Is it worthwhile keeping the property?

S

suicra05

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I am repaying a Buy to Let mortgage at 1400 per month. My management fees are 350 monthly. My rental income on the property is 1950 monthly. I am paying tax and PRSI on the income at the higher rate. When I take the expenses into account I am just wondering is it worthwhile to continue with this property. When I take the tax and PRSI into account how much am I actually gaining, Is it 200 euro monthly or less?
 
What’s your mortgage rate?

Also, €350pm management fees seems very high - are you sure that’s correct?
 
It is a tracker interest only mortgage at 5.3%.
The 350 management fee is correct unfortunately as repair works to building included.
 
suicra05 said:
It is a tracker interest only mortgage at 5.3%.
The 350 management fee is correct unfortunately as repair works to building included.
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It looks like your gross rental profit (assuming you have no other deductible expenses) is €2,400.

Take income tax, USC and PRSI off that figure and you get to keep €1,152.

Take LPT off that figure and I strongly suspect you are making a loss on the rental.

Sell!
 
If you are on interest only, are you getting anything from the 200 euros a month (after taxes -income tax and LPT- general rental costs, furniture, white goods, insurance, RTB registration, boiler servicing...) Or am I missing something?
Same advise as above.
 
Rent governed by RTB as in Dublin area. Market rate is a lot higher.
I could hold on if I discovered I wasn't operating at a loss
 
Are you able to get it to market rate?

Options
  1. Ukranian scheme for two years
  2. Untenanted for 2 years
  3. Renovations / floor plan change
 
At the current run rate, it would cost €42k to leave vacant for two years.

That’s hardly a viable option.
 
What does “untenanted” mean?

The exemption applies where a property has not been rented for a period of two years prior to the commencement of a tenancy.
 
Sarenco said:
What does “untenanted” mean?
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Means there is no tenant who is the subject of a lease.

Exemption requires that the property is not subject to a lease registered to RTB.

So for example, property could be let as holiday let, property could be used by Student offspring, property could be occupied by OP.

Any or none of these might be viable for the OP, but they are all options to be considered.

Property is a long term asset & needs to be viewed as such if you want to keep it.
 
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DannyBoyD said:
Exemption requires that the property is not subject to a lease registered to RTB.
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No it doesn’t!

The exemption only applies where the property has not been rented for two years. You have made up the bit about not being RTB registered.
 
Sarenco said:
No it doesn’t!

The exemption only applies where the property has not been rented for two years. You have made up the bit about not being RTB registered.
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Sigh.
Haven't made anything up, the word used is tenancy, not rented.

The exact wording is:

"No tenancy of the dwelling subject to tenancy existed during the 2 years
immediately preceding the date ..."

And RTB is quite clear on situations where registration is not required.
 
Rental property is a long term investment and private landlords are under threat from diminishing returns.

You are in the Mortgage phase, if the rental property is washing its face, not costing you, you are doing well.

The Rental income phase with mortgage cleared, based on data about 9600 annual rental income after tax per annum but if you factor in annual rpz increase you could be looking at about 15000 after tax in 20 years.

Sale phase, all going well you sell the rental property for well in excess of 14 times the annual rent.

Before deciding on whether to keep the property, consider how many mortgage years remain, where you are in life, age, retirement, income sources etc and whether you want to be a landlord because it’s not for the faint hearted.
 
Sarenco said:
The exemption only applies where the property has not been rented for two years.
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It’s pretty clear what he is saying, namely that the relevant two years can elapse even if there is occupation of the dwelling once said occupation does not qualify as a tenancy under the Residential Tenacies Act.


DannyBoyD said:
So for example, property could be let as holiday let, property could be used by Student offspring, property could be occupied by OP.
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Is a good set of examples. Property could also be occupied by a friend or family member under a caretaker arrangement where they pay all bills and managements fees.
 
My tenant purchased a new house and gave me notice tenancy will be ending 17th June

After doing all the figures and based on all the new legislation coming down the tracks which will tie landlords hands even more, I have made the decision to sell the property despite getting a rental income of 1500 pm

The cure has now become worse than the symptons and the risk of holding propery and renting is not worth the risk
 
DannyBoyD said:
"No tenancy of the dwelling subject to tenancy existed during the 2 years
immediately preceding the date ..."
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Eh, I’m not seeing the words “registered” or “RTB” there. Maybe I missed it…
Dr Strangelove said:
Property could also be occupied by a friend or family member under a caretaker arrangement where they pay all bills and managements fees.
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The BTL will cost €42k to maintain over two years at the current mortgage rate/management fee.

Even if the rent doubled to bring it back to market rent after two years, I very much doubt that €42k would ever be fully recouped.

The combination of the RPZ regime and increased costs has made many rentals unviable. That’s the simple reality.
 
Sarenco said:
The BTL will cost €42k to maintain over two years at the current mortgage rate/management fee.
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There are options where the loss is far lower. They involve leaving the property occupied but without a tenancy in place, see above.

Without knowing the OP’s wider financial position and appetite to stay as a landlord I wouldn’t recommend any course of action, just advise to consider options.
 
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