Should I sell or rent?

W

wildeoscar

Registered User
Messages
8
Hey ladies and gents,
Hope you can help me answer some questions about a decision I have to make.

Purchased a shoebox apartment in South Dublin in '06 for 405k.
Remaining mortgage is approx. 300k.
Currently in a 3 year AIB fixed rate (Ends in March '19)

It has been owner occupier until we recently moved to a house and now need to decide whether we try to sell it or rent it.

In summary, my preference would be to sell if we can cover the outstanding value on the mortgage. I don't particularly want to become a landlord right now.

Recent sales in the area suggest we may be able to sell for around 300k on a good day.
So my questions are:
1.) If we decide to sell, and cover the outstanding mortgage amount as it fair to assume the bank will allow the sale? Do I need to speak to them in advance of attempting the sale?
2.) In the event of a sale of a property while in a fixed rate are there penalties? Any idea how much that would be with approx. 18 months left in the fixed term?
3.) If we got an offer of say 290k - would the bank consider writing off the balance?
4.) If we can't get the right offer, we're in a good location so we'd have no problem renting it and covering the mortgage - but I'm fully aware that there are a myriad of additional overheads when considering becoming a landlord. Are there any good references for doing a business plan/budget as a prospective landlord to see what we'd be getting ourselves into?
5.) Finally, a stupid question I should really know the answer to, but I assume the bank currently hold the deeds for the property until the mortgage is cleared (I was young and foolish when I purchased the property so I probably didn't ask important questions like this)

Thanks!
 
Hi Oscar

If you have bought another house, then you probably should sell this house. You would have enough exposure to the property market.
If you do not own another house, it may be worth holding onto this to give you a stake in the property market.
If you bought in 2006, is there any chance that you were entitled to a tracker? If you have a cheap tracker on this or if you are entitled to one on expiry of the fixed rate, then it's probably worth holding on to the apartment.

Now to answer your questions.
2) There is usually a break fee for coming out of a fixed rate early. But it might be quite small. The only way to find out is to ask AIB how much it is.

When you find out, please do post the results in this thread

It may be much cheaper than you think to break out of a fixed rate early...

1) If you clear the mortgage and any break fee, then you do not need the approval of the lender or to speak to them in advance.

3) No, the bank would not write off the balance unless you were in deep financial trouble which you don't appear to be in. Even then, they probably wouldn't.

4) Plenty of threads here.
https://www.askaboutmoney.com/threads/key-posts.5997/

I am not aware of any good book or guide to it. But it would be a very good resource.

5) Yes, the bank has the deeds. When you instruct your solicitor to prepare the sale agreement, they will get the deeds from the bank.


Brendan
 
If the selling price does not clear the mortgage and the break fee, then you might consider holding on to it and renting it.

The problem is the hassle of renting. In an ideal world, you would rent it for a short period until the price has risen enough for you to clear your debt. But the regulation is so anti-landlord now, that you may not be able to sell it and the tenants may make it difficult to sell.

Could you consider letting it out on Airbnb ?

This would be a lot more work, but it's much more flexible. You could sell it when you want to.


Brendan
 
If you have a mortgage on house with AIB, you can probably carry balance of apartment mortgage onto house. Unclear if you are renting or bought house?

AIB facilitate negative equity mortgages for suitable candidates. Know someone approved on this recently.
 
wildeoscar said:
Hey ladies and gents,
Hope you can help me answer some questions about a decision I have to make.

Purchased a shoebox apartment in South Dublin in '06 for 405k.
Remaining mortgage is approx. 300k.
Currently in a 3 year AIB fixed rate (Ends in March '19)

It has been owner occupier until we recently moved to a house and now need to decide whether we try to sell it or rent it.

In summary, my preference would be to sell if we can cover the outstanding value on the mortgage. I don't particularly want to become a landlord right now.

Recent sales in the area suggest we may be able to sell for around 300k on a good day.
So my questions are:
1.) If we decide to sell, and cover the outstanding mortgage amount as it fair to assume the bank will allow the sale? Do I need to speak to them in advance of attempting the sale?
2.) In the event of a sale of a property while in a fixed rate are there penalties? Any idea how much that would be with approx. 18 months left in the fixed term?
3.) If we got an offer of say 290k - would the bank consider writing off the balance?
4.) If we can't get the right offer, we're in a good location so we'd have no problem renting it and covering the mortgage - but I'm fully aware that there are a myriad of additional overheads when considering becoming a landlord. Are there any good references for doing a business plan/budget as a prospective landlord to see what we'd be getting ourselves into?
5.) Finally, a stupid question I should really know the answer to, but I assume the bank currently hold the deeds for the property until the mortgage is cleared (I was young and foolish when I purchased the property so I probably didn't ask important questions like this)

Thanks!
Click to expand...

you will get far more than 300 k today , south dublin is at most 10% off the peak right now ,maybe 15% for apartments
 
Brendan Burgess said:
Hi Oscar

If you have bought another house, then you probably should sell this house. You would have enough exposure to the property market.
If you do not own another house, it may be worth holding onto this to give you a stake in the property market.
If you bought in 2006, is there any chance that you were entitled to a tracker? If you have a cheap tracker on this or if you are entitled to one on expiry of the fixed rate, then it's probably worth holding on to the apartment.

Now to answer your questions.
2) There is usually a break fee for coming out of a fixed rate early. But it might be quite small. The only way to find out is to ask AIB how much it is.

When you find out, please do post the results in this thread

It may be much cheaper than you think to break out of a fixed rate early...

1) If you clear the mortgage and any break fee, then you do not need the approval of the lender or to speak to them in advance.

3) No, the bank would not write off the balance unless you were in deep financial trouble which you don't appear to be in. Even then, they probably wouldn't.

4) Plenty of threads here.
https://www.askaboutmoney.com/threads/key-posts.5997/

I am not aware of any good book or guide to it. But it would be a very good resource.

5) Yes, the bank has the deeds. When you instruct your solicitor to prepare the sale agreement, they will get the deeds from the bank.


Brendan
Click to expand...

Many thanks for the detailed reply Brendan. Re: tracker - I think I missed the boat there (stupidly). We signed up to an interest only 1 year offer the first year of the mortgage and when we came off that we auto went onto the variable rate and never switched to a tracker - eejits!

We have purchased another property and I don't necessarily want to become an accidental landlord, especially given the way the wind is blowing with govt. regs so I'm inclined to try and sell. Of course if we don't get the right offer we'll reluctantly go the rental route.

thanks again!
 
Brendan Burgess said:
Could you consider letting it out on Airbnb ?

This would be a lot more work, but it's much more flexible. You could sell it when you want to.

Brendan
Click to expand...
I hadn't given it serious thought - i'll look into it in more detail and see what demand there is for this in our area. Thanks Brendan.
 
If you decide to keep the property why not just let a management company look after it for you. No hassle and costs about 5 or 6% of rental which can be written off as an expense.
 
According to the latest CSO figures, Dublin residential prices are still 26.4% lower than the peak reached in February 2007.
 
Sarenco said:
According to the latest CSO figures, Dublin residential prices are still 26.4% lower than the peak reached in February 2007.
Click to expand...

no way is south dublin that far off peak , the entire county of dublin might deliver that kind of average and i add , media and CSO are usually at least six months behind the reality on the ground , the move up since brexit is at least 20%
 
galway_blow_in said:
real experience from talking to people who both work in the industry and family members who are actively trying to get a place to live
Click to expand...
It all depends on the area, property type and price bracket. 3 bed 'starter' family homes in a decent area are probably close to peak. But 1 and 2 bed apartments miles from anywhere aren't anywhere close. I'm familiar with lots of developments in the greater Sandyford area where 2 bed apt would have been 450+ in 2007 (I almost bought), and have only recently broke through 300 again. Similarly 3 bed semi in D14 that would have been 800+ are just about breaking through 600 now.
 
galway_blow_in said:
no way is south dublin that far off peak , the entire county of dublin might deliver that kind of average and i add , media and CSO are usually at least six months behind the reality on the ground , the move up since brexit is at least 20%
Click to expand...

Well, Daft puts the year-on-year rise in asking prices in South County Dublin (Q2 2017) at 8.8%, which is considerably less than the comparable figures for Dublin as a whole.

With the greatest of respect, I would suggest that your "friends and family house price index" lacks statistical rigour.
 
RedOnion said:
It all depends on the area, property type and price bracket. 3 bed 'starter' family homes in a decent area are probably close to peak. But 1 and 2 bed apartments miles from anywhere aren't anywhere close. I'm familiar with lots of developments in the greater Sandyford area where 2 bed apt would have been 450+ in 2007 (I almost bought), and have only recently broke through 300 again. Similarly 3 bed semi in D14 that would have been 800+ are just about breaking through 600 now.
Click to expand...
Sarenco said:
Well, Daft puts the year-on-year rise in asking prices in South County Dublin (Q2 2017) at 8.8%, which is considerably less than the comparable figures for Dublin as a whole.

With the greatest of respect, I would suggest that your "friends and family house price index" lacks statistical rigour.
Click to expand...
Sarenco said:
Well, Daft puts the year-on-year rise in asking prices in South County Dublin (Q2 2017) at 8.8%, which is considerably less than the comparable figures for Dublin as a whole.

With the greatest of respect, I would suggest that your "friends and family house price index" lacks statistical rigour.
Click to expand...

well we all know you go 100% by textbook references
 
Oscar,

At risk of brining this back on topic....

If you're planning on selling, don't forget to factor in the additional costs you'll have to pay on top of clearing the mortgage. Commission (about 1.5%+VAT), legal fees and getting a BER cert. There will be a small release charge on the Mortgage, and potentially you might need documentation from your management company which could cost a few hundred. Get 2 or 3 estate agents to have a look at it and they'll advise you what the market is like for your specific apartment, a value, and when they think is best to put it in the market.

If budgeting to keep and rent, make sure you've done your tax calculations properly. I know you mentioned in you OP that rent would cover mortgage, but when you factor in management fees and Taxes, it might be cashflow negative to hold onto it.

Best of luck making a decision, and please let us know in relation to break cost from AIB.
 
RedOnion said:
Oscar,

At risk of brining this back on topic....

If you're planning on selling, don't forget to factor in the additional costs you'll have to pay on top of clearing the mortgage. Commission (about 1.5%+VAT), legal fees and getting a BER cert. There will be a small release charge on the Mortgage, and potentially you might need documentation from your management company which could cost a few hundred. Get 2 or 3 estate agents to have a look at it and they'll advise you what the market is like for your specific apartment, a value, and when they think is best to put it in the market.

If budgeting to keep and rent, make sure you've done your tax calculations properly. I know you mentioned in you OP that rent would cover mortgage, but when you factor in management fees and Taxes, it might be cashflow negative to hold onto it.

Best of luck making a decision, and please let us know in relation to break cost from AIB.
Click to expand...


the rent is pretty terrific right now across the market in dublin irrespective of taxes , the number one risk is getting a delinquent tenant you cant shift ,everything else pales into comparison

auctioneers fees should not be any higher than 1.25%
 
galway_blow_in said:
auctioneers fees should not be any higher than 1.25%
Click to expand...
Try telling Sherry Fitzgerald that!
Don't forget the marketing budget; photos, myhome listings, etc. I'm aware of a few independent estate agents quoting 1%, but any of the better recognised names in Dublin are charging between 1.25% and 1.75%. I said 1.5 to cover the other costs as an average.
 
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