Rental property or stock market?

Question

I own two multi-families free-and-clear in a hot area of New Jersey. I am thinking of selling one in order to have less headaches and take the money to buy high dividend stocks. Thoughts?

Each multi-family clears A net profit of $30k.

I figure I can get $625k to $650k for the house.

After realtor fees, taxes, etc. think it’s worth it to sell and plunk the money down on some high dividend stocks (ie Exxon 5.7% and REITS)? Or should I stay put?

John Morgan · Answer

Stay put. Inflation will be the game changer for you. Ride it out. The stock market is peaking and seems to be stalling out. RE still has some legs.

Account Closed · Answer

Do both!

I've got 1 long term rental, 1 short term corporate rental, 2 mortgage notes, and a portfolio of 11 high yield dividend stocks.

Mike Schofield · Answer

I second on doing both!  You could refinance your properties to take cash out.  You could continue to collect rents that pay down those mortgages, have money to invest in the market, and still get the depreciation tax break.  You'll continue to keep any appreciation and cashflow, while avoiding the capital gains and the cost of the sale (taxes, fees, and commissions.  Leverage is your friend as long as you don't over extend yourself.

Dwayne Poster · Answer

I second on holding. Stock market is prime for profit takers to break the bank in short order, while housing has latency that will give one time to evaluate and reorganize.

Leslie Pappas · Answer

This is an instance where a 1031 Exchange can make a huge impact. If you have owned a rental property for a significant period of time, when you sell most investors end up paying somewhere between 30-40% in taxes. Completing a 1031 Exchange allows you to defer that tax and depreciation liability and invest in other properties.

If you're an accredited investor and looking to defer your capital gains tax but doesn’t want to be a landlord anymore you might consider reinvestment into DSTs (Delaware Statutory Trusts). They are hands-off, institutional grade real estate investments, and they allow you the option to diversify. You can buy into institutional grade $50-125M projects with as little as $100,000. Professionals with decades of experience and very impressive track records do all the heavy lifting for you. You get potential cash flow, tax shelter and appreciation. Loans are non-recourse.

If I can help in anyway, please feel free to contact me, feel free to check out my blog here on BP. Leslie

https://www.biggerpockets.com/...

Joshua Janus · Answer

Are you looking to purchase more property in the future? What did you pay for that property originally? The capital gains taxes will be difficult to recoup quickly from a high dividend stock I would say.

Rental property or stock market?

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