Seems to be a recurring question here about people looking to rent out or sell their rental, so thought I’d share my wee story of 4yrs as a reluctant landlord. More of a blog entry than a post, but might be useful for some.
Back in 2006, as a single chap, I made the decision to buy a 2-bed apartment for the princely sum of €385k. Gosh. We all know what happened in the coming years in terms of the crash. In the fire sale auctions of the time an apartment in my block went for €105k. Ouch. But, life also went on met a girl, got married, wanted a bigger place.
So in 2014, I found myself with an apartment still in negative equity but no longer meeting my needs. We were lucky enough to be able to build our a new home for ourselves elsewhere, but options were limited for the apartment and we reluctantly decided to rent it out and become a landlord.
Tracker mortgage at 0.95% meant mortgage repayments of €875, and rental income was €1200 a month.
I lived about an hour from the rental property, and worked 9-5, so managing the property myself was never really an option, so I used a local property management agent. They had known tenants on their books, and had the place filled quickly. Life was good.
It was first rented in November 2014. The management fee was 10%, which I questioned from time to time. But shortly after being rented out, on New Years Eve, the apartment upstairs flooded, and water came down into my apartment. The management agent was worth a lot more than 10% that month. Good choice. I didn’t question the 10% after that.
2yrs went by with same tenant before we hit first issue. Rent was late. Rang the agent, they explained they were already in touch with the tenant, the couple had separated and were trying to work things out. Asked me what I wanted to do. Wasn’t really interested in being responsible for kicking out a single mother and child, so gave them some time to work it out. 2 weeks later money was paid, arrears cleared. Phew.
For the next 2 yrs (4yrs in total) I had the same tenant, above late rent was the only issue.
The agent took care of boiler servicing when required, and replaced the hob when it died. I got a call for the alarm PIN at one time, but other than that the phone never rang, and the rent arrived every month. Easy enough.
I missed opportunities to raise the rent, and got caught out when the Rent Pressure Zone’s landed. Rent was raised to now €1300ish, compared to new units on the market at 1600. But, but, but …. yeah, what could have been.
Nearly got myself into trouble with the first years tax, and ended up paying 10% late fee on my return, but got an accountant sorted after that, and was put straight for the years after. Tax was working out around €4-4.5k, bit of a kick in the teeth really for all those who think ‘sure the rent covers the mortgage’ …. yeah, but not the tax bill.
Over time, my thoughts on the apartment varied from “I’ll be stuck with this forever”, to “sell it as soon as it clears itself” and more optimistic views of “it’ll make a nice pension in in the future”. Mostly heart over head.
So this year, I took a look at what the apartment was doing for me and whether it was worth keeping. On the home front, we had 2 little kids, and a wife considering taking some time off work. The apartment was doing ok, but really needing 300quid top-up a month to ensure it cleared the tax bill and other expenses. This wasn’t much in the scheme of things, but single income carrying the risk of rising interest rates on 2 mortgages wasn’t something I wanted to consider for the future.
The market looked to be doing well, apartment valued @ €310k with an outstanding mortgage of €270k, so it would give me back some change. It also allowed me to recognise a loss, which I can use against some shares which have faired better over the past few years. Seemed a safe way out.
So, apartment sold, €40k cleared off the PPR mortgage. Will sell the shares shortly and knock those off the mortgage also.
Overall, I think I got lucky with a decent management agent and a reliable tenant. But, all things being equal, I was carrying more risk than any short term reward it was going to pay me, and I’m at a time where I’d rather simplify things for a little while. Never really wanted to be a landlord, so I’m not anymore.
Tom
Back in 2006, as a single chap, I made the decision to buy a 2-bed apartment for the princely sum of €385k. Gosh. We all know what happened in the coming years in terms of the crash. In the fire sale auctions of the time an apartment in my block went for €105k. Ouch. But, life also went on met a girl, got married, wanted a bigger place.
So in 2014, I found myself with an apartment still in negative equity but no longer meeting my needs. We were lucky enough to be able to build our a new home for ourselves elsewhere, but options were limited for the apartment and we reluctantly decided to rent it out and become a landlord.
Tracker mortgage at 0.95% meant mortgage repayments of €875, and rental income was €1200 a month.
I lived about an hour from the rental property, and worked 9-5, so managing the property myself was never really an option, so I used a local property management agent. They had known tenants on their books, and had the place filled quickly. Life was good.
It was first rented in November 2014. The management fee was 10%, which I questioned from time to time. But shortly after being rented out, on New Years Eve, the apartment upstairs flooded, and water came down into my apartment. The management agent was worth a lot more than 10% that month. Good choice. I didn’t question the 10% after that.
2yrs went by with same tenant before we hit first issue. Rent was late. Rang the agent, they explained they were already in touch with the tenant, the couple had separated and were trying to work things out. Asked me what I wanted to do. Wasn’t really interested in being responsible for kicking out a single mother and child, so gave them some time to work it out. 2 weeks later money was paid, arrears cleared. Phew.
For the next 2 yrs (4yrs in total) I had the same tenant, above late rent was the only issue.
The agent took care of boiler servicing when required, and replaced the hob when it died. I got a call for the alarm PIN at one time, but other than that the phone never rang, and the rent arrived every month. Easy enough.
I missed opportunities to raise the rent, and got caught out when the Rent Pressure Zone’s landed. Rent was raised to now €1300ish, compared to new units on the market at 1600. But, but, but …. yeah, what could have been.
Nearly got myself into trouble with the first years tax, and ended up paying 10% late fee on my return, but got an accountant sorted after that, and was put straight for the years after. Tax was working out around €4-4.5k, bit of a kick in the teeth really for all those who think ‘sure the rent covers the mortgage’ …. yeah, but not the tax bill.
Over time, my thoughts on the apartment varied from “I’ll be stuck with this forever”, to “sell it as soon as it clears itself” and more optimistic views of “it’ll make a nice pension in in the future”. Mostly heart over head.
So this year, I took a look at what the apartment was doing for me and whether it was worth keeping. On the home front, we had 2 little kids, and a wife considering taking some time off work. The apartment was doing ok, but really needing 300quid top-up a month to ensure it cleared the tax bill and other expenses. This wasn’t much in the scheme of things, but single income carrying the risk of rising interest rates on 2 mortgages wasn’t something I wanted to consider for the future.
The market looked to be doing well, apartment valued @ €310k with an outstanding mortgage of €270k, so it would give me back some change. It also allowed me to recognise a loss, which I can use against some shares which have faired better over the past few years. Seemed a safe way out.
So, apartment sold, €40k cleared off the PPR mortgage. Will sell the shares shortly and knock those off the mortgage also.
Overall, I think I got lucky with a decent management agent and a reliable tenant. But, all things being equal, I was carrying more risk than any short term reward it was going to pay me, and I’m at a time where I’d rather simplify things for a little while. Never really wanted to be a landlord, so I’m not anymore.
Tom