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Apartment in negative equity

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  • 30-07-2012 10:20pm
    #1
    pc174
    Registered Users Posts: 4 ✭


    My wife owns an apartment which she bought in 2006, before we met for 160k. I have my own house with a large mortgage,(also in negative equity). We are living in my house and have rented the apartment but seem to have a large turnover of tennants. There is a shortfall of 300eu between rent and repayments which we can just about manage but when apartment is empty, we cannot afford repayments, causing untold stress everytime we get word a tennant is leaving. Until now, we have not had to default on repayments but just got word current tennant is leaving in 8 weeks. Has anyone any ideas how to sort ourselves out.... all options are open from trying to sell apartment (current value prob 75k) and trying to pay back balance over time to going to bank and allowing them repossess.
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    #2
    Mimikyu
    Registered Users Posts: 18,918 ✭✭✭✭Mimikyu


    This post has been deleted.


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    #3
    pc174
    Registered Users Posts: 4 ✭pc174


    Tks captain Morgan. The apartment is located in an area where there are large numbers of unoccupied apartments and tenants staying for 12 months and moving on seems to be the general trend. Also, with so many landlords in financial trouble, they are dropping rents to rediculous low levels to try to keep theirs occupied.


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    #4
    Zulu
    Registered Users Posts: 10,965 ✭✭✭✭Zulu


    pc174 wrote: »
    ... Also, with so many landlords in financial trouble, they are dropping rents to rediculous low levels to try to keep theirs occupied.
    This is were your trouble lies. I'm in a similar situation, however, thankfully, my apartment is in town so relatively easy to let. That said, there are always apartments to let in my development. My "secret" is simple, but mightn't be helpful.
    I ensure my apartment is nicer than the others. No crappy, tatty furniture. It's done up to a standard that I'd like to live in. Granted there's a fair amount of the ikea catalogue in there, but it's nice.
    Secondly, I let for cheaper than anyone else. Take the lowest (comparable) rent in the area and take away €50 (or at least match it).

    If you can't do this, your a little snookered. But it's important to consider, if you rent for, say, €500 per month you can earn €500*12=€6000 in total. If you can't let for a month between tenants you can only earn €5500. If you can't let for 2 months, it's €5000. etc.

    Now consider €5500/12=€458 per month. So if you drop your rent to €475 in order to rent quickly, you'll earn €5700 in total.

    TL/DR: dropping your rent to rent quickly can save you money in the long run. Don't doggedly try to hold onto a rental value at the cost of loosing a months rent.


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    #5
    pc174
    Registered Users Posts: 4 ✭pc174


    Thanks Zulu. We're lucky in that as it was my wife's home originally it's nicely decorated, well above usual rental standard. I might have a look at decreasing rent again and trying to get someone in long term, it's just very worrying each time a tenant decides to leave.


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    #6
    Zulu
    Registered Users Posts: 10,965 ✭✭✭✭Zulu


    pc174 wrote: »
    ...it's just very worrying each time a tenant decides to leave.
    Yea I hear you. I only let to professionals for that very reason. And I don't let to RA. The way I reckon it, professionals are too busy to move if they're happy in a place. So keep them happy and you'll be alright. I feel your pain though, there's nothing worse that trying to find tenants.


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    #7
    iguana
    Registered Users Posts: 12,916 ✭✭✭✭iguana


    pc174 wrote: »
    Thanks Zulu. We're lucky in that as it was my wife's home originally it's nicely decorated, well above usual rental standard. I might have a look at decreasing rent again and trying to get someone in long term, it's just very worrying each time a tenant decides to leave.

    Perhaps you could advertise it as X rent for a 12 month lease or a rent of X-€100 for a 2 or 3 year lease?


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    #8
    donalg1
    Closed Accounts Posts: 3,513 ✭✭✭donalg1


    Would you consider the RAS scheme through the LA, I think they guarantee you rent for 10-12months per year, you would need to check this out with them of course to find out the exact number guaranteed. They also may not pay you as much as you would get on the private rented market but would give you a steady, predictable income.


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    #9
    Zulu
    Registered Users Posts: 10,965 ✭✭✭✭Zulu


    donalg1 wrote: »
    Would you consider the RAS scheme ...
    OP might, I certainly wouldn't


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    #10
    pc174
    Registered Users Posts: 4 ✭pc174


    donalg1 wrote: »
    Would you consider the RAS scheme through the LA, I think they guarantee you rent for 10-12months per year, you would need to check this out with them of course to find out the exact number guaranteed. They also may not pay you as much as you would get on the private rented market but would give you a steady, predictable income.

    We already contacted the LA re RAS scheme and after they sending out an engineer and giving us a list of works (smoke and carbon alarms in each room etc) to get done, which ended up costing almost 1k, they decided to tell us they have a number of apartments on their books and weren't interested in taking on any more til they shift what they have.


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