Inherited Propterties, Is it Worth it?

[Kurt K.]

Earlier this year (January), my father passed away and I inherited 14 units (7 structures) free and clear (C propterties). I live in AZ but the properties are in IN so I have hired a property management company. And the PM is doing a great job so far with all of the challenges. So far we have evicted 10 tenants due to not paying rent who were not screened prior to ownership. We have managed to rent 7 units (all screened), keep 4 tenants good tenants and currently have 3 more to rent. After these evictions I have had to put in new carpet, vinyl (not every one) and purchased new appliances in some of the units to make them rentable and up the rent in all of them.

Numbers Talking
Total value of properties = $400k - $450k
Total monthly income = $6,875 (all rented) x 12 = $82,380 yearly gross
(net income would minus 10% PM fees and maintenance fees)

Deferred Maintenance 
Adding up deferred expenses this year, because of the neglected properties, we will have spent nearly $100k by the end of this year getting these up to par. That includes 4 roofs, a boiler, a boatload of new appliances, carpet, vinyl, and etc. I won't list everything. Fortunately, my wife and I had the cash on hand to make these improvements. And we have already talked to our tax guy twice this year plugging in the numbers.

Long-Term Goals
We are thinking long-term, and wanting to keep these at least 5 years, possibility more. My wife has recently retired and I will retire in 4 years. So this could be some future passive income. Were hoping that investing in the properties will be worth it and the right decision. If you have any input that would be great.

[Mags S.]

The passive income on paid off properties is nothing to sneeze about.  DH and I recently retired (6 yrs ago).  Could you get the same passive income via another means?  With that type of passive income, you could put social security, pension or any retirement funds on hold for now or drastically reduce how much you withdraw from them annually.  It sounds like You've already expended the money to keep them in pretty good shape for a number of years.  It would be a no brainer for me - I'd hold on to them.