to sell, or not to sell

[bwglaw]

I am at a dilemma whether to sell or not to sell. As many of you may know I am currently residing in the Republic of Georgia.

Last year (Sept 05) I bought a newly built property for £19,000. I am currently spending around £8,000 to have it all fitted out and is near completion. I have been advised it will be worth $92000 when completed, that is about £52,000. It has the potential to rent out for $800, about £400 per month - however, not sure of the demand because can only rent to business people i.e Americans, Russians etc

My wife is afraid to let go of the investment and if I decide to sell I am quite happy to sell, however my wife is attached to the property. I am thinking to sell and put down on a £80,000 house in the Midlands to rent out.

Should I sell...? Opinions appreciated indeed ;) We do have the option to put a deposit on another property here, which will be ready in 3 years time. I don't have any mortgages and don't intend to start a long-term mortgage (i.e. more than 10 years)

[crus]

Hmmm,

nice profit, why not take some out against that profit and do another one or two for profit, which should be easier with your aquired local knowledge from the previous one keeps the missus happy and the money working?

D

[bwglaw]

Afraid the banks are not that advanced here. I own the property 100% and cannot take some out. Its all or nothing. I am trying to persuade my wife to sell and split to put on 2 or 3 £80k houses to rent, which would be paid off in under 10 years.

I could put all on the £80k house and have a small mortgage to pay off within 5 years! My wife is from Georgia so it is first time she has had a property here especially with many struggling to get one and she is not knowledgable how the UK property market works but has an idea.

At 31 I want to be mortgage free! ...or no more than 10 years.

[crus]

Your doing well so far,

I still have 100k round my neck.

How do the deeds work, you may be able to borrow privately, for a few extra points. I guess it depends on the risk.

D

[bwglaw]

Borrowing here is not an option because I am not a resident and have not been here for 1 year at least and must have income deriving from this country and not the UK! Bit of a catch 22.

Deeds?!...huh...here is a more straightforward buying process. Took me a total of 12 hours to buy the new development from start to finish. Ownership is transferred by Notary and the Govt makes it official.

Credit is not a problem, it is more about releasing the profit. I can buy the £80k house without selling the property here but would only put a 5% deposit and would be looking at a 25-year mortgage. Whereas a £50k deposit and a £30k mortgage would come to £350/month over 5 years. I can rent it out for £500 anyway!

Upon selling I could put a deposit down on another development and wait 3 years to reap similar profits with several properties in the UK. If only I could convince the wife, even though its my dosh! ;)

[crus]

OK,

so your plan is to return to the UK, or stay in Georgia,
if its notary based, then transfer part ownership under contract to a private individual for a % under value and offer a % return over 3 years by way oif interest. Balance this against risk, build in your experience to make it work and in the background of an icy UK market you will probably get a taker.

Or, form an offshore company, in Jersey for example, transfer ownership of the property to the company then borrow against it as an asset. You can move the shares about from person to person easily and as value increases you have the assets protected offshore.

I 'believe' this is often done with 500k plus to avoid inheritence tax, but the ease of ownership should work here, with the right person.

D

[Jayne]

Hi,

I'd sell it and buy a UK property, either with a small mortgage or see what you could get for cash at a property auction. The UK rental market is booming at the moment, young people cannot afford mortgages so most are renting and I personally don't think it will change too soon.

Jayne :D

[clairemackaness]

If your a UK resident but living in US, why not re-mortgage your property in Georgia with a UK bank and then use the mortgage to buy further investment properties.

My in-laws live in France and thats what they did

[Astaroth]

A 9% return certainly isnt bad for a rental property (a friend who was in the property development game always aimed for a 10% return) but it may be more of a concern if you feel the market is weak.

With neither being a financial advisor nor knowing your financial situation I doubt I am in the correct possition to give you advice one way or the other. Personally I am young, have a decent pension scheme and have growing savings so I would probably look to sell the property for a tidy profit but there are plenty of circumstances where a long term income may be a more preferable solution rather than quick cash

[crus]

Whoops, made an assumption when you said Georgia, I assumed you meant the country?

Was I right, or making an ASS out of U and ME.

D

[bwglaw]

The property is in Tbilisi, Georgia - not in the US. I am a British Citizen and I am only here for 3-4 months and expect to return either end of this month or Feb.

The share equity does not operate here and its either you own it or you don't. Bank interest rates here are about 14% per annum!!

The market here, I would not say it is weak, but it does seem rather suspicious that the property market is booming only 2 years after corruption was eradicated and new govt came into power. The average income here, eg; my wife's sister is an Auditor and she gets 600 lari/month (£200) and yet many cannot buy in the city unless you are in business.

Borrowing from a UK bank is not an option I want to take because I can easily put a 5% deposit down and get the house I want, but I am looking to be mortgage free ASAP to generate an income from the rented property.

Off-setting to an offshore company...hmm... a new arena for me so would have to look into it. I go to Jersey often when I am sailing ;)

[bwglaw]

Have now found a solution. Wife now convinced after talking my ideas with her family and they think it is a good idea. We will sell the property for a minimum of $90,000 and buy the other new development we wanted for $43000 (which will be finished in 3 years) and the other half to put down on a house in the UK, we will then have the best of both worlds and reap more profit in 3 years!

I will be offering my property services to others shortly via a website if anyone wants any advice on investing over here.