Dilemma - keep apartment or sell up and invest the difference

[torsion]

Hi all,

It's been a long time since I posted last and I've been distracted from FIRE.

I have the demons calling me on this subject. I am currently an expat living in NYC with my wife and soon baby arriving in weeks.
I own an apartment in London, UK with an outstanding mortgage of approximately GBP265,000. It's located in a highly rentable area in North Greenwich which for those that don't know is one stop away from Canary Wharf which is considered as part London's financial district. Here is a link to a not too different apartment http://www.rightmove.co.uk/property-for-sale/property-55284071.html
Straight to the point facts - the rent (GBP1428.00) almost covers the mortgage (GBP1541.24) repayment. I am responsible for paying the maintenance/service charges which are circa GBP4,000 per year so including the difference of the rent vs mortgage I am essentially out of pocket by GBP5358.88 which is my "investment" if you can call it that into the property.
Just had the property valued at circa GBP450,000, the property prices have increased at a sharp rate since I bought the property in 2008 however due to Brexit we could see a slight leveling of this growth in the coming years.

With my re-ignited interest in getting the hell out of the corporate rat race and reaching the goal of FIRE could I please have your opinions, I am thinking of selling up and investing the difference in an index tracker in an attempt to reach FIRE earlier.
If I do this, people that know me will question, "so what happens when you go back to the UK and where will you live". This doesn't bother me, it's the reassurance that I am doing the right thing :)
I had initially thought of this apartment as my "retirement" fund/investment but I may well be better off reinvesting the difference which could be just shy of GBP200,000 should I sell for the projected market value which would be a significant chunk to put into that vehicle.


Thanks in advance,

Don

**Edit - please let me know if I have posted this in the wrong area!

[ashfo]

I'd sell.  The rent doesn't even fully cover the mortgage so you are cash flow negative every month just on this.  Then there is the additional maintenance fees you mentioned.  A good rental property should cover all the expenses and still cash flow some money each month.  Unless you plan on moving back in the next few years and renting it out is just a stop gap measure, then I would sell.

[torsion]

Thanks for that first response!
The intention is to move back to the UK in the next 2-3 years however not necessarily to that apartment. Renting it out was a stop gap measure as at the time I moved to the US I wanted to keep hold of the apartment. Noted on the negative cashflow - not ideal at all. Seeing that the value has bumped up a fair bit the temptation is there to sell up and re-invest the difference which I am sure will do better in funds (edit - where the money will work for me rather than this current constant negative cashflow)
Also been reading some jlcollins and getting my head round renting vs owning debate.

[NoVa]

Quick question, if comparable properties sell for around GBP 450,000, your rental income of only GBP 1,428 seems absurdly low given the desirable location. Do you know what comparable rents are?

Off the top of my head, I would think that this is a bad time to try and sell a property in the London area, given the turmoil from the Brexit vote. I would at least wait a couple of months until the market stabilized. At this moment no one really knows the impact on the financial district, lots of people are panicking.

jfolsen

[torsion]

Thank you for your reply - the rental I mentioned is net (minus the agent fee), gross rent is GBP1,500 which is market rate around that area. I've had incremental raises in this every year I've been away so far.
Good point about selling right now, was more a general question as to my situation with this property and my thought on what I could do with the difference and investment vs keeping the property and as the previous poster said being in negative cash flow.

[undercover]

How well have you done on appreciation as a yearly ROI? (Current value - purchase price - expenses / years owned / purchase price). It could be that you hold on to it and it appreciates even further, though I wouldn't bet on that. As far as moving back, it looks to me like renting is going to be cheaper than buying most of the time - so even if you do move back, it's probably going to make more sense to rent unless you plan on staying there indefinitely.

I'd say sell at this point. You know you're going to be gone for at least 2-3 years and even if you move back to the same city then renting is much cheaper unless you plan on staying there for a long long time, as said before.

[2lazy2retire]

Similar situation here, rented out our house in South London when me moved stateside - just in case we came back and needed somewhere to live , that was 14 years ago :).
The market has been on our side - using undercovers calc above - about 9%/year (S&P was under 6% for same period) . A few times we have explored selling and even had an offer back 10 years ago but pulled back at the last. With the recent CG tax law changes for non residents it might be time for us to pull the plug but BREXIT has thrown a spanner in the works, alongside that the house is getting tired and needs an overhaul, most likely stick with it until brexit shakes out - but who knows. I would be interested to see how you go and how your agents see the current market.

PS: Where would you put the proceeds, would you look for something in the UK or move it this side?

[torsion]

@2lazy2retire - thanks for your input.

I think I would stick proceeds in something in the UK - GBPUSD is in my favour right now being in NY and moving it over here I'd lose way too much in the FX. I still have a short/medium term view to move back to the UK.

As @jfolsen said  - will wait a few months to see what happens to the market. No urgency to sell right now esp post Brexit.

[2lazy2retire]

@2lazy2retire - thanks for your input.

I think I would stick proceeds in something in the UK - GBPUSD is in my favour right now being in NY and moving it over here I'd lose way too much in the FX. I still have a short/medium term view to move back to the UK.

As @jfolsen said  - will wait a few months to see what happens to the market. No urgency to sell right now esp post Brexit.

With any UK invextment - be careful with the PFICS, FACTA's, FBARS etc :(