R2I challenges. Need guidance.

r2i_june_08 · Post by **r2i_june_08** » Sat Jan 26, 2008 8:25 pm

Guys,

I am USC, planning to R2I between June - Dec of 2008.

Here is my situation. Will appreciate if I can get some feedback from folks in this community.

Current Situation:
1. I have a house in suburbs of Mumbai which is fully paid.
2. I have around USD 110K ( ~43 Lakhs), in US, in stocks, MFs and CDs.
I plan to transfer this to India in 2/3 transactions.

3. Plus I have around (10 Lakhs) in India, in stocks/MFs/Cash
4. I have around USD 100K in 401(k) ( Mine = USD 60K , Spouse = USD 40K)
5. My monthly expenses in Inida, will be around Rs 50K post R2I. I plan to take up a job after some time.

6. I have a house in US, which needs to sold or rented out. With the housing market in doldrums, I am not sure if I can find any buyer. I am looking at least USD 30K loss/bring to settlement, if I were to sell the house in
today's market.

7. I also have student loan of around $30K, which I plan to payoff before I R2I.

Questions:
1. I will be having around 50+ lakhs upon R2I. Is that sufficient for semi-retired?

2. What should be my strategy for house.
I have 3 options : a. Sale b. Rent c. Foreclose ?

Selling is extremely difficult in my area.( Northen Virginia). I prefer selling now, because market will not improve in coming years. Take the loss and move on ?

If were to rent it out, I can get around 75% of the monthly mortgage payment as Rent. Still need to pay the remaining 25% from pocket.( it may be offset by the tax rebate on Interest).
But if I were to rent it out, I still have to undergo the selling process again in future. My loss may be more.

Third option is to foreclose the house, if I cannot sell it. Foreclosure will destroy my credit history for 7 years and also there can be potential deficiency judgement. ( VA has deficiency judgements).
I will need a good lawyer/agent to handle this situation.

3. If I were to take a loss in selling the house, I will have to withdraw some cash from my 401(K) to cover the loss.
Leave the remaining money in 401(K).
Is it OK to do this ?
Or should I withdraw everyhing from 401(K) in coming years.
I am looking for suggestions/validation of my actions.

SSRK · Post by **SSRK** » Sat Jan 26, 2008 9:31 pm

send me a PM on your Northern VA home details/flyer if you have one--someone I know may be looking to buy a home in the DC area soon if their move pans out & I will keep my eyes open--stay in touch & best of luck with your R2I plans

dheeraj_handa · Post by **dheeraj_handa** » Sat Jan 26, 2008 9:58 pm

If you have 50+ lakhs in India you should be ok , since you have no mortage on Indian home, also my suggestion with 401K is to keep it invested either here or India, if you keep In India you can get good rate, but keeping here may not fetch that, however if you remove you may have to pay penalty so you have to think on all that, regarding house its better to sell it off before R2I

idlyvadasambar · Post by **idlyvadasambar** » Sat Jan 26, 2008 10:52 pm

1. I will be having around 50+ lakhs upon R2I. Is that sufficient for semi-retired?

IMO, it probably will be enough barring any future major expenses. may also depend if you have kids and how many (they will be a growing expense as they grow up). try not to lose any money on your house selling front.
also, if you want to be semi-retired depends on what kind of job/biz you will be doing and how much it will generate.

r2i_june_08 · Post by **r2i_june_08** » Sat Jan 26, 2008 11:12 pm

Right...Moving 401(K) to India may be better in long run if invested in proper MTFs and stocks. Since I will be withrawing in small amounts in future, I may end up paying less tax. But I will be hit with penalty of 10%