Time to sell rental property?

M

Male Doon

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My wife and I currently have a tracker mortgage on the house we have lived in for ten years now. We have been renting out our former house in Dublin since we moved, and so far we have been lucky with any tenants we've had.
The value of the rental property at peak was around 450k so I suppose it's worth around 180-200k now. No mortgage outstanding on it.
Current repayment on the house we live in now is 1200 pm (11 years left). About 140k left to pay. (Borrowed 267k in 2004)
Current rent is 1000 pm. I put 300 euros aside each month to pay costs on rental house, leaving net contribution to our mortgage of 700 euros approx.

With the supposed uptake in house prices, we were considering selling the rented house around this time next year. Looking to be mortgage free again.
So the question is, would it be a good time to sell, taking account of selling costs, and capital gains tax due etc?
Any replies would be much appreciated.
 
Your rent seems low. Personally I'd try to raise the rent to it covers the mortgage and keep it a while longer. What was the long term goal with the property?
 
Male Doon said:
Current rent is 1000 pm. I put 300 euros aside each month to pay costs on rental house, leaving net contribution to our mortgage of 700 euros approx.

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So from your rental your net income is 700 Euro's which you pay towards your current mortgage.

I'm amazed that your rental gives you this much. On a property with no mortgage I would have thought you were paying the tax man at least 50%?

Nobody can answer about prices of property on AAM.

Why do you want to pay off your mortgage? Trackers are the cheapest money around, it is probably not advisable to pay it off. In any case you are actually probably paying very little interest and the capital payments are all reducing the amount owed, while you gain another asset.

What would you do with the extra 60K between paying off the home mortgage and the selling price.
 
Thanks for the replies...in relation to your question, AlbacoreA, when we decided to move in 2003, I was wearing boom-tinted glasses (a popular fashion accessory at the time!) and so we considered that over the next five years or so, that we could sell the rental property at a profit; hindsight and all that.

Bronte, you are right about tax eating into the rental income. Last October, I had to add extra money to cover the taxation (hadn't allowed for the USC) BUT I don't think it is as high as 50%. The tax relief on maintenance and repairs helps to offset the full impact. But in general, taxation is only going in one direction and that is one of the reasons we are considering off-loading.
Also, landlord fatigue is setting in... a bit older now and busy enough keeping our own house in order without worrying about another house.
Finally, regarding reasons for wanting to sell, I suppose at the back of our minds is the possibility of some major economic shock occurring in the world, leaving us with a big mortgage late in life and a worthless house.
Having re-checked the balance on our mortgage, it is actually 150k, but in any event between selling costs , CGT, and everything else, I would expect to only just about break-even in the event of selling the rented house. I wouldn't at all expect anything near a 50k or 60k windfall after a sale.
Overall, the reason I posted my query was just to obtain some feed-back about how things stand on this front at the moment. Glad to see that both of you see some merit in holding onto the rental property.
 
Can you raise the rent to cover your costs and perhaps an agent to manage it. That might make it less of a mental burden. In 10~15yrs time you might be glad of the extra income.

If you want it off your back now, or can't keep up the payments, then I'd consider selling it. If the quick buck plan is history. Perhaps you should rethink why you have it, and how you can use it. You might not qualify for mortgage quite so easily again. So bear that in mind.

Any other advice would require talking about the property market, and we can't do that here. It would also need to know your ages, and other details.
 
Male Doon.

What ever about the figures and economics of your case.

Once I see (landlord fatigue) starting , it tells me sell .

The (old fatigue syndrome) has a hateful habit of getting worse!

Also getting older (hopefully wiser) gets worse!

Good luck.
 
Well, based on the above replies, some food for thought there, alright. It's encouraging that there appears to be some financial merit attached to our scenario, whereas I had assumed that any advice forthcoming would have been more negative generally.
Not in any hurry to sell, and the point was made that our mortgage repayments would now mostly go towards reducing the capital. So the jury is out...

Thanks again to those who replied.
 
Do you think that you are getting lower than standard market rent? If so, and you are happy to live with that a good alternative might be to hand the rental property over to the local authority/county council.
I don't know the details of the scheme but AFAIK the general principles are:
- you give the house to the local authority for a fixed number of years.
- they pay you a monthly rent regardless of whether it's occupied or not.
- they do all maintenance.
- at the end they give it back to you in the same condition as you gave it to them.
The downside is that the rent that they pay is below the market rate. However, if you are already living with that, then you get the benefits of not having to worry about tenants/hassle for a fixed time period. Worth considering?
 
Macstuff said:
...
- at the end they give it back to you in the same condition as you gave it to them. ...
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Are you sure. I don't think that's true. I seem to remember seeing some discussion about the LL having to pay for some things. I can't find it at the moment.
 
That's the theory. Not quite the same in practice. Plenty of headaches remain for landlords who hand over to Local Authorities
 
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