Should I sell my rental house and kick out long-term tenants?

[Benjamin Aaker]

Hi BP Team! 
I have a 3 bed 2 bath SFR and have rented to tenants for the past 2.5 years. They rarely have repair requests, and only for important things that I want my tenants to inform me about (water in the basement). They always pay the rent on time. The mortgage is set up to pay down quickly and just have a profit. We raise the rent ~$25 annually but these tenants have refused to re-lease, so they are on month-to-month.

I'm all-in $150k into the place and purchased it for $135k and have $95K remaining in principal. It would sell right now conservatively for $220k. The place is comfortably paying down its mortgage but a big repair would mean an out of pocket expense, which I can pay, but not happily. I am all-in in multifamily and have a few SFRs, such as this one, from former days and am looking to get out of the SFR business.

The tenants are not interested in buying the property from me. Should I sell the property?

[Sean Ross]

@Benjamin Aaker I want to tie together a couple of different threads here. 

You could sell and redeploy you equity into a different investment as @Alex Olson advises (using a 1031 exchange to defer all of your potential tax payments), but remember that the rules for 1031 exchanges don't give you a lot of time to find a replacement asset.  

So I also want to echo what @Lien Vuong says here. Take the time to learn about your potential reinvestment options.  

If you 1031 into a different property, here is a quick list of your options:

• single-family residential
• multi-family residential
• commercial
• resort
• farm or ranch
• storage facility
• net-lease management
• unimproved land
• water rights
• oil rights
• timber rights
• properties with a TIC structure or other fractional interests
• options to purchase
• conservation easements
• Delaware Statutory Trusts

So you can use your proceeds as a down payment on any of these as long as your intent is to hold them for long-term use (investment or business).

We are seeing a LOT of money flow out of SFR and office space into DSTs and NNN options right now.