Inherited house - let or sell?

[AlastairSC]

My brother and I have inherited our family home in Dublin 6W, following our mother's death. No mortgage on it. Neither of us wants to live there - we have our own houses, which are manageably mortgaged and not in negative e. Neither of us has any other loans.

Should we let it out or sell it? Letting means refurbishments costing about €5k. We've had it assessed at about €1300 pm. It was valued for probate last Jan at €350k but we'd probably not get that at this stage, I guess. We're not pressed for the money either way.

My brother thinks we should sell. Reasoning: falling market, asset turned into cash which can be invested elsewhere, no renovation expenses (sell as it is), no property taxes and landlord hassles.

I think we should let. Reasoning: Refurbishment costs will be made back in first few months. Thereafter it gives us both an income. We still retain the option to sell any year, or pass it on to children to have the same choice.

At this stage we're not emotionally attached so trying to make the best use of the asset we've inherited. What do you think we should do and why?

 

[Eithneangela]

I've had good experiences letting out my family home in Dublin for the past 6 years. I only let it to families - this is really important when letting out what was a family home. Also, I let it out unfurnished - this has resulted in me getting tenants who are returning/coming to work in Ireland and who want longterm lets with their own furniture. There are considerations:-

- Household Charge (soon to be Property Tax)
- NPPR
- PRTB
- Income Tax on Rental Income
- Ongoing maintenance (stuff always breaks down, especially kitchen white goods, bathroom equipment, and regularly used contents. Also, stormy weather can bring exceptional repairs and regular refreshing of external walls/windows etc is advised.

You can claim an annual 12.5% of contents against rental income, in addition to vouched repairs and maintenance not undertaken by yourself.

I would go for the rental option because the market is still very bad and although it seems to have reached the bottom in Dublin, nobody is sure. In any event, I suspect you're going to have to pay to have the house refreshed whether you rent or sell. Also, the house is mortgage-free, so after the initial outlay for refurbishment and taking the above items into consideration, it is a source of ongoing income.

Good luck with the process.

 

[Padraigb]

If you don't come to an agreement, then your brother can force you to sell.

Ask yourself this: if you had approximately €350k to invest, would you use it to buy a house like this one as a buy-to-let?

 

[oldnick]

Houses, as opposed to apts, don't get a good yield (though not much does nowadays).

Without details it's hard to guess rent -but if you got 15k gross that's under 5% of the value.
With running costs, even when tax allowable, that may come to under 4% -maybe 12k on which you pay tax. If you pay tax on the higher level then that will leave you with 3.000 each (on lower rate maybe 4.500).

Who needs the hassle of renting out for that ? Especially as you'll have to fork out several grand to get it in good rentable condition.

If you do decide to rent Eithneangela's advice about unfurnished is sound. Saves much hassle, complaints, worries. And , strangely you don't have to charge much less to rent.

I make my only living from letting property and get economies of scale, devote time and effort and am ticking over. But it's getting harder for all landlords and the govnt seems determined to make it harder still.

The best money-earners from letting properties are well located city centre apts. If your brother insists on selling then tyake half the money and buy an apt where you can get nearly the same rent as from your 6W house -a grand a month.
Apts are so cheap at present. Dont expect prices to ever rise but it should always provide a small income with much less hassle than a house.

 

[AlastairSC]

Thanks for those responses. Following a more recent valuation (€260k) we have decided to redecorate, do minor plumbing works and rent out. The advice on unfurnished strikes a chord - no pre-let unrecoverable expenses and, if it doesn't work and we find a family who do want furniture, it can be in place within a few days (and might therefore be offset-able against rent?). Any further structural work could be put off for a year and thus be an eligible expense as well. Now off to find a painter.....

 

[facetious]

Thanks for those responses. Following a more recent valuation (€260k) we have decided to redecorate, do minor plumbing works and rent out. The advice on unfurnished strikes a chord - no pre-let unrecoverable expenses and, if it doesn't work and we find a family who do want furniture, it can be in place within a few days (and might therefore be offset-able against rent?). Any further structural work could be put off for a year and thus be an eligible expense as well. Now off to find a painter.....

In this case, you want to read and re-read the Residential Tenancies Act 2004 as well as the Housing (Standards for Rented Houses) Regulations 2008 and the amendment 2009.
Renting is all very well if this go right! However, if things go wrong .....

Do you know all the landlord’s obligations?
Do you know all the Tenant’s rights as well as his obligations?
Do you know what standards you must have the property in as regards Structural Condition, Sanitary Facilities, Heating Facilities, Food Preparation and Storage and Laundry, Ventilation, Lighting, Fire Safety, Refuse Facilities, Electricity and Gas?
Will you be required to register the tenancy with the PRTB?
You will have to pay the NPPR tax.
You will have to have a BER certificate.
You will have to have someone that can be contacted in emergencies
Have you considered your tax obligations?
You will have to have landlord’s insurance.
What type of lease will you use?
What happens if you want to regain your property during the lease period?
What are the implications of a Part 4 Tenancy?
What are the implications of regaining possession if your tenant has a fixed term lease.
And what will you do if your tenant doesn’t pay the rent or is anti-social, or that some appliance in the apartment is not working properly?
You will have to have landlord’s insurance.
What is the process that you must follow if the tenant fails to pay the rent.
What constitutes "illegal eviction"
What if the tenant overholds?