Advice re selling investment property

F

Felicity

Registered User
Messages
5
The house is a 2 bed mid-terrace in Swords.

Bought in 2003 for €240,000
Currently worth approx €240,000
Outstanding mortgage €120,000 with 11 years remaining
Interest rate ECB + 0.95% for the remaining term
Tax, income levy, PRSI costs approx €4,500 per annum (after eligible deductions)
Current rent €1,200 per annum

My husband and I are dying to sell it to get rid of it. We've come out the other side of the property crash so we don't want to make the wrong decision in selling it if the value is going to continue to rise. We'd be raging if we sold it now and in two years it would sell for €50k or so more. We don't 'need' the money from the sale now but it would be nice to have it.

Any thoughts? Thanks in advance.
 
Felicity, we do not allow speculation about house prices on Askaboutmoney. People are free to give their views on any other aspects of this question.

Brendan
 
It seems to me that you could be getting a much higher rent.

If you can continue to pay the mortgage for 11 years you will get the full sale price rather than 50% as now.

What is the capital gains tax position. Was this ever your home.
 
Sarenco said:
That's some deal for your tenants!

Do you have a mortgage on your PPR and, if so, what is your current mortgage rate?
Click to expand...
Oops - €1,200 per month.

Yes re the mortgage on PPR. The rate is ECB + 0.65% - balance €160k with 9 years remaining on the term.

Three kids - 13, 11 and 8 who will need college education funded in the future.
 
Sounds like you have already made your decision.
I wouldn't sell however. Im looking at it from today's perspective, not the last 14 years of grief. That cant be changed no matter what.

2 bed property, yielding €14,400 on a loan of €120k.. You own it outright in 11 years. There has to be some level of risk involved, and for what its worth, I think its worth it.

You have to leave college funds , holidays, your own home improvements etc out of the investment property business, this has to be a stand alone investment for it to reap any rewards.
College funds are not cheap, but how would you have managed it without the investment nest egg. Assuming all is good with employment in your house hold, you will source the college fund.

Im a firm believer in not dipping into investment return funds, unless its for the said property.
 
I would estimate that you are making an after-tax profit of around €4,000 pa on the rental. If you liquidated the equity in the rental and paid it off your PPR mortgage that would save you less than €1,000 pa in interest payments.

Is the risk and hassle of the rental worth ~€3,000 pa to you?

Releasing the equity and paying down your PPR mortgage would obviously improve your cash-flow position. Would that have a material impact on your lifestyle?

I can certainly see the investment case for retaining the rental but it's not particularly compelling.
 
Thanks to all who replied.

We're going to think about it for a few months and reconsider it in Q2 next year. We have a good tenant and we don't want to increase the rent on him - he genuinely can't afford it. Although the irony is if we sell he'd have to move out. The last time it was rented for €1,400 per month the tenant sublet and destroyed the place. I ended up at the PRTB. I don't want that to happen again so I value my good tenant.

Releasing the equity would enhance our lifestyle for sure. It's that gamble re age. One of us could be dead by the time we've had a chance to enjoy some of the money. Very morbid! I will be entitled to a public sector pension of approx €35k and lump sum of approx €105k when I turn 60 (I'm 44 now and I'll have full service at age 60) and my husband has a reasonably good private pension so we have those for the future.

Anyway thanks again - we'll see what the new year brings.
 
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