Scruffy Man
Registered User
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- 16
Hi,
My wife owns a rental property (used to be her house before we married) and I need some advice on whether I should sell it or keep renting it.
Background.
She bought it in 2001 and completely renovated it, total cost including renovation was €153k. It is a 2 bed inner city house in Albert Road, Cork. Two bedrooms upstairs, living room, kitchen and bathroom downstairs.
I did some refinancing of our own house and the investment property and now the current mortgage on the investment property is €193k (interest only).
Peak price for this house was approx €300-320k.
I think I could sell it now for €175k.
Reasons to sell:
The general consensus is that it will drop probably another 20% over the next 2 years and probably stay there for some years to come. Based on a 7% yield it is worth approx 135-140k.
Reasons not to sell:
If I did sell I will need to find €25 600k pay of the mortgage.....I don’t have that cash (at the moment). I could borrow it at a struggle if it made complete sense to do so.
Mortgage shortfall €18k (193k – 175k)
Agents fees €3200
Redecorate before selling: €2000
6 months mortgage payments while waiting for sale to go through: €2400
Rental income is €800/m from a tenant who has been there 5 years and by all accounts looks like staying on indefinitely. My current interest rate is a 0.9% tracker. My current repayments are €320/m so the property is making a surplus of €480/m (€5760 per year)
When interest rates go back up to 4.5% + 0.9% bank margin = 5.4% then interest payments are 10,368 per year = 864/month.
My question is this: rather than having to fork out approx €26k if I was to sell now, would I not be better off renting for the next ten years with the hope that I will break even due to the current rent surplus per year (obviously this will be reducing with each interest rate hike), inflation effectively reducing my debt – so if I do sell in ten years and I am still short €26k then it won’t feel like so much.
Any advice greatly appreciated.
My wife owns a rental property (used to be her house before we married) and I need some advice on whether I should sell it or keep renting it.
Background.
She bought it in 2001 and completely renovated it, total cost including renovation was €153k. It is a 2 bed inner city house in Albert Road, Cork. Two bedrooms upstairs, living room, kitchen and bathroom downstairs.
I did some refinancing of our own house and the investment property and now the current mortgage on the investment property is €193k (interest only).
Peak price for this house was approx €300-320k.
I think I could sell it now for €175k.
Reasons to sell:
The general consensus is that it will drop probably another 20% over the next 2 years and probably stay there for some years to come. Based on a 7% yield it is worth approx 135-140k.
Reasons not to sell:
If I did sell I will need to find €25 600k pay of the mortgage.....I don’t have that cash (at the moment). I could borrow it at a struggle if it made complete sense to do so.
Mortgage shortfall €18k (193k – 175k)
Agents fees €3200
Redecorate before selling: €2000
6 months mortgage payments while waiting for sale to go through: €2400
Rental income is €800/m from a tenant who has been there 5 years and by all accounts looks like staying on indefinitely. My current interest rate is a 0.9% tracker. My current repayments are €320/m so the property is making a surplus of €480/m (€5760 per year)
When interest rates go back up to 4.5% + 0.9% bank margin = 5.4% then interest payments are 10,368 per year = 864/month.
My question is this: rather than having to fork out approx €26k if I was to sell now, would I not be better off renting for the next ten years with the hope that I will break even due to the current rent surplus per year (obviously this will be reducing with each interest rate hike), inflation effectively reducing my debt – so if I do sell in ten years and I am still short €26k then it won’t feel like so much.
Any advice greatly appreciated.