Should I sell a defective concrete block home or hold on to it for the passive rental income

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UseABC

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Hello

I am looking for some advice.

I am in my early 40s. I own a home that I let out that is affected by defective concrete blocks. The home is in a very good condition now, but it will deteriorate over time and worst case scenario , it might need rebuilding. Hopefully it will take up to 10-20 years to get to that stage, but no one knows really.
I don't have a mortgage for this home.
My tenant recently asked to buy the house at a below market value price. They have full knowledge of the issues that could develop over time.

Should I sell? Would I be crazy to hold on to a defective home for the "passive" rental income it produces?



A few items I'm trying to take into consideration:

It would take me 20 years of rent income (after tax) to make the amount I could sell the house for.
I don't need the money right now and I already have a house of my own also mortgage free.
The housing market is crazy. If I changed my mind, I would not be able to buy another house at this price, especially since my county is riddled with defective homes and most building efforts over the next years will be focused on fixing these homes.
The government is offering a repair scheme for defective blocks homes. This scheme is not workable at the minute but there is hope of improvement in the future.
Insurance wise, because these houses are not fully insurable, I am currently liable if anything was to happen that can be linked to the defective blocks, including a fire.

I am hoping someone can offer some wisdom on what I should do.
Thank you!
 
Personally speaking I'd sell and get out now. it's only going to be hassle in the future. Peace of mind is more important then what might or might not happen on a Govt scheme in the future.
 
I think you are answering the question yourself and checking if there's any reason NOT to sell.

If the tenant is offering below market price, but within a reasonable level. I'd certainly consider it. If you are "in profit", then €10k undervalue is really only costing you €6700 after CGT.

Depending on your pension situation you could drip feed the money from the sale into your everyday spending whist maximising pension contributions on as much income you have at high rate tax.
 
If the price is acceptable, sell. Take into consideration:
1) Value of defective concrete block home might deteriorate not appreciate (or appreciate slower than inflation rate) even if the market will continue up.
2) For the calulation of whether it makes financial sense, any profit after tax on your investment (ETFs, Bonds, etc) of the money you receive from sale would go against the rental income after tax.
3) Mitigating the insurance risk as you mentioned
4) Peace of mind

In my mind...no brainer.
 
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