I hate my rentals- should I just sell and be done with this game?

[Tiffany Roberts]

I'm looking for opinions on if I should sell my rentals. I have 5 single family homes and I hate them. They are under quasi-management (long story) and largely I don't have to babysit them, but every notice of an issue makes me hate them more. Most recently a tenant moved out and left the house full of roaches and another one just had an animal in the attic that somehow knocked down the ceiling light in the kitchen. My taxes are overly complicated and worst of all these houses really only break even for us every year. I know these are basic rental type things but I with a full time job and young kids and my own primary home that needs a lot of attention it just all feels like a huge strain to do anything at all for the rentals.

BUT, we have great interest rates on the mortgages, really good tenants, and the rentals won't always break even-- they will go up in value and in rent. My kids won't always be little and needing so much and maybe I'll even get to retire early with the income these houses make. 

Honestly I'm scared that if I get rid of them all now I'll be kicking myself in 10 years for how shortsighted I was. 

Right now though its just so hard.

If anyone has been where I am now with just being fed up with it all and you can let me know how you handled it-- or if you have any sort of perspective you can offer I would really love to hear it. 

[Erin Church]

Hey Tiffany,

So sorry to hear you're burned out. As a person who also does live-in flips and renovates rentals, I get it. I think there is a chance that you don't actually hate your rentals, but rather, you hate where your mental health/stress level/amount of free time is. The rentals are the easiest thing to ditch and your brain has decided that you need to let something go... which is easier if you hate it rather than still love it (as you mentioned you previously did). 

I think once you are over the remodeling hump, take a pause, enjoy some "free time" and less stress, and then decide a few months after that if you want to sell. It's just a matter of getting through whatever remodel(s) you're doing. 

For now, it sounds like you're making enough money that you can pay people to do the tasks for you. Forget the immediate money and pay people to take care of the things that are feeling heavy. That can look like having a "complete" property manager or just calling reputable companies for all issues that come up. Also, maybe use a couple of vacation days to just "be" and try to recharge.

When you have a little extra "water in the well", things like broken light fixtures, random animals, and so on aren't a big deal. If they are, keep the full service PM. 

All that being said, if you are at "the very end of your rope" do whatever you need to. Sometimes there just isn't enough gas in the tank to get over the next hump and if you've hit that point, do whatever you need to to lighten your load. 

[Krista K Nelson]

Before you sell... please talk to your accountant about the capital gains and depreciation you will have to pay back... that might frustrate you more than fix up issues.  I am right there with you... but getting closer to retirement and my real estate has FAR Outpaced any other investment I could have had... hang in there...at least you have property managers... I have been dealing with all the tenant and repairs myself... and at times will a full time career...it sucks.- Krista

[Cole Schlack]

Sell them , if you dont love them and you would not buy them again, Sell!!  There are sooooo many other types of RE to buy.  Ive owned them all in 8 states, now I only buy things that are great, great locations, interesting, fun to use(Vacation Rentals).  Land, I own some of the most amazing parcels.  You can make the same or more in many different areas, often the more specialized the more appreciation potential.  I hope you find what makes you happy

[Malek Bohsali]

Quote from @Carl W.:
You say you hate them and hate is a very strong word. But an important one. Listen to your gut. You should not hold on to something you hate simply out of fear of the unknown. Free yourself.

If you're uncomfortable letting them all go, lighten the load and let one or two of them go instead. You might actually find you love the feeling of letting them go and eventually get rid of them all. You can take your money and invest in other ways. Best of luck!

 Lighten the load is good advice. Sell the most problematic one first, see if that makes enough of a difference.  Be sure to screen your tenants, replace over time with higher quality ones. 

Yes, over 10 years you'll be kicking yourself.  Today timing might not be right for you - young kids and other responsibilities tie you up.  

[Malek Bohsali]

Another move you can make is to sell one and pay off another one entirely… no mortgage or interest payment on a unit does wonders for your cash flow! 

Hope it helps!  Randy   

 Love that idea

[Malek Bohsali]

Quote from @Tiffany Roberts:

all of them  seem like they should cash flow but the reality is our business bank account never reflects that, but it could be bc we are constantly in the process of remodeling something, I'm actually not sure. 

Are you remodeling b/c you think the tenants are demanding/ deserve nicer places to live or b/c things are falling apart?  Once my parents told me our tenants bathroom was nicer than their own I quit upgrading unless I had a complaint or there was a serious issue.

[Henry T.]

When I first started, my lease was one page. If I were to sign a new lease today it could easily be 100 pages.  I get it what you're saying. Seattle has become the worst place in the world to be a landlord.  With each house sale I've felt a great relief. It's getting more difficult for anyone to afford a house. For the uncertain future, you might want to keep a couple properties for your kiddos??

[Tim Exposito]

Hello, 

What did you end up deciding to do, if anything? 
Let me know if there is anything you need help with related to your houses. I know how it can be, not sure if you’re close to the properties or not. I’m located in Jackson, not to far away if you have some issues you need resolved. Looking to network with more landlords in the area. We own STRs and MTRs in our area. We love the MTRs so Much. Maybe we can connect on that sometime! Maybe an option for a property or two? 

[Account Closed]

"worst of all these houses really only break even for us every year"

Honestly, that's the part that sucks the most, regardless. Hassle or no hassle. And as far as people telling you about "appreciation", remind them you are in MI, by the way. 

If you can't fix the profitability, what's the point. Are you mortgaged to the teeth? did you over pay? or both?

[Jack B.]

Quote from @Lane Kawaoka:

@Tiffany Roberts 

Congrats on snagging those five rental properties. What comes next really hinges on where you're at financially - your income and net worth specifically. If you're already in the accredited investor club, well, then I'd say it might be time to consider moving away from those individual rentals and leaning more into syndications and private placements.

Anyway, if your net worth is north of half a mil, or even a million, then you might want to hop on the LP train sooner rather than later. Personally, back in 2015 and 2016, I was juggling 11 turnkey rentals. Let me tell you, tenants can be a handful. And I reckon you're feeling that too.

You're not alone – even with professional property management, I had my fair share of eviction dances and other major hiccups. It just sorta pulled me away from what I was best at, especially when I was clocking in at my engineering gig trying to progress my career.

A bunch of folks on these forums cover the whole spectrum, from newbies to 1m net worth plus investors. For those just starting out, diving into rental properties makes sense. But if you've hit a point where you're kinda tipping the scales, that's when it's worth considering a shift and step into that passive investor zone.

My perspective shifted when I started mingling with other accredited investors. Surprisingly, a bunch of them were saying goodbye to their rentals too. Maybe I'm just nudging you in that direction, like those folks did for me. But hey, just don't repeat my "buy 11 of them" move.

 Accredited investor here and was recently a super accredited until the Fed and interest rates.

After 14-16 years of RE investing, I too am tired of it. I thought I’d hold forever but now I’m eyeballing the stock market. I could have made 3x what I make in RE in the stock market last year, and I’m in a high appreciation market. That’s 1.5 million I could have made instead of the zero appreciation I had or the usual 500k a year appreciation. Sure some years in stocks are down but same with RE like now…As I get older and more tired of the BS I want to sell and be free. 

[Jay Hinrichs]

Quote from @Jack B.:

Quote from @Lane Kawaoka:

@Tiffany Roberts 

Congrats on snagging those five rental properties. What comes next really hinges on where you're at financially - your income and net worth specifically. If you're already in the accredited investor club, well, then I'd say it might be time to consider moving away from those individual rentals and leaning more into syndications and private placements.

Anyway, if your net worth is north of half a mil, or even a million, then you might want to hop on the LP train sooner rather than later. Personally, back in 2015 and 2016, I was juggling 11 turnkey rentals. Let me tell you, tenants can be a handful. And I reckon you're feeling that too.

You're not alone – even with professional property management, I had my fair share of eviction dances and other major hiccups. It just sorta pulled me away from what I was best at, especially when I was clocking in at my engineering gig trying to progress my career.

A bunch of folks on these forums cover the whole spectrum, from newbies to 1m net worth plus investors. For those just starting out, diving into rental properties makes sense. But if you've hit a point where you're kinda tipping the scales, that's when it's worth considering a shift and step into that passive investor zone.

My perspective shifted when I started mingling with other accredited investors. Surprisingly, a bunch of them were saying goodbye to their rentals too. Maybe I'm just nudging you in that direction, like those folks did for me. But hey, just don't repeat my "buy 11 of them" move.

 Accredited investor here and was recently a super accredited until the Fed and interest rates.

After 14-16 years of RE investing, I too am tired of it. I thought I’d hold forever but now I’m eyeballing the stock market. I could have made 3x what I make in RE in the stock market last year, and I’m in a high appreciation market. That’s 1.5 million I could have made instead of the zero appreciation I had or the usual 500k a year appreciation. Sure some years in stocks are down but same with RE like now…As I get older and more tired of the BS I want to sell and be free. 

Jack, have you ever contemplated being the BANK as a form of diversification? All my decades doing HML s for investor pretty much to a person at some point they get burnt out landlord syndrome and especially my SF Bay area clients when I had my shop in Oakland. My clients had massive run up in values and then tier of the 3 ts and decide to take some chips off the table and of course there is tax liability but once you get past that 8 to 14% returns consistently with a great broker is a pretty passive to fully passive investment making you some nice money.. Especially someone as smart and versed in RE as you are.. you could do very well and maybe your already doing it or considered it.

[Eric James]

A lot of people heard the real estate hype and bought a rental property. Only to discover it wasn't as financially beneficial as they thought it would be and also stressed them out. Sounds like you figured out rental real estate isn't for you.

[Andre Davis]

I would first say take an inventory of your whole process from financing to ending a relationship with a tenant. You want to find what exactly is bothering you as accurately as possible, then ask if you have the skill to make it better or do you have the tenacity to fix it through gaining the knowledge or farming that pain out to someone else.

Now you can weigh the pros and cons Ben Franklin style. I always try to keep in mind that growth is painful and I remind myself that I've been there before. For example, going to college, first job,  getting married, having children, HELL changing careers at age 50, and obtaining a master's degree.

I have a 6 flat and 3 tenants at the same time are being evicted. My cash flow is gone and easily half my profit for the year is gone and it's only February. This is one of those times where I can say I hate real estate too, but I'm going to evict them, fix whatever, and get back to the profit I had when everyone was paying, but I'm going to go with all Section 8 tenants this time and visit the current home of prospective tenants and not ignore my gut. 

I have no choice but to succeed, at my age, I'm never going to have $1MM to invest to only pull out $40,000, the 4% rule,  but I can take $80,000 to make that $40,000 using leverage in a C area. The bottom line, if you're going to run at least know exactly what you're running from and just make an informed decision. Be blessed.

[Lane Kawaoka]

Yeah, it's evident that there's a strong pro-real estate sentiment here on the forums haha, and sometimes we can get caught in a self-confirming loop. Real estate thrives on leverage since it tends to be a slow mover, which can be a double-edged sword. 

Previously, we used to secure apartments with 70% or more leverage, but now that's dropped to around 50% as the max that the capital markets can go. It's reflective of the current environment in commercial real estate lending, especially with interest rates sitting at around 5.5%.

One can say that well with bad leverage in REI then abandon it. But sophisticated investors have a certain asset allocation mix with REI say 10-80% of their portfolio.

[James Wise]

Quote from @Tiffany Roberts:

I'm looking for opinions on if I should sell my rentals. I have 5 single family homes and I hate them. They are under quasi-management (long story) and largely I don't have to babysit them, but every notice of an issue makes me hate them more. Most recently a tenant moved out and left the house full of roaches and another one just had an animal in the attic that somehow knocked down the ceiling light in the kitchen. My taxes are overly complicated and worst of all these houses really only break even for us every year. I know these are basic rental type things but I with a full time job and young kids and my own primary home that needs a lot of attention it just all feels like a huge strain to do anything at all for the rentals.

BUT, we have great interest rates on the mortgages, really good tenants, and the rentals won't always break even-- they will go up in value and in rent. My kids won't always be little and needing so much and maybe I'll even get to retire early with the income these houses make. 

Honestly I'm scared that if I get rid of them all now I'll be kicking myself in 10 years for how shortsighted I was. 

Right now though its just so hard.

If anyone has been where I am now with just being fed up with it all and you can let me know how you handled it-- or if you have any sort of perspective you can offer I would really love to hear it. 

 TL;DR: If you hate them, yes, just sell them and move on.