All Forum Posts by: Bruce Reeves

I am planning on selling my duplex rental next year (Jun 2026). The AC systems are 15+ yrs old and hanging by a thread. I may get a new AC installed on both sides, gas furnace is good for now. 

Questions - is this an improvement that will increase my basis upon sale or a repair I can take on my expenses? If I can treat the cost either way, does in matter if I lower my capital gains or take it as an expense off the P&L? Just estimating my marginal tax rate will be 22%.

Thanks for any insight.

Executive summary - My duplex will be paid off next year and I want to sell. FMV approx 425k.

My goal is passive income and diversification. IRA in a 60/40 stock/bond at Vanguard but not too excited about putting sale proceeds there nor paying capital gains and depreciation recapture the year after sale.

My current thought on the duplex is owner finance to the current tenants. Four year history, excellent track record.

If they change their mind or can't come up with 10% down, then open it up to the public on an owner finance. 

I like the idea of having a good return (6-8%?) with a physical asset backing it up. 

Question - Between Social Security and the rental income, I don't need more money, but wonder if I'm overlooking some opportunities. I've always wondered if a camper van is right for me!

Again, it's has to be passive, I'm done my stent as a landlord (98% all good thanks to screening). Not really wanting to tackle 1031's, etc. 

Anyone have alternative investment advice with a risk factor similar to owner financing?

Geez, I'm just trying to get a second look at my math for the current situation. The other non-math issues I'm good handling myself. 

Playing around with my Excel spreadsheet and got to thinking about selling my rental property in the next few months vs waiting until it's paid off in Jun 2027. 

Have a 27k mortgage balance, sale price est at 415k. Assume break even cash flow while rented which includes a generous $600/mo repair fund. 

If I can park the 388k ($415-27k) for one year at CD rate of 4.5% and then est 300k (after paying cap gain/depr recap) at 3.0% (assume CD rates lower) that interest income of about 24 months net of ordinary income tax is about the same as my current mortgage.

Trying to play devil's advocate and think why selling this year does not make sense. 

Pro - I avoid any future repair expense. Not a landlord anymore after 27 yrs!

Con - lose any possible property appreciation over the next two years. And "if" no significant repairs, lose the 600/mo cash flow. 

Am I missing anything significant in this thought process?

Thanks for the feedback. This is why I posted. Never had the thought of wildfires and homeowners insurance rates. 

Yes Erica, I do have NC on my radar. The Beech Mountain general area. I was surprised even though the elevation is not that high (4.5k?) the high temps for Jul/Aug rival the high temps in parts of the Rockies.

Been retired for four years. Getting the idea of a summer home to beat the heat in Arkansas. Landlord of 25yrs, so rental property is not something new to me. 

At this point I just have a fuzzy idea of what I want to accomplish but here goes. 

Looking to buy a small condo/house/townhouse for a summer get away for parts of Jun/Jul/Aug. Fish, pickleball, hike, golf, gym for activities. Decent grocery store and general shopping, not way out in a rural setting. 

Thinking the San Juan Mountains in Colorado or perhaps Eagle's Nest NM area. 

I have stayed at an AirBnb for a month in the past but no interested in doing that. That would make things too easy.

Budget is somewhat limited in the 200-300k range. Leasing it out via Airbnb or Vrbo is an option if available and demand is there.

No creative buying strategies needed. Just your basic 20% down get a loan, etc.

I know there are 84 other variables that come into play in making the decision.

Does the think tank here have any general pieces of advice?

The tenets are paying off the remaining mortgage via rent payments. I don't want to stop them paying my mortgage note until the duplex is paid off. I know the due on sale clause is unlikely to be called by the bank, but don't want to sell with even a small mortgage balance left.

Seller finance is to lessen the cap gain/depr recap tax hit. But am trying to get 75k out from the sale. If they get a bank loan of 75k, I will carry the remaining balance on a ten year with balloon. 

Looking for reason this (2nd position) is not a good idea. I'm not worried about tenets ability to pay. 

It's late I didn't read your post correctly. Current mortgage bal is 42k.

Property will be free and clear in two years. That is when I will sell.

My duplex will be paid off in two years. Current tenets are potential buyers. I want to pull some cash out of the sale. If sales price is 400k and I want 75k cash but tenets only can provide 15k, what are my options? I know I can sale to a buyer that has 75k down, but would prefer to work with my existing tenets. 

If the buyer got a loan from a traditional lender to get to the 75k number, would that automatically put me in a second position on my seller financed note? I am assuming the lender even at a low LTV would require a first position, but just guessing as this is my first seller finance transaction.