could get if you invested the proceeds (very roughly), vs continuing to rent it out. Do you want to continue to be landlords, or would you rather have the funds to fill up those other buckets?

[justme]

So even at the top rent profit and lowest selling profit - it'd be 15 years for the rent profit to equal what you'd get from selling. And that doesn't account for any increase in the 90k being invested 15 years. And in 15 years there's likely to be some pretty expensive maintenance/replacement you'd have to do on the house - which would make it even longer for "break even". 

Honestly with that kind of profit I think I'd sell. The main reason why I would consider renting my current place when I move was more because of not getting a ton of money selling it. Though I'd probably get around $50k whenever I do so I think I'd just sell and invest the cash. But part of that is it's a condo so I have less control over expenses and shit long term. 

[azucena]

I'm thinking the same thoughts as justme.  15 yrs breakeven, maintenance, and tenant risks <<<<<<< cash in hand + interest/earnings potential

[Lizard Queen]

The way I'm looking at it is you're comparing investing this money 2 ways-- within the rental property,  or in the market (the student loan interest confounds that, but I'm ignoring it at first). So looking at the nice round number of $100k net. 4% rule gets you $4000/year. You're getting $3-6k, so right in there. Now, if you need this money for college, who knows what you could sell for at that point? OTOH, is the student loan interest more or less than what you'd expect to make in the market?

[finnime]

Unless you have future plans for owning the property, it seems to me you'd be better off selling as the market is hot. You will gain much more control over your investment, now and in the future. And it should be much less stress, too, unless you're into day trading or junk bonds. Then maybe you want to reconsider.

[raeoflyte]

Jul 2, 2021 13:15:23 GMT -5 Lizard Queen said:

The way I'm looking at it is you're comparing investing this money 2 ways-- within the rental property,  or in the market (the student loan interest confounds that, but I'm ignoring it at first). So looking at the nice round number of $100k net. 4% rule gets you $4000/year. You're getting $3-6k, so right in there. Now, if you need this money for college, who knows what you could sell for at that point? OTOH, is the student loan interest more or less than what you'd expect to make in the market?

The kids college accounts are painfully under-funded and this is an easy way to fix that. Dh's student loan interest is low, but we haven't made much of a dent in them either.

I always planned on rentals being a good chunk of our retirement, but after the last bubble I decided to focus on investing so I'd be less likely to lose my income (from real estate) at the same time my assets tanked. We have a triplex too and I was/am comfortable with the 2 rentals and wasn't planning on selling either one, but I never thought we'd be able to sell for so much either. As long as we're not stupid with the money it seems too good to pass up.

[Lizard Queen]

Jul 3, 2021 9:57:46 GMT -5 raeoflyte said:

Jul 2, 2021 13:15:23 GMT -5 Lizard Queen said:

The way I'm looking at it is you're comparing investing this money 2 ways-- within the rental property,  or in the market (the student loan interest confounds that, but I'm ignoring it at first). So looking at the nice round number of $100k net. 4% rule gets you $4000/year. You're getting $3-6k, so right in there. Now, if you need this money for college, who knows what you could sell for at that point? OTOH, is the student loan interest more or less than what you'd expect to make in the market?

The kids college accounts are painfully under-funded and this is an easy way to fix that. Dh's student loan interest is low, but we haven't made much of a dent in them either.

I always planned on rentals being a good chunk of our retirement, but after the last bubble I decided to focus on investing so I'd be less likely to lose my income (from real estate) at the same time my assets tanked. We have a triplex too and I was/am comfortable with the 2 rentals and wasn't planning on selling either one, but I never thought we'd be able to sell for so much either. As long as we're not stupid with the money it seems too good to pass up.

Whereas the others are looking at cash flow, I'm simply comparing investment income. However, cash flow is extremely important, so if you feel more comfortable with sticking with only the triplex, selling the SFH seems like a good way (to me) to diversify your portfolio more. There is something to be said for peace of mind.

As far as the college funds, I've got really mixed feelings personally on that since it does decrease possible financial aid. I think my kids are both around $9k currently. I really don't know what to shoot for.

[debthaven]

raeoflyte since you still have the triplex, I'd probably sell. 

Just curious, what did you decide to do?

[raeoflyte]

Jul 8, 2021 16:20:43 GMT -5 debthaven said:

raeoflyte since you still have the triplex, I'd probably sell. 

Just curious, what did you decide to do?

We decided to sell. Waiting on property manager to know if we can get in before the end of August.

[raeoflyte]

Jul 3, 2021 11:26:34 GMT -5 Lizard Queen said:

Jul 3, 2021 9:57:46 GMT -5 raeoflyte said:

The kids college accounts are painfully under-funded and this is an easy way to fix that. Dh's student loan interest is low, but we haven't made much of a dent in them either.

I always planned on rentals being a good chunk of our retirement, but after the last bubble I decided to focus on investing so I'd be less likely to lose my income (from real estate) at the same time my assets tanked. We have a triplex too and I was/am comfortable with the 2 rentals and wasn't planning on selling either one, but I never thought we'd be able to sell for so much either. As long as we're not stupid with the money it seems too good to pass up.

Whereas the others are looking at cash flow, I'm simply comparing investment income. However, cash flow is extremely important, so if you feel more comfortable with sticking with only the triplex, selling the SFH seems like a good way (to me) to diversify your portfolio more. There is something to be said for peace of mind.

As far as the college funds, I've got really mixed feelings personally on that since it does decrease possible financial aid. I think my kids are both around $9k currently. I really don't know what to shoot for.

I think peace of mind for the kids college accounts will be worthwhile.
This summer I started feeling like we were out of time, and ds has some lofty ideas I'm hoping we can support. Add in that my income fluctuates and I'm getting anxious. We're making great money right now. If it keeps up we should be able to add to their savings pretty well, but I don't think they'll qualify for financial aid. Pessimisticly I'm assuming my income is about to take a significant hit and it will rebound right when we are filling out fafsa's. I need to read up and making an actual plan though.

[debthaven]

raeoflyte I think you made the right decision!

I read something interesting, I think in the WIR Savers thread? About funding more for the older child's college costs, and less for the younger child's, since it has more time to grow. 

Good luck! 

[countrygirl2]

We are keeping ours longer. Houses here are so scarce I don't think the prices will go down much. Also hubs keeps them in great shape. We said age 80 to start selling, we will see.

We sold one rental and then the renovated house.

But this grosses $35k and now very little exp, prop tax, and ins, and a water bill. So we will net around $28k. Hubs was pouring money back in, not ours but left us without much from the rentals, so now that has stopped. We will have money from them. About time to benefit from them.

[countrygirl2]

I am looking at my above post. We have pretty much decided that if anyone moves we will sell. Only have 1 possibility at this time. Decent properties here to rent are practically non existent, we get calls daily. One renter came yesterday and paid Novembers rent, they want to make sure they don't lose what they have.