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Sell now or wait and rent out

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  • 16-03-2012 8:39pm
    #1
    Doom
    Banned (with Prison Access) Posts: 2,381 ✭✭✭


    Not sure what to do, I have a buyer interested, if he pays what i'm asking I could walk away with 5k, or I could rent it out and possibly move into positive equity in 3yrs if prices don't drop too much more.
    This could mean in a few yrs it could be worth abit, i'm on a tracker rate of 1.8%, so its a cheap mortgage. Rent Wise its in a good catchment area.


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    #2
    Victor
    Registered Users Posts: 78,400 ✭✭✭✭Victor


    Renting out the property probably means it will come off the tracker.

    I don't see anyone saying property prices will rise and I see every reason for them to drop.


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    #3
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    Doom wrote: »
    Not sure what to do, I have a buyer interested, if he pays what i'm asking I could walk away with 5k, or I could rent it out and possibly move into positive equity in 3yrs if prices don't drop too much more.
    This could mean in a few yrs it could be worth abit, i'm on a tracker rate of 1.8%, so its a cheap mortgage. Rent Wise its in a good catchment area.

    A big factor here for me is what is the achievable rental income V monthly mortgage repayment? Do you have to subsidise the mortgage repayment from your own money each month or will the rent generate a surplus for you? If it was me and the rent was covering the mortgage and providing some surplus and I thought that long term there would be a good chance of having a tenant in place I'd hold onto the property. So long as the rental income per annum exceeds the annual drop in value and possible rate increases it makes sense to hold on to it...Crystal ball stuff a bit though and will depend on your attitude to risk...


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    #4
    odds_on
    Closed Accounts Posts: 1,869 ✭✭✭odds_on


    Isn't it funny the way so many people think that the answer is to rent out.

    There is a lot of hard work, many rules and regulations, expenses some of which cannot be claimed back, and probably the biggest and most costly problem of all - if you get a bad tenant: Late rent, rent arrears, house trashed well beyond the value of the deposit, anti-social behaviour for which the landlord is responsible and over-holding to name but a few problems.


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    #5
    MagicMarker
    Banned (with Prison Access) Posts: 32,865 ✭✭✭✭MagicMarker


    If you can sell now for a profit then wtf are you waiting for?


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    #6
    Doom
    Banned (with Prison Access) Posts: 2,381 ✭✭✭Doom


    MagicMarker wrote: »
    If you can sell now for a profit then wtf are you waiting for?

    Well I can't do much with 5k, but by paying down the mortgage and renting it out, I'm going to eventually be in positive equity and own it too.


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    #7
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    The answer is not necessarily to rent it out.. The answer is to weigh up the figures, the rent V repayment, costs associated with being a landlord, hassle attached to being a landlord, long-term rental view, long-term interest rate view, long-term property value view, current financial circumstances, where you going to live, cost involved etc etc and if it generates a good yield as an investment then rent it out - if not, sell. It needs to be made as purely a business decision and remove any emotional attachment you might have to the property when making the decision.


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    #8
    realgirl
    Closed Accounts Posts: 212 ✭✭realgirl


    Doom wrote: »
    MagicMarker wrote: »
    If you can sell now for a profit then wtf are you waiting for?

    Well I can't do much with 5k, but by paying down the mortgage and renting it out, I'm going to eventually be in positive equity and own it too.


    Not sure if I have missed something here but it seems to me that if you can sell now without losing any money, avoid the hassle of being a landlord, then buy another property at what is likely to be a lower price in the future, why would you consider doing anything else? Good luck :-)


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    #9
    NIMAN
    Registered Users Posts: 33,602 ✭✭✭✭NIMAN


    AS someone in your situation, I am trying to sell.

    Yes I might make money in the long run, but I know one thing for sure, and thats rent allowance is going down, property tax will only go one way, 2nd home tax is bound to increase, and only God knows what else home owners or landlords will be taxed on.

    If I could sell tomorrow, I would. Forget about making too much profit.


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    #10
    Marcusm
    Registered Users Posts: 10,320 ✭✭✭✭Marcusm


    Does your buyer really have the money? Will they live in it or rent it out? I fid it hard to believe that with €5k equity, it rents at such a level that, post tax,you have substantial ability to pay off the debt. If it does, you must have it priced poorly or you're not taking account of the correct costs (incl tax).

    I am currently bidding on rental properties and some value is available but only realistic if you're not relying on bank debt.


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    #11
    Idbatterim
    Registered Users Posts: 17,852 ✭✭✭✭Idbatterim


    Op what type of property is it and in what area. The only thing that jumps out as a pro to me, is the tracker which will be at a rate that will never be offered again in all likelihood... is this your current home?


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    #12
    CricketDude
    Closed Accounts Posts: 247 ✭✭CricketDude


    As previous posters have said do your sums.

    After all expenses, even if you do end up having to put in one or 200 euro a month yourslef (as long as you can afford it), it wouldnt be the end of the world. Would you be happy to be buying the place for one or 200 a month. I think most would.


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    #13
    Pkiernan
    Registered Users Posts: 4,310 ✭✭✭Pkiernan


    OP, here are some of the expenses you will face, if you decide to rent legally:

    1. PRTB Registration fee
    2. Loss of tracker mortgage if bank finds out.
    3. Increased insurance premium.
    4. BER Certificate (valid for 10 years).

    AND the 2 biggest factors:

    5. Increased tax liability: You will pay income tax (PAYE and PRSI) on the FULL rent, not the full rent less the cost of the mortgage. You can deduct the interest paid on the mortgage from your taxable income though.

    6. Your residence will no longer be classified as a Primary Residence, and will therefore be liable for Capital Gains Tax when you do decide to sell.


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    #14
    realgirl
    Closed Accounts Posts: 212 ✭✭realgirl


    You can only deduct 75% of the mortgage interest for tax purposes, not all of it


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    #15
    NIMAN
    Registered Users Posts: 33,602 ✭✭✭✭NIMAN


    You also have to pay €100 household charge annually on your rented property, and €200 annually for the 2nd home tax.

    And its very unlikely this annual amount will remain at €300 for long!


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    #16
    Victor
    Registered Users Posts: 78,400 ✭✭✭✭Victor


    Pkiernan wrote: »
    6. Your residence will no longer be classified as a Primary Residence, and will therefore be liable for Capital Gains Tax when you do decide to sell.[/B]
    You need to make a capital gain to be liable for CGT. :)

    The years that it was a principal private residence will reduce any liability somewhat.


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    #17
    bakerbhoy
    Registered Users Posts: 586 ✭✭✭bakerbhoy


    2. Loss of tracker mortgage if bank finds out.

    Not so . I have 4 mortgages with the same lender . Two of which are trackers.

    One which is on a rented property which is known to the lender .


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    #18
    pawnacide
    Closed Accounts Posts: 228 ✭✭pawnacide


    The only reason I can see to hold on to a property is if you're assuming there will be a capital gain within a period you're comfortable with and that depends on things like your age, whether you want to leave it to kids etc.

    I personally can't see a significant capital gain being realized on the vast majority of generic houses in the medium term (10-15) yrs.

    Ask yourself this question .. would you buy the house NOW for what you're being offered ?


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