Should I sell or Hunker down?

Teacherman

I'm married-live with wife in her 2 bed . Mortgage under 150k.

Im worried though about a property I have in Tallaght. 1 bed. In a decent area -has rented last two times on market but last rent dropped 200 euro to 800. Mortgage is 135k but I bought it for 180K but put 30k of my own money into it.

My job is secure. Wife lost hers but has part time work. Should I sell this investment property or hunker down. Place was originally my own residence.
Recent Changes in interest write off have not helped-100% to 75%.

Its on a tracker but not naive to think rates will stay low beyond 2011.

Teacherman

Come on there must be at least one opinion out there!?

bop1977

I think if you can make both mortgage payments then hold onto both of them for now.

Teacherman

Thanks. Have got an accountant so he might clear up matters. Anybody else in a similar predicament?

rugbyman

you dont mention how much the house would fetch today.
regards,rugbyman

Teacherman

Prob 125k-130k . Apartment not a house.

silverside

why would you want to keep the 1-bed ?

it's hardly paying its way (particularly with the changes to mortgage interest relief) and is falling in value for the forseeable future. OK you have negative equity which you would have to pay off, maybe at a higher rate - but i think its better to take the hit now rather than waiting until prices further and/or your circumstances change (job loss, pregnancy etc).

i appreciate this may sound negative, its not meant personally.

Teacherman

Motgage is now only 580. At its height it was 750 when rates were high,

rugbyman

If you sell now, the price would not clear your mortgage and pay estate agents fees., and you wave good bye to your own 30 k. if the 800 per month covers your mortgage ,I would say hold on.

was 180 k. at the height of the market, or did prices in the area go higher.? you may not see a price rise from todays price for some years.

regards,Rugbyman

ronbyrne2005

Rents are falling and will continue to for years to come. Interest rates can only go higher. Property prices will also keep dropping for forseeable future . Sell while you can and maybe you can buy an investment property much cheaper in the future.

Teacherman

rugbyman wrote: »

If you sell now, the price would not clear your mortgage and pay estate agents fees., and you wave good bye to your own 30 k. if the 800 per month covers your mortgage ,I would say hold on.

was 180 k. at the height of the market, or did prices in the area go higher.? you may not see a price rise from todays price for some years.

regards,Rugbyman

Bought 180k in 2003. At its height was 260K IN 2006.

rugbyman

You are at present looking at a 50 % drop from its height. this is higher than is quoted in the media lately(do not have exact figures).
Prices ,of houses in general, will fall further i.m.o. ,but maybe not in this area. You have stated that it is in a good area. If it is near public transport links, then it may not fall any more. I say this without knowing anything of its exact location, or how many better buys there may be in the area. It may be five years before it gains and you may not always find tenants(again depending on location).

rents have fallen, but yours has already. A one bed flat means a single tenant, who generally speaking cannot afford even the new lower rent ,or a couple for whom the accomodation is costing 100 per week each.

It cannot be an easy decision, but sell now and you have a very definite loss.

I had two relatives in london who walked away from negative equity flats in london in 1990. if a doomsday collapse occurs to your flat you can always
hand it to the lender. your credit rating will suffer ,but will that matter in that scenario.

regards,rugbyman

Teacherman

Thanks. Its in the kiltipper part of Tallaght. Well served by bus routes. Near shops. Has sports club near by.

Good Karma

Hi Teacherman

Definately keep it, it might not be giving you an optimum return on your investment at the moment, but these things peak and trough. Never sell in a falling market, if you don't have to.

I have lots of rentals and am getting good money for them, never have a problem letting them out (they are fitted to a high standard) and I always accept rent allowance - it's safer than having a private tennant who might loose their job.

At the moment if you can service the capital and interest - your doing well. If you can just service the interest your doing ok.

Look at it as your retirement fund. If you still have this property in fifteen years, you'll probably have very little of a mortgage, a good income every month (providing you keep it right) and an asset that WILL have appreciated in value which will be somewhat index linked to average lifestyle costs in 2024!

mikemac

Teacherman wrote: »

Thanks. Its in the kiltipper part of Tallaght. Well served by bus routes. Near shops. Has sports club near by.

Nice area, well for Dublin 24 area.
Are you near the new stadium?

A friend had a 2 bed apartment in that area and they was lots of interest in renting it, mainly from people on rent allowance.
Rents are collapsing but the rent allowance seems to have set a floor for the area though I think it got cut again last week

I'd consider keeping it and if you do get a good tenant, treat them well!

Teacherman

Thanks for all the posts . Think my own family situation will improve. Wife on 14k a year at present-it can only go up!

AARRRGH

First post at 17:00...

Teacherman wrote: »

I'm married-live with wife in her 2 bed . Mortgage under 150k...

Then 7 minutes later...

Teacherman wrote: »

Come on there must be at least one opinion out there!?

Is that you, Glacier?

SkepticOne

Good Karma wrote: »

Never sell in a falling market, if you don't have to.

Why do you say that? When should you sell?

Good Karma

In a rising one! Timing is everything and that's what makes a good investor, get out too soon and you might miss the gain, stay in too long and prices fall (nearly every element apart from probably gold) will rise and fall little bits or lots.

But really the best time to get out is when you are happy with your profit regardless of anything else that is happening in the market.

Keith C

Teacherman wrote: »

Thanks. Its in the kiltipper part of Tallaght. Well served by bus routes. Near shops. Has sports club near by.

Id hang on to it, loads of apartments were bought by flippers in marlfield, deerpark area & been up for sale for a long time

http://www.irishpropertywatch.com/salesSearchResults.php?Address=tallaght&Beds=1&Type=any&Region=Co.+Dublin

item 7 on sale since 30.11.07 :eek:

southofnowhere

My question is the same as the OP's so I didn't see the point starting a new thread.

Bought my house in Waterford city in late '06 for 240k. They eventually went up to 262k a little bit later.

Now at 210k, but then that's advertising so who knows what they would actually let one go for if anyone was feeling brave, you would imagine a good bit less.

My mortgage (Ulster bank Tracker - 40 years) is just under 215k. So it's great for me at the moment with the interest rates.

Put a lot of time and effort (and well over 30k) into the house and it's very well finished. Which hopefully will stand to me.

However, with budget, prospect of all mortgage interest relief (even for the first time buyers like myself) being abolished eventually and my employment circumstances, things are looking dodgy. When interest rates begin to come up again I could be in big trouble.

Anyway I'm contemplating offloading it for around the 200k mark and taking the hit now to protect myself from a much bigger hit in the next couple of years.

Now I'm well aware that no-one might touch it with a barge pole, but let's just say they would, what do people reckon?

Am I throwing the baby out with the bath water? It would be a calculated risk at best I suppose.

Also how much will I be handing over to the State in tax on any prospective sale?

Raskolnikov

I'd say hang onto the place.

Your mortgage payment should be just under €600pm and I can't see rent for a one bedroom place in Dublin going below, rent allowance/supplement will ensure that. I would listen to the advice of Good Karma. Rent allowance/supplement tenants are ideal as they are a much more reliable form of income and would probably be more likely to stay in the property for longer. Also, while you're getting €800pm, I would most definitely still be putting any excess you're making into overpaying the mortgage. I think it's essential you keep your margin of safety here.

jackal

Good Karma wrote: »

Timing is everything and that's what makes a good investor, get out too soon and you might miss the gain, stay in too long and prices fall

Thats priceless. *Guessing* - the new foolproof investment strategy. :pac:

Good Karma

It's about timing as I said and making an informed decision....not guessing. There are plenty of factors you would look for before cashing in an investment like market trends, etc. :rolleyes:

Teacherman

southofnowhere wrote: »

My question is the same as the OP's so I didn't see the point starting a new thread.

Bought my house in Waterford city in late '06 for 240k. They eventually went up to 262k a little bit later.

Now at 210k, but then that's advertising so who knows what they would actually let one go for if anyone was feeling brave, you would imagine a good bit less.

My mortgage (Ulster bank Tracker - 40 years) is just under 215k. So it's great for me at the moment with the interest rates.

Put a lot of time and effort (and well over 30k) into the house and it's very well finished. Which hopefully will stand to me.

However, with budget, prospect of all mortgage interest relief (even for the first time buyers like myself) being abolished eventually and my employment circumstances, things are looking dodgy. When interest rates begin to come up again I could be in big trouble.

Anyway I'm contemplating offloading it for around the 200k mark and taking the hit now to protect myself from a much bigger hit in the next couple of years.

Now I'm well aware that no-one might touch it with a barge pole, but let's just say they would, what do people reckon?

Am I throwing the baby out with the bath water? It would be a calculated risk at best I suppose.

Also how much will I be handing over to the State in tax on any prospective sale?

Firstly-I would reallt evaluate your employment situation. What are odds of you losing it? Secondly -are you married? Is your wife/partner working?
So long as you have some income coming in banks will strike some deal with you. Answer above questions first.

loyatemu

southofnowhere wrote: »

My question is the same as the OP's so I didn't see the point starting a new thread.

Bought my house in Waterford city in late '06 for 240k. They eventually went up to 262k a little bit later.

Now at 210k, but then that's advertising so who knows what they would actually let one go for if anyone was feeling brave, you would imagine a good bit less.

My mortgage (Ulster bank Tracker - 40 years) is just under 215k. So it's great for me at the moment with the interest rates.

Put a lot of time and effort (and well over 30k) into the house and it's very well finished. Which hopefully will stand to me.

However, with budget, prospect of all mortgage interest relief (even for the first time buyers like myself) being abolished eventually and my employment circumstances, things are looking dodgy. When interest rates begin to come up again I could be in big trouble.

Anyway I'm contemplating offloading it for around the 200k mark and taking the hit now to protect myself from a much bigger hit in the next couple of years.

Now I'm well aware that no-one might touch it with a barge pole, but let's just say they would, what do people reckon?

Am I throwing the baby out with the bath water? It would be a calculated risk at best I suppose.

Also how much will I be handing over to the State in tax on any prospective sale?

no tax on selling your own residence, it'll cost you maybe 2% in estate agent and solicitor fees. if others are looking for 210k you're unlikely to get more than 180k if you can find a buyer at all...

why do you want to sell though - you're going to make a loss, why not just keep living there? if things get tight you could always take in a lodger.

ronbyrne2005

Good Karma wrote: »

It's about timing as I said and making an informed decision....not guessing. There are plenty of factors you would look for before cashing in an investment like market trends, etc. :rolleyes:

Timing is a mugs game, any investor will tell you and a market can remain irrational longer than you can remain solvent

silverside

southofnowhere - yours is a very different situation. I think you should stay put, partly for peace of mind partly for financial reasons.

You have a tracker so your mortgage should be manageable, you wont get as good a deal again.
Owning your house gives you stability, even if you are in negative equity its unlikely you will be turfed out on the street unless things get really bad - if you get laid off i think the govt might help with the mortgage.

If you sold you'd have to take out a loan to repay the negative equity, to rent (with all the uncertainty that entails) - and you'd probably want to buy again in a few years, with all the hassle and cost involved.

Kipperhell

southofnowhere wrote: »

My question is the same as the OP's so I didn't see the point starting a new thread.

The OP seems to be taking about a 2nd property he bought as an investment where you seem to be talking about your home. These would be pretty different situations.

Generally if the investment isn't losing money it is best to wait it out. If it is going to lose a lot of money selling then this is doubly true. if you are convinced it will end up costing and loosing money you try to get out before it gets that way or worse.

Generally it is best to keep your home as you need a place to live either way. It sounds very affordable to you so just hold on and continue to use it as your home.

Akrasia

bop1977 wrote: »

I think if you can make both mortgage payments then hold onto both of them for now.

Why? Do you think prices are going to increase?

Rents are falling, house prices are falling, one bed apts are the lowest end of the market and they are going to face an enormous amount of pressure (why buy a one bed apartment for 150k when you can buy a 3 bed semi for a few grand more or the same price)

Wait and see was a good strategy while prices were rising, but trying to wait out the housing crash means you could be waiting for a very long time before prices recover to what you paid a few years ago and in the meantime, could see the value of your property fall by more than half, not to mention the interest on the mortgage or expenses involved with property ownership

Akrasia

rugbyman wrote: »

if a doomsday collapse occurs to your flat you can always
hand it to the lender. your credit rating will suffer ,but will that matter in that scenario.

regards,rugbyman

do not follow this advice Ireland has different legislation to the UK. You can't just Hand back the keys and let the lender take the loss, they have the right to sue you for the ourstanding amount of the loan and can chase you for this amount for the rest of your life.

Akrasia

Good Karma wrote: »

Hi Teacherman

Definately keep it, it might not be giving you an optimum return on your investment at the moment, but these things peak and trough. Never sell in a falling market, if you don't have to.

never listen to any advice that starts with the word never

southofnowhere

Thanks to everyone for the replies. Plenty of common sense in there. May cut my cloth to measure better I reckon (including getting a lodger in).

I don't want to sell and never did. Just worried my hand might be forced.

Good Karma

ronbyrne2005 wrote: »

Timing is a mugs game, any investor will tell you and a market can remain irrational longer than you can remain solvent

Yeah, exactly..... you've just proved my point ......irrational or not...it's still comes down to timing.