Is seller finance the solution?

[Bruce Reeves]

Landlord since 1999. Duplex I lived in back in the day and kept after moving out. Very good area (Northwest Arkansas) and good property to attract solid tenants. It's been 95% good experience all these years as I screen tenants properly.

Bought for 125k with loan, value today approx. 335k. Ran a proforma sale through TurboTax to see the damage Cap Gain and Depr Recap would bite me. It's impressive, about 60k.

Retired three years, 64 now. Duplex mortgage will be paid off next year. Rent income will net annual about 17k. As far as risk goes, based on my 23 yrs rental history, I put the risk of significant income interruption at very low. More appreciation very likely.

But, I would like to divorce myself of being a landlord. I've paid my dues and prefer to simplify.

I run three scenarios in Excel to see which options leaves me with the most cash at 70, 75, 80, 85, & 90 yrs old. 1) Sell and add 275k to my three fund Vanguard portfolio, 2) not selling and maybe get property mgmt and 3)  seller finance. If I could get a minimum 4% market return for the next 20 yrs, I would sell as soon as my tenants payoff the mortgage next year. But no such guarantees are available.

My fear. A prolonged bear market and watching my investment slowly dwindle and want to kick myself for selling a "sure thing".

Possible solution - seller finance at 6.5% or whatever with a 10 year balloon. At the 10 yr mark, a 30yr, 335k loan at 6.5% with 10% buyer down has a payoff of 284k. Total pymts to date to me 252k.

This takes my anxiety away as I have excellent collateral if buyer gets goofy. Plus an infusion of cash (less taxes) in ten yrs.

Many more variables to come into play, but what do ya'll think about the seller finance route to ease my investment diversification fears and spread that tax impact?