Rent or sell?

[Jaxharyn]

Hi,
1st post here, and would appreciate any feedback from people with experience. Wife and 3 young kids are moving into larger second home. We are wondering if we should rent out our current home or sell, to use this money against mortgage of second home?

1st home;
Cost: 210k
Current valuation: 305k
Mortgage: €140k remaining @3%, €1.1k p/m (14yrs remaining)
Rental valuation: 1.5k p/m

2nd home:
Cost: 390k
Mortgage: €310k remaining @3%, €1.2k p/m (25yrs remaining)

We have never rented out before so we would definitely be using a property Mgmt service at the start anyway. Tax on any profit would be at higher rate and if we were to rent, and found it positive, we would continue to rent, at least 5yrs. We have 30k in savings, and have pension.

Considering, all of your experience with renting, is it worth it or should we sell? Any advice is greatly appreciated

 

[jpd]

If I were you, I would sell the house, take the net proceeds (305 - 140 - 10 (costs) = 145k) and reduce the new mortgage from 310k to 165k and pay it off in about 14 years

Your 1,200pm looks low if the rate is really 3% and the term 25 years - looks more like 35 years to me

 

[Jaxharyn]

If I were you, I would sell the house, take the net proceeds (305 - 140 - 10 (costs) = 145k) and reduce the new mortgage from 310k to 165k and pay it off in about 14 years

Your 1,200pm looks low if the rate is really 3% and the term 25 years - looks more like 35 years to me

Thanks for a mill for reply, apologies you're 100% correct, it's 1.4k p/m mortgage for new home not the 1.2k p/m I've put down above. Checked other figures and they're correct at least.
Yeah I'm leaning towards selling just want to check out other opinions, especially from those who rent out currently, so thanks again

 

[Brendan Burgess]

If you rent out the house.

Rental income: €18k
less costs : €4k
less interest €4k
Profit before tax: €10k
Tax on profits: €5k
Profit after tax: €5k

If you sell the house

You can pay the proceeds off your mortgage and so you will save

€4,800 interest. (€160k @3%)


So, financially, it's about the same.

But you will have all the headaches of being a residential landlord for no financial benefit.

House prices might rise, but they might also fall.

So, it's fairly clear, sell.

Brendan

 

[Jaxharyn]

Thanks for taking the time to reply. My gut and (rough!) calculations were leaning me towards selling. Others have told me to rent it out and see how it goes. They aren't landlords so I'd be wary of their opinions but at the same time it was leaving me doubt myself.
From your reply and the reply above, I've gotten all the confirmation I need that selling is the correct option. Honestly, thanks for your help, it was starting to stress me out thinking I was missing something in my own calculations!