Relocating outside the US - Sell or Rent?

[Jay Warner]

Career moves are moving my family to Europe for a few years. We purchased our home in 2019 and have an estimate ~$150,000 in equity in the home today. Based upon current rent estimates from local PMs we could expect around $1k per month cash flow if we were to rent the home. 

No one can see into the future, my concern is whether or not I should risk losing the equity in the home ($475k single family home) if there is a recession or housing downturn during these years. 

Ideally I planned to utilize the equity to begin my investor journey, so cashing out now could secure this but we would obviously no longer own the asset. 

Any advice? 

[Charles Carillo]

@Jay Warner

Whenever I am thinking about selling a property, I ask myself if I would purchase the property again today. Since this is your primary residence, you are able to benefit from the Capital Gains Tax Exemption; which would eliminate your gain (verify with your CPA). 

If you were still planning on renting the property, I would want to dig into the $1k per month cash flow number. Some PMs and RE agents fail to include all rental property expenses in their calculations when speaking to potential clients. $1k per month could become a much smaller number when all of the fees are actually accounted for.

[Account Closed]

Quote from @Charles Carillo:

@Jay Warner

Whenever I am thinking about selling a property, I ask myself if I would purchase the property again today. Since this is your primary residence, you are able to benefit from the Capital Gains Tax Exemption; which would eliminate your gain (verify with your CPA). 

If you were still planning on renting the property, I would want to dig into the $1k per month cash flow number. Some PMs and RE agents fail to include all rental property expenses in their calculations when speaking to potential clients. $1k per month could become a much smaller number when all of the fees are actually accounted for.

Agree with Jay here. Be sure to consider PM fees, vacancies, reserves, etc. 

[Carlos Ptriawan]

Quote from @Jay Warner:

Career moves are moving my family to Europe for a few years. We purchased our home in 2019 and have an estimate ~$150,000 in equity in the home today. Based upon current rent estimates from local PMs we could expect around $1k per month cash flow if we were to rent the home. 

No one can see into the future, my concern is whether or not I should risk losing the equity in the home ($475k single family home) if there is a recession or housing downturn during these years. 

Ideally I planned to utilize the equity to begin my investor journey, so cashing out now could secure this but we would obviously no longer own the asset. 

Any advice? 

Located in Ohio ? primary ? then sell.

If it's California, primary --> rent

[Vicki X.]

Quote from @Jay Warner:

Career moves are moving my family to Europe for a few years. We purchased our home in 2019 and have an estimate ~$150,000 in equity in the home today. Based upon current rent estimates from local PMs we could expect around $1k per month cash flow if we were to rent the home. 

No one can see into the future, my concern is whether or not I should risk losing the equity in the home ($475k single family home) if there is a recession or housing downturn during these years. 

Ideally I planned to utilize the equity to begin my investor journey, so cashing out now could secure this but we would obviously no longer own the asset. 

Any advice? 

If I were you, I would research the rental demand in the area (zillow, furnishedfind), run my own numbers and analysis, or at least verify the numbers and calculations from the PM. Then compare the return to the return I would get by selling and putting it in other investments. Make sure you take the selling cost into account.

It's difficult to time the market. Will you relocate back to Cincinnati at some point? Do you like your neighborhood? How do you see the local economy? Are you in a comfortable financial position where you don't rely on the gains from selling the property? If that's the case, you could always bet on the long term upward trend of real estate and keep the house, in my opinion.

[Tchaka Owen]

Quote from @Jay Warner:

Career moves are moving my family to Europe for a few years. We purchased our home in 2019 and have an estimate ~$150,000 in equity in the home today. Based upon current rent estimates from local PMs we could expect around $1k per month cash flow if we were to rent the home. 

No one can see into the future, my concern is whether or not I should risk losing the equity in the home ($475k single family home) if there is a recession or housing downturn during these years. 

Ideally I planned to utilize the equity to begin my investor journey, so cashing out now could secure this but we would obviously no longer own the asset. 

Any advice? 

Yes. Rent it and enjoy Europe.
1. There's a chance you will lose equity. So what if you do? No one can predict the future and if you move that to other properties, who is to say those don't drop. What's the chance of it dropping $150k of value? My guess is that it's quite unlikely.
2. There's a chance the home will appreciate during those few years. Is that a problem?
3. The tenants will be paying down your mortgage for several years. Nice!
4. You'll be getting cashflow. Whether it's $1000/mo or merely $500/mo, it's still nice.

Markets go up and down, that's the norm. As an FYI, my folks haven't lived in the US in 4 decades. Upon leaving one time they bought a TH and held it for a while, paid it off in 11 years and had cashflow for a long time (eventually sold). 

My input: get a HELOC on it (while still owner-occupied) and go enjoy Europe. 

Tchaka

[Simon Ashbaugh]

Quote from @Jay Warner:

Career moves are moving my family to Europe for a few years. We purchased our home in 2019 and have an estimate ~$150,000 in equity in the home today. Based upon current rent estimates from local PMs we could expect around $1k per month cash flow if we were to rent the home. 

No one can see into the future, my concern is whether or not I should risk losing the equity in the home ($475k single family home) if there is a recession or housing downturn during these years. 

Ideally I planned to utilize the equity to begin my investor journey, so cashing out now could secure this but we would obviously no longer own the asset. 

Any advice? 

 Realistically with interest rates where they are (and what you probably got on it now) you'd have to buy a couple properties to make up for what it sound like itll make you. Id hold onto it! run the numbers yourself in the BP rental property estimator.

[Erin Azar]

I suggest keeping it. I have done the overseas living thing on a couple of occasions, and while it is fun and a definite life experience, it does stunt your asset accumulation. The US is still a great place to own assets, and with inflation persistence, I anticipate things will continue to rise, albeit slower. Keep it and have fun in Europe!!

[Rick Albert]

A couple of things to think about:

1. Do you plan on ever coming back? It might make sense to keep it in the event you move back and need a place.

2. What would you do with the net proceeds? I know you mentioned you would start your investing journey, but what does that look like and is there enough money there to actually do something? $150,000 only goes so far nowadays. 

3. Who cares if there is a recession or downturn. Just keep renting it out and wait it out. On a practical basis over the last six recessions, only twice have we seen price reductions. 

4. Selling makes you rich, monthly income makes you wealthy. You need to make the money work for you.

5. Could you hold on to it for a couple of years and then sell it? That way you still qualify for the capital gains exclusion, but would net more because your tenants paid down the mortgage.

You answer these questions, and you should get pretty clear on your answer.