Investor Education · 3 min read
Getting Your Money Out of California — The Right Way
Older couple. Worked hard their whole lives. He did his own repairs, collected his own rent — the kind of landlord who knew every tenant's name. Owned two duplexes. Lived in one. When they finally pulled up stakes and headed to the Ozarks — clean lakes, golf, the life they'd earned — he hired me to manage both.
Then I got the call. He wanted to get his equity out of California.
Here's how that conversation went.
1. Start with the trust
Before we talk about any transaction, get a revocable living trust in place so you can pass this legacy to your son without putting him through probate. He got it. Done.
2. Call your CPA first
The duplex you lived in? You may qualify for the long-term capital gains exclusion — two out of the last five years as your primary residence. That's a question for your accountant, not me, but it's a real number worth checking before you assume you owe everything.
3. Work your network
Do any of your golfing buddies happen to be an Ozarks real estate broker? Turns out — two of them are. Pick one. Go talk to him about what your 1031 exchange target looks like up there. Prices are a fraction of California. Cash flow per dollar won't match what you're used to, but you can buy more doors. It's about rebalancing your liabilities, not chasing the same per-unit numbers in a different zip code.
4. Set up the exchange properly
Your California agent can refer you to a qualified intermediary — that's your accommodator. This won't be a simultaneous close; plan for a standard forward exchange. If you don't have an experienced top producer you trust, I can point you to one.
5. Consider the short-term rental angle
One of his golf buddies is already running a short-term rental up there and doing great — and right now the tax picture is favorable because of the 100% bonus depreciation in the One Big Beautiful Bill. He asked the obvious question: what if the Democrats win and change it?
Honestly? Most of the time you're grandfathered. And here's the thing — the 1031 exchange alone saves you $80,000 in taxes. You can afford some uncertainty. Don't overthink it. Talk to your friend who's running the STR and watch how his bank account looks. If he's managing it right, the accelerated depreciation takes care of the rest.
You save $80,000 in taxes just from the exchange. You can afford a few mistakes. Don't overthink it.
6. Handle the tenants right
He was worried — we'd just renewed one lease and filled another unit. I told him: the leases are contracts. They transfer with the property. If the new owner wants them out, that's his negotiation to have. Let him buy them out if he wants to live there.
The other unit is month-to-month — 60 days' notice. I'll make it right with the tenants.
He thanked me for helping him think through all of it.
That's the job. Not just filling vacancies — helping people set their families up for generational wealth.
Thinking about moving your equity out of California? Let's talk through the options before you make a move.
Richard J. Miller Founder & Broker · County Property Management Serving Ventura County since 1986 · DRE #00578068
(805) 482-9800 · cpm@c-p-m.com · www.c-p-m.com