I'm a newbie here, and I'm hoping for some good advice on how to make a mustachian move across the pond. I know the Norwegian real estate market might work differently than in the US, particularly in terms of taxes/politics, but I'm looking for more general advise and wisdom. We are looking to move to the states in a year or so, partly because my husband misses the US, family and culture, and partly in hope of more opportunities for us there. And the question is then, what to do with my apartment?
My situation: I'm a Norwegian married to a man from the US. We live in Oslo, Norway. Up until last fall we were renting short-term flats and houses, but I did the math and found out that we would save more money owning rather than renting after we moved into Oslo (for work). So, now we own a super cute 1BR apartment downtown Oslo, in an up-and-coming neighbourhood. We live less than five minutes from "everything", in an old apartment building from 1882. The area is dominated by immigrant low-income families, but gentrification is slowly happening (unfortunately) all around us, and there is a lot of development of high-end apartments and businesses a few blocks from here.
Because we've talked about moving overseas for a while, we've had a good savings rate the last years. But partially because of that, a huge chunk of my savings went into buying the apartment. I forked up 170 000 NOK (roughly 23 000 USD) and have a mortgage of (gasp!) 1 750 000 NOK (235 000 USD) in addition to student loans. A large part of my salary naturally goes into paying down this mortgage; I get around 30 000 NOK/month after tax and pay 15 000 in housing (including utilities and everything), out of which 8500 is pure principal. We would pay at least 12 000/month if we were renting (anywhere in Oslo! It's insane), and my mortgage gives me tax benefits (I pay 2-3000 NOK less per month in tax because of my mortgage). The real estate market in central Oslo is hot, and according to conservative estimates my apartment has already risen by at least 100 000 NOK since we bought it (and winter is usually not a time for growth in the real estate market here). If this rise will continue or not is uncertain of course, but I doubt that it will deprecate any time soon.
My mortgage is divided in two+one: a huge chunk of it is on a 25-year downpayment plan, and a smaller portion is on a 6-year plan. I also have a shared mortgage with the other apartment owners in the building (this is included in the numbers above) which is only 10 years (8 years left now), and amps up the shared costs considerably. This means that I could pay down the entire smallest chunk pretty soon and have slightly lower monthly expenses. It would also be beneficial to get rid of my share of the other mortgage, as lower shared costs is a big selling point.
We have an OK savings rate aside from paying down mortgage. We live frugally (which can be hard in Oslo), and manage to set aside at least 5000 NOK (700 USD-ish) per month. I hope to increase the savings rate now that we are preparing to leave. If my husband got a job, we would be able put aside nearly all of his income (anywhere from 1000 to 2500 USD), giving us a lot more flexibility in how to go about this. The interest on my savings account is ridiculously low (but so is the interest on my mortgage - yey), so I divide my savings between 3000 in a savings account and 1000 to index funds as a basis (and 1000 to be flexible - usually index). Once my savings account is back to a healthy buffer state, I'll put everything into index funds and/or perhaps mortgage. My plan is to have about 100 000 NOK in savings/funds be the time we leave for the US (13 400 USD today), and my husband will have a similar amount (or higher if he gets a job).
Now, I have several options:
1. I could sell the apartment when we move, and take the money and run. That would mean selling it in April 2016 approx.
2. We could rent out the apartment for a year, at 12-13 000/month and then sell it. We would need to pay tax on the income from rent.
3. We could rent out the apartment for more than a year, but then we will also have to pay tax on the revenue from selling the apartment - Norwegian tax laws.
Option 2 is a tempting option to me, but I am worried about several aspects. First, that 100 000 NOK is not a huge safety net when transitioning to another continent. On the other hand, it would be nice to have someone else pay down further on the mortgage even after I quit my job. A year of renting it out has several drawbacks; it would probably deplete my savings a bit (during the process of selling the apartment there will likely be months without income and just expenses, and I might not get enough income to cover both principal, interest and other expenses), I would need to go back to Norway to arrange the sale, and there's risk involved in having strangers live in the apartment before selling. I also don't know what the market will be like that far into the future, whilst right now it is hot.. In other words, this is the risky option. But, we also have the option of staying with my inlaws for a while (if we chose to move to Texas) and I have a network to help me out in Oslo.
Option 3 mitigates some of the concerns about option 2, in that over time the effect of vacancy during the sale will be "offset" by the huge chunk of mortgage paid, and I might be more free to sell when the market is good if I create a sustainable setup where rent > costs. More time also means lower shared mortgage, which will make the apartment more attractive. If we rent out the apartment over a long period, it will likely start creating some income as well. The main drawbacks are the taxes I would pay when selling (28 % of revenue - not counting paying down mortgage and sales costs) and the fact that my money will be tied up in Norway rather than creating opportunities for us in the states. We could move back to Oslo for a year before selling the apartment, and then we would avoid this tax.
Option 1 is also tempting, naturally. I would be left with anywhere from a few hundred thousand NOKs up to maybe 600 000 NOK (80 000 USD). The drawbacks are that I'm excluded from future growth in the market, I have less safety to return to if the US dream fails, and there is something psychological about owning your own home that is just very appealing to me. I worry that I am letting the emotions affect my thinking here, and that is why I'd love to get some advise from this forum. Also, in Norway, it is totally normal to own your own apartment, even if you're in a low-paying job (my part-time receptionist friend is looking to buy), so my thinking might be influenced by the social norms here.
Now, I'd love to hear some suggestions on what would you recommend that I do about the apartment and why/how? (If I go for option 2, should I save up as much as possible now, or pay down my short-term mortgage to lower monthly costs during the rent period, etc?)
Also, any good tips about transferring money overseas without loosing it all in bank fees and so on?
