Should I sell apartment?

C

Cooley

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Hi looking for advice on whether to sell a 2 bed apartment. Lived there but due to growing family moved out a few years ago. Couldn't sell before now due to being in negative equity. It seems like it is finally out of negative equity. Tenants moving out soon and don't know whether to rent again or sell. Main reason to sell is the hassle of being a landlord and apartment feels like a burden. Rent is 1500 per month. Mortgage outstanding is 185,000, UB tracker 1.15% above ecb rate. Pay tax on it every year. Looking for advice on whether to sell or is it a worthwhile investment to hold on to? thanks
 
A few questions :-

What do you think is the fair market value of the apartment today? Could you charge a new tenant a higher rent?

Also, do you own your current PPR? If so, is there a mortgage on the property and what rate are you paying?

Do you have sufficient cash flow to comfortably fund your lifestyle expenses? Are you contributing to a pension?
 
I believe you will find those interested in Irish rental property advocating a hold and those not interested advocating a sell, there is an increasing burden on the landlord ( substitute that for fat cat with one property ) to get everything right including the tenant, if it goes wrong it can go terribly wrong, with just one property only you can weight up whether you are in it professionally, economically and for the long haul.
 
There isn't really enough information there for anyone to give you an answer as to whether it would be financially beneficial in the med/long-term to hold on to it. However, as you are finding it a burden, the question is really for you, at what return would it be worth holding on?
 
IMO once it's a burden and on your mind then get rid. If you want to unburden without selling then get a good property agent to do all the work for you and let it ride over the long term but this is only feasible if you don't need to add a huge amount of your own money after turnover. In that case it comes down to whether you are willing or can to afford it.
 
Thanks for all the replies. To answer the questions- market value of apartment is around 200,000. Couldn't charge a new tenant higher rate, that is going rate in area.

Own our own ppr, mortgage is 190,000 approx, mortgage 3.2% ub variable.
Both work and have money to fund modest lifestyle. Both contributing to pensions through work.
Don't put any extra money towards apartment at the moment as rent covers mortgage, expenses, tax.
 
Cooley said:
. Rent is 1500 per month. Mortgage outstanding is 185,000, UB tracker 1.15% above ecb rate.
Click to expand...

This is a very profitable investment

The rent is €18,000 a year
The interest on the loan is about €2,000
Assume other costs of around €3,000
So you are making a profit before tax of €13,000 a year!

That is easy money for the hassle of renting.

A lot of people do a calculation: "The rent received doesn't cover the repayments and tax so it's losing money" But most of your repayments are capital. So you are quickly paying off your mortgage.

Brendan
 
I went through a similar debate myself recently and think it was helpful to put the rental return into a percentage (yield) so you can compare it to selling the apartment and having that money in a bank account. So in your case, if you sold the apartment you would have €15k to put in a bank account at say 2% interest, giving you a return of €300 before tax. Your €15k invested in the apartment is giving you a return of €13k before tax, or 86%. You obviously have to make a call on the increased risk with the property (it being unoccupied in a downturn, the value decreasing, damage etc.), but looking at those figures it seems like a fairly good risk/return to me.
 
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