A burned-out landlord has five exits: sell on the open market, sell to a cash buyer with tenants in place, hire a property manager, do a 1031 exchange into easier property, or hold and hope. Each fits a different situation.
KEY FACTS FROM THIS GUIDE
- Tenant-occupied properties can be sold; leases and deposits transfer at closing
- Self-help evictions (lockouts, utility shutoffs) are illegal in OH, TX and GA
- Depreciation recapture at sale is taxed at up to 25% (IRS Pub. 544)
- A 1031 exchange defers gains if you reinvest on the 45/180-day deadlines
Open-market sale
Best price if the unit is vacant, updated and photogenic. With tenants inside, showings become a legal and practical nightmare, and financed buyers’ lenders often balk at occupied units in poor condition.
Cash sale with tenants in place
The clean break: no evictions, no make-ready, closing in weeks. The price reflects the occupancy situation honestly, and the settlement statement transfers deposits properly. This is usually the right door when the tenants are the problem.
Put a number on the exit, then decide. Written numbers, licensed title company closings, zero pressure.
Property management
Solves the 2am phone calls for 8 to 12 percent of rent plus fees, but does not fix bad tenants or looming capital expenses. Works when the property itself is healthy and only your time is the issue.
1031 exchange
Defers all capital gains and depreciation recapture by trading into another investment property, including passive options like DST shares. Strict 45- and 180-day deadlines; talk to a qualified intermediary before selling anything.
Hold and hope
The default choice, and the most expensive one when the property runs negative every month. Put a monthly number on the bleeding and the decision usually makes itself.
Get a free written cash offer here, or book a free consultation if you want to talk it through with a real person first.