I bought an apartment for €275,000 at the height of the boom. They are now selling for around €210,000. There is approx €170,000 left to pay on the mortgage. The property is in a rent pressure zone so the max I can rent it for is €1200 when the market value rent is €1600. Should I rent it out again or just be done with it and sell up?
Should I sell or rent out my apartment
- Thread starter Delmer
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Brendan Burgess
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Check out this Key Post to understand how to approach it systematically.
Key Post - Keep Apartment as Rental or Sell?
Updated May 2020 The question regularly comes up on AAM whether somebody should keep an apartment that their family has outgrown as a rental or whether they should just sell up. Borrowers often run projections on the anticipated rental income from an apartment with a cheap tracker and conclude...
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Thanks @Brendan Burgess If I sell up and use the equity to pay off my new mortage I would save 1022 in interest.
If I keep it and rent it out I make a net profit after tax and expenses of 4490
The mortgage repayments on the apartment are approx 7200
4490 isn't a whole lot of profit but it is a good bit more than I'd save on interest on the new mortgage. What would you do in this situation?
If I keep it and rent it out I make a net profit after tax and expenses of 4490
The mortgage repayments on the apartment are approx 7200
4490 isn't a whole lot of profit but it is a good bit more than I'd save on interest on the new mortgage. What would you do in this situation?
NoRegretsCoyote
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You have equity of €40k and net profit of about 10% of that.
Over time though as you pay down the mortgage the net yield will fall. If you owned the house outright your net yield would be about 2%.
You have to decide whether it is worth the hassle and risk of being an amateur landlord.
Over time though as you pay down the mortgage the net yield will fall. If you owned the house outright your net yield would be about 2%.
You have to decide whether it is worth the hassle and risk of being an amateur landlord.
Is the projected differential of €3,468 sufficient reward to you for all the risk and hassle of running a property rental business?
One positive point to note is that your apartment could increase in value to €275k without any CGT concerns.
@Sarenco that's a good question. If I get a good tenant that might be ok. If I get a bad tenent then definitely not.
Hanging on to it is basically making a bet that house prices will rise and I can sell at a better price in the future. I don't have a great record when it comes to the property market. Maybe getting out now would be wisest. I'm still on the fence though.
Hanging on to it is basically making a bet that house prices will rise and I can sell at a better price in the future. I don't have a great record when it comes to the property market. Maybe getting out now would be wisest. I'm still on the fence though.
This is a fair point - its a responsibility. Also, with political atmosphere as it is, its hardly going to be sweetness and roses for landlords in the future.
Seeing the rent is 400 a month under market rate it should be possible to select a good tenant
The other thing to think about is it may be worth more than 210.000 to a new owner seeing they can start rent at 1600 if renting it out again,
I'm pretty sure the new owner is tied to the existing rent level (plus pro rata increase where applicable) even with new owner and/or new tenants.
That's why the rent level effects the sale price.
That's true as things stand.
However, the RPZ regime is due to expire at the end of this year. Unfortunately, we don't know what will replace it.
What price did you get?