Owning two or 1 Property - Good or bad debt?

[Cintrapark]

I am 38 years old.

I own a two bed property in London and the mortgage is around 170,000 GBP (281,000 USD). I believe it is worth around 350,000 GBP (545,000 USD). Right now I'm on an interest only mortgage but will shift to a 25 year repayment one in 2 months.

I'm now living in Tel Aviv, Israel and I bought an off plan apartment which will be ready in two years. Once the building is ready in 2017 I will take out a mortgage of around 140,000 GBP (218,000 USD). My partner will assist in paying off the mortgage even though it will be my apartment. The apartment at that point will be worth around 430,000 GBP (670,000 USD).

I do not plan on returning to the UK.

If I were to sell my apartment in London I would have zero mortgage in Israel AND I could invest the money left over together with the rent from paid by my partner.

In addition, I also have a pension from work and a few investment funds that I contribute to every month (500 USD every month).

The question is this - do I sell the apartment and live mortgage free in Israel, or tough it out so that I ultimately have 2 apartments.

[riverwed070707]

Sell.

[Cintrapark]

Why do you feel I should sell it?

[disneysteve]

Why do you feel I should sell it?

It's difficult enough to be a long distance landlord when the distance is a few hundred miles. You're talking about nearly 4,000 miles and in another country. I would think that the hassles, tax implications, currency conversion, etc. would far outweigh any potential benefit of keeping and renting out the London property.

[Ima saver]

I agree with disneysteve. I would sell. Being a long distance landlord is a pain in the rear.

[riverwed070707]

Why do you feel I should sell it?

Everything Disney Steve said combined with the fact that you didn't give any compelling reason to keep it. You just asked if you should sell and have 0 mortgage + money to invest or tough it out so you have 2 apartments. Whats the value in having 2 apartments? Are you renting it? It is providing supplemental income you are in turn investing or are you just paying on 2 mortgages? I just gathered from the way you posed your question that selling and living mortgage free sounded like the win-win situation.

[AlexM1359]

Those properties in London will only increase in more value. I'm pretty sure the housing marketing there is healthy enough. I'd hold on to them for longer.

[snafu]

I know from experience it's incredibly difficult to manage a property while you live in another country. Real estate is a totally illiquid asset. Much simpler to own International stocks or mutual fund which can be sold any business day/business hours.

If you have a trustworthy, competent manager in London and the property yields sufficient income to pay it's costs, taxes, mortgage, manager,+ at least 1% for maintenance and carrying costs should it become vacant, it might be worth the struggle and frustration of a distant owner until the London real estate market is touted as 'strong.' That would be time to again evaluate your desire to retain the property.