This seems to happen with investors who get frustrated with real estate and tenants in general. I would characterize them as tired landlords. Sometimes they have only owned their assets for a few years. They are selling regardless of where we are in the real estate cycle. They often sell in the building phase or the beginning of the growth phase. I haven’t really found this strategy is used with investors that have owned real estate properties for over 10 years.
They move back into what they are more familiar with and perhaps were also always investing in – the public markets. They may have alternative stock strategies like option investing that they had been focusing on and are continuing to use those strategies for additional income.
These investors would have the number of dividend paying stocks that they hold for a longer period of time or they have a split of growth stocks and bond portfolio looking to live off a yeild of 4% or some other number.
If we look at the example of the 5 million equity left after all the real estate assets were sold and using a safe withdrawal rate of 4% they would be looking at 200,000 per year before taxes.
These are the eleven ways that I have seen real estate entrepreneurs use their properties to retire:
Quentin D’Souza is the Chief Education Officer of the Durham Real Estate Investor Club. Author of The Action Taker's Real Estate Investing Planner, The Property Management Toolbox: A How-To Guide for Ontario Real Estate Investors and Landlords, The Filling Vacancies Toolbox: A Step-By-Step Guide for Ontario Real Estate Investors and Landlords for Renting Out Residential Real Estate, and The Ultimate Wealth Strategy: Your Complete Guide to Buying, Fixing, Refinancing, and Renting Real Estate.
Using Real Estate for Financial Independence (Retirement)
Sell Some Assets and Private Lend the Money for Financial Independence (Retirement)
Convert Real Estate Portfolio Into a REIT or Fund for Inter-generational Wealth and for Financial Independence (Retirement)
VTB Mortgages on Apartment Buildings then Private Mortgages for Financial Independence (Retirement)
Sell Some Assets and Pay Off the Rest for Financial Independence (Retirement)