How Long to hold - Posted by LAURE

Posted by phil fernandez on December 31, 1998 at 12:48:51:

Soapy you’re always thinking. LOL. Dante and JP had good ideas too.

I was serious about my post though. As Terry Vaughn says - look outside the box - and I’m just trying to do that. Kinda like look outside the casket and preserve your assets.

How Long to hold - Posted by LAURE

Posted by LAURE on December 31, 1998 at 08:20:23:

As I have said here before, most of my experience is in being a Landlord. I have been reading Rich Dad Poor Dad, and he said he holds his rentals for 2-7 years (I think). Anyone have a rule of thumb? I have been watching my return on capital go down as my equity has reached almost 80%. The numbers show a lower return the more equity you have, however the cash flow sure does get nice. I just listed a property last week for 75k that I bought for 21k 10 years ago. Recently rehabbed for 12k. It has been 100% occupied for the last 10 years and paid for itself.

Just torn between “cashing out” my equity and re-leveraging for a better rate of return, or keeping a Grade A home that gets lower rent than it deserves. Seems that the market isn’t bearing rent over $750/ month.

By the way, it’s a 20 year old split foyer with detatched 2 car garage.

Laure :slight_smile:

Re: How Long to hold - Posted by Rob FL

Posted by Rob FL on December 31, 1998 at 16:29:36:

I know several investors that when their rentals get free and clear they sell the property with 10-20% down and seller financing for 15 years. You still get a down payment, long-term cash flow, and spread out your capital gain tax over several years. If you want to keep them from refinancing after 2 or 3 years, then put in a clause for a prepayment penalty.

Re: How Long to hold - Posted by Dante Willis

Posted by Dante Willis on December 31, 1998 at 09:04:08:

I am not selling anything now just because the capital gains kills me. The only way I sell is if I can do a 1031 exchange. I just don’t wanna give the government another 20% and I think that capital gains will receive a more favorable treatment startin in 2000 under the Busch/Watts Administration.

Re: How Long to hold - Posted by phil fernandez

Posted by phil fernandez on December 31, 1998 at 08:54:39:


To sell or hold is always an interesting question. I don’t think there is a standard answer here. I have always said if you do not have a specific need for the equity, why sell the house. If you sell, your cash cow has stopped producing.

Plus you have the miserable tax consequences. You have dpreciated your rental and now when you sell the governmnet will recapture that depreciation on top of being taxed on the appreciation. One way to avoid the tax consequences of selling would of course be to refinance, but have a use for this refinanced money.

I plan on dying with my rentals so my estate will get the properties at it’s current far market value.

Others will have their ideas, but hold and die works for me.

Happy New Year Everybody.

Don’t you mean . . . - Posted by reif

Posted by reif on December 31, 1998 at 09:47:33:

Bush/(Elizabeth) Dole?

1031 - Posted by Laure

Posted by Laure on December 31, 1998 at 23:20:03:

I have done 2 1031 exchanges this year already. Problem is that the two I sold were a commercial building and a 4 plex. So I had to exchange for quite a few single family homes. I’m getting pretty tired of fixing and renting. I think I picked up 8 homes this year, so I have been burning the candle at both ends getting them all “on line”. I don’t think I could ever pay the IRS their capital gains tax… they get enough the way it is !! LOL

Laure :slight_smile:

Re: How Long to hold - Posted by Dante

Posted by Dante on December 31, 1998 at 11:03:38:

Does this mean you’ve figured out a way to take it with you when you die? Have you found a way to avoid the ultimate Due On Sale clause?

Re: How Long to hold - Posted by J.P. Vaughan

Posted by J.P. Vaughan on December 31, 1998 at 09:28:13:

Hey, Phil, can we finalize my adoption papers this week?


Re: How Long to hold - Posted by Laure

Posted by Laure on December 31, 1998 at 23:22:01:

hmmm… due on sale clause. related to santa clause?

hehehe. :slight_smile:

Phil, go ahead… - Posted by Soapymac

Posted by Soapymac on December 31, 1998 at 10:22:21:

and do it…just as long as the ernest money requirement is not too high!