Where will you keep your rental profits?
I get asked this a lot. Should I keep my rental profits in the USA or transfer them back home? Well, as always, this is down to your own financial circumstances. Whether you want to rely on your new profits in the here and now, or think of them as savings that you can use later.
The question isn’t really anything to do with cash flow. It’s more to do with the weakness of the dollar against the strength of the pound. In essence what we’re talking about is dabbling on the
FOREX (Foreign Exchange.)
Lets say the dollar remains weak against the pound for the next five years and in that time all or most of the rental profit you earned was left in your US account. Then something changes, the US
dollar grabs a hold and starts to climb its way back. Next thing we know its at $1.5 to the £1. If you exchange your dollars for pounds your profits have increased even further.
example 1: bringing profits back now. (dollar at 2 to 1)
$10,000 /2 = £5000
example 2: wait 4-5 years. (dollar at 1.5 to 1)
$10,000 /1.5 = £6,666
So, if you don’t have to exchange your profit, then wait a while.