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How do I manage selling or renting
a home from overseas?
Dear Money Matters,
I am planning to buy a house in a few months. I may have to pack
my bags after two years and leave this country. In that situation,
do I have to necessarily sell the house, or can I rent it? If I
am not able to come back and sell it, is there a way to sell the
house in my absence, or do I have to be present?
Dheeraj
Dear Dheeraj,
First, you have every right to rent your house regardless of where
you live. Moreover, should you ultimately decide to sell the property,
there is no need for you to be physically present. You can always
hire a real estate broker to handle the transaction on your behalf.
Also, thanks to Federal Express and other similar services, it's
a breeze to get papers back and forth for you to sign.
However, there are some issues to bear in mind. First
off, should you decide to rent the property, it will be impossible
for you to serve as a hands-on landlord (unless you want to jump
on a 747 with a wrench in your luggage every time the tenant calls
to say the toilet is leaking). That means you'll have to pay someone,
such as a property management company, to handle the details of
the rental, including upkeep and rent collection. Likewise, if you
sell the house, that, too, will cost you, as you'll have to pay
someone to represent you.
There may also be a couple of concerns regarding the
purchase of the property of which you should be aware. One of the
central principles of sensible homeownership is owning the property
long enough to recoup the expense of buying the property -- closing
costs, points and any other upfront costs. It generally takes three
to five years to offset those expenses. So, if you're thinking of
buying the house but only expect to own it for two years, you may
not have enough time to build up sufficient equity to outweigh the
transaction costs.
The other potential issue is renting the property
too quickly. When most people buy homes, the lender approves the
loans on the assumption they're going to occupy the property. In
your case, living in the house for a couple of years and then renting
it shouldn't pose a problem. On the other hand, buying a home on
the premise that you're going to live there yourself and turning
around and immediately renting it out won't sit well with your lender.
Most are perfectly happy to lend money on rental properties, but
they're considered higher risk, so they charge a higher rate.
-- Posted: April 24, 2002
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