We're a teaching couple with 20 years experience. We've done about 10 overseas and will probably do another 8-10 before retirement. We were kind of late to the game, but in the last few years we've been investing in ETFs (exchange traded funds) in the U.S.
We don't know where we'll wind up after retirement. Maybe back in the U.S. but very likely somewhere less expensive. But our kids will probably go to university in the U.S., so we've been thinking about buying a piece of property as an investment. With the place we have in mind we could probably collect rent that would be just a bit more than the mortgage. We're also hoping this will earn us in-state tuition for the kids (although I've heard that owning property alone might not be enough). And then in some time we'd sell it for what we hope would be a profit or live in it without a mortgage.
Does this make sense or is it better to just keep investing in our diversified market funds? We've been enjoying a relatively modest lifestyle overseas, but we're starting to get worried without any pension and not much in social security earnings. Any advice appreciated.
Investment Advice for Americans
Response
Owning property and paying property tax can sometimes be enough to establish domicile for in state tuition factors, the states that dont want state income tax records.
Understand that managing property even if you use a management company is not an investment, its a business. That said it could work for you assuming property values are stable or appreciate. You also have the benefit of real property. I cant say which is better without seeing your portfolio.
If you are worried and have no pension you need to start looking at the EU or heading back to your HOR (assuming its not the UK).
Understand that managing property even if you use a management company is not an investment, its a business. That said it could work for you assuming property values are stable or appreciate. You also have the benefit of real property. I cant say which is better without seeing your portfolio.
If you are worried and have no pension you need to start looking at the EU or heading back to your HOR (assuming its not the UK).
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eion_padraig
- Posts: 408
- Joined: Sat Dec 11, 2010 8:18 pm
Re: Investment Advice for Americans
@justlooking,
I work with students who are applying back to the US for university and their parents owning property is usually not enough to establish residency for the purposes of in-state tuition. There is variation from state to state. Even within the same state university system there can be different decisions made. The states with well-regarded public universities tend to be the toughest on it. So, while property may be a good investment for other reasons, it's not likely to give your kids residency.
Have you looked into the books by Andrew Hallam? He was (formerly I think) a teacher at Singapore American School. His first book is "poor Teacher" and his later one is "The Global Expatriate's Guide to Global Investing". He gives some good advice about thinking through this question and what things to avoid. One thing he discusses are there being some terrible players that try to sell crappy investments to international teachers at conferences or even visiting schools that people get suckered into because they don't know any better.
He recommends a few good companies like Vanguard for low-cost investing.
Good luck.
Eion
I work with students who are applying back to the US for university and their parents owning property is usually not enough to establish residency for the purposes of in-state tuition. There is variation from state to state. Even within the same state university system there can be different decisions made. The states with well-regarded public universities tend to be the toughest on it. So, while property may be a good investment for other reasons, it's not likely to give your kids residency.
Have you looked into the books by Andrew Hallam? He was (formerly I think) a teacher at Singapore American School. His first book is "poor Teacher" and his later one is "The Global Expatriate's Guide to Global Investing". He gives some good advice about thinking through this question and what things to avoid. One thing he discusses are there being some terrible players that try to sell crappy investments to international teachers at conferences or even visiting schools that people get suckered into because they don't know any better.
He recommends a few good companies like Vanguard for low-cost investing.
Good luck.
Eion
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justlooking
- Posts: 118
- Joined: Sat Feb 14, 2009 1:02 am
Re: Investment Advice for Americans
Thanks, Eion. We are familiar with this guy. In fact, we moved our money out of schemes set up with the approval of schools and into ETFs. And the funds are doing well. Just wondering if we should diversify even more by buying a property too. Lots to think about.
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eion_padraig
- Posts: 408
- Joined: Sat Dec 11, 2010 8:18 pm
Re: Investment Advice for Americans
I've been thinking about the same thing.
Property is a tough one. I have some that's being rented out and making more than the mortgage, but I had some trouble with the renters and late rent last year that was a real hassle. It got worked out, but I haven't set my eyes on the property for a while. It's also not in an area I see returning to and not near any family of mine. My family is somewhere I don't think I'd retire to either and the cost is high for buying property to rent in the area they live. I'm paying down the mortgage at a pretty good pace, but it's not without some stress when I think about it.
I envy those folks who have family that they trust to look over property and serve as property managers.
I've had colleagues who have done really well with property back in North America and people who have had major hassles (my looks like nothing in comparison) with tenants that have really damaged their property or major repairs due to thinks like flooding. I think it's a matter of how much risk you are willing to take to return a profit, just like other investments.
If I knew I wanted to return to a certain place in the US when I retired, then I'd be much more likely to buy a place there.
Eion
Property is a tough one. I have some that's being rented out and making more than the mortgage, but I had some trouble with the renters and late rent last year that was a real hassle. It got worked out, but I haven't set my eyes on the property for a while. It's also not in an area I see returning to and not near any family of mine. My family is somewhere I don't think I'd retire to either and the cost is high for buying property to rent in the area they live. I'm paying down the mortgage at a pretty good pace, but it's not without some stress when I think about it.
I envy those folks who have family that they trust to look over property and serve as property managers.
I've had colleagues who have done really well with property back in North America and people who have had major hassles (my looks like nothing in comparison) with tenants that have really damaged their property or major repairs due to thinks like flooding. I think it's a matter of how much risk you are willing to take to return a profit, just like other investments.
If I knew I wanted to return to a certain place in the US when I retired, then I'd be much more likely to buy a place there.
Eion