Moscow/Sochi...Keep/Flog?

CKhalvashi

I think I've mentioned somewhere that we've got 5 properties in Russia, 3 of which are rented to locals.

One of the Moscow properties I am keeping either way, as it's MF and I'm on a Russian contract for weeks at a time. Below is what's left.

All prices are USD, and it's the exchange rate that's worrying me about selling.

Central Moscow, paid $490k (in shell condition), spent $200k-ish, worth $800k-ish. Rented for $3k/month, $116k mortgage remaining at 8.5%
2x Central Sochi, paid $20k each (in reasonable-ish condition), spent $90k on the two, worth $180k-ish each. Rented for $800/month each
1x Sochi Outskirts (4 bed house), paid $110k, spent $70k, worth $180k-ish, short term rented for $100 daily, 5-15 days/month.

All Sochi properties were bought in cash.

There are various aspects to this one, which are not completely clear from the outset, one of which being that Sochi is the host city of the Winter Olympics in 2014. I don't have a clue what this will do to the local economy afterwards, is the reason I'm asking now.

The tax man is also seeing more than I am

Ideas please?

CK

vivatifosi

Well, first I'd keep anything that was important to me for reasons beyond the financial. For example, if you ever wanted to retire to Moscow or Sochi, I'd keep a base of some description there because you don't know what will happen in the future and whether you will have the chance again. You haven't said whether one is important because it was a childhood home... Sometimes housing decisions need to be made for reasons that are about more than immediate financial gain and only you can know that.

Then I'd look at Olympic housing markets and see when they peak pre-games. It probably isn't yet, maybe next year. If you're thinking of getting rid of Sochi, then do it then.

If its a tax issue, is there something else you can do, like put them inside a company to make more tax efficient (I don't know anything about this so that's something you'd need to investigate yourself).

Beyond that I have no idea...

Generali

You're talking about properties with a Net Asset Value of > $1,000,000,000 with income of approx $60,000 a year.

Get proper advice. Advice alone should only cost a couple of grand, maybe not even that. The cost is in getting the paperwork done.

Personally I wouldn't keep too large a %age of my net wealth in Russia as IMO the political risks are huge: AIUI property is often expropriated and I wouldn't want that risk. I have no idea of your personal circumstances and you may have the contacts to be able to mitigate the risk. I have friends in Europe and Asia that can hold property that I wouldn't feel comfortable about due to their connections.

chewmylegoff

CKhalvashi wrote: »

I think I've mentioned somewhere that we've got 5 properties in Russia, 3 of which are rented to locals.

One of the Moscow properties I am keeping either way, as it's MF and I'm on a Russian contract for weeks at a time. Below is what's left.

All prices are USD, and it's the exchange rate that's worrying me about selling.

Central Moscow, paid $490k (in shell condition), spent $200k-ish, worth $800k-ish. Rented for $3k/month, $116k mortgage remaining at 8.5%
2x Central Sochi, paid $20k each (in reasonable-ish condition), spent $90k on the two, worth $180k-ish each. Rented for $800/month each
1x Sochi Outskirts (4 bed house), paid $110k, spent $70k, worth $180k-ish, short term rented for $100 daily, 5-15 days/month.

All Sochi properties were bought in cash.

There are various aspects to this one, which are not completely clear from the outset, one of which being that Sochi is the host city of the Winter Olympics in 2014. I don't have a clue what this will do to the local economy afterwards, is the reason I'm asking now.

The tax man is also seeing more than I am

Ideas please?

CK

go non-dom and sell the lot.

Mr._Pricklepants

Generali wrote: »

You're talking about properties with a Net Asset Value of > $1,000,000,000 with income of approx $60,000 a year.

Yes, 60K on a billion is a bit meagre as yield

PasturesNew

I think we need a Field Trip so we can truly evaluate the situation.... if you can charter a plane for us and accommodate us ... it'll only take about a dozen of us a month to let you know.

Generali

Mr._Pricklepants wrote: »

Yes, 60K on a billion is a bit meagre as yield

LOL! I managed to gain an extra 3 noughts from somewhere.

I should work for the Treasury.

CKhalvashi

Generali wrote: »

Personally I wouldn't keep too large a %age of my net wealth in Russia as IMO the political risks are huge...

...you may have the contacts to be able to mitigate the risk...

Does one of these count?

I don't know what's going to happen with the economy, and neither does anyone else. We bought cheap, and they're worth a fortune in comparison!

CK

michaels

I know you have assets elsewhere as well so having some in a 'petro-economy' area sounds like useful diversification. However the yields on current values seem poor compared to what you might get elsewhere so unless you are expecting significant capital appreciation (I know, SOchi and Olympics) then you might be better with different assets in the same markets? Obviously there are probably lots of tax implication distortions but property is also an illiquid asset potentially subject to malevolent beauracracies whereas cash in the bank can be moved quickly should the need arise.

AFAIK the pre-olympic hype tends to exceed the reality on the ground both during and after the actual events so as Viva says, look in to this more but probably sell in the run up to the event even if this means forgoing a potential short term rental bonanza (which often doesn't materialise).

CKhalvashi

michaels wrote: »

I know you have assets elsewhere as well so having some in a 'petro-economy' area sounds like useful diversification. However the yields on current values seem poor compared to what you might get elsewhere so unless you are expecting significant capital appreciation (I know, SOchi and Olympics) then you might be better with different assets in the same markets? Obviously there are probably lots of tax implication distortions but property is also an illiquid asset potentially subject to malevolent beauracracies whereas cash in the bank can be moved quickly should the need arise.

AFAIK the pre-olympic hype tends to exceed the reality on the ground both during and after the actual events so as Viva says, look in to this more but probably sell in the run up to the event even if this means forgoing a potential short term rental bonanza (which often doesn't materialise).

The thing worth bearing in mind here, in the long run, is that the Sochi properties are in a position to gain 100% of purchase price, year on year, with all hope that the prices don't go down.

Is the most important thing here not to bear that in mind, rather than current value?

CK