Should I sell and rent for a while ? (05-06-2008)

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IFT

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Re: Should I sell and rent for a while ?

I tried posting a table but it just messed up completely

what do you want to know?
You can publish a spreadsheet using google documents . PM the spreadsheet to me and I can do it for you if you like.
 

Kemo_Sabe

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241
Re: Should I sell and rent for a while ?

I think what your proving can be explained basically as this:
Say interest rates are 6% (on savings and mortgages). If rental yields are 3.5% then you are financially better off renting (or deferring trading up) in periods where annual house price increases are less than 2.5%.
It's as simple as that.
Some of the scenarios above show savings as a result of staying longer in the less desirable house, these need to be offset against the benefit of actually living in a better house. I will obviously save money if I drive round my '94 fiesta for a few more years rather than buy a BMW.
good summary, of course there are less tangible factors to be weighed up:

- the utility of having your own place (i.e. can do whatever you like with furniture/decoration etc, kids can draw on the walls, dog can dig up the garden etc)
- the opprobium of family/friends who tell you that you're 'insane'
- the flexibility of renting

etc etc
 

eamonn123456

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483
Re: Should I sell and rent for a while ?

and don't forget that there is no shame in paying for the benefit of knowing how much your target house will cost.

If you trade up now, you know (roughly) how much it will cost you.

If you sell-to-rent-to-buy, you are adding time, uncertainty, costs and risk to the equation.

Bearing in mind that the market is already well off its peak, this option is less attractive now than it was had the OP done it at the peak. (Before anyone starts, I know that no-one can be expected to have called the peak.)

But I think there is still merit in it, as long as you do your sums (correctly! and in a brutally honest way), are aware of the risks based on various scenarios, and can live with the worst case scenario.

Otherwise, pull your horns in and stay within your comfort zone.
 

Sangster

Registered User
Messages
32
Re: Should I sell and rent for a while ?

Just an update - EA is calling over this Friday to give us a valuation. I'll let you know the results as to be honest my decision will be based off what they say.
 

eamonn123456

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483
Re: Should I sell and rent for a while ?

Interesting. Are you saying that your decision will be based on the valuation of a single EA?
If that is so, then your approach to making a decision seems much simpler than mine would be. I sometimes wish I could be more decisive about these things. Is there a large element of gut-feel in your decision making?
 
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IFT

Guest
Re: Should I sell and rent for a while ?

Interesting. Are you saying that your decision will be based on the valuation of a single EA?
If that is so, then your approach to making a decision seems much simpler than mine would be.
I believe he said that his decision would be based on what 'they say'.
 

Sangster

Registered User
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32
Re: Should I sell and rent for a while ?

OK -so we had 2 ea's over on Friday. One reputable 'independent' and one big national one. (not sure if I can give out the names) The big one valued it at 600k and the local guy at 620. The big crowd won't move off the 1.5% fee whereas the local guy is only 1%. We are going to take the plunge, god knows how long it might take to sell.
 
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Treehouse

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Re: Should I sell and rent for a while ?

OK -so we had 2 ea's over on Friday. One reputable 'independent' and one big national one. (not sure if I can give out the names) The big one valued it at 600k and the local guy at 620. The big crowd won't move off the 1.5% fee whereas the local guy is only 1%. We are going to take the plunge, god knows how long it might take to sell.

Earlier in the thread I said you'd be lucky to get 600k, so it's only fair I reply to this and say so far it looks like I could be wrong. Either that, or the EA's are overestimating in their valuations. Interesting to see what happens. I still say a 2006 valuation at €650-€700k equates to sub-€550k today, but the EA's say otherwise, so we'll see.

And Sangstar, the length of time it takes to sell is purely a function of price. If you priced it at a €1m, it would sell in 2030. If you priced it at €100, it would sell tomorrow. In that sense, the length of time is not the important variable, price is. You can sell it any time you want at the right price, or you could wait forever at the wrong price.
 

angela59

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594
Re: Should I sell and rent for a while ?

Hi Sangster,

We had our own house valued by 4 different auctioneers early last year - valuations ranged from E680,000 to E700,000 to E750,000. We have dropped price to E610,000 and after a year of trying to sell it am taking it off market end June. As you are based in Dublin yours will probably sell quicker - I'm rural but I wish you the best of luck. I will stay out of property market for a while too stressful for me!

Angela59
 

Sangster

Registered User
Messages
32
Re: Should I sell and rent for a while ?

Treehouse - I meant we'll see how long it takes at that price. I suppose if it's still on the market after the selling season in autumn then you may have ben proved right. But like you say, your not a ea. I hope you are proven to be wrong though :D

Angela - I'll get back to you re. the stress of it all in a couple of months time ;)

Thanks to everyone who has contributed to this thread - I'll keep you updated with the sales process (or lack thereof) in due course
 
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wildcard

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Re: Should I sell and rent for a while ?

I'm also thinking about selling up now and buying again in a couple of years time. If I do I can afford to save roughly 35k a year after paying rent. This will give me an extra 70k to put towards the purchase of a new house with any profit I make now. Sounds better than staying put and loosing money by the month! But in saying that I'm still in the thinking stage and weighing up the pros and cons. Fair play to you op for taking the plunge, be interesting to see how you get on.
 

Complainer

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4,951
Re: Should I sell and rent for a while ?

I'm also thinking about selling up now and buying again in a couple of years time. If I do I can afford to save roughly 35k a year after paying rent. This will give me an extra 70k to put towards the purchase of a new house with any profit I make now. Sounds better than staying put and loosing money by the month! But in saying that I'm still in the thinking stage and weighing up the pros and cons. Fair play to you op for taking the plunge, be interesting to see how you get on.
Sounds like a plan to sell low and buy high, which may not be the best approach in the long term. Your extra 70k will not be much use if the price has gone up €150k in the meantime. It's a huge gamble you are taking.
 

Sangster

Registered User
Messages
32
Re: Should I sell and rent for a while ?

An update for anyone still interested. The first viewing was 3 weeks ago and we had an offer the next day. We went sale agreed last week at for about 2% below asking, so please god things will go through now and we have agreed with the purchaser that we will move out in september.

So far, there has been no stress (apart from getting the house ready for viewing). We have been so lucky so far, we are just hoping it all goes through now.

The funny thing is the fact that ours has sale agreed so quick and for so close to asking is making me think that maybe the market doesn't have that much left to fall before things level off again.
 

eamonn123456

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483
Re: Should I sell and rent for a while ?

Well, that's the thing isn't it? If prices level off or even start to rise, it negates the attraction of selling - to rent - to buy for anyone who is thinking of doing that purely in order to sell high and buy low.
Risky strategy but it could work, as long as prices drop sufficiently after one sells.
 

Sangster

Registered User
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32
Re: Should I sell and rent for a while ?

Update : house sold for 2% below asking. Contracts have been exchanged and move day has been set. The rental prop works out about E300 less than current mortgage so hopefully I'll be in a good position when we decide to get back onto the ladder. At the moment we feel that this time next year will be when we do.
 

angela59

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594
Re: Should I sell and rent for a while ?

Well done sangster - you proved us all wrong! Good to hear good news rather than the doom and gloom. I was telling you about my tale of woe trying to sell earlier - we have taken house off market - we said we'd give it a year and did. Am glad we are staying now - are in the middle of revamp and will do attic conversion in time. I'm actually glad now we didn't go and build - can be stressful. Good luck in your renting and hope you get that dream house for good price!

Angela59:)
 

ClubMan

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43,866
Re: Should I sell and rent for a while ?

The rental prop works out about E300 less than current mortgage
But your rental payments, unlike annuity mortgage repayments, are not purchasing any equity in the property in which you live.
 

poorrelative

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Re: Should I sell and rent for a while ?

But your rental payments, unlike annuity mortgage repayments, are not purchasing any equity in the property in which you live.
Yes but at least the 300 is making about 4% interest (or simply not being eroded by inflation) whereas only about 40% of the monthly mortgage repayments are paying capital of an asset depreciating at a rate of...well lets say slightly more than 4%
 

eamonn123456

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483
Re: Should I sell and rent for a while ?

Well done sangster - you proved us all wrong!
Not much is proven until the time comes when the OP buys a house.

Personally, and with no disrespect to the OP, I hope that the Irish property market stabilises and stays that way.
 
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