Author Topic: Sell or keep a house while we live overseas.?  (Read 4526 times)

Villanelle

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Sell or keep a house while we live overseas.?
« on: March 13, 2013, 03:28:15 PM »
My husband is in the military and we've spent the last 3 years overseas, with another 2.5 to go (give or take).

When we left the States, property values were shit and we decided to keep the home as a rental.  We weren't underwater, thanks to a large downpayment, but we were afraid of selling and locking in a huge loss loss (selling low, basically) and not being able to afford something even remotely comparable when we returned to the States. (At the time, we thought we'd only be overseas for about 2.5 years.)  The house was worth about $125k less than we paid at that time..

After all expenses (including the mortgage which we overpay each month, the property taxes, a property manager, and everything else) and figuring in the tax advantages, we probably lose a little money each month.  The property has come back up by about $75-85k since we left, but is still worth about $50k less than we paid. So while we lost money if you just look at expenses vs. income, we've increased equity and net worth by about $80k in 3 years (in addition to the amount of principle we've gotten rid of), which is a damn fine return.

Those numbers may seem large, but it is in a very high cost of living city and is actually a townhouse which is less than 2000 sqft and not especially luxury in any way. 

So, do we sell, or hang on to it?  If it makes a difference, there is an extremely good chance that we will be returning to that city in 2.5 years for at least a year, if not several, and we would be happy to move back into that house if that is the case.  But it's also possible we could never be in that city again.

So, thoughts?

TheDude

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Re: Sell or keep a house while we live overseas.?
« Reply #1 on: March 13, 2013, 04:25:45 PM »
Its a pretty personal decision IMHO because some people are wired about their houses.  From my POV I say sell it. I don't like the idea of being a long distance landlord.

Our circumstances were different but my wife and I spent some time in Taiwan. Before we left we sold the house and about ab 60% of our shit. However, we didn't have anyone to move us ( I assume the military does) and we knew we wanted to be out west when we came back. There was however a chance we would be back as my wife was able to take a leave of absence from her school. We decided that even if we were to come back it just wasn't worth the hassle of owning while we were overseas (and that was only for a year) There are after all houses on every corner.

lhamo

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Re: Sell or keep a house while we live overseas.?
« Reply #2 on: March 13, 2013, 10:29:11 PM »
Can you raise the rent a bit so you are at least not losing more money on it every month?

In your circumstance I would probably keep it at least until you know whether or not you will be stationed back there again.  It would be a pain to sell it and then have to move back to the same city and rent or buy something more expensive.

Is this by any chance in the DC area?  If you aren't already, consider advertising it to State Department people -- many are pretty desperate for housing options for one-year or less transitional positions in the DC area and would probably pay a premium, especially if it is in a good school district (I witnessed a colleague go through this -- she was kicking herself that they hadn't kept their DC area home...). 

In our case we left the US still owning our NYC co-op, which we could not rent out.  we wanted to make sure our overseas positions would work out before we sold.  We put it on the market 10 months later, had an offer we accepted after our first open house, and closed the sale about 4 months after that.  This was in 2003, though, when the NYC market was hotter than blazes.  I sort of wish we had ridden the market up a couple more years -- the people who bought from us resold in 2005 or 2006 for almost double what they paid us.  But since we couldn't rent it we decided at the time it was better to sell, so it was what it was.    We held onto the profit we made and had some nice gains on it when online banks were paying 4-5% interest.  Eventually we bought another property here in Beijing, which has appreciated very nicely.  Wouldn't have purchased here if we weren't in it for the long term, though -- China has some pretty nasty taxes on real estate if you don't hold for at least 5 years (roughly one more year until we can cash out).

lhamo

Villanelle

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Re: Sell or keep a house while we live overseas.?
« Reply #3 on: March 14, 2013, 11:25:39 AM »
Raising the rent is likely not an option.  We seem to be getting fair market for it, and since even one month empty would cancel out the gains from raising the rent as much as $200 (which is *way* more than we could realistically raise it), we decided to keep our current tenant.  When her lease was up, we asked her to pay more and she said she'd move out, so we kept it the same in order to avoid a vacancy.

I hate the idea of losing money every month, and it is only small consolation that with the increase in equity, we sort of aren't actually losing money (though of course those gains aren't really real until the place is sold and they are realized, though I doubt the market will drop again, or at least not to the levels it was at when we left in 2010).

DoubleDown

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Re: Sell or keep a house while we live overseas.?
« Reply #4 on: March 14, 2013, 02:58:41 PM »
If you expect housing prices in your area to increase even at least modestly, I would definitely not sell. You are kicking ass on appreciation vs. the small amount of money you are out of pocket each month. You have a good, stable tenant, and apparently being a long-distance landlord has not been a hassle. Add to that the convenience of having a place to return to once your tour is up. And without knowing your tax situation, there's a good chance you're getting a nice deduction being able to write off the expenses, depreciation, and loss.

So as long as values are increasing even slightly, I would hold onto it! If you expect the area to go to hell, then you could dump it.


Villanelle

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Re: Sell or keep a house while we live overseas.?
« Reply #5 on: March 16, 2013, 12:17:34 PM »
Since the area already went to hell (at one point our place was down more than 20% from what we paid and more than 30% from the highs), I don't see it happening again. 

I guess we'll stay for now.  Thanks for all the input!