Rent out my property or sell it

D

Dublin

Registered User
Messages
18
Hi,

I have a query on whether I should rent out my property or sell it.

I am purchasing a new property as a result of my existing property being too small now we have kids. I need to decide what to do with my two bed apartment.

The details are as follows:

Market value: 285k
Mortgage balance: 282k
Term left: 25 years
Monthly mortgage: 1,400 (this takes account of mort interest relief no longer received)
Mortgage interest rate: 3.2% variable
Rental income possible: 1,700
Management fee: 2,000

Any advice on this is greatly appreciated.

Kinds regards

dublin
 
You have a surplus of €3600 per annum.

From this take away the management fee and you have €1600.

Then factor in PRTB and Insurance and you are probably down to €1000.

Assume that there will be no maintenance, painting, replacement of any fixture or fitting, no voids, no letting agent fees etc and just pay tax on it and you have €500.

It aint worth the hassle for €500 per annum.

My advice is to sell.

You will have selling fees, but then the investment/millstone is gone and you can enjoy life in the new place with wife and kids.
 
Ravima said:
You have a surplus of €3600 per annum.
Click to expand...
This is cashflow surplus. Part of that cashflow is paying capital off mortgage.

Rent: 20,400
Interest cost: 9,024
Mgt fee: 2,000
Other costs: ?

There's equity of 3k.
There is a very big return available for 3k, but extremely vulnerable to property price changes. So how much risk do you want to take on?

Take a look at this key post to see how to make a financial assessment (I know it's written from a tracker mover point of view, but there is lots of valid information, and things to consider): https://www.askaboutmoney.com/threads/keep-apartment-as-rental-or-move-tracker.203907/


Do you need a mortgage to buy new place? Have you checked if a bank would lend to you if you keep apartment?
 
Last edited:
How confident are you that you'll achieve €285k? That's only €3k more than the mortgage outstanding.

Putting it on the market is time-consuming and expensive only to discover that the best offer is €270k.

Do you have the funds to clear the balance if the sale price disappoints? Don't forget estate agent fees too.



In the meantime you can probably switch and get something better than 3.2%.
 
You will get 1700 per month for apartment. Pay mgt fees of 2000 per year from this and around €400 per month tax on the rent. Can you afford to pay mortgage on new house and put 200 or 300 every month towards paying for apartment?
 
As redonion has mentioned - have you talked to the bank. You'd have to have the 3.5 times income to cover the mortgage outstanding and the new mortgage.
 
If you have to employ a letting agent you will have also to pay €1500 + for letting and doing the associated documentation. I assume you are in a RPZ so your rent will be restricted to 4% per annum after 1st letting. When I read your post first and before I read any of the replies I thought you shoud sell and I still do. Too much hassle and annoyance long term with all your borrowings. More rental regulations coming down the road as well.
 
Thanks everyone for the replies.
Certainly gives me various things to consider.

To answer some of the questions you have put to me:

I have checked with several banks and I would be mortgage approved if I kept the apartment.

I would be able to cover the new mortgage along with the commitments of the retained property.

I understand the risk involved and the fact that not having a tracker rate makes it less attractive but some of the principal is being paid down each year so creating equity (although this is on the basis that property values don’t drop too dramatically!).

Properties of a similar spec in the area have sold for 285k to 290k in the last 6 months so I would be confident of getting 285k for it.

Another driver behind considering keeping the property even for the next few years is to enable us to move to a new property and avoid having to move into a rental property as it’s unlikely that we could sell the apartment and find and purchase a new house in a short period of time.

Thanks again for your views on this. As I said plenty to consider.
 
Dublin said:
Another driver behind considering keeping the property even for the next few years is to enable us to move to a new property and avoid having to move into a rental property as it’s unlikely that we could sell the apartment and find and purchase a new house in a short period of time.
Click to expand...
Having personally been through the stress of selling / buying (and purchase falling through), I can understand completely your reasoning for wanting to buy and move before you sell. But that only has to be for a few months - I wouldn't let it be the sole reason to keep it longer term.
 
You must log in or register to reply here.
Back
Top