[USER]

51M, married, three adult children and one 10 year old. Sole provider, $180K income. 1.46M net worth from a rental property, brokerage, Roth IRA, mixed Roth/traditional TSP, and HYSA.

The rental property is valued around $442K, Retiring possibly as early as 57 but will probably work a few years past that as long as I’m still enjoying it.

No debt. We live fairly modestly, but have everything we want and travel 2-3 times a year while saving about $80K per year.

I’m confident that financially I can retire with military pension, va disability, fed job pension, SS starting at 62, and the amount saved that will continue to grow until then.

I’m wrestling with whether or not to sell the rental property. It’s value has increased about 2.5 times since it was purchased.

I lived in it until 2017 and it has been rented out since then.

4 different tenants since it was rented, 3 were decent, 1 caused about $8-10K damage that I had to pay out to repair.

We live in a different area far from the rental house and we rent the house we currently live in.

Pro and cons to keeping it:

Pros
-Location is a growing area with property values expected to continue to rise.

-I get around $2K income every month after management fees.

-I have a good property manager that I trust.

-Location has low property taxes (around $2K/yr) and insurance isn’t too bad (also around $2K/yr).

-I think I’ll have to pay substantial capital gains tax after selling.

Cons
-House is 26 years old – original roof is still doing good, but chances are it’ll probably need replaced within 10 years or so.

Google says lifespan is 15-50 years.

That cost will be around $20K I guess.

-As I get older, I want to simplify our finances. Luckily I have a good property manager, but it does cause me some stress at times.

-We have been unable to keep tenants long-term and turnover maintenance has been around $2K each time (except the one $8-10K already mentioned).

Anyways, is there anyone else that is or was in a similar situation? What do you think, keep or sell?

Lease is up in May and I don’t know yet if the current tenants are leaving or staying.

My gut is telling me to keep it if the tenants stay, sell if they don’t renew.

[Kim]

Have you thought of moving back into the rental house since you own it and you’re renting now?

[Robert]

My reflexive answer is to always keep residential rental real estate; as it has been an indispensable component of my own journey towards FIRE.

However, while you have clearly crushed it in terms of a net worth of close to one and a half million at your age; you have indicated that you do not own the house you currently occupy.

And there’s nothing wrong with that; although I have owned rental property for decades, I did not buy my first home to live in until after I had turned 60.

Yes, you would have to pay substantial capital gains tax after selling; however if you do a 1031 exchange, I don’t believe there will be a tax penalty unless there’s excess left over after you purchase your home- which I presume you do would use the sale proceeds for.

I would sit down and discuss this with my spouse and perhaps run Some of these options has a good CPA or a good tax accountant. As far as getting and keeping a good tenants – that’s the job of a good property manager.

If your property manager is not cutting the mustard, perhaps it is time to replace him or her.

Good luck.

[Lauren]

If you sold and invested the $440 proceeds would it give you a return greater than the rental income and appreciation? If so then yes.

If not, can you cash flow the big improvements like the roof? if no then I would probably sell it and invest in securities instead.

If you think the combination of appreciation and monthly income will continue to grow then keep it.

[David]

It sounds like you’ve done a great job building a solid financial foundation and maintaining a balanced lifestyle.

The rental property dilemma is understandable, especially with your desire to simplify things as you approach retirement.

Your gut instinct makes sense—keeping the property if the current tenants stay minimizes turnover costs and potential stress.

However, if they don’t renew, selling might be a good opportunity to offload the responsibility while locking in the significant appreciation and reducing future maintenance risks.

You could also look into a 1031 exchange if you decide to sell, allowing you to defer capital gains taxes by reinvesting in a different property, possibly closer to where you live or one requiring less hands-on management.

Ultimately, the decision comes down to whether the financial benefits of keeping the property outweigh the stress it causes and how much you value peace of mind heading into retirement.

[Russell]

I’m in a very similar situation. Rental properties at former duty stations I’m now far away from.

I’m selling when the current leases expire. Will greatly simplify my finances, and some of the costs incurred from repairs have wiped out long stretches of rental income.

My current default plan is to put the proceeds from the sale into dividend funds and use the dividends to cover rent in the early years of retirement until we find a place we want to settle down long term.

If your current tenant is a good one, you could hold it until they want to move out.

[Author]

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