Next step....ways to invest after selling...

[Pixel Rogue]

This question is a little broader than 'real estate' as the solution yet looks like a good place to ask. 

We are considering converting one of the investment properties into our primary residence.We might do this once every two years to sell and cash out as we start to scale down. We might use one rental as permanent primary home. 

Biggest question ~ lets say we sell the primary home move into an investment and convert the investment to primary residence, what the some good ways to invest the income generated from the sale of the primary home (ideally in tax minimized conditions.). We are not as interested these days in picking up new investment 'properties' per say ~ possibly open to some type of REIT. Simply moving the funds to a savings/money market/mutual fund account that will be taxed annually on earnings is not desired. Same question if we decide to move & convert every 2 years.

[Dave Foster]

@Mike Dymski atta way!  That's a creative way to treat the problem of not wanting to be an active landlord but still wanting returns better than a savings acct.  @Pixel Rogue, I have a couple of clients who have done just that.  They have positioned their rental portfolio into desireable homes (in one case three condos side by side on St. Pete Beach).  Their retirement job is to sell their first primary residence and spend the next two years living on that cash.  When the cash runs out or they're tired of where they are they will sell the converted investment where they are.  Because it is a converted investment they will have to prorate the gain between the period they lived in it and the period it was a rental.  But at least part of the gain will be tax free.  They will move into the next rental and do it again.  What a way to spend retirement - living in awesome places enjoying tax free cash!

If moving that often doesn't float your boat then the other alternative would be to 1031 into DST or TIC projects. DSTs are far more common these days. They are completely passive and so you take a return hit for that passivity and conservative nature of the asset. But they're return is actually superior to a lot of places in the country that are appreciation high and cash flow low.

Both of these options have merit as does simply buying some properties in highly appreciating areas and not even renting them.  Simply hold for appreciation.  That's not an unheard of model.  Or raw land share cropped out to corporate farmers.