Sell or rent apartment in Dublin 4?

obi604

Very general question.

2 bed apartment in Dublin 4, worth about 300k. it is ready to move in to. The mortgage is still on tracker at 1% so repayments are low enough.

As the market is now, is it better to try and sell it or rent it.

Victor

obi604 wrote: »

As the market is now, is it better to try and sell it or rent it.

I'm not sure that is a question that can be easily answered, not least that we don't know what rent might be achievable, what costs there are and what your investment strategy or other motivations are.

We don't even know if it is your residence or not.

obi604

Victor wrote: »

I'm not sure that is a question that can be easily answered, not least that we don't know what rent might be achievable, what costs there are and what your investment strategy or other motivations are.

We don't even know if it is your residence or not.

was thinking I would need to provide way more info.

P. Breathnach

Look at the terms of your mortgage: the tracker rate might be conditional on the apartment being used as your principal residence.

obi604

P. Breathnach wrote: »

Look at the terms of your mortgage: the tracker rate might be conditional on the apartment being used as your principal residence.

oh ok. so if the apartment was to be rented. ......... that the mortgage may change from a tracker to something else. What would that something else normally be ?

bmm

An apartment in Dublin worth 300k. Are you sure it's an apartment?

obi604

bmm wrote: »

An apartment in Dublin worth 300k. Are you sure it's an apartment?

Yes. Look at daft for prices. I know advertised price is not totally indicative of selling price but it ll give you a guideline.

P. Breathnach

obi604 wrote: »

oh ok. so if the apartment was to be rented. ......... that the mortgage may change from a tracker to something else. What would that something else normally be ?

SVR (Standard Variable Rate). Probably about 4% p.a.

obi604

P. Breathnach wrote: »

Look at the terms of your mortgage: the tracker rate might be conditional on the apartment being used as your principal residence.

would most tracker mortgages have this condition of the principal residence thing built in ?

P. Breathnach

obi604 wrote: »

would most tracker mortgages have this condition of the principal residence thing built in ?

I don't know. I know that some do.

hfallada

obi604 wrote: »

would most tracker mortgages have this condition of the principal residence thing built in ?

Yes. But apparently most banks are turning a blind eye to mortgages on principle residences being used for rental purposes. They prefer to have a performing mortgage, than a defaulting mortgage at 4%.

Most people just rent their principal private residency and not tell the bank. There is very little reason to keep a house for renting when the interest rate is 5%.

P. Breathnach

bmm wrote: »

An apartment in Dublin worth 300k. Are you sure it's an apartment?

As with any postcode, there is a range of possible prices for properties that are basically fairly similar, but is different parts of the postal district. Some 2-bedroom apartments in D4 might achieve a price of €400k+. Similar apartments elsewhere in D4 might fall well short of €300k.

Victor

bmm wrote: »

An apartment in Dublin worth 300k. Are you sure it's an apartment?

daft.ie list about 15 such properties. D4 extends beyond Ballsbridge.

lima

obi604 wrote: »

oh ok. so if the apartment was to be rented. ......... that the mortgage may change from a tracker to something else. What would that something else normally be ?

How do you get a mortgage if you don't even understand this Q?

obi604

lima wrote: »

How do you get a mortgage if you don't even understand this Q?

excellent input, thanks, well done.

lima

obi604 wrote: »

excellent input, thanks, well done.

Just saying!

But in all fairness, it might be best to sell now, there are bubble-prices in D4 right now, prices seem to have shot up 30-40% for apts (which I think is the reason for this '30%' increase in apt prices across Dublin). This is the only area of Dublin with such a concentration of high-earners, many of whom want to live near work

obi604

lima wrote: »

Just saying!

But in all fairness, it might be best to sell now, there are bubble-prices in D4 right now, prices seem to have shot up 30-40% for apts (which I think is the reason for this '30%' increase in apt prices across Dublin). This is the only area of Dublin with such a concentration of high-earners, many of whom want to live near work

Fair enough

But I dont think they are bubble prices yet, well not like the old bubble prices anyways

P. Breathnach

obi604 wrote: »

Fair enough

But I dont think they are bubble prices yet, well not like the old bubble prices anyways

You are a property speculator. Perhaps you don't see yourself that way, but you are trying to read the market and judge the most advantageous time to sell.

I have been watching the market as an intending purchaser. In my opinion, prices in D4, D6, & D6W have recovered from the crash better than in most other areas, and we are not likely to see significant increases in the next year or two.

But it's an opinion, and I could be wrong. Nevertheless, were I in your position, I would sell now. My decision would be underpinned by an awareness that renting it out is not hassle-free.

obi604

P. Breathnach wrote: »

You are a property speculator. Perhaps you don't see yourself that way, but you are trying to read the market and judge the most advantageous time to sell.

I have been watching the market as an intending purchaser. In my opinion, prices in D4, D6, & D6W have recovered from the crash better than in most other areas, and we are not likely to see significant increases in the next year or two.

But it's an opinion, and I could be wrong. Nevertheless, were I in your position, I would sell now. My decision would be underpinned by an awareness that renting it out is not hassle-free.

to be honest, im just a joe soap trying to make the best decision for my family.


yeah, I know the renting thing sounds mighty, especially with me being on a tracker, but then I would have to put money in to place, maybe have to deal deal with dodgy tenants, fix stuff, do the place up, be prepared for gaps where I have no renters etc

Gmaximum

My 2 cents for what it's worth having had to rent an apartment out due to negative equity when house prices crashed and my personal circumstances changed. Being a landlord is a pain and not worth the effort for the small return you may make on a mortgaged property. If you can get out by selling and making a fen bob there are easier was of getting a return on investment

from_atozinc

Gmaximum wrote: »

My 2 cents for what it's worth having had to rent an apartment out due to negative equity when house prices crashed and my personal circumstances changed. Being a landlord is a pain and not worth the effort for the small return you may make on a mortgaged property. If you can get out by selling and making a fen bob there are easier was of getting a return on investment

Thanks for input. I just hope I make the right decision. On one hand, it would be great to sell it and be done. ....... but on the other hand then I'm thinking would I be silly not to rent. seeing as mortgage is about 1000 and I could get 1600 on rent.

but then of rents go down......I would probably need to invest 10 k in it etc etc

quadrifoglio verde

Bear in mind that if you rent it out you'll be paying tax on the entire income before making any mortgage repayments.

from_atozinc

quadrifoglio verde wrote: »

Bear in mind that if you rent it out you'll be paying tax on the entire income before making any mortgage repayments.

Thanks. so from example above I'd be paying tab on the 1600 figure, correct ?

What rate is this tax at ?

Idbatterim

An apartment in Dublin worth 300k. Are you sure it's an apartment?

Its D.4 and I can imagine 2 bed apartments there range from the low - mid twos, up to four 2 bed apartments in D.4 ranging in price from 700k up to 795k...

just checked everything in D4 on myhome is looking from mid twos and up...

El_Dangeroso

from_atozinc wrote: »

Thanks. so from example above I'd be paying tab on the 1600 figure, correct ?

What rate is this tax at ?

It depends on your other income, could be up to 52%, I believe. You can write off 75% of mortgage interest which in your case is minimal.

quadrifoglio verde

from_atozinc wrote: »

Thanks. so from example above I'd be paying tab on the 1600 figure, correct ?

What rate is this tax at ?

if you're paying tax at the higher rate it'll be 52%. At the same time, it could be a nice pension plan, sit down and do the sums, speak to an accountant as they can advice you best on how much tax you'd have to pay.

RainyDay

quadrifoglio verde wrote: »

if you're paying tax at the higher rate it'll be 52%. At the same time, it could be a nice pension plan, sit down and do the sums, speak to an accountant as they can advice you best on how much tax you'd have to pay.

It's not a pension plan. It's a property. Pension plans don't call you at midnight on Saturday to fix a leaky roof. If you want to run a small business, and take everything that goes with that, then think about keeping it.

P. Breathnach

from_atozinc wrote: »

Thanks for input. I just hope I make the right decision. On one hand, it would be great to sell it and be done. ....... but on the other hand then I'm thinking would I be silly not to rent. seeing as mortgage is about 1000 and I could get 1600 on rent.

but then of rents go down......I would probably need to invest 10 k in it etc etc

That's not nearly enough information on which to make a recommendation to you, and I see a problem in the way you are looking at things. The mortgage payment is not an expense in the ordinary business meaning of the term: it comprises two elements, interest and loan repayment. If you don't separate those elements in your calculations, you are not going to make a proper business case for renting out the apartment.

You don't think of mentioning management charges, which I imagine might be in the region of €1600 p.a. You make no provision for depreciation on the contents. You seem not to have thought about the cost of repairing or replacing any appliances that fail. I could go on, but I hope you get the message: you probably need to sit down and "do the numbers" with somebody who knows the score. And you have to allow for the hassle factor.

Suppose you let the place out for 12 months, and cleared an after-tax profit of €6000. Would that be good?

Suppose you then put the property on the market and found that I had made a good guess: that there was no significant increase in property prices in your segment of the market. How would you feel about that?

Victor

El_Dangeroso wrote: »

It depends on your other income, could be up to 52%, I believe. You can write off 75% of mortgage interest which in your case is minimal.

You pay income tax and USC (no PRSI) at your highest rate on whatever profit you make, but you are only allowed 75% of the interest as an expense. Repayments of the mortgage are not a deductible expense.

El_Dangeroso

Victor wrote: »

You pay income tax and USC (no PRSI) at your highest rate on whatever profit you make, but you are only allowed 75% of the interest as an expense. Repayments of the mortgage are not a deductible expense.

Did I say they were?

eclectichoney

Victor wrote: »

You pay income tax and USC (no PRSI) at your highest rate on whatever profit you make, but you are only allowed 75% of the interest as an expense. Repayments of the mortgage are not a deductible expense.

I believe since 2014, you do have to pay PRSI on unearned (e.g. rental) income?
http://whatsnew.citizensinformation.ie/2013/10/18/prsi-on-unearned-income/