Sell overseas land or not

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avgguy1
Posts: 29
Joined: Fri Dec 29, 2023 4:10 pm

Sell overseas land or not

Post by avgguy1 »

Hello All,
My parents have a piece of land at a beach area in Vietnam. They bought it for $30,000 in 2010. Value peaked in 2019 but because of Covid 19, the real estate market stays put. Now the estimated value of the land is around $200,000. If sold, the money will be shared equally by 3 children (I'm one of them).
The question is: should my parents continue to keep the land for a few years more to wait if the value goes up. Or should they sell it now so each of the children would get around $60,000 to invest (for example VTSAX)? Of course if I and my siblings need the money now, we would convince our parents to sell. But we can survive without that money.
But in your opinion, which way is better? Sell the land later or now?
Thank you.
exodusNH
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Joined: Wed Jan 06, 2021 7:21 pm

Re: Sell overseas land or not

Post by exodusNH »

avgguy1 wrote: Sat Jan 20, 2024 3:45 pm Hello All,
My parents have a piece of land at a beach area in Vietnam. They bought it for $30,000 in 2010. Value peaked in 2019 but because of Covid 19, the real estate market stays put. Now the estimated value of the land is around $200,000. If sold, the money will be shared equally by 3 children (I'm one of them).
The question is: should my parents continue to keep the land for a few years more to wait if the value goes up. Or should they sell it now so each of the children would get around $60,000 to invest (for example VTSAX)? Of course if I and my siblings need the money now, we would convince our parents to sell. But we can survive without that money.
But in your opinion, which way is better? Sell the land later or now?
Thank you.
Unless someone intends to build a house there, sell the land. The next earthquake that causes a tsunami could render that property unsellable.
bob60014
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Re: Sell overseas land or not

Post by bob60014 »

Much easier to sell now while they are still with us, I would think.
henry
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Joined: Fri Mar 16, 2007 3:33 pm

Re: Sell overseas land or not

Post by henry »

bob60014 wrote: Sat Jan 20, 2024 4:38 pm Much easier to sell now while they are still with us, I would think.
This was a concern for one of my relatives as well. Her parents owned overseas land in their native country. She's US born and can barely speak her parents' native language, and hasn't been to the country in years. Parents were getting older and she saw how difficult it would be for her to navigate selling this land this without them, so she encouraged her parents to sell while they were still alive, which they did.
Topic Author
avgguy1
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Joined: Fri Dec 29, 2023 4:10 pm

Re: Sell overseas land or not

Post by avgguy1 »

henry wrote: Sat Jan 20, 2024 5:33 pm
bob60014 wrote: Sat Jan 20, 2024 4:38 pm Much easier to sell now while they are still with us, I would think.
This was a concern for one of my relatives as well. Her parents owned overseas land in their native country. She's US born and can barely speak her parents' native language, and hasn't been to the country in years. Parents were getting older and she saw how difficult it would be for her to navigate selling this land this without them, so she encouraged her parents to sell while they were still alive, which they did.
I forgot to disclose that my parents have gifted the land to my youngest sister who resides in the US. She grew up in Vietnam so there's no language barrier. She's only 30 y.o. so she'll have time to wait for a good selling opportunity to come.
henry
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Joined: Fri Mar 16, 2007 3:33 pm

Re: Sell overseas land or not

Post by henry »

avgguy1 wrote: Sat Jan 20, 2024 7:14 pm
henry wrote: Sat Jan 20, 2024 5:33 pm
bob60014 wrote: Sat Jan 20, 2024 4:38 pm Much easier to sell now while they are still with us, I would think.
This was a concern for one of my relatives as well. Her parents owned overseas land in their native country. She's US born and can barely speak her parents' native language, and hasn't been to the country in years. Parents were getting older and she saw how difficult it would be for her to navigate selling this land this without them, so she encouraged her parents to sell while they were still alive, which they did.
I forgot to disclose that my parents have gifted the land to my youngest sister who resides in the US. She grew up in Vietnam so there's no language barrier. She's only 30 y.o. so she'll have time to wait for a good selling opportunity to come.
Well, it's good to hear that those are not concerns.

I guess something else to consider are the carrying costs. Are there land or property taxes that your sister or your parents have to pay every year? I am guessing this is undeveloped land but are there are there any costs for maintainance and upkeep? Is this a lot in a developement? Are there association fees that have to be paid? Like an expense ratio on a mutual fund, costs can put a drag on any investment.

Not knowing anything about undeveloped beach property in Vietnam, I'm going to guess it's a riskier investment compared to something like VTSAX. Risker as in having a higher chance to underperform VTSAX, but with smaller chance for very high return compared to VTSAX.

Your sister is 30 years old. Having $60,000 to invest at such a young age could be a big deal. Depending on when she is going to retire, $60,000 invested today in VTSAX with dividends reinvested (or reinvested elsewhere in her portfolio), could really add up over the next 25 to 35 years.

But maybe you, your sister and your other sibling, are confident enough of your retirement finances that you don't even need to consider what happens with this land. In that case, maybe keep the land and consider it an alternative investment in your portfolio. Maybe it will add some diversification benefit. And if it doesn't appreciate as well as you had hoped, no one's retirement gets derailed by holding on to it.
Topic Author
avgguy1
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Re: Sell overseas land or not

Post by avgguy1 »

henry wrote: Sat Jan 20, 2024 8:21 pm
avgguy1 wrote: Sat Jan 20, 2024 7:14 pm
henry wrote: Sat Jan 20, 2024 5:33 pm
bob60014 wrote: Sat Jan 20, 2024 4:38 pm Much easier to sell now while they are still with us, I would think.
This was a concern for one of my relatives as well. Her parents owned overseas land in their native country. She's US born and can barely speak her parents' native language, and hasn't been to the country in years. Parents were getting older and she saw how difficult it would be for her to navigate selling this land this without them, so she encouraged her parents to sell while they were still alive, which they did.
I forgot to disclose that my parents have gifted the land to my youngest sister who resides in the US. She grew up in Vietnam so there's no language barrier. She's only 30 y.o. so she'll have time to wait for a good selling opportunity to come.
Well, it's good to hear that those are not concerns.

I guess something else to consider are the carrying costs. Are there land or property taxes that your sister or your parents have to pay every year? I am guessing this is undeveloped land but are there are there any costs for maintainance and upkeep? Is this a lot in a developement? Are there association fees that have to be paid? Like an expense ratio on a mutual fund, costs can put a drag on any investment.

Not knowing anything about undeveloped beach property in Vietnam, I'm going to guess it's a riskier investment compared to something like VTSAX. Risker as in having a higher chance to underperform VTSAX, but with smaller chance for very high return compared to VTSAX.

Your sister is 30 years old. Having $60,000 to invest at such a young age could be a big deal. Depending on when she is going to retire, $60,000 invested today in VTSAX with dividends reinvested (or reinvested elsewhere in her portfolio), could really add up over the next 25 to 35 years.

But maybe you, your sister and your other sibling, are confident enough of your retirement finances that you don't even need to consider what happens with this land. In that case, maybe keep the land and consider it an alternative investment in your portfolio. Maybe it will add some diversification benefit. And if it doesn't appreciate as well as you had hoped, no one's retirement gets derailed by holding on to it.
Thanks for your input, Henry. All three of us aren't comfortable with our current financial positions. We can survive but our lives would be much better with the help of $60k for each. Perhaps in the thread title I shouldn't ask to sell or not. The question should be 'when'. We don't want to sell it for $200K and then a few years later that land value would increase significantly. We need money but we can wait 2-3 years. Currently the area is already developed with residential houses, hotels, a golf course, restaurants, etc. Property tax for our land is affordable. It's a very peaceful bay.
LotsaGray
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Re: Sell overseas land or not

Post by LotsaGray »

avgguy1 wrote: Sat Jan 20, 2024 7:14 pm
henry wrote: Sat Jan 20, 2024 5:33 pm
bob60014 wrote: Sat Jan 20, 2024 4:38 pm Much easier to sell now while they are still with us, I would think.
This was a concern for one of my relatives as well. Her parents owned overseas land in their native country. She's US born and can barely speak her parents' native language, and hasn't been to the country in years. Parents were getting older and she saw how difficult it would be for her to navigate selling this land this without them, so she encouraged her parents to sell while they were still alive, which they did.
I forgot to disclose that my parents have gifted the land to my youngest sister who resides in the US. She grew up in Vietnam so there's no language barrier. She's only 30 y.o. so she'll have time to wait for a good selling opportunity to come.
You talk about your parents choosing to sell the land. But then you say that they have gifted it to your sister. If truly gifted, then selling or not is up to your sister. Then there is the next inconsistency, you talk that the cap gains is to be split 3 ways between siblings. But fact is that only happens is sister chooses to do so. It is her property. Not only does she decide to sell or not but she also gets the $. If she chooses to share the proceeds, then she will need to gift them to the other two siblings. But she is going to have to pay 100% of the taxes on the gains (about $170K per your estimates). So it won't be the $180K your estimated split 3 ways.

So you need to confirm who actually holds the title, who will pay the taxes, and if that person will choose to sell as well as if they will choose to share the proceeds.

But to answer your question about should you sell, the easy way IMO is the old question if you did not own it would you buy it today. Sure you can hold it and hope it goes up (back up?) but then if it gets to the same preCV highs, will you just come back and ask it is going up in value should I sell. No one can predict the exact future value with certainty. Even without some black swan event which could wipe out the value anytime, there is plenty uncertainty in RE. Not saying you should sell as that again is your choice. Just saying that no one can give you a certain answer.
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Metsfan91
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Re: Sell overseas land or not

Post by Metsfan91 »

avgguy1 wrote: Sat Jan 20, 2024 10:58 pm
henry wrote: Sat Jan 20, 2024 8:21 pm
avgguy1 wrote: Sat Jan 20, 2024 7:14 pm
henry wrote: Sat Jan 20, 2024 5:33 pm
bob60014 wrote: Sat Jan 20, 2024 4:38 pm Much easier to sell now while they are still with us, I would think.
This was a concern for one of my relatives as well. Her parents owned overseas land in their native country. She's US born and can barely speak her parents' native language, and hasn't been to the country in years. Parents were getting older and she saw how difficult it would be for her to navigate selling this land this without them, so she encouraged her parents to sell while they were still alive, which they did.
I forgot to disclose that my parents have gifted the land to my youngest sister who resides in the US. She grew up in Vietnam so there's no language barrier. She's only 30 y.o. so she'll have time to wait for a good selling opportunity to come.
Well, it's good to hear that those are not concerns.

I guess something else to consider are the carrying costs. Are there land or property taxes that your sister or your parents have to pay every year? I am guessing this is undeveloped land but are there are there any costs for maintainance and upkeep? Is this a lot in a developement? Are there association fees that have to be paid? Like an expense ratio on a mutual fund, costs can put a drag on any investment.

Not knowing anything about undeveloped beach property in Vietnam, I'm going to guess it's a riskier investment compared to something like VTSAX. Risker as in having a higher chance to underperform VTSAX, but with smaller chance for very high return compared to VTSAX.

Your sister is 30 years old. Having $60,000 to invest at such a young age could be a big deal. Depending on when she is going to retire, $60,000 invested today in VTSAX with dividends reinvested (or reinvested elsewhere in her portfolio), could really add up over the next 25 to 35 years.

But maybe you, your sister and your other sibling, are confident enough of your retirement finances that you don't even need to consider what happens with this land. In that case, maybe keep the land and consider it an alternative investment in your portfolio. Maybe it will add some diversification benefit. And if it doesn't appreciate as well as you had hoped, no one's retirement gets derailed by holding on to it.
Thanks for your input, Henry. All three of us aren't comfortable with our current financial positions. We can survive but our lives would be much better with the help of $60k for each. Perhaps in the thread title I shouldn't ask to sell or not. The question should be 'when'. We don't want to sell it for $200K and then a few years later that land value would increase significantly. We need money but we can wait 2-3 years. Currently the area is already developed with residential houses, hotels, a golf course, restaurants, etc. Property tax for our land is affordable. It's a very peaceful bay.
Sell the land now. The land is in your sister's name. What would happen if she changes her mind later and doesn't want to share with you? You'll get nothing. It is better to sell it now and distribute the proceeds among the 3 siblings.
"Know what you own, and know why you own it." — Peter Lynch
toddthebod
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Re: Sell overseas land or not

Post by toddthebod »

avgguy1 wrote: Sat Jan 20, 2024 7:14 pm I forgot to disclose that my parents have gifted the land to my youngest sister who resides in the US. She grew up in Vietnam so there's no language barrier. She's only 30 y.o. so she'll have time to wait for a good selling opportunity to come.
Have gifted? Past tense? Then what do your parents have to do with this? And will your sister give you $70,000 when she sells it?
Topic Author
avgguy1
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Joined: Fri Dec 29, 2023 4:10 pm

Re: Sell overseas land or not

Post by avgguy1 »

LotsaGray wrote: Sat Jan 20, 2024 11:36 pm You talk about your parents choosing to sell the land. But then you say that they have gifted it to your sister. If truly gifted, then selling or not is up to your sister. Then there is the next inconsistency, you talk that the cap gains is to be split 3 ways between siblings. But fact is that only happens is sister chooses to do so. It is her property. Not only does she decide to sell or not but she also gets the $. If she chooses to share the proceeds, then she will need to gift them to the other two siblings. But she is going to have to pay 100% of the taxes on the gains (about $170K per your estimates). So it won't be the $180K your estimated split 3 ways.

So you need to confirm who actually holds the title, who will pay the taxes, and if that person will choose to sell as well as if they will choose to share the proceeds.

But to answer your question about should you sell, the easy way IMO is the old question if you did not own it would you buy it today. Sure you can hold it and hope it goes up (back up?) but then if it gets to the same preCV highs, will you just come back and ask it is going up in value should I sell. No one can predict the exact future value with certainty. Even without some black swan event which could wipe out the value anytime, there is plenty uncertainty in RE. Not saying you should sell as that again is your choice. Just saying that no one can give you a certain answer.
I appreciate your input. My parents will pay for all the sale tax. My sister'name in the title is just a way to reset the clock because the age of my parents. But there's never a doubt among the family members that my sister would keep the land for herself.
Sprucebark
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Re: Sell overseas land or not

Post by Sprucebark »

I used to work at a company that did business in Vietnam. Vietnam is a very complicated place to do land transactions. I didn’t think you could ever “own” the land either- I thought it was all owned by the state.

It was pretty difficult to move money too.
halfnine
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Re: Sell overseas land or not

Post by halfnine »

Owning foreign land and real estate is something my parents as well as siblings do as a method of diversification. What they don't do, though, is have more invested in land than in the market. If this is a substantial part of any sibling's NW then it would be in the best interest to sell it sooner rather than later.
inout123
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Re: Sell overseas land or not

Post by inout123 »

Hi avgguy1,

I'm a Vietnamese currently living in a beach area of Vietnam (which I think where your land is :) ). If you are not in a hurry perhaps you should wait for 2-3 years, right now is the bottom I think. One factor is that Viet expats can own property soon, besides the usual factors of economic cycles.
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David Jay
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Re: Sell overseas land or not

Post by David Jay »

avgguy1 wrote: Sat Jan 20, 2024 10:58 pmWe don't want to sell it for $200K and then a few years later that land value would increase significantly.
This dilemma won’t ever change. In 2-3 years you will have the same dilemma. It is the nature of speculative investments.

In my opinion, if all siblings can use the money now, sell now.
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
Carefreeap
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Re: Sell overseas land or not

Post by Carefreeap »

David Jay wrote: Tue Apr 02, 2024 9:24 am
avgguy1 wrote: Sat Jan 20, 2024 10:58 pmWe don't want to sell it for $200K and then a few years later that land value would increase significantly.
This dilemma won’t ever change. In 2-3 years you will have the same dilemma. It is the nature of speculative investments.

In my opinion, if all siblings can use the money now, sell now.
+1

The land has appreciated nicely. You guys could use the money now. There's no guarantee that the land will go up. You might want to look up the concept of "opportunity cost".

As mentioned above your sister may be the sweetest person alive. But if your parents pass and she's got a partner that feels she entitled to the whole piece things can get very ugly fast. Sell it now and avoid the problem.
Every day I can hike is a good day.
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