Is It Time To Sell The Rental House?

I have a close friend who, like many people, loves the idea of owning a rental home.  Years ago, when many people were making great paper gains by buying homes, he asked my advice on getting a rental.  After discussing the market at the time, I suggested he wait for a better opportunity.  That was 2006.  He was patient, and a few years later bought a great home, at a much lower price.  He has been happy with the steady rental income it has provided.  What he never expected was the rapid increase in value.  From time to time, I would ask him whether he is interested in selling.   He never has been.  He likes the idea of owning a home in this nice neighborhood, and of providing a family with a great place to live.  He also does not want the huge tax bill that would come with depreciation recapture and a capital gain.  I understand all of this, and have never pushed him to sell.  Until recently.  Current home prices feel like having a billionaire knock on your door with a suitcase of cash to tell you he is buying your house, even though it is not for sale.  Rather than slamming the door in his face, it might be worth having a conversation.  Let’s look at some housing data.

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