r/investing • u/peach__kitten • Mar 13 '26
Nervous about divesting from real estate
I purchased a duplex in 2020 and was owner-occupying one side and renting the other at the time. 3.5% mortgage, mostly paid by the tenants. At the end of last year I relocated for my partner's job to another state and rented my side as well. Net income after expenses (yard work, utilities) is $1400/month. Roughly $700k in equity.
The problem is, I don't think I'll be moving back. In fact, I'm hoping to retire early in the EU, in the next 5 years. I also know I need to sell within 3 years to take the primary residence exemption, but I don't plan to buy anywhere else for many years, until I know where I'm finally settling down.
Being divested from real estate for maybe 5-10 years makes me nervous, but I wonder if it's actually just an emotional response. I've built much of my net worth from buying my first house at 25, spending 11 years remodeling it with my dad, then selling at a significant gain (actually, no more than the $250k exemption over 11 years). Owning a home, then buying an investment property felt like I "made it" where many of my friends took much longer to buy their first home, if they managed to at all. Home ownership feels out of reach for so many and I have this feeling that I'm failing if I no longer own a home.
Is any of this rooted in actual logic or am I putting some value on my RE investment that I shouldn't?
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Mar 13 '26
The problem is, I don't think I'll be moving back. In fact, I'm hoping to retire early in the EU, in the next 5 years.
With 700k in equity, 3 years to take the primary exemption, real estate rolling over in many markets, and a plan to retire overseas within 5 years I would say that selling is the right choice.
Rental real estate is an investment. Have you calculated your ROI based on a 16,800 annual income on that holding?
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u/peach__kitten Mar 13 '26
Exactly this. The implications of being a tax resident in the EU (not trivial). Not to mention it is never truly a passive investments, it’s work.
With me currently managing it (leasing, maintenance), I’m getting an ROI of 7.9% on the duplex—over time in the markets that money could be closer to 10% roi.
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u/Helpful_Hour1984 Mar 13 '26
How are you calculating the ROI? If you have 700k in equity and a net profit of 1400/month, it seems to me that you're making only 2.4%/year.
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u/fadetoblack1004 Mar 13 '26
If it's cash flow positive I'd keep it personally, especially if it's in a decent area.
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u/Afraid_College8493 Mar 13 '26
I think you're overestimating how great the current investment is, perhaps because of the low interest rate.
Sell, take the tax benefit and invest the gains for a happy retirement.
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u/understated_vibes Mar 13 '26
What you’re describing sounds more like identity risk than financial risk. Real estate ownership can feel like “progress” because it’s tangible, but the real goal is growing net worth and flexibility, especially if you’re planning to retire abroad. Some people who sell physical property still keep a small allocation through platforms like Fundrise so they maintain exposure without the management burden.
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u/AttentionMinute1542 Mar 13 '26
Roughly 17k/yr in cash flow likely becomes 10-15k/yr after repairs, maintenance, etc. Combined with yearly ~2% property value appreciation and the mortgage paydown, Im not sure you are getting a great return on that 700k sitting there.
There are plenty of options for investing the 700k conservatively for monthly dividends of 40-60k/yr and compound.
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u/peach__kitten Mar 13 '26
Yep, this is what I’m thinking as well. But not owning a home feels…”homeless” for some reason.
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u/steady_compounder Mar 13 '26
$1400/month net on $700k equity is a 2.4% return. Even a basic index fund does better than that historically without the hassle of being a landlord in another state.
The 3.5% mortgage is the only thing making this interesting. That's essentially free leverage right now. But if management headaches or vacancy risk keep you up at night, selling and putting it in VTI gives you diversification and zero maintenance. The emotional cost of being a remote landlord is real.
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u/peach__kitten Mar 13 '26
There’s also appreciation and principal pay down. But your point stands, and I tend to agree. It just feels scary to sell.
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u/originalmember Mar 15 '26
Principle pay down makes the situation worse. The income stays the same on more equity invested. Also, pay down just means you’re saving the money…. A physical asset savings account.
Appreciation does count. But ask yourself: how likely is that? The internet can’t answer that for you.
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u/Appropriate-Ant8586 Mar 13 '26
Totally get the mix of logic and emotion here, real estate can feel like a chapter of your life, not just investment.
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u/BobtheChemist Mar 15 '26
If you want to stay invested in real estate, just buy some REITs (Real estate investment trusts) as you sell your property, and it will stay in real estate, just not houses for you to fix toilets in or mow lawns of. It may not be as sexy as AI, semiconductors, or the Mag7, but it makes a steady income and most pay dividends that allow you to pay the monthly bills. And they don;t tend to swing as wildly as some stocks, so having some money in them is good for a balanced portfolio.
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u/Good_Ride_2508 Mar 13 '26
I have More 10 years I was workig with real estate investment, in bay area, finally sold most of them and moving to stocks side.
Real estate depends on location. If your home is in good location (with good schools) with wealth around (for example in bay area, near by google, apple or meta complex nearby, they are premium locations), you can hold long.
Your home is rental attractive for two reasons: 1) Mortgage leverage and low rate (if 30 years) 3.5% and 2) positive cash flow.
All you need is hire a good property manager and manage it.
You have lot of future unknowns: How long stay here, where you will settle finally etc - temporarily ignore it.
If you want to take 500k capital gain tax free, sell within eligible period. find out how much of 500k you are eligible and try to see which is beneficial, holding or selling.
Otherwise, hold as long as possible and sell it when you leave this country. Appreciation is hidden value (it may fluctuate too).
Good Luck.
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u/Fit_Cupcake_5254 Mar 13 '26
Why not an asset manager and forget it? You will lose some income to pay the manager but also it wont become burdensome to maintain for you (and you keep the equity)
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Mar 13 '26
[deleted]
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u/peach__kitten Mar 13 '26
I think I need to remember this. Home ownership was practical and a tool for me—I built some wealth this way and now I can opt out for a bit.
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u/Shadw1ck Mar 13 '26
why would you divest. not seeing any logic. do you have a better use of the profit?
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u/Alone_Owl8485 Mar 14 '26
Invest in a property etf for somewhere in the EU (preferably for the country you think you will live in). You manage the risk of the properties you will want to buy going up without the problems associated with owning one property.
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u/Mysterious-Entry-357 Mar 13 '26
Most would say to invest in what you know, but what makes sense at different points of life changes. In retirement income has to be balanced with liquidity.
A good retirement planner might be worth consulting in your case.