Sell rental property or leave as is?

dmos87

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We have a 2bed investment apartment in a local town that we purchased a year ago. We purchased for 81K, and put approx 5K into renovations (new kitchen counters and tops, appliances, flooring and paint work throughout). The outstanding mortgage is just under 55K. Its currently rented out for 800p/m, easily pays the mortgage, management fees, tax man etc. and we make just about 95 euros a month on it. No issues so far as we replaced everything before renting out.

We've moved into our dream home and it needs extensive work - plastering, proper ventilation etc. We had planned to do it job by job, and its been fine. Total bill for it all will be in the 50K region. I do not want to take out a loan.

Lately I'm getting itchy feet - its partly due to me expecting and wanting the house done before baby arrives. The management company aren't the best and owner occupiers want to drop the management company and go it alone if everyone agrees to it (i.e. self-manage). I'm debating whether it might be a good option to sell the apartment now. Currently there is nothing for sale in this suburb town at all, not even 3 bed semis etc. The price register shows that an apartment in the building (same size, 2 bed also and a little bit worse for wear than ours) sold 10 months ago (2 months after we bought) for 97k. I'm estimating we would sell for just over 100K reasonably, maybe a little more.

i'd appreciate opinions - what do you think? Are we better off to sell the apartment and finish our home, or leave things as they are? I'm unsure how to calculate what the profit (if any) would be from the sale. It was bought as a long term investment as our son has special needs, we wanted to ensure if he could ever live independently it was there for him and close to home. He has improved dramatically and I don't feel we have as much need anymore to worry.
 
It sounds like selling it would raise about 38k after about 7k fees and cgt. I'm generally against investing in btl property until the more tax efficient options are exhausted (ie your own house is free and clear, and you're fully funding your pensions).

The only thing this property has got going for you is that the rental yield (relative to it's value) is quite good. This seems to be most common in "factory towns" where the local economy depends on a few large employers paying good wages to recent graduates (ie tenants have lots of cashflow but no capital). If that's the case here, it adds an extra level of risk to holding property in the area.

It might help to look at your situation from the opposite angle. If you had 38k in the bank, would you buy this property tomorrow, and then take out a new mortgage on your own house for renovations? No chance.
What if you were offered a 7k discount on the market price? If not, then you should sell.
 
It looks like a very profitable investment and from your account of the supply and demand in your particular town, it seems that things are going in the right direction.

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The fact that you have made a profit on it is not especially relevant,except that you would have a CGT bill to pay.

We had planned to do it job by job, and its been fine. Total bill for it all will be in the 50K region. I do not want to take out a loan.

Why not?

Personally, I would have no problem taking out a loan for such a good return.

It depends on the amount of work involved in managing the apartment.

Brendan
 
We have a 2bed investment apartment in a local town that we purchased a year ago. We purchased for 81K, and put approx 5K into renovations (new kitchen counters and tops, appliances, flooring and paint work throughout). The outstanding mortgage is just under 55K. Its currently rented out for 800p/m, easily pays the mortgage, management fees, tax man etc. and we make just about 95 euros a month on it. No issues so far as we replaced everything before renting out.

We've moved into our dream home and it needs extensive work - plastering, proper ventilation etc. We had planned to do it job by job, and its been fine. Total bill for it all will be in the 50K region. I do not want to take out a loan.

Lately I'm getting itchy feet - its partly due to me expecting and wanting the house done before baby arrives. The management company aren't the best and owner occupiers want to drop the management company and go it alone if everyone agrees to it (i.e. self-manage). I'm debating whether it might be a good option to sell the apartment now. Currently there is nothing for sale in this suburb town at all, not even 3 bed semis etc. The price register shows that an apartment in the building (same size, 2 bed also and a little bit worse for wear than ours) sold 10 months ago (2 months after we bought) for 97k. I'm estimating we would sell for just over 100K reasonably, maybe a little more.

i'd appreciate opinions - what do you think? Are we better off to sell the apartment and finish our home, or leave things as they are? I'm unsure how to calculate what the profit (if any) would be from the sale. It was bought as a long term investment as our son has special needs, we wanted to ensure if he could ever live independently it was there for him and close to home. He has improved dramatically and I don't feel we have as much need anymore to worry.


800 PM is an excellent return on an 81 k investment , id keep it
 
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