Hi Wizard
From the borrower's point of view, this is a break-even investment.
Rental income| €26,000|
Interest|€21,000 |Assuming ecb +1%
Other costs |€3,000
Tax|€3,000
Loss|€1,000
If rents rise over the coming years, and interest rates fall or don't rise too much, this could become a profitable investment.
On the other hand, it could become loss making.
If I had other assets which could be targeted to pay the shortfall, I would go for this deal.
But house prices have to rise by 140% before the negative equity is recovered.
Personally, I would prefer to get rid of such a millstone. Either through a voluntary arrangement, a PIA, a DSA or bankruptcy.
I might propose a 5 year deal to ptsb. "I will manage this investment for 5 years and we will see how it turns out. If I make the repayments for 5 years, I will have the option at any stage of selling the property and having the shortfall written off"
If property prices or rent spike upwards over the next 5 years and this becomes profitable or at least the end of negative equity is a bit closer, then I would keep the investment.