Should I sell my house or rent

Discussion in 'Mortgages and buying and selling homes' started by epopnomis, Jan 12, 2018 at 1:47 PM.

  1. epopnomis

    epopnomis Registered User

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    Hi, looking for opinions on renting vs selling my house. The house is in Terenure Dublin bought a few years ago for just over 200k, would reckon I would get over 400k for it if I put it on the market. There is no mortgage on the property. If I was to rent it out per month I would reckon I would get circa 2300€ a month so 27600 a year, as I'm self employed I would be paying up to 55% tax (correct me if I'm wrong) on this plus the hassle of renting in the first place and costs like property tax, insurance and registering the property. I will also be moving to Cork so I will not be near the property if anything goes wrong.

    Any opinions on my predicament.

    Thanks
     
  2. cremeegg

    cremeegg Frequent Poster

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    The only issue for consideration is what you expect the price of property to be in 2 years. If you think you could get €600k in 2 years keep it.

    Otherwise is a net €8k-€10k a year (after allowing for opportunity cost) worth the hassle to you.
     
  3. epopnomis

    epopnomis Registered User

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    That's the million dollar question will property's keep climbing?, I'm inclined to think that in the area the house is in the price should rise but who knows. With the option of selling the house we could pay off the mortgage in cork, leave us mortgage free but also take a valuable asset from us. 8-10k a year net would of course be valuable but as I've never been a landlord before I'm nervous on 1) letting the house out to maniacs and 2) Dealing with all the things that can possibly go wrong with a house. :)
     
  4. Sarenco

    Sarenco Frequent Poster

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    How much would that save you in interest payments?
     
  5. cremeegg

    cremeegg Frequent Poster

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    On average most tenants are fine. Its no harm to be aware that there are some maniacs out there, but probably a lot less than you might think reading the threads on here. A forum like this naturally gets more posts about the problems that the no problem situations.

    If you do let, my single piece of advice to avoid disaster is try to be sure that the tenant can afford the rent. 90% of problems arise where the tenant is struggling financially.
     
    odyssey06 and epopnomis like this.
  6. epopnomis

    epopnomis Registered User

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    The interest on this would be around 50k
     
  7. epopnomis

    epopnomis Registered User

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    Also if I rent the house I will be in the CGT territory of paying 33% on a pro rata of the profit off the sale... I'm inching toward selling. Just might cut out all the hassle.
     
  8. aristotle

    aristotle Frequent Poster

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    I'd be inclined to rent out even with the tax.

    You will have an asset that is paying you an income with no debt on the asset. You might take the view that the value of the asset will keep increasing over the medium term so you can revise that decision to sell or not later.

    But it would be a good asset to have as part of generating income for your pension years.

    Even if you rent the house to the worst ever tenants who trash the place beyond all recognition you will still be able to sell it if you want. It might command an under the market price value but you will be able to sell.

    In all likelihood you will get mostly ok tenants who will be fine. Do your homework properly on tenants before you rent to them.
     
  9. Sarenco

    Sarenco Frequent Poster

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    Sorry, I should have been clearer - I was really thinking about the annual interest bill.

    For example, if the mortgage on your PPR in Cork was, say, €400k@3% that would represent an annual interest bill of €12k. In those circumstances, would it be worth keeping your €400k equity tied up in your Dublin rental if it's only yielding, say, €10k (net of costs and taxes) per annum?

    Or to put it another way, using those figures as an example, would it be worth spending €2k per annum to gamble on rising house prices?
     
  10. epopnomis

    epopnomis Registered User

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    Thanks for all your replies... as always its a great forum for honest opinions... pushing towards the selling avenue. Possibly buy a rental property in Cork in a few years when the bubble inevitably will burst..
     
  11. cremeegg

    cremeegg Frequent Poster

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    While we don’t speculate on property prices here, I hope I may be allowed tell this anecdote.

    In the mid 1990s we rented a small 2 bed house in a good area in West London. We discussed buying it or something similar but at £400k We considered it too expensive and we intended to return to Ireland.

    Those houses are on Zoopla for £1.4million now.
     
  12. Sarenco

    Sarenco Frequent Poster

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    Don't confuse strategy with outcome Cremeegg - past returns are not indicative of future results...

    If you happened to be in London ten years earlier in the mid-80s your experience might have been very different.
     
  13. galway_blow_in

    galway_blow_in Frequent Poster

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    a house bought in dublin at the time would also have quadrupled
     
  14. Lillymarlane

    Lillymarlane New Member

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    You really should consider;
    any tax implications on your Dublin house. Is it your principal residence? If not, you will pay over 33% free gratis of the profit on it if you sell it.
    Have you children that may wish to study in Dublin in the future?
    Have you looked at the real value of the rental market for this house. A good estate agent will give you a true valuation of annual return value so you can make an informed decision. Not all renters are cat! From experience I can tell you the name of one that I had a problem with since 1995 over a number of lets...and the name of an excellent estate agent!
    Are you mortgage free in Dublin? If yes, and can afford the mortgage in Cork without being pennypinching then I would really consider holding onto an asset in morter and look at any rental profit as a bonus.
    However, if there is a mgt on dublin and no children to benefit from a place to go to when college comes then bag the tax free principal residence profit and get mgt free in cork....then count your blessings! Good luck!
     
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  15. DCD

    DCD Frequent Poster

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    I live sixty miles from a Dublin rental. Used to hate those phone calls always at the wrong time from tenants. Eventually signed it over to SDCC under the long term rental scheme. Handed the keys over for ten years they fully manage everything. Get 80% of market rent. No calls no repairs etc. Council are contracted to return property at end of term in original condition. Seven and half yrs to go.
    Review your full financial position. Currently renting is just not worth the return the hazzle or the risk.
    Im sure you have worked hard and long to get where your are. Why risk it now? diversify?
     
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  16. RedOnion

    RedOnion Frequent Poster

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    Hi OP,

    I'm in a very similar position to yourself.

    I have a house in Dublin, although with a very small mortgage (15% of value), and we are moving down the country this year.

    I looked at renting our Dublin House (>2,500 per month), but it didn't make sense to me if I had a mortgage on our new home. Instead, we're selling the house, using the equity to buy a house where we're moving, and will have enough left over to make some investments. You'll see some posters have a bias for / against property investment, but for me being completely debt free opens up a lot of options.

    I might still end up investing in property. Even if I do end up buying a rental property in Dublin and can't buy it outright, it's better to have a mortgage on the buy to let, than your PPR from a tax point of view. You're also in the position of being self employed, so if you do have a yearning to be a landlord you should get advice on whether you should be buying property via a pension structure rather than directly.
     
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  17. epopnomis

    epopnomis Registered User

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    Thanks for all the replies. We’re lucky enough our mortgage for the new house will be manageable about 800 a month over 20 years. If I was to leave the house vacant for a year would that be an issue. Would I be liable for tax??? Also is it worth getting an agent involved? Surely the best person to rent out the house would be myself? Finding it hard to understand what an agent does. Surely putting an ad on daft would be handy enough.
     
  18. Kilconleagirl

    Kilconleagirl New Member

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    I need advice whether to sell or rent out our property, We have 60k equity (bought for €140k and €80k left in mortgage) in it and savings of 30k, we both have a combined incomes of 66k and have permanent jobs, one of in public and the other in the private sector, but am now thinking should I rent out the property instead as there is a shortage of property in the area for rent. My husband has no pension so could hold onto the property until he retires and sell it then, my question is would the bank lend us the money to purchase a new house for say 250k based on our circumstances?

    Thanking you in advance
     
  19. galway_blow_in

    galway_blow_in Frequent Poster

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    keep the house , your joint income is small so tax on the rent wont be too much of an issue

    if worried about tenant problems , consider entering in to a long term lease with the council , the guarenteed reduced rent should still more than cover mortgage repayments
     
  20. RedOnion

    RedOnion Frequent Poster

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    Hi,
    You'd need to provide more detail around both your ages, if you've children, and any other financial commitments to have an idea of whether you'd get a mortgage.

    But first of all, the maximum a bank can lend you is 80% as you're not first time buyers. So you'd need 50k deposit, plus enough for stamp duty and legal fees.

    You haven't provided nearly enough details for anyone to provide an objective view on holding onto the existing property as a rental (as a starter, how much would it rent for).