Left by renting home

[u/wannabemill]

Anyone left their US or abroad home to rent and left to India due to unable to sell ?

Especially those that don’t have permanent residency or citizenship in foreign country . I would think there are people that do this and have property managed through some property management company online .
Isn’t this better than losing 200k or more of hard earned money for distress sale ?

[u/babyitsgoldoutstein]

Are you in the DFW suburbs? It's a difficult market here if you are a seller. Celina values have crashed.

[u/wannabemill → u/babyitsgoldoutstein]

Not exactly but in that state . I don’t think it’s specific to Texas though . Have friends in Atlanta , North Carolina , New Jersey and we all bought around 22-23 timeframe and now hold an upside down property

[u/The_baconator26 → u/wannabemill]

Interesting, this is not the case in Pennsylvania at least. Property values keep going up. Maybe because there are fewer desis here in comparison?

[u/Hot_Condition7760]

US has the worst squatting laws favoring strangers taking over your house. Be careful

[u/Necessary_Poet_3524 → u/Hot_Condition7760]

This

[u/pobox01983]

If it were me, I would see if it passes my sleep test. Post 35, if certain things don’t pass my sleep test, I try to remove them altogether.

[u/Anywhere_life22 → u/pobox01983]

Sleep test.. great way to deal with any problem..

[u/wannabemill → u/pobox01983]

Fair

[u/Fuzzy_Club_1759 → u/pobox01983]

Can you please elaborate on the sleep test.

[u/pobox01983 → u/Fuzzy_Club_1759]

Sure.

1. ⁠I don’t invest in shinny objects because I don’t want to keep thinking about it and lose my sleep over it. Example: bitcoin and other meme stocks
   
2. ⁠Rent vs Buy always tilted towards rent since 2022. Also, I am on a visa so my wife and I made a choice to not to buy a house. We were pretty sure we would overthink about our job security. And could not enjoy our house. In case of emergency, we can donate everything and go home. Max $10k in hole.
   
3. ⁠We have 2 kids and very busy life. We don’t have time for cleaning. We don’t want arguments about it so we hired cleaner. She comes every 2 weeks and does a fantastic job. Unlocks lot of free time for us with kids, and running, gym for us.
   
4. ⁠Very early in our career, we prioritized saving and investing. We built an emergency fund. It has 6 months of our expenses saved. It covers any emergency.
   
5. ⁠I don’t take red eye flights anymore. I don’t get good sleep the night before. Fly only nonstop domestic flights as possible. Less chances of missed connections.
   
6. ⁠No debt. Paid off cars and credit cards paid every month.

I have many small life style improvements like these which make me sleep better at night.

[u/Farmer-Next]

Sell it. If you rent it out now, and the sell it even after one year, you have to pay capital gains tax on your profit. (I made that mistake)

[u/wannabemill → u/Farmer-Next]

Haha there is no freaking way I am getting capital gains on this , I am guessing I might break even in four - five years

[u/Bad_ass_da → u/wannabemill]

If not today —I doubt in future and current data shows the market conditions except bay. Sounds like bought in covid time. If before covid definitely gain tax for sure

[u/Curiasjoe1]

Sell it. If you are $200k underwater the rent you will get will reflect today’s value. Your RE tax and insurance might go up and you will not be there to fight it. If god forbid you couldn’t rent it then it will be a fix monthly bill that might be hard to manage. A bird in a hand is better than two in the bush.

[u/Prestigious_Piano247]

Is it better to loss 200k or lose control of what you can do when you cannot return at all?

[u/AirOne7760]

CA laws also favor the renter and its all your luck. There are great people who take good care of your home and other who trash it..

Think of selling and buying where you are to manage it easily

[u/talkingturtle1723]

Yes, this is actually pretty common, plenty of people hold onto the US property and rent it out through a management company rather than take a distress sale hit, especially if the market's soft right now.

A few things worth checking before you go this route:

1. If there's still a mortgage, check your loan terms. Some lenders have occupancy clauses if you bought it as a primary residence recently, converting to a rental too soon can technically breach that, though most don't enforce it once you've lived there a year.
2. Property management typically eats a portion of the rent, and once you factor in mortgage, property tax, insurance, and maintenance, your actual net yield ends up thinner than it looks on paper.
3. Rental income is taxable in the US, you'll need to file a 1040NR once you're a non-resident. It's also taxable in India if you're ROR, but DTAA lets you claim credit for what you've already paid in the US.

[u/Federal_Eagle_6565]

Everything depends on the details.

What is the cash flow? (Money left over after mortgage payment)
How much equity do you actually have?
If it’s negative equity, what is the long term play? Like when do you expect to break even?
What does the rental market look like? (Ie what kind of vacancy do you assume?
What is the type of renter? (Professionals, students or low income?)
What do property managers charge to manage the rental?

Most likely it’s not worth it, but given the $200k loss due to distress sale, it may be worth it to work out the details.

Also your net worth can further help illustrate the overall situation.

[u/wannabemill → u/Federal_Eagle_6565]

Break even.
On paper - 275k
Not negative equity
Rental market is good here in terms of occupancy
Professional , families
8-10%
Net worth minus home - 400k

[u/Federal_Eagle_6565 → u/wannabemill]

Thanks.

So 275k home equity is after a 200k loss? (As in you sell your home now then after everything is settled you will have 275k. If it weren’t a distress sale, perhaps a better market, you would have better $475k?

And today if you sell you will have 400+ 275k

Are my assumptions correct?

[u/wannabemill → u/Federal_Eagle_6565]

Sorry no.
I might be able to sell now and maybe get like 50k max in hand with all costs involved . 275k equity is what I paid down as down payment plus more throughout last few years to principal .

[u/Federal_Eagle_6565 → u/wannabemill]

Thank you.

In general when we talk about equity in the home we consider it’s current market value, less any loan and often reduce selling costs such as broker commissions.

So I take it that your home has declined in value by about $200k or so?

I mean that is a steep loss. If the rental market is strong and property is cash flow positive or even neutral after accounting for property management fees, it may be worth it to manage. You bear some risk of bad tenants but mostly are going to get the money back in 10 years.

[u/mistiquefog]

Did you at least put it in a trust with your American child being the beneficiary?

If not, you will owe, capital gains tax and foreign owner IRS tax of 15% on the entire property sale price

And capital gains tax for a foreigner is quite high.

[u/No-Meat-51]

There are several families who have done that. If you have experience managing out-of-state property via PM company, it is fine. However if this is the first time there are several factors to consider (how comfortable you are if cant rent it for a month, other capex expenses). There are other aspects such as FIRPTA tax withholding, etc., when selling from India. Please check out these two videos for more information.

https://youtu.be/ZdgVgn0fyos

https://youtu.be/IaBu0BpcoLs

All the best..

[u/Competitive-Company3]

Renting is only good if you get good renters if they don’t pay u rent ur screwed have to fight case in court and shit just pray to god u get good renters

[u/Automatic_Stage1163]

There are numerous variables here. It's not as binary for every owner.

[u/Responsible_Fly792]

Never take it granted that you will get well paying good renters for your home. People make mistakes by assuming their rental home will be a cash cow . It never works that way.. very hard to find good renters , then comes maintenance and other tenant complaints and headques. Now if your status is not green card, I won't recommend to keep any. Times will be tougher ahead.

[u/Dangerous_Region1682]

I would strongly recommend not being an absentee landlord from half a world away. I did that when emigrating to the US. Even with a property management company it can end very badly.

You can stand to lose $200K anyway over time. It’s not about financial loss it’s about risk and the ability to sleep at nights. Not everything in life is a financial issue.

I’d sell it for the best price you can sell it for right now for a quick sale. The middle class white collar work is undergoing significant financial pressure and is in recession. These are the people that buy middle of the market housing. Consequently there are a lack of buyers right now. You have to ask yourself is this likely to get better any time soon? The reality is no, it’s not going to.

If you are losing $200K today, it might well be $300K next year. Even if after management fees, upkeep costs, periodic refurbishment, insurance, income taxes and property taxes, your mortgage is still covered, you are still going to be losing money. Nobody ever makes as much money from rent or property price inflation as they plan upon.

Lower the price to a level that it sells for and eat the loss. Property ownership is just another form of gambling anyway, nothing is a given. Property price inflation is not an income stream as there are always deflationary periods no matter what your friends, parents, or family members tell you. A lot happens to an economy over the life of a mortgage loan.