All Forum Posts by: Leticia S. Tucker

 You can, when you sell your tax is only qualifying use/years owned.

@Leticia S. Tucker 

@Jonathan R McLaughlin is absolutely right. If you're ever audited you would have to provide documentation of how your intent changed. That becomes increasingly tricky if you do that in the same tax year that you actually exchanged into it, but there is no statutory holding period, so if you can demonstrate your change in intent it would be allowable.

I would sell the primary residence. 

That primary residence tax exemption is huge.

I would move into one of the rentals. 

@Jori Anderson I cannot disagree more with the financial advisor recommendation.  Their qualifications and certifications regardless whether it is a pay for service or free consultation, they are doing a service for a paycheck.  Some of them do it based on a commission on what they sell and some get a combination of base pay with combination of commission.  

If you are going to invest in real estate, make money and then go to a financial advisor with a pile of cash to ask someone who collects a paycheck, isn't "successful" and is subjected to the rat race that we all on this forum are trying to get out of, I think you are misguided.   I know a financial advisor.  He had a successful career outside of the financial industry.  After several months of training, he his out there teaching people how to save money.

As far as how much you need for retirement?  As I mentioned earlier, I am able to retire in 7 years.  I don't know what is enough.  I know that in retirement, I will want to continue to grow my portfolio so I can do whatever it is I need and want to ensure I am able to enjoy myself and stay healthy.  There is no fun not having to work but not being able to go out because I don't have the money because someone told me that is what I need.  Don't let someone tell you what you need.

I understand. I just had a battle with cancer (and winning!), and I am definitley not wanting to wait to enjoy my life.

Jori, I implore you to get out of that mindset.  You are part of a larger community that is taking control of your own destiny.  Don't hand it over to someone else.

@Leticia S. Tucker There are many resources out there.  Since you are a school teacher, I can turn the tables:  Here are your summer reading books:

Rich Dad Poor Dad

Cashflow Quadrant (sequel to Rich Dad Poor Dad)

Richest Man in Babylon

Tax Free Wealth - Tom Wheelwright

Infinite Banking (I am just learning) - This talks about the life insurance strategy.

I will get these books... but my summer is almost over, and what I have left I will be in Hawaii... so no promises of completing the assignment on time! 

It makes me feel great giving a teacher homework.  What kind of teacher?  I only liked science.  So if you teach any other subject, you aren't good  in my book.  Just kidding.  This will help you understand some of the things I was talking about.  There are no cliff notes either like I would get.  There isn't a test either - it is called life.  There are risks with everything we do.  If you educate yourself, you mitigate those risks.  Unlike school, team efforts are allowed, but I urge you to approach other people's advice with caution to include mine.  What works for me, my not work for you or make you comfortable, which is why I laid out as many of the options that are available to you without telling you what you should do.  There are so many more options you can do with your money that I probably didn't think of.

I teach mathematics at the high school level. Loved science, and most other subjects... just love learning. But math is so foundational to EVERYTHING. And team efforts are definitely allowed, even encouraged!

And I am cautious... and make up my own mind... ask my husband...lol.

Robert Kiyosaki has a podcast and YouTube Channel where you learn a great deal.  You can also look at Minority Mindset on YouTube.  There are so many resources.  

I also recommend that you join your REIA. They have many educational and networking events. The local one for me is only $150 a year and I have learned so much and made many connections. I can't tell you that I have made my money back through the connections, but I can tell you that I have learned a great deal and being with like minded people has helped me, but I don't know if I can tell you that I have made my $150 back.

Hi Leticia, 

The first thing I would do is go to your financial advisor and if you don't have one make sure you go to one that is fee-only and take into consideration how much you actually need to live comfortably in retirement in addition to listing out everything that you'd like to do, and the lifestyle that you want to live.  When you have the numbers in front of you and your vision of how retirement will look, you will be able to confidently make a decision on how to shift your resources to make it happen.

Kind regards,

Jori 

I am not a fan of throwing your money in the market.  The question is what is your plan with the $200k in tax free money.  Just as a side note, if you are single the cap gains are tax free up to $250k,so if you have $300k profit you will pay tax on $50k.  Still not a bad deal.  But the question is what do you do with the money.  

You can lock it up into an annuity that will guarantee you an annual payout for the rest of your life.  Is that enough to live on?  Only you can decide that.

You can throw the money in the stock market.  Anyone knows that we are not in the strongest economic setting right now.  Talks of depression/recession are everywhere.  Inflation is at 9%.  If you decide to do this, you need to get a 9%+ return on your money in order to see it grow with inflation.  Mind you this is after taxes on capital gains because there are no tax shelters investing in stocks.  Not a risk I would be willing to take in 10 years time.  (BTW, I am able to retire in 7 years time).

You can throw your money in a bank account so it loses value as inflation climbs.

You can put the money in a whole life insurance plan and borrow against it to pay yourself interest.

Your can become a private lender at your local REIA and get returns that way.

You can invest in a syndicated deal, assuming you are an accredited investor.  Those usually have better returns.

You can cash out refinance and take the lump sum tax free.  You can use this money to purchase more cashflowing properties with levarage.  Granted your cashflow will take a hit on this property.

You can leave it alone.  $1,000 a month is $12,000 a year.  In 10 years your rent will probably go up at least a couple hundred dollars.  So $14,000 a year.  That is some nice supplemental income when you are retiring, but it all depends on your personal situation and what works best for you.  The options are countless.  You need to decide what you will need in 10 years.  Some of the options are risky.  So you need to decide if you are willing to lose that money if you take the risks.

I love all the answers above and I think if you are looking to retire in 10 years then that has a big influence on it. If you are leaning towards selling it to get out of managing the property, I would suggest considering investing in the market right now. Everything is down considerably and even on a low rate of return you could make substantial gains over the next 10 years (using this as retirement). 

We have great property management company, so we are fine on that end.

If you need the $1000 a month rent as income then renting isn't a bad option.. if not, you may find it more hands off and less stressful to go purchase index funds. Lets say you end up with $200,000 cash after the sale, and put that in a fund that generates 9% a year, in 10 years you have $473,472.74. It really just depends what you feel more comfortable with.

We ate considering it.

You could rent it, make $12,000 a year cash flow and keep adding equity, if the market keeps appreciating you may end up with a net positive outcome 10 years down the road above the market.

And there in lies the dilemma, to sell or not to sell. Prices here are insane. I doubt this opportunity will come up again in the next ten years.

What I would NOT do is refinance it as your mortgage rate is excellent. You have lots of options, and none seem bad to me!

Yes, thank you for that reminder. Truly Blessed to have these kind of choices.

I agree with @Steven Foster Wilson and would strongly consider the HELOC. Keep the 2.75% rate on that property and tap some equity to grow. A few more cash-flowing rentals could provide great income during your retirement years. Or it's a massive headache. Depends on your PM experience, strategy, and level of involvement.

Actually just noticed you're in Riverside, CA. I'm not from that market but we can assume cash-flow is hard to find. Maybe sell a property and throw it all into growth stock mutual funds. No capital gains is huge. $300k in mutual funds, compounded interest, 10 years, that's an easy win-win. 

 Why not refinance and rent it out? Then you can use the refinance money to go buy another and get passive income.

My current interest rate is 2.75. I would be very expensive to refinance. And in the Coachella Valley realestate prices are way to high, no cash flow.

Or HELOC it? I would call lenders and see what is the best they could do. I like to use this calculator to run my numbers https://www.calculator.net/ren...

@Leticia S. Tucker I believe moving into one of the rental houses within a year will likely cause the 1031 to be disallowed unless there is very clear documentation of a change in intent.

Ah, yes. I forgot about that. Thanks for the reminder!

By no means an expert so take with grain of salt @Dave Foster consistently gives good advice on the subject.

He is awesome!

Do you mean retirement from a job or retirement from managing rental property?

We have a great property managent company, so not a hassle. We are wanting to retire from our jobs.

Big difference. Also, is the house you have now suitable for the kind of life you want to lead in retirement and as you age?