Teacher with multiple properties living on the breadline

Nikephorus

Registered User
Messages
42
Age: 33
Spouse’s/Partner's age: n/a

Annual gross income from employment or profession: c.€60,000
Annual gross income of spouse: n/a

Type of employment: Public Sector
In general are you:
(a) spending more than you earn, NO
or
(b) saving? Not really, just maintaining all mortgages and loans

Rough estimate of value of home: €280,000
Amount outstanding on your mortgage: €180,000
What interest rate are you paying? Tracker (ECB +1.15%).
Outgoings = €950, Rent ( I have it rented out = €950).

I currently rent a room from a friend for €300 per month, figured it would be more economical less hassle than living in my own property and letting a room.

Do you own any investment or other property? Yes (and here comes the complicated bit...)

Investment Property #1, Value €280,000 (own 60% of this with business partner A), Mortgage €180,000, Tracker (+0.85%) - Monthly Payments (incl bills etc) = €1000, Rent = €950, VERY STABLE tenants.

Investment Property #2, Value €475,000 (own half of this as co-owner with business partner B), Mortgage €320,000 (only liable for 33% of this, as I provided the deposit for the property purchase). My monthly payments for this property, including all bills are €627. My friend who co-owns the property currently lives in the apartment and pays me a rent of €500 per month. This situation has worked well for several years. We are overpaying the mortgage to build up a lump sum and reduce the outstanding loan. I was initially unsure about doing this, but my business partner was verty eager to do it, and I agreed to maintain a very cordial partnership.

Investment Property #3 (in Belfast), Value £230,000, Mortgage £190,000. My monthly payments are about £500, Rent should be about £750, but tends to be average at about £300 due to difficulties finding tenants.

Investment Property #4 (also in Belfast, I own 50% of this with business partner A), Value £180,000, Mortgage £145,000. Outgoings = £400, Rent £450. Tenants are stable.

Other borrowings – No car (dispensed with it as a "luxury", but sure miss it...)
Credit Union Loan of €29,000 (6.5%, paying €325 off it per fortnight, will be paid off mid 2013) - this was taken out to finance modernisation/refurbishments to the houses.
Credit Union Savings of €2300 (2%, have been told I can't use this to pay off some of the loan until loan is much smaller)
Nationwide Loan (in UK) of £4000, paying £70 off this per month, will be paid off in 2013.

I have overdrafts with PTSB of about €8,000
I have overdrafts with Nationwide (UK) of about £3,000


Do you pay off your full credit card balance each month? YES
If not, what is the balance on your credit card? Rarely use the credit card.

Do you have a pension scheme? YES - DB scheme through work, plus an AVC scheme, which i have recently frozen to concentrate on reducing debts.

Ages of children: None
Life insurance: YES


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

After paying €325 per fortnight to the credit union, rent of €300 per month, subsidising my southern properties by perhaps €200, subsidising my northern properties by perhaps €500, nibbling away at my overdrafts north and south by a few hundred, living expenses of about €400, I have nothing left over. I have absolutely no leeway here. I am very patient and ahve stubbornly dug my heels in to tough it out, but it does bug me from time to time that I have all these properties which are hamstringing my life. I have become quite an expert on living cheaply...
[FONT=&quot]A major concern is that when interest rate hikes happen (ECB and Bank of England), it’ll push me over the edge.[/FONT]
I am reasonably happy the way my (very modest) property portfolio in the ROI is going. Rents are basically covering the costs.
I am fairly unhappy the way my properties in Northern Ireland are faring. However, I would like to tough it out up there, as I would like to build up a portfolio of investment properties over time, both in the UK and Ireland.

I REALLY REALLY don't want to sell. My job is safe and I don't mind a long haul, but would appreciate any help. Suggestions, guffaws or prayers gratefully received!
 
Re: Sink or swim.....

Ok,

you have a very substantial property portfolio which is well in positve equity. You have a pretty high paying job and a job for life. You have a rolls royce pension scheme. You are unwilling to sell any of your 5 properties to help clear loans and free up cash for day to day stuff, as "as I would like to build up a portfolio of investment properties over time, both in the UK and Ireland".

I'm not sure you're going to get much sympathy here!
 
Re: Sink or swim.....

100% fair enough. Not looking for sympathy as such though, just any thoughts outside the box.
 
I'd point out that the first house is not actually your home if you have it rented out and are living elsewhere. Bear in mind that as this is an investment property also now with associated tax, registration and possibly stamp duty responsibilities.
 
If you can't reduce your out-goings, can you increase your incomings?
How much extra would you require to be adequately comfortable?

Can you realise that by tutoring/grinds in the evening or weekends?

Go trawler fishing in Alaska for the summer.
Teaching summer school in the middle east????
 
Hi Nike

You have to sit back and think what your financial objective is?

I would like to build up a portfolio of investment properties over time, both in the UK and Ireland.

This sounds more like a fetish to me than to be a well thought out financial objective.

I would suggest something like the following would be appropriate:

1) Don't risk going broke
2) Stay solvent
3) Live comfortably
4) Build up wealth

You are well off and should be enjoying life. It's appalling that a well off person can't enjoy life because
I have all these properties which are hamstringing my life. I have become quite an expert on living cheaply...

It is also odd that you are renting a room to live in rather than enjoying a home.

You do face going broke. If property prices fall you would be in trouble. When interest rates rise, you will be in trouble. If rents drop or you get a bad tenant, you will be in trouble.

I suggest the following:
Try to switch all your mortgages to interest only.
Use the proceeds released to reduce your expensive loans - e.g. the Credit Union.

Decide what a comfortable level of borrowing is for you.

I would have thought that around 70% Loan to Value would be the absolute maximum. I think you should aim for 50%, though.

Put all your properties on the market simultaneously and sell whichever ones get buyers first.
 
Thanks for those suggestions. Really appreciated. "Cute tagline" - I just meant your new title for the thread is more eye-catching. And topical...

Yes, it would make sense to increase earnings to generate some extra cash. Will redouble my efforts to find some evening grinds (or anything basically - am not fussy about type of work, don't think anyone can be in current climate).

Interesting suggestion to switch to interest only and then plough money into clearing CU loan. I presume the lenders will then witch me to a standard variable though, which would negate some of the benefits?
 
You are taking and almighty leveraged bet on one asset class, property, which is totally bombed out and will probably continue to slump for several years. To me this is very much akin to borrowing to gamble and putting all the borrowed money on one horse!

You would be better off getting out now whilst you can and clearing some of your debts or you could end up subsidising your tenants "in the long haul" because rents will continue to fall and eventually when interest rates start to rise you will be squeezed dry like a lemon.

What is the point of owning several properties which are decreasing in value and where you are actually loosing money each month because the income from the properties does not cover the costs and you have to subsidise them with your salary? Sheer madness in my opinion and in alll likelihood it is going to get worse unless you get out!
 
Steve

There is still a ban on property price discussion.

It is ok to talk about the risk of price falls, but not to forecast falls or rises.

Brendan
 
.....
I REALLY REALLY don't want to sell. ...
You don't own any assets.

The bank owns the assets.

You have debt.

Best case you owe debts of €689,500. Worst case you owe debts of €1,059,000.

You have to service this debt - either by finding renters to help pay your debt, part funded by renters and part funded by you or, worst case, fully funded by you.

Sell.
 
You are taking and almighty leveraged bet on one asset class, property, which is totally bombed out and will probably continue to slump for several years. To me this is very much akin to borrowing to gamble and putting all the borrowed money on one horse!

You would be better off getting out now whilst you can and clearing some of your debts or you could end up subsidising your tenants "in the long haul" because rents will continue to fall and eventually when interest rates start to rise you will be squeezed dry like a lemon.

What is the point of owning several properties which are decreasing in value and where you are actually loosing money each month because the income from the properties does not cover the costs and you have to subsidise them with your salary? Sheer madness in my opinion and in alll likelihood it is going to get worse unless you get out!

100% agree with the above. Also agree with the "fetish" thing. Do you really want to be "rich" that badly to take up such a huge risk? Leaving life right now has to be worth something... or a lot...

I myself know what it is to be "obsessed" with something or to be overly-driven in one particular direction in such a way that you really loose the north cos you can't see anything else than your goal... I know you were not looking for "psychological" help here but I would really really try to think what is the reason for your wanting to build a property port-folio so badly.

Edited to add: i did not intend to agree or deny with the part in the post above where Steve speculates above property prices :)
 
Thanks guys for the inputs so far. You have certainly got me thinking. Just wondering, is there ANYONE (obviously not so far!) who thinks that what I am doing, i.e. toughing it out is not a crazy thing to do and is a valid way to achieve things....
 
Thanks guys for the inputs so far. You have certainly got me thinking. Just wondering, is there ANYONE (obviously not so far!) who thinks that what I am doing, i.e. toughing it out is not a crazy thing to do and is a valid way to achieve things....

It is certainly a valid way to loose money...which appears to be your ultimate goal!
 
Sorry Nikephorus, I reckon you should sell too.

I know several people in a similar position to you but with a very different view on things, in fact they are pretty much tearing their hair out.

Even if you do see these properties as an investment what is the point in having them if you have no money to enjoy your life with?

The way I see it you have 5 substantial mortgages not 5 investment properties. If you look at them this way maybe it will help you to part with them:)
 
Back
Top