Owning a home ‘back home’ comes with some major Pros & Cons for International Educators. A big Pro of home ownership, and I think you’ll agree, is you have a place to retreat to in an unforeseen crisis such as Covid-19 putting a sudden end to your job. On the other hand, a huge Con for home ownership is the question of ‘How do you take care of the place and protect your investment when you’re 1000s of miles away?’
If you are planning to own a home from overseas, the Con side — a mortgage, potential troublesome tenants, regular maintenance and upkeep, annual taxes and insurance, emergency repairs — needs to be balanced against the Pro side — potential rental income, property value appreciation, a home to park yourself during the summer, a place to call home in the event of an emergency.
If a mortgage and other house-related bills are dependent on your teaching position and/or tenants, you may want to think twice. The headaches may not be worth the benefits of long-distance home ownership. However, if you’re financially solvent, home ownership could be the way to go, provided you have trustworthy people to oversee your property in your absence. Teachers report making more in rental income as compared to their salary.
ISR asks: Do you own a home that you maintain from a distance? Has it been a positive experience? What advice do you have for other International Educators considering owning a home ‘back home?’
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I bought a home in a popular vacation spot, I don’t rent it out, and it’s one of the best decisions I ever made. I was careful to make sure that the annual costs would be very manageable. I now have a great place to go during breaks when i want, as an investment it has been a wise decision, and while I was initially nervous about being away with an empty place I got over that fear very quickly. The sense of having some roots while also hopping all over the globe is great.
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When we went overseas the first time, we sold our house but kept the two duplexes. The house we sold is right around the corner from where I live now and I could almost cry when I drive by and think of the money we left on the table. But oh well. Plans change and we thought we were never coming back. Today those duplexes pay all three of my mortgages and the grandkids’ college costs.
Lessons learned? 1) Keep your options open, since the future is unknowable. 2) Prices and rents have been skyrocketing and you might well be priced out if you ever hope to return. 3) You have to live SOMEWHERE in retirement, so make plans. 4) I’m a longtime landlady, but property management is definitely not for everyone. However, with today’s online tools and a decent property manager, rentals are 100 times easier to handle from overseas than they used to be.
Home ownership is how ordinary people build wealth, so if at all possible, I’d suggest getting on the property ladder. It worked for me.
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Keeping and renting out my home was almost the best decision I made when I decided to teach overseas for 20 years. It effectively acted as my pension pot. I was greatly helped in this by advice from a friend who was already a landlord by ” Headleasing ” my house to the local university for about 7 years. Later I moved to having a Managing Agent, I am now on my second of those but I have now been using them for 13 years. OK , they aren’t cheap but a good one takes the worry out of letting.
As for ” Kickers’s ” problems with the UK tax authorities my experience has been totally the opposite . If you keep everything straight from Day One then you shouldn’t have problems. However it sometimes required a little action when I was back in UK on annual vacation.
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My father and I have teamed up to set up a group of property investment companies – I am working internationally so have a good income but am time-poor, he is retired now and has more time so he does all the research and due-diligence. Although not from there, we set up a company in England and bought a property there as the market entry price point is much lower than other countries. Later we set up another company in Scotland and have bought and sold properties there as well (different laws hence different companies and related bank accounts). We let out properties through a serviced accommodation company. We have managed to set up a good team of people – reliable (& decently priced) accountant, lawyer and sourcing agent as well as the serviced accommodation people. There are several benefits of buying property through a company (whether in your country of citizenship or elsewhere) – limited liability in case of being sued, the company itself is a local entity for tax (soooo much less complicated than managing international tax as an individual) and costs for maintaining the property can be tax deductible. Pre-covid our company also paid for us to fly to the UK to visit the properties each year or two from the rental revenue.
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We own two rentals and a home just for us that we return to on long breaks. While we have had some less-than-great renters, the income generated outweighs the headache of minor repairs. It has been nice to watch value of our investments increase over the years. A good property manager (we pay 15% monthly) and insurance are essential in our opinion.
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Owning our home without renting it out may not have been the soundest financial decision, but it was a wonderful decision for our family’s mental health. Our children had a home base instead of having to couch surf and impose on relatives. Having a lakeside home meant extended family came to see us. When a family emergency meant returning stateside for a stint, we had no worries about where to go. Two children chose to attend college in the vicinity of the home and it was a great home base for their summers which were longer than ours, allowing them to find jobs in the area. These now adult children who lived all over the world have an answer when people ask them where they’re from.Our retirement will not be an unknown, it will be going back to a beloved home.
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I’ve been an international educator on-off 23 years. Most recently I came overseas in 2012 after living back in USA for 18 years. I spent many hours agonizing over my condo because I had to continue paying the mortgage and homeowners association fees. Several former colleagues told me renter horror stories and I had recently completed annual renovations. Calculations for furniture in storage, management fees, renting space when I came home, etc. meant I would save about $8,000/year.
I decided to keep it empty under the watchful eyes of my neighbors and return home during summers. My first summer home, I was so happy having a place to stay amidst familiar surroundings! My CPA would always tell me how much money I could earn renting it, and my response was, “Sometimes happiness is more important than money.” For me it was an exceptional decision :-]
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As we were first preparing to teach overseas, in 2005, friends urged me to sell the house and put all the money in the then-booming stock market. I decided not to sell, mostly because of the hassle, but also figuring that the house’s value would always be at least comparable to other houses, if we wanted to live elsewhere after returning. During the 2008 recession we were glad we had kept the house! We fortunately had good luck with renters, though it meant that our summers were spent foraging among relatives and vacation spots. A stint in Saudi allowed us to pay off the mortgage and enjoy a peaceful base from which we can now consider overseas retirement, supported by the equity. Advice? if you own a house you like, keep it — it is worth the effort to find renters and pay managers, and should at least pay for itself. Tax considerations will vary for Canadians and Brits who may prefer to prove non-residency by divesting themselves of property; US citizens’ residence status is only a state issue.
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We sold our home in 2009 and began teaching in Saudi Arabia. In 2013, we purchased a home but decided to not have renters. This meant we could store our valuables and have an home to come home to during any holiday. Our neighbour looked after our property and we paid him well. It was such a great feeling knowing we had a home to return to whenever we wished. Our home has doubled in price so it was a good decision. Personally, if you can afford it, keep your home without renters so that you have a retreat to go to at any time. The peace of mind was priceless.
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I remember renting my home and being harassed and threatened with court action by the UK tax authorities over the rent I received even though I had told them I was doing this (which they admitted two years later). They scared my tenants away, told me lies and the thousands I was told I owed them turned out to be £19 or about $25. I cost me a fortune and I needed to fly back from Africa to sort it out. The full saga is a book long. I would strongly advise you to consider how honest you are with the tax people as they will treat you like a criminal weather you are honest or not!!
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No home or chains to tie me down… I am and will always live happy wild and free!!!!!
Stock market returns historically are 10% annually if averaged over multiple years!
REITS are a safe way to invest in real estate without the headaches of home ownership.
Home values can go up, down, need repairs, get trashed by tenants, have insurance, have taxes…
I owned an RV for the last 15 years while teaching overseas and it was great to come home to every summer :-). Now in retirement planning I am thinking of buying a bigger more luxurious RV for my early active years of retirement and continuing the life style of mobility and adventure.
Thinking outside the box.
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I have had a positive experience owning a home while teaching on the other side of the world. The key is to have either an agency or family and friends take care of it while you are away as others have stated. I find it easier now that most of the costs including taxes can be paid online. It was difficult years ago when there was no mechanism to pay them other than through a check. My property quadrupled at least in value over the years and I am thinking of finding a second home just for short-term rentals and staying when I am not in school.
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I’ve thought about buying an investment property, somewhere near a beach or ski resort that we could use and rent out; but unless my investment can promise no headaches (unlikely) and guarantee a 7% return on my investment as my index fund typically does, then I don’t necessarily see the gain? Is it the security of a place to go if you loose your overseas job?
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I don’t know about making more in rental income than teaching salary, but in my case it has certainly been more in capital gain than my teaching salary.
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I have owned a home “back home” for ten years. My son lived in the house for a few years while he attended college. We then let a math teacher from the local high school live in the house for free in exchange for taking care of the place and paying the utilities. We did this with another teacher from the school when he moved to a different city. We did come back in the Summer month and were all together in the house. We eventually sold it and purchased another home that we moved into and lived in for about 5 years. We now have a home in Mexico but keep the one in the States. A friend lives in it and cares for it. It’s increased in value at least 40%. It’s a great investment. We did pay cash each time which took a lot of pressure off us. It could be a very different experience if you were dependent on renters to help you make the mortgage payment. The stock market is a fools game.
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My husband and I just purchased our first home in the US, even though we haven’t lived there in well over a decade. We paid in cash so that we didn’t have to deal with a mortgage and have family living there in exchange for them taking care of the property. In our case, the prices in our desired area were increasing at such a rapid rate that we likely would have been priced out if we waited too much longer. The pros for us are that we are helping family, diversifying our investment portfolio, and having a place to spend summers. I do not know if we would have made the same choice if we didn’t have trustworthy “renters” (even though they only pay utilities) ready to go.
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During my first six years abroad, I owned a home which I rented out through an agency. That agency allowed me to select my renters, and I could view credit history and scores and assess the debt-to-income ratio of prospective renters. Having worked in mortgage lending, I chose the leasing agent with those provisions. I had an excellent experience.
After 6 years abroad, I knew that I had no plan to move back into the home. It was 10 years old, and not where most of my family and friends were. So I sold it (before the appliances started dying and repairs would be needed on the wooden deck). Because my renters were impeccable, I got top dollar, even in 2016!
Mine was a great experience. But t I can’t speak for everyone.
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