Should I sell my investment property

C

cremeegg

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I am considering if I should sell an investment property.

After CGT and fees I would probably get €130 to €140k. There is no mortgage.

I get €12,600 rent annually. It is in an RPZ. The property is newly renovated, maintenance costs should not exceed €1,000 per year. Insurance and LPT costs together are less than €500 There are no management fees or agents fees.

I have significant other exposure to property.

My timescale is long term. I hope to have some assets in my will.

What other factors should I consider.

I will not sell unless I know what I am going to do with the sale proceeds. €10k pa would probably be my max pension contribution.

Any advice suggestions welcome.
 
It sounds like you are achieving a gross yield of around 8% on the current fair market value of the property. That's a very attractive return in the current environment.
cremeegg said:
I will not sell unless I know what I am going to do with the sale proceeds.
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That's really the key question in my opinion.

Do you have a mortgage on your PPR that you could pay off with the sales proceeds and, if so, what is the mortgage rate? If the PPR mortgage rate is more that the net, after-tax rate of return on the rental (which seems unlikely) then that's one option.

When you say that €10k is your maximum pension contribution, is that the relievable maximum amount at the appropriate % of your net relevant earnings or is it due to cashflow constraints?
 
If you have good tenants who might stay long term I would see no reason to sell, unless you fear a downturn in property prices. If your tenants give notice you could revisit it then.

Have you mortgages on your other investment properties?
 
Hi cremeegg

The bigger question should be your total asset allocation and borrowings.

If all your eggs are in the property basket and you have borrowings, then I would suggest that you should reduce both your exposure to property as an asset and borrowings as a liability.

It may be that you sell some other property instead. For example, it wouldn't make sense to pay CGT on the sale of this property if you have an unrealised capital loss on another property.

If you have cheap trackers on particular properties, then you probably should not sell them or pay down those mortgages.

In theory, you should diversify your investments to include a significant portion in the stock market. There is risk of a substantial fall in both. But diversification is the right strategy now even if it turns out that property prices outperform the stock market over the coming years.

So it depends on your overall position.

What would a decision tree look like?

1) If you have cheap trackers making up more than 50% of the value of the property, keep it for the moment.
2) Sell properties in order of their capital losses or least capital gains.
3) Use the proceeds to pay down any non-tracker borrowings in the order of the net after tax interest cost
4) Invest any net proceeds in the stock market in a diversified portfolio of shares or via an ETF aiming, over time, for a 50% stock market/ property spread.
5)The vehicle for the stock market investment may be a pension fund subject to your tax efficient maximum.

Brendan
 
Brendan is obviously right that your overall financial position is an important factor in this decision.

But as a stand-alone investment, it looks like a good one to me.
 
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cremeegg said:
I am considering if I should sell an investment property.

After CGT and fees I would probably get €130 to €140k. There is no mortgage.

I get €12,600 rent annually. It is in an RPZ. The property is newly renovated, maintenance costs should not exceed €1,000 per year. Insurance and LPT costs together are less than €500 There are no management fees or agents fees.

I have significant other exposure to property.

My timescale is long term. I hope to have some assets in my will.

What other factors should I consider.

I will not sell unless I know what I am going to do with the sale proceeds. €10k pa would probably be my max pension contribution.

Any advice suggestions welcome.
Click to expand...

When you figure out what better use you can put the €130 to I'd be very interested !

Does your exposure to property matter if your mortage to value is ok and if the rent is covering the mortgages and other costs.

It might be an idea for you to do the money makover thread. You could do it under a different username if you prefer, it's something I've considered doing.
 
Bronte said:
It might be an idea for you to do the money makover thread. You could do it under a different username if you prefer, it's something I've considered doing.
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I was thinking of doing the same......is this acceptable with the moderators....will you have to create a new profile?
 
We don't have a problem with that at all.

The only time we don't like duplicate registrations is where it is where there is an underhand purpose.

Brendan
 
Bronte said:
When you figure out what better use you can put the €130 to I'd be very interested !

Does your exposure to property matter if your mortage to value is ok and if the rent is covering the mortgages and other costs.

It might be an idea for you to do the money makover thread. You could do it under a different username if you prefer, it's something I've considered doing.
Click to expand...


You are anonymous posters! We don't know who you are anyway!!! :rolleyes:
 
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