Should I sell?

FlashGordon1969

I posted another thread about my tracker but this is another issue I need to look at:

I have a one bed In tallaght renting at 725. Rents ok but I have obviously taken a drop. Fully tax compliant. On a tracker but the bank could squeeze me on it as got it when I was owner occupier.

I bought it for 180k in 2002. Mortgage now 128K. Prob worth near 100k but very little moving out there.

I live with the wife in her 2 bed-well ours now which is prob worth 200k with 80k positive equity.

The wife point blank refuses to sell the 2 bed-its her pension she says. Would want to rent it if we bought a house.

Eventually we want a house but I think we would be nuts to keep two investment properties and a house. Both jobs are secure. We have 90k in Savings.

Its giving up the tracker and kissing goodbye to 80k of a loss that makes it difficult!
We have no kids at the moment but you never know!

mathie

Property 1 : Mortgage of 128K. Realistically after EA and Solicitors fees you sound like you'd get 80K from the sale. -48K

Property 2 : Mortgage of 120K? Realistically after EA and Solicitors fees you sound like you'd get 170K from the sale. +50K

Savings of 90K.

So right now you stand to have 90K and would break even if you sold both.
If you sold the 1bed then you'd have 40K savings.

If you really want a house then you'd need to sell the one bed but be prepared to take a serious hit on it.

If you went to the bank with 40K in savings and a 2-bed with equity then I'm sure you'd get enough for a house.

Best of luck.

FlashGordon1969

How high are estate agent fees and solicitors fees? Would it really take 20K??

TwoShedsJackson

Estate agent usually charges 1.5% or so of sale price, solicitors fees likely to be at least 2k, maybe a bit more if extra work has to be done but shouldn't be over 3k. Nowhere near 20k.

FlashGordon1969

Thanks two sheds. What would you do on substantive issue?

am i bovvered

Property 1 is renting out at 725/month with a mortgage of 128 owed, that makes it commercially viable... just, if you feel you are able to manage it and the bank will allow you to maintain the tracker. I certainly would not sell this in the present climate, you could loose the tenant and the property might not even sell, in neg equity at the moment. If you sell now you take an 80k hit !

Property 2 would need more information provided, what type of mortgage do you have?, what rent do you think could be achieved?, do the figures add up?.

You say your wife will not consider the sale of property 2 if it ends up that it would make financial sense could she reconsider the option.

90k savings with 2 secure jobs, plenty of people would love to swap places

Riskymove

I think you might have to pay taxes on the sale as you are not using it to buy another principal residence

muletide

mathie wrote: »

Property 1 : Mortgage of 128K. Realistically after EA and Solicitors fees you sound like you'd get 80K from the sale. -48K

Property 2 : Mortgage of 120K? Realistically after EA and Solicitors fees you sound like you'd get 170K from the sale. +50K

Savings of 90K.

So right now you stand to have 90K and would break even if you sold both.
If you sold the 1bed then you'd have 40K savings.

If you really want a house then you'd need to sell the one bed but be prepared to take a serious hit on it.

If you went to the bank with 40K in savings and a 2-bed with equity then I'm sure you'd get enough for a house.

Best of luck.

32K for EA and Solicitors fees ?? Jesus, who are you using

5-7K max is much more realistic. These sort of unfounded, pulled out your hole figures help no-one.

mathie

muletide wrote: »

32K for EA and Solicitors fees ?? Jesus, who are you using

5-7K max is much more realistic. These sort of unfounded, pulled out your hole figures help no-one.

Did I say it'd cost 32K for EA and solicitor fees?
Maybe read my post?
:rolleyes:

I'm going on the basis that a one bed in Tallaght will not actually sell for 100K even though the OP says it's probably "worth" that. As he conceedes there's very little moving out there.

I'd say he'd be very lucky to get 80-85K.
128K - 83K = 45K negative equity.
3K (fees) = 48K actually owing... as I originally said.

Snakeblood

FlashGordon1969 wrote: »

I posted another thread about my tracker but this is another issue I need to look at:

I have a one bed In tallaght renting at 725. Rents ok but I have obviously taken a drop. Fully tax compliant. On a tracker but the bank could squeeze me on it as got it when I was owner occupier.

I bought it for 180k in 2002. Mortgage now 128K. Prob worth near 100k but very little moving out there.

I live with the wife in her 2 bed-well ours now which is prob worth 200k with 80k positive equity.

The wife point blank refuses to sell the 2 bed-its her pension she says. Would want to rent it if we bought a house.

Eventually we want a house but I think we would be nuts to keep two investment properties and a house. Both jobs are secure. We have 90k in Savings.

Its giving up the tracker and kissing goodbye to 80k of a loss that makes it difficult!
We have no kids at the moment but you never know!

I'd get rid of whatever I could at the moment, minimising losses, unless you go REALLY long view and think in terms of 20 years when things might be back up to a reasonable level. The next five years are going to blow, and blow hard. I'm trying to sell a 1 bed around there myself due to changed circs, and I've had no bites at all, after steadily dropping for a while.

Snakeblood

mathie wrote: »

Did I say it'd cost 32K for EA and solicitor fees?
Maybe read my post?
:rolleyes:

I'm going on the basis that a one bed in Tallaght will not actually sell for 100K even though the OP says it's probably "worth" that. As he conceedes there's very little moving out there.

I'd say he'd be very lucky to get 80-85K.
128K - 83K = 45K negative equity.
3K (fees) = 48K actually owing... as I originally said.

Reading your post didn't help seeing as you didn't give what you thought it would sell for which is important info, so the most likely explanation for your figure was either bad at maths or bad at estate agents.

mathie

Snakeblood wrote: »

Reading your post didn't help seeing as you didn't give what you thought it would sell for which is important info, so the most likely explanation for your figure was either bad at maths or bad at estate agents.

Fair point but I'd assumed what most people would these days of 10 - 20% less than asking / expected sale price.

FlashGordon1969

just to clarify-i have seen one beds in area for 130k asking but i dont think they will sell. i think it would prob sell for 100-110 . it rents about 725 which would not be a bad return . in a decent area. sorry about lack of capitals- mug in one hand etc no table:p

Snakeblood

mathie wrote: »

Fair point but I'd assumed what most people would these days of 10 - 20% less than asking / expected sale price.

Fair enough, I was just being the voice of reaon. Otherwise I fear you might be right anyhow...

The_Conductor

At the moment the figures don't really add up to sell the one bed. The ROI, even allowing for the cost of servicing the mortgage etc, is surprisingly good. If there is a reduction in allowances (esp. mortgage interest as a tax deductable expense, as is proposed), you would be in an entirely different boat.

As you have said yourself- there is very little movement in the property market there at the moment- so its very difficult to try to figure what the going market rate is. Asking prices are a load of waffle- most sane sellers are pricing a 20-25% deduction into their asking price, on the basis that potential purchasers are going to negotiate like mad.

If the apartment is in a good location- and you are likely to be able to keep a high tenancy rate, with good tenants- I'd be inclined to hang onto it.

You have 90k in savings- this would support a 20-25% deposit on a new mortgage of 400k- and you are not in a negative equity position on the other two properties (despite their significant fall in value)- so you really have no compelling reason at this point in time to get rid of either or both of the properties. There are two big elephants in the room- 1. Interest rates going up and 2. the reduction and planned abolition of mortgage interest as an allowable deduction for landlords- either or both of these will seriously affect your calculations and potentially wreck/further erode the market value of either or both of the apartments.

Ps- I'm delibertly not saying anything about your other half and her comments about her apartment being her pension........ Us Irish need a serious dose of reality.........

FlashGordon1969

am i bovvered wrote: »

Property 1 is renting out at 725/month with a mortgage of 128 owed, that makes it commercially viable... just, if you feel you are able to manage it and the bank will allow you to maintain the tracker. I certainly would not sell this in the present climate, you could loose the tenant and the property might not even sell, in neg equity at the moment. If you sell now you take an 80k hit !

Property 2 would need more information provided, what type of mortgage do you have?, what rent do you think could be achieved?, do the figures add up?.

You say your wife will not consider the sale of property 2 if it ends up that it would make financial sense could she reconsider the option.

90k savings with 2 secure jobs, plenty of people would love to swap places

The wifes 'place' is a two bed. Great location. Worth at least 200k but only owe 120k . Prob would rent for 1k a month. Two bed-a big two bed.Parking space . Low management fee as the guy who built lives next door and keeps it low. He built it well because he lives so close! Its on a variable rate with EBS

Budget Marketing

To be honest you simply wont sell it easily. There are hundreds if not thousands of properties on the market in and around tallaght.

Given that its a rental property it probably needs a new kitchen paint etc to make it even ready for viewing.

Hundreds of the same houses semi d ex rentals....It would take months.

gurramok

Who would buy a 1bed? Certainly not a couple to live in and certainly not an investor.

That tracker rate will go up when interest rates return to normal and you find you will have to make the shortfall in rent. So its up to you if you want to keep it for the next 20yrs with it loss making in the next few yrs or get rid of it now.

D3PO

given the yield on the rental of property 1 I dont think you should be selling anyway.

Jo King

The chances of getting another loan with two existing properties are extremely low, probably nil. If you are not selling it will be "no way josé" from the banks. Keeping a one bed apartment is not wise. Apartment blocks tend to degrade over time and inevitably rents fall, vacancy rates rise and service charges rise. When interest rates and taxes rise and rent falls it is not going to be a pretty sight.

OMD

Just to summarize:

• At present you have 2 properties worth an estimated €300,000
• You have a total mortgage of €248,000
• Properties potentially earn €16,000 a year in rent assuming 11 months occupancy.
• You have €90,000 in savings.

You have substantial equity in your property, your yield is quite good overall, your rental income covers your mortgage easily and your savings are substantial. I think you should be able to keep both properties and get a third house to live in. You need to discuss with a brooker. I certainly don't see the point in selling the first property as its yield is very good at present.

Have you considered keeping both properties, renting them out and then renting a decent 4 bed house yourselves?

johndaman66

OMD wrote: »

Have you considered keeping both properties, renting them out and then renting a decent 4 bed house yourselves?

+1 on that idea. In fact I don't really see the need to rent a 4 bedroom house from your point of view if its just yourself and your wife living in it. Why would you need all the extra rooms. For that matter I don't see why your wifes appartment would not suffice for yer accommodation needs at the moment, on paper anyway. Maybe ye feel like ye have outgrown it/ would like more space/ to move away further from a very built up urban area etc etc and thats fair enough too. I can see why you would want to move into a house if and when ye had kiddies though as apartments are not ideal to bring up a family in.

At the moment it appears that both appartments are providing a good return in investment or potentially could in the case of your wifes. Also the reality of the matter is that you simply may not shift either for the price you have in your head, you may well need to go lower for a buyer to bite. As such I'm not sure if I'd be very eager to sell either apartment at the moment if I were in your shoes. Think it hard to justify spending 400k plus on a new house at the moment as house prices dropping further south the whole time. With you are wife collectively owning three properties ye will be very very exposed to property and well in the red in account of it. Depends on the property too of course and what sort of deal you could hammer out.