Rent not covering mortgage

N

niceone

Guest
It's amazing how things have changed in 18 months !!! Back then the rent was making me a nice annual profit. But now the tide has turned. I have 3 rental properties on interest only mortgages as follows:
Property / Rate /Profit (monthly)
A 0.0503 -€77
B 0.0485 €219
C 0.0469 -€4

So, I am €138 in the black every month. BUT when we see the next .5%interest hike I will be in the red. Now I have to consider my options ! Should I subsidise these properties with a view to making 5% to 10% gain in value. Should I approach a bank with a view to consolidating the 3 separate loans into a single loan (commanding a lower interest rate) or should I now consider off-loading the properties.

Any advice ?
 
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It's amazing how things have changed in 18 months !!! Back then the rent was making me a nice annual profit. But now the tide has turned. I have 3 rental properties on interest only mortgages as follows:
Property / Rate /Profit (monthly)
A 0.0503 -€77
B 0.0485 €219
C 0.0469 -€4

So, I am €138 in the black every month. BUT when we see the next .5%interest hike I will be in the red. Now I have to consider my options ! Should I subsidise these properties with a view to making 5% to 10% gain in value. Should I approach a bank with a view to consolidating the 3 separate loans into a single loan (commanding a lower interest rate) or should I now consider off-loading the properties.

Any advice ?

What about the cost of your time and maintainence? Also, if you don't sell, you'll eat into your capital appreciation gained.

I'd bank, fast. Many other investment opportunities out there that won't cost you much time nor hassle.
 
To add to poor yield woes, Sherry Fitzgerald is reporting this morning that second-hand Dublin house prices actually fell in the last quarter of 2006.

The strategy of tolerating low/no yield in order to hold out for capital appreciation is looking like higher risk gamble.
 
A lot of this was down to people waiting for news on stamp duty in the budget. You'll see that prices will rise again in Q1 of this year and will keep rising.

I certainly wouldn't sell but there's no harm in shopping around for a better deal on your mortgages. Ther's big competition now in this market and it's good news for Joe Public.

Good luck with it.
 
A lot of this was down to people waiting for news on stamp duty in the budget. You'll see that prices will rise again in Q1 of this year and will keep rising..

I'm simply passing on Sherry Fitzgeralds findings regarding the house price falls in 2006 and the increased risks around this.

As far as I understand, your kind of blatant speculation and hype on the future direction of house prices is now suspended on this site.

You can put your case to the test over at

[broken link removed]

or

[broken link removed]
[broken link removed]
 
Remix, your reference to the Sherry Fitz article was quite selective and disingenuous. It smacked of tabloid headline journalism. In the article itself, there is a quote "She (the Sherry Fitzgerald economist) expects a slowing towards single digit percentage growth in 2007" yet you only quote the (0.7%) drop in Q4 last year in Dublin.

So in other words, the Sherry Fitz economist agrees with what I am saying (that "prices will rise again in Q1 of this year").

You provided the link to what the Sherry Fitz economist said for everyone to see. I agreed with the economist's prediction then you accuse ME of blatant speculation and state that this is not allowed on this site. Why then do you provide links to such articles if they are not allowed?
 
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No point in wriggling around, let me remind you of what you said.

You'll see that prices will rise again in Q1 of this year and will keep rising.

That kind of statement well deserves to be 'flamed'.
 
... the Sherry Fitz economist agrees with what I am saying (that "prices will rise again in Q1 of this year").

Sherry Fitzgerald have a vested interest in the property market and therefore cannot be relied on for independent, unbiased opinion on where the property market is going.
 
No point in wriggling around, let me remind you of what you said.

You'll see that prices will rise again in Q1 of this year and will keep rising.

That kind of statement well deserves to be 'flamed'.

Last time I checked this was a forum where people are entitled to express there views....
 
Last time I checked this was a forum where people are entitled to express there views....

You don't seem to have been very thorough in your checks.

Didn't you see any of the new rules regarding the issue in question ?
 
Apologies Remix I have not seen the new rules.

Disregard my last post please.
 
Its a tough decision to make, if you think that the ECB will increase rents further this year then you will probably go further into the red. If not you could be at the low point. Are these properties in areas where the rental market is strong, i.e. could you get higher rents than what you are currently charging?
 
Apologies Remix I have not seen the new rules.

Disregard my last post please.

None necessary! I'm but a mere poster - although strangely enough I seem to have found myself impersonating a moderator on this one :eek:
 
Thanks to all who have responded so far. I know there's Bulls and Bears on this one but I am interested to see how others would deal in my situation.

Made a few calls to Mortgage provide - First Active will provide a .75% above ECB Tracker = 4.25% which will certainly help keep me in the black. I suppose my ultimate move depends on how high Interest rates hike.

I am reasonably confident that we are now in a 5% growth market and capital appreciation would not be a major concern for me (at the moment)
 
Remix, I see you chose to underline a bit that time. So I take it that you agree with what preceded the "and will keep rising". With regard to my 'keep rising', I will opine further - prices will rise in the next 12 months.

I believe that the vast majority of economists - at least the ones I know - do not disagree with this prediction. It is based on this that I would not myself cash in on any investments yet. There may come a time but it is not yet here.

You might give me a look at the rules you refer to by the way, thanks.
 
Remix, I see you chose to underline a bit that time. So I take it that you agree with what preceded the "and will keep rising". With regard to my 'keep rising', I will opine further - prices will rise in the next 12 months.

I believe that the vast majority of economists - at least the ones I know - do not disagree with this prediction. It is based on this that I would not myself cash in on any investments yet. There may come a time but it is not yet here.

You might give me a look at the rules you refer to by the way, thanks.


Ah! now a 12 months timeframe! that's a significant change from 'will keep rising'. I wouldn't put any certainty on it myself - even in that timeframe. Looks risky.

Many of economists quoted in the media are bank employees.

As far as I know, discussion/speculation on future direction of house prices has been terminated. There was a lot of discussion around this. You could PM a moderator if you want more details.
 
Thanks, I'm fed up talking about it anyway. All day, every day!

All we need really is one good horse...!
 
It smacked of tabloid headline journalism

Jonnypool - your bullish bias, writing style and "tabloid" retort remind me of a once frequent poster (now banned) on AAM - SteelBlue05.


http://www.askaboutmoney.com/showpost.php?p=259935&postcount=2077


Niceone - when you made your decision to purchase investment property, did you stress test your calculations with a possible increase in interest rates? I wouldn't re-evaluate a long term investment if I had factored potential interest rate hikes into my decision to begin with.
 
Sherry Fitzgerald have a vested interest in the property market and therefore cannot be relied on for independent, unbiased opinion on where the property market is going.

The methodology that SF use to calculate their index is laughable. They get their own in-house estate agents to estimate how much they think a certain basket of houses would sell for from quarter to quarter. It's not based on actual sales, just opinion. It should be taken with a very large pinch of salt.
 
Whathome - Yes I did the stress test. Original interest rate was 2.5%, I stressed upto double that (which my accountant said wouldn't happen in this decade) and was comfortable that rent would pay mortgage. And so, 2 years later, the interest rate has doubled.

After 5% I can afford to subsidise but is that the prudent thing to do ???
 
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