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?