sell my apartment now?

Needtomove

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22
Age: 40
Spouse’s/Partner's age: 37

Annual gross income from employment or profession: €35K
Annual gross income of spouse: €34K

Monthly take-home pay: 4,200

Type of employment: e.g. Civil Servant, self-employed: PAYE

In general are you:
(a) spending more than you earn, or
(b) saving?

Breaking even on take-home pay –no savings-
Rough estimate of value of home: €320K
Amount outstanding on your mortgage: €200K, 27 years remaining
What interest rate are you paying? 4.35%

Other borrowings – car loans/personal loans etc:
1. Credit union- owe €4, 500 – have €3000 in shares-obviously ca not touch due to loan
2. Home improvement loan - €4500

Do you pay off your full credit card balance each month? No
If not, what is the balance on your credit card? €1200
Savings and investments: 3K credit union- but see above tied up with loan-

Do you have a pension scheme?
Yes, current fund value €55K


Do you own any investment or other property?
Yes, value €115K, outstanding mortgage €95K.
Rental income covers mortgage.

Ages of children: 4 and 3

Life insurance: Yes, on home mortgage, and through work scheme

What specific question do you have or what issues are of concern to you?

Main questions are on apartment-
apartment would sell for €115k at present.
Rent received= €850pm
Each month pay:
· Mortgage is €690pm month ( incl €50pm off arrears of €1900)
· Letting agent fee €84 ( don’t mind it being this high-very good agency- and is tax deductible)
· Management fees €50
· So, rent received covers all.
But, I must cover all problems/fixtures/issues with the apartment out of my own pocket, plus this €2k tax bill per year- and now there may be something wrong with the boiler there!:(
As you can see we are both on relatively low salaries and as well as usual bills and utilities to pay, as well as loans, there is also a €1050 childcare bill per month to pay. No continguency fund as no savings, so this apartment ( originally my family home- bought 10 years ago- 15 years left on the morthgage) is causing me untold stress.
It’s the usual……feeling that I will “let it go now and make nothing on it after 10 years – and plenty of my own money gone in to it”
I fully realise that I am lucky in that it would seem there is a chance I can sell now, whereas a lot of people would be in a lot of negative equity.
· Owe €95k on mortgage
· Would cost €2400 solicitor between gathering all documents etc- ie management company documents too-
· Agreed with letting agent a fee of 1% plus VAT
· Tax bill for 2014 after all expenses accounted for coming in at €2k, for 2015 would estimate to be similar , so another 2k
· Advertising cost to sell €700 due to estate agent
Overall by my calculations I would be left with €11k if I sold which be great for paying off my credit card/credit union, and household loan.
Judging by above figures, and yield etc. that you experts can work out a lot better than me!!! Would it seem advisable for me to sell now? One has just gone sale agreed for €118k but not on propertypriceregister yet.
In my mind I paid out- initial deposit/doing it up/further investment in furniture etc./taxes…..so not counting in the 7 years mortgage payments when it was home= €30k, or, is that silly to think that way?
Thanks
 
Not sure why you are asking for help with this decision. You have really set out your own case for selling the property very well Ie.
  1. It's currently costing you at least 3k net pa. ie. 2k in tax plus a minimal 1k conservatively for repairs/wear & tear
  2. You have a credit card bill which needs immediate clearance. Interest cost should also be factored in as a cost of holding on to the apt
  3. Sale will produce a minimum of €11k to clear CC and also save you a minimum of 3k pa (outlined above)
  4. Holding on for a higher price is a risk and given your net outlay of 3k pa the capital gain will need to exceed this level each year in order for this action to be profitable.
Assume that you don't currently own this apt. Would you be prepared to invest 11k in the purchase of this property now based on the parameters as outlined above and given your current financial circumstances? If not you should sell!
 
It's currently costing you at least 3k net pa. ie. 2k in tax plus a minimal 1k conservatively for repairs/wear & tear

This is not correct.

Part of the €690 you are paying each month reduces the capital you owe on the apartment. If you keep going as you are in 15 years you will own the apartment outright.

The question is are you willing to deal with the stress for a further 15 years to earn the value of the apartment. Would you feel less stressed if you realised that there is a valuable reward at the end of 15 years.

It is a choice but you should choose on the basis of a clear understanding of the facts.

You have a reasonable income, perhaps there will be a big reduction in childcare costs in a few years. The credit card bill, the new boiler are small issues in the scheme of things.

People who are comfortably off in their 50s are often the people who dealt with these issues in their 30s.
 
You have a reasonable income, perhaps there will be a big reduction in childcare costs in a few years. The credit card bill, the new boiler are small issues in the scheme of things.

People who are comfortably off in their 50s are often the people who dealt with these issues in their 30s.

Totally agree with this (as I would being a landlord too whose being doing this for a very long time !)

Needtomove

I don't see where you have stress from, the rental seems to be ticking over there very nicely. Advice

- Tackle credit card debt, you really need to get a handle on this.
- Get life insurance on the rental (should be cheap and while not compulsory I would highly recommend it as an easy way of leaving an asset to your family if unfortunate circumstances arose)
- Solicitors fee is way high for a sale
- You're carring four debts outside the mortgage, 2 credit union loans, CC and arrears. I'd bet this is the real issue, and if you tackle each one of those you'll have a much better financial status, how much do each of those 4 cost you? In order the arrears has to be paid first, but the CC is the worst interest (how much ?). Any chance the CU would give you a payment break so you could tackle this? They really should do something with the shares as that's very high savings to loan
- Is the home loan with a bank ? Interest rate?
- Need to start saving when you've the debt sorted out.
- Don't see that you've a situation really bad, a quite normal one for a person with the costs of young children factored in.
 
Thank you all for the taking the time to reply, I really appreciate it!, it’s making me look at my apartment in a positive light rather than negative as I had been!
I can now see how this would be a better idea to try my best to keep it for the next 15 years until it is fully paid off and I can sell then to pay off the mortgage on my own family home, and still have a nest egg whilst both of will be 52/55 years old and our children will be ( maybe!) starting college ….
In answer to your questions, outstanding debt as follows:
· Credit card-€1180 – arrangement made-5 year plan-1% interest-€25pm
· Reduced work loan-€180pm-2 years remaining-interest 6%
· Mortgage arrears on apartment €1900-arrangement made to pay €50pm ( included in total €690 being paid at present)
· Credit union loan €4400- shares €3000-interest higher- think almost €13%
· Mortgage on own home-€1000pm-interest 4.3%!!-BOI- ONLY 3 YEARS IN-27 YEARS REMAIN-balance €200k-value of home –circa €320-home for life-no issues here re a move-
· Already have life assurance on the rental property.
We have zero savings-so looks like I will have to borrow 2k from the credit union to pay for this tax- so above figures will change-
So, in yer opinion we are better to start tackling all debt above- so that some year I can start actually saving for this tax??
Don’t see childcare reucing anytime soon- changed childcare arrangement recently-this used to be €1400pm to a crèche-
Am trying my best across the board to stay on top of everything
Panicked re selling as this tax now due-and no money in savings/no contingency for anything big going wrong with apartment e.g. boiler
Tenant is through rent allowance and has signed a lease up ti 03/2018 so I realize I am lucky there- I have a good tenant and a good letting agent managing the property.
Bottom line-?? In everyone opinion it is better to battle on, and eventually get a lump sum to clear our own mortgage and have a nice nest egg?
 
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This is not correct.
Fair point! However "cost" is a relative term and my context was cash-flow related. Needtomove main difficulties appear to be cash-flow related. I.e. All things being equal the apt may well be a good long term investment. However she needs to assess whether she can "afford" to maintain this investment. If cash-flow is tight currently and you are struggling with this on a daily basis then you should address the immediate issue rather than the long term issue. In terms of outlay this apartment will continue to be a net negative for you in the forseeable future and if this is causing you problems in meeting your day to day expenditure why on earth would you pit yourself through the pressure you are currently under for the potential benefit of having a nest-egg in 10-20 years time?
As I said previously, would you go out and invest in an apt now given your current financial circumstances. If the answer is no, then you need to seriously consider a sale. If you wish to save for retirement etc, pensions/savings bonds offer you greater flexibility and tax benefits and can be addressed in line with your capacity to save!!
 
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