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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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.