Another reluctant landlord

petalini

Hi,

Looking for a little guidance please. Apologies as Im sure this has been done to death but I'm getting myself in a bit of a muddle as to what is best.

Basically, own little cottage dublin 1 lived there 10 yrs but outgrew it. Little girl needed space so had to rent. House needed work done but we are ready to rent it out now, and need to quickly as new rent is crippling!

I'm just not sure what way to go. Our house rent is due for renewal next Feb and I'm afraid landlady might put up rent more and we cant afford it. So may need old home as back up in case in say six months time. We don't want to move back but I don't want to be homeless either!

Just not sure to try airbnb, but we both work and it may be more hassle than it's worth? Short term like spot a home. Seems like a good option but again no guarantee that we can rent it ASAP. Or rent for 6 months only and then see?? Can this be done or is it yearly leases only??

Many thanks for any advice or direction....

Moonbeam

Would you not sell it and buy something else?

petalini

Not feasible at the moment, negative equity. Maybe towards the end of next year. It will be worth alot more. Brexit too might throw things a little.

Claw Hammer

Go for a student letting. You will be getting back possession every few months.

endacl

Good advice. Students during college year, and air b&b during the summer when demand would be higher.

diggerdigger

petalini wrote: »

Not feasible at the moment, negative equity. Maybe towards the end of next year. It will be worth alot more. Brexit too might throw things a little.

Most banks have NE mortgages, and tracker portability, etc. So a lot of the recession "traps" have been freed.

Not sure I see your logic on the price? If your selling and buying, what you would be buying would be more too.


Though maybe you just want to sell and be done with property.

Samuel T. Cogley

AirBnB it through Airsorted.

petalini

Thanks. Ideally we want to sell but I think we will wait until the end of next year when our finances might be stronger (husband self employed). Also buying in dublin but crazy a moment, so I thought renting was good option until we got our bearings a little. It's a lovely little house, not sure if it would suit students, was thinking professional couple.

I've heard mixed reviews about airsorted so that put me off a little but it hard to know who to believe. Has anyone used spot a home? Maybe longer leases might suit us better through a company like this or chance renting ourselves via daft for six months or just rent and see what happens???

Is there any difference tax wise??

Thanks again for taking time to reply

petalini

OK, I think this airbnb might be a runner with some professional help and then see how we are next year. Gonna make a few calls, thanks !!

April 73

If your plan is to rent the house out while you are renting yourselves for the next year with a view to selling it and buying a bigger place I think you are over-complicating your life.

Unless it is a studio apartment why not grin & bear living in the house, overpay your mortgage (I’m sure the rent you will be paying yourself will more than cover your own mortgage) and exit negative equity as soon as possible.

You are running a risk with tenancy laws all supporting tenants at the moment. What happens if you have non-payers, over-holders, or a new law is passed so you can’t sell with tenants in-situ? You will be really stuck. If you don’t want to be a landlord - don’t do it. Move back, suck it up for a year & reduce your risk.

petalini

I completely agree, moving back and selling up would be the answer but it's a tiny one bed cottage with no outside space in summerhill city center. I thought for some quality of life we would rent then sell when we can. This year is not an option, it would be at least mid next year before we could realistically have the deposit etc.. Anyways will be here until Feb at least.

It's a muddle. I need to think about it. Thanks

petalini

I could maybe rent for six months tho, no and then see? Maybe that would be easier than paying someone to airbnb. Our mortgage is 740,tracker a month. Rent, the way its going would be 1700-1800(its a lovely little house) so I think we might be covered tax wise and earn more than short term??

It's so hard to know

Samuel T. Cogley

petalini wrote: »

I could maybe rent for six months tho, no and then see? Maybe that would be easier than paying someone to airbnb. Our mortgage is 740,tracker a month. Rent, the way its going would be 1700-1800(its a lovely little house) so I think we might be covered tax wise and earn more than short term??

It's so hard to know

Someone is going to get in, get settled and then potentially tell you to naff off when it comes time to move out. You'll make more money on AirBnB even with the agency fee. I'd strongly advise against short term lettings unless you know it's to someone on a short term secondment to Dublin.


Incidentally, after they are there 6 months they aquire Part IV rights, which at the moment you can evict on the basis of needing the property for your own use, but don't bank on it staying that way.

petalini

Yes, it's the taking the risk of letting tenants in thats holding me back. It's just if they refuse to leave... But in long term it's less hassle... but airbnb will give us more control but will be regulated soon.

Pros and cons for both.

Maybe I'll try airbnb until the budget at least and make decision then. I thought if we kept it to six months we might get away with legalities but it depends on the renter

Browney7

petalini wrote: »

Yes, it's the taking the risk of letting tenants in thats holding me back. It's just if they refuse to leave... But in long term it's less hassle... but airbnb will give us more control but will be regulated soon.

Pros and cons for both.

Maybe I'll try airbnb until the budget at least and make decision then. I thought if we kept it to six months we might get away with legalities but it depends on the renter

If you keep it to less than six months you keep some of the "legalities" out of it but you still run the risk of when you tell the tenant you are giving them their 28 days notice you get told "yeah right". With proper vetting etc you can minimise but not eliminate. It's a small risk but potentially quite ruinous for you.

Look into corporate lettings but summerhill may not cut the mustard on that front

petalini

Yes, , it's nice but not quite there yet!! Lots of corporate lets but they are the lovely Georgian houses. No one even knows they are there !! Ours is more a quirky cottage.

I'll try short term for moment and just pray we find someone we know and work it that way. The budget is going to restrict things anyway by looks of things.

Good advice, thanks!

April 73

Have you crunched your numbers yet to see how much profit you would make on letting the property once running costs & tax is taken into account? It’s very hard to make the final decision until you know the financial outlook.
Couple of other questions to help inform the decision: How much will you be paying in rent yourself?
How much negative equity is left?
Have you fully investigated selling & porting your tracker to a new property?

PS - to stay away from Part IV tenancies you will need to only allow a 5 month lease to allow for the termination notice to expire before six months.

petalini

April 73 wrote: »

Have you crunched your numbers yet to see how much profit you would make on letting the property once running costs & tax is taken into account? It’s very hard to make the final decision until you know the financial outlook.
Couple of other questions to help inform the decision: How much will you be paying in rent yourself?
How much negative equity is left?
Have you fully investigated selling & porting your tracker to a new property?

PS - to stay away from Part IV tenancies you will need to only allow a 5 month lease to allow for the termination notice to expire before six months.

Thanks April,

Our situation is this-

Needed to move as baby, now a toddler, was very, very, ill last year and we needed to move to give her better quality of life. Otherwise we would still be there.

Bought it ten yrs ago, for 300. Put 50 grand into it as needed total renovation (literally cheapest house in dublin at the time).

Morgage 220. We used savings to top up rest and good will from family to renovate.

Apologies negative equity wrong terminology as we would like to get at least close to what we paid. Its like our second child and I know it's value will increase over next year or so as the area is becoming more gentrified.

Morgage left to pay approx 150.

House probably worth- 275 currently. Can rent most likely for 1700. Morgage plus life assurance 800.

Current rent 2500. Beautiful home, could not afford to buy but enjoying it while we can.

I was thinking that next year we could maybe sell and trade up, taking tracker with us. Its with ptsb so it's possible. But bit afraid too as we have been there before and it's a buyers market.

I was also thinking of renting and let someone pay off old mortgage until we can sell up end of next year. Let the value come up a little, closer to what we paid. Just need flexibility to be able to sell and help top up this crazy rent we are paying.

Does this make sense?

Appreciate your help with this

PhoenixParker

I dont think it makes sense to wait.
While the house you currently own is rising in price, so is the next house you buy. At best waiting is a zero sum game. More likely, the house you'll buy is more expensive and therefore rising more, so in absolute terms you're costing yourself money waiting.

Mr. Grieves

Sell now, or at least in January.

After costs you'll have 100k deposit to buy something more suitable for your needs, without having to scrimp and save for years. Most first-time buyers would kill to be in your position. Doing it earlier will probably allow you to get a larger mortgage or lower repayment, as the bank will give you a longer term based on your age. If things change in the future or a second child arrives, you may have missed your opportunity. I don't know what your tracker rate is, but banks are offering as low as 2.3% fixed now, so I don't know if losing the tracker is so bad.

Holding out for what you paid makes no sense. Add up how much you might have paid in rent in the last 10 years if it makes you feel better about selling for less than you paid.

Edited to add: is there anyone in Dublin still in negative equity? I've heard other people refer to being in negative equity but I suspect they really mean their house is worth less than they paid for it - but this doesn't prevent them from moving in the way negative equity does, if they've been paying the mortgage for ~10 years.

BrokenArrows

Id agree with the previous posters. You could sell now and have 125k in cash.
That puts you in a very strong buying position when it comes to a new property.

Anything could happen between now the time you hope to sell in a year. Between now and then you will have paid 30k as you said its 2.5k a month in rent which is insane.

Will this house rise by 30k in the next year? I doubt it!
Even if it does then you are still working at a zero sum game as another poster mentioned.

Sell now, buy something which is suitable for you. Repay your family with the profits and the remainder for a deposit.

You are focued on selling for more than you originally purchased it for, but thats just your own thinking and doesnt actually effect you financially when you look at the numbers.

petalini

Excellent advice, thank you! Sometimes it is hard to see the wood for the trees. I think we will aim to sell up in the new year. I'm 38, husband is 40,and we would love to try for second child so time is not on our side.

Moving gave us breathing space to get house fixed up properly, so it's ready for rent or to sell. Just try get something to tide us over for few months and move on I think.

It's was always a gamble with our little house but it got us through the resession when hubby lost job etc.. We've built up enough to make it work hopefully

April 73

petalini wrote: »

Excellent advice, thank you! Sometimes it is hard to see the wood for the trees. I think we will aim to sell up in the new year. I'm 38, husband is 40,and we would love to try for second child so time is not on our side.

Moving gave us breathing space to get house fixed up properly, so it's ready for rent or to sell. Just try get something to tide us over for few months and move on I think.

It's was always a gamble with our little house but it got us through the resession when hubby lost job etc.. We've built up enough to make it work hopefully

Best of luck with the decision. Hope it works out. In your shoes I’d offload as soon as possible while it’s still looks newly renovated & decorated. Autumn is a good time to sell.

April 73

One other thing to add - we bought a new house in 2004 and put a lot of money into it over the years - floors, bathrooms, Garden landscaping & a new kitchen extension. We sold it in 2015 for less than we bought it (only €7k less but when you consider what we also put into it, it was considerably less).
But...we bought a house with the proceeds (having paid down the mortgage over those years) in an area that we couldn’t afford in 2004. We chalked down the “loss” to the cost of having 14 happy years in the house. With hindsight I’m glad we did sell & move then & not wait until the house value rose to a point at which we would “breakeven”. You can never predict the future.

petalini

April 73 wrote: »

One other thing to add - we bought a new house in 2004 and put a lot of money into it over the years - floors, bathrooms, Garden landscaping & a new kitchen extension. We sold it in 2015 for less than we bought it (only €7k less but when you consider what we also put into it, it was considerably less).
But...we bought a house with the proceeds (having paid down the mortgage over those years) in an area that we couldn’t afford in 2004. We chalked down the “loss” to the cost of having 14 happy years in the house. With hindsight I’m glad we did sell & move then & not wait until the house value rose to a point at which we would “breakeven”. You can never predict the future.

Yes, we are in a similar position and it's reasurring to know that it all worked out well for you. I think it's time to be realistic and let go

We have saved hard and were sensible with the purchase to begin with in hindsight. We could have gone mad and probably lost the house when husband was out of work but thankfully held on as the tracker allowed me to cover our mortgage etc for few years.

Babas needs forced us to rent now but it has allowed us to fix house up (very hard to do when your living in it). I know it's a good chance to move. At this rate we will be totally priced out of any better areas that were beyond our reach before so it makes sense.

Thanks again for the advice. We will try airbnb with airsorted for few months, and get our ducks in a row to move. Onwards and upwards

I am very grateful. I know we have built up an asset despite the odds. It just feels a bit like groundhog day with the madness of buying again but at least we've gone up the ladder a bit!