Why sell a income producing property?

General Real Estate Investing
1

Hey all,
I am brand new to RE investing. I have been doing a lot of research to answer question that i have but there is one question i can’t find a satisfactory answer for :banghead: Why sell a property if it produces income? Any help would be greatly appreciated.

James

2

Hi,

Generally speaking all properties have what's called a "Tax Basis" once the property exceeds the tax basis the owner recieves no more benifit for taxes for ownership of the property!

With that said the tax basis gone, it has very few benifits to keeping!!!

You can choose a normal basis of 28.5 years or an excelerated basis of 7 years??? Check your state for tax allowances?? (I believe that’s correct although I will call my accountant Monday?)

             GR
3

1031 tax exchange to get a bigger property and more income.

Headaches (not ready to be a landlord)

Need cash

Relocating and do not want to be an absentee landlord (again headaches)

Tackle a new project and can not devote time to current properties.

4

You can also end up with too much cash in a deal, making $300 a month cash flow when you have $10- $20k in equity is one thing, but if you have $50k in equity your return is dropping,consider refinancing or selling, like doing 1031 exchange into a larger property as mentioned above,

andy

5

:beer Thanks, guys! That answer that question (caused some more but that’s to be expected!)

6

You should always be selling your houses. You get a portfolio that is the size you want. Say you need $2,000/month so you buy 7 houses that yield $300/month each. When you buy the house you make everything new with the financing. If you want to real estate but not deal with repairs you sell your houses when they get 5 years of so. That way you never do maintenance. You always have 7 houses but no the same 7 houses. Use a 1031 and sell the oldest house and buy a newer one.

7

Last one I sold because a street rat pulled a gun on me…Yep, time to sell.