Empty house - Should I let and downfalls to consier

FionnK86

In 2017, a relative left mam 50k & 4 siblings 10k each. Before I'd a chance to dsicuss, parents used money to buy a derelict property in leitrim for 50k, they've now put about 60k into roof repair and getting one of houses into shape. They asked for my money and didn't have much choice.

There are two houses on site, a 2 bed/1 bath and a 4 bed/2 bath. The latter is still unliveable but roof is fixed now. There valuing both houses at 130k altogether, but I think it's high, especially for condition of 2nd house.

With LPT, electricity & insurance, we're spending about €500 between us to maintain empty property, plus there could be future maintenance.

Rent in area is about €400pm. Myself and brother have talked about renting but there are some downfalls. We both rent in Dublin and wouldn't know much about tax situation nor dealing with tenants. We could find a local repair guy we trust but having read the threads here, there isn't much convincing me to go for it.

We're thinking if property goes up in next ten years, we might be happy enough to pay the €5000 to maintain in mean time and get that back, without tenants.

Has anyone here been in similar situation recently?

enricoh

Would you get any use out of it using it as a holiday home between the lot of ye, maybe rent it out for a month every year on air bnb , pay the bills n a few quid in the pot for repairs.

FionnK86

enricoh wrote: »

Would you get any use out of it using it as a holiday home between the lot of ye, maybe rent it out for a month every year on air bnb , pay the bills n a few quid in the pot for repairs.

We would get a bit of use out of it, but it's about €40 in petrol to get up there, so AirBnb probably out of the question, cheaper places that that online.

L1011

Something to consider here is that at very low rents you can often find that the upkeep of the property costs you more than your rental income at times - or all the time.

FionnK86

L1011 wrote: »

Something to consider here is that at very low rents you can often find that the upkeep of the property costs you more than your rental income at times - or all the time.

I'm afraid of that. I'm renting in Dublin and repairs (socket replacements) have already cost LL €100, that'd be equivalent of weeks rent. And at that I wouldn't be around to supervise damage.

Claw Hammer

Why had you no choice about giving them 10k. There are tenants looking for accommodation in Leitrim. Much of the Celtic Tiger surplus has been absorbed.
The main thing is to get the right tenant. Get an accountant to deal with the tax issue.
Avoid families and n'eer-do-wells. Try and get someone who is building their own house.

jimmycrackcorm

Assuming that you are on the higher rate on tax, then basically you will have to pay half your rent in tax so basically only getting 200 per month in return - is that worth the hassle?

However, you could use the rental income to pay for necessary repairs as allowable expenses:
Allowable expenses include:

rates you pay to a local authority for the property
rents you pay for property such as ground rents
insurance premiums against fire and public liability
maintenance of your property such as cleaning, painting and decorating
property fees before you first rent out your property such as management, advertising, legal or accountancy fees
cost of any service or goods you provide that are not repaid by your tenant (such as electricity, central heating, telephone, service charges, water and refuse collection).
certain mortgage protection policy premiums
expenses in between renting out the property in certain circumstances
capital allowances
repairs, such as rot treatment, mending windows, doors or machines
certain pre-letting expenses on vacant residential property
the cost of registering with the Residential Tenancies Board (RTB)

It's difficult in that you actually need to do the repairs to the larger house which you say is currently unliveable. You might be better off taking out a mortgage to do that up and claiming the mortgage interest relief against subsequent rental income. There are restrictions though. The mina one is a chicken and egg situation - you need to actually first rent out the property before you can start claiming this. But this is one of the most tax-efficient ways to deal with turning the property into an asset of value.

Lantus

What was the intention in buying them if not for rental or living in?

Can't understand why you have no choice in handing your money. Are you going to get an assured percentage of the property value?

Mrs OBumble

Lantus wrote: »

Can't understand why you have no choice in handing your money.

Irish Mammy asked :rolleyes:



OP - who actually owns the houses now? What is that person's marginal tax rate?

skooterblue2

Too complex a deal.
Too many owners.
Too far away.
Sounds like a money pit with more problems on the way.
You dont come across as an experienced landlord.
Sell up asap before the real recession starts.
Go out on a high note

Wesser

If your parents own the property then surely it's their decision ?

DubCount

This is a complicated situation. Already asked above, but who owns the property and what is the status of the 10k OP has put in (is it a gift, a loan, a part purchase of the property ....). The days when residential property letting was an "amateur" game are long gone - unless you know all about the various legislation in the area, and all potential upcoming policy changes, its just a mine field. Discriminate against a HAP tenant when choosing who to let to, what happens if the tenant stops paying rent, what if the wording of an official notice tenant is slightly off.... land mine after land mine.

If you can sell for 130k or even 120k, you pretty much get the money back (collectively). My advice is sell and have an agreement in advance as to who gets what proceeds and what share of whatever profit or loss that arises. Leave property letting to professional Landlords - thats pretty much Government Policy.

FionnK86

Hi all,

Apologies for the late response & thank you for your help and comments so far. Will do best to respond to each question. I'd a choice but they're my parents so when mam asked for my share to put into it, I felt obliged so not much choice. I'd like an accountant to look into how much it would be, but we'd be looking at putting more into it hiring one than we have at the moment. Me and brother are renting in Dublin and put about 50% of wages to rent and can't get job down country with degrees we have.

Myself and this brother are on the house, ive two younger siblings each granted same amount but can't go on deed so we could feck off with the money, but Irish mammy would get involved then as Mrs OBumble said!

I'm not an experienced landlord, but also wouldn't be too inclined to sell right away. Recession will likely come, but as I said in OP would be happy to ride the wave with €5000 over 10 years or more, once we didn't have to put anything else major into it. We're clearing the trees away manually and I reslated roof with new cappings last summer so I feel not much else will be required other than keeping mould in check annually.

Spoke with parents and brother tonight about feedback here, and we came to agreement not to let as theres' too many points where we could fall down. There's talk of Airbnbs and ill have to look into insurance. The way I see it, you're multiplying chances of a PIAB claim if you've more tenants in over AirBnB so not too sure.

Anybody know anything about AirBnb?

What part of leitrim is it in?
Air b&b is great, if it's located somewhere people actually want to stay. For example, in the middle of Carrick, then plenty of stags & hen parties in non covid times. Is it near any good fishing lakes? There should still be plenty of anglers coming over, after covid.
There is much more maintenance in an air b&b, cleaning and washing after every visit etc.
There's a reason houses in leitrim are cheap.
Do your parents live near it, could they keep an eye on it if it is let out on long term rental?

FionnK86

bubblypop wrote: »

What part of leitrim is it in?
Air b&b is great, if it's located somewhere people actually want to stay. For example, in the middle of Carrick, then plenty of stags & hen parties in non covid times. Is it near any good fishing lakes? There should still be plenty of anglers coming over, after covid.
There is much more maintenance in an air b&b, cleaning and washing after every visit etc.
There's a reason houses in leitrim are cheap.
Do your parents live near it, could they keep an eye on it if it is let out on long term rental?

It’s in Dowra, near Lough Allen so expect anglers would be coming up after covid.

Yes I said that to him, and if key breaks in door or window smashes they’d have to come up from Kildare which is €40 petrol and tolls so you’d already be into your profit.

We’d have to pay a dividend to a helpful neighbour but even then only so much they could do if they obliged

elperello

If the property doesn't "wash it's face" ie. cover the cost of owning it in some way it's just going to drain your finances until you sell it.

You need to sit down as a family and ask yourselves why you are holding on to it.

Dowra really wouldn't be a popular destination for tourists. There may be some anglers but I'm not sure there would be a good enough stream to support an Air b&b.
Would you not just rent it to the council or someone on hap?

Also, just wondering if they bought it for 50k, who is now valuing it at 130k?

Spanish Eyes

Leave the decisions to Mammy. You’ve put ten grand in without knowing why she bought the derelict properties. OK help out when you can, but it’s not really your problem nor your brother’s either.

Does mammy live near the property? Sorry to say it, she may be the beneficiary, but is kicking back her heels waiting for her two strong sons to sort out the mess. Back away slowly .... this sounds nightmarish, and what’s in it for you? That’s the important question.

Deeec

When you're parents purchased the property what did they intend to do with it. Do they intend to move there at some stage in the future?

cute geoge

There are probably plenty of people willing to rent if rent is not over priced ,the trick is to get some clients that are not pernickity .If living rooms have air vents fitted go for hap client ,money paid into account at end of month automatically .Houses get run down being left idle and if it is turning a few pound you need never be in a hurry to sell.I bought a house in local town but would only check in their twice a year ,my client has it at small bit under market rates but paints and up keeps the property .If you could get the likes of a young lad with building trade to rent to you would be on a winner

Lantus

Deeec wrote: »

When you're parents purchased the property what did they intend to do with it. Do they intend to move there at some stage in the future?

A critical point that's not been answered. I suspect the decision to buy was fuelled by drink and feeling like big shots with the inherited money with tales of making easy money based on anecdotes.

You should all sell. Get your money back and don't entertain this nonsense again.

Did the survey not say the roof was knackered?

I suspect multiple mistakes have been made either in ignorance or deliberately.

The assumption of parents taking their children's inheritance and getting it seems really toxic.

dubrov

OP, 400 rent per month on a place that is worth 130k is a pretty poor return, especially for Leitrim. Add in the fact you are thinking of not renting it makes it a definite sale. Holding it and not renting is not an investment, it's a hobby.

You'd be better off using the money to buy shares and having an easier life. You'd get a better return than the not renting scenario as well

amber2

Seems like a haphazard investment which no real thought, aim or planning went into. I think your parents got themselves into this and really it should be them resolving the issue. They are now spreading the burden.

Also you, the children seem to be at an age whereby this inheritance money would be useful to you within the next few years.

FionnK86

dubrov wrote: »

OP, 400 rent per month on a place that is worth 130k is a pretty poor return, especially for Leitrim. Add in the fact you are thinking of not renting it makes it a definite sale. Holding it and not renting is not an investment, it's a hobby.

You'd be better off using the money to buy shares and having an easier life. You'd get a better return than the not renting scenario as well

Thanks very much for feedback and questions all. Apologies for not answering re why they bought it in first place. Firstly, it wasn't 'drink fuelled', no need to cast aspersions. I think it was probably in their head because they were going through a hard time with bank looking for repossession of our own home.

Now it's been cleared up and they've come to an agreement, but it's involved both my parents back at full time shift work so it's harder for them to get up there for maintenance so it's sitting there.

That's something I've heard alright Dubrov, I've a small bit invested in 60/40 portfolio which is doing well despite covid so if I had have been this informed 3 years ago I probably would've put it in there.

I've got time tonight to do some reading on the Air BnB side but its looking like I'll be going back to plan I'd at start of not keeping it.

Deeec

FionnK86 wrote: »

Thanks very much for feedback and questions all. Apologies for not answering re why they bought it in first place. Firstly, it wasn't 'drink fuelled', no need to cast aspersions. I think it was probably in their head because they were going through a hard time with bank looking for repossession of our own home.

Now it's been cleared up and they've come to an agreement, but it's involved both my parents back at full time shift work so it's harder for them to get up there for maintenance so it's sitting there.

That's something I've heard alright Dubrov, I've a small bit invested in 60/40 portfolio which is doing well despite covid so if I had have been this informed 3 years ago I probably would've put it in there.

I've got time tonight to do some reading on the Air BnB side but its looking like I'll be going back to plan I'd at start of not keeping it.

Fionn I think the best option would be to put the property up for sale and see if there are any offers made for it. It sounds like it may not even be worth what was spent on it. It was a poor decision made by your parents.

It sounds insane that your parents spent €130K on a property when their own home was under threat of repossession. Never ever give them money again!

amber2

I think the more we hear the worse the investment and the grounds for the investment sounds. Maybe the 90k inheritance was split between kids and Parents for a reason and the deceased wishes should have been adhered to.

Edit : please don’t think I’m Taking a personal pop at Anyone. I am not, I Don’t know your family or your circumstances, just someone on the outside taking a different perspective on your situation.

It seems someone made a bad investment and they need bailing out by their kids, something none of you had any hand act or part in buying but now your inheritances has been absorbed into this. It should never have been bought if they didn’t envisage seeing good their investment themselves.

I can see where you allegiances lie and commend you for that but yes there is a but, now you are all dragged into this mess of a bad investment.

Was the quick purchase of the house in order to 'hide' the inheritance from the bank?
Seems crazy that their own house was in danger of repossession and they bought a wreck in the back end of nowhere in leitrim rather then use that money to assist their own issues with the bank.

Sell the house, if you possibly can get your money back from your parents and never give them another penny!!

Lantus

bubblypop wrote: »

Was the quick purchase of the house in order to 'hide' the inheritance from the bank?
Seems crazy that their own house was in danger of repossession and they bought a wreck in the back end of nowhere in leitrim rather then use that money to assist their own issues with the bank.

Sell the house, if you possibly can get your money back from your parents and never give them another penny!!

There's more to this than first outlined. Op I wasn't trying to insinuate they were drinkers but that there were undisclosed external factors which seems to be the case.

JimmyVik

I would sell that now.
I have seen this type of set up before.
It will only cost you all money.
Then when one member of the club runs out the others will have to put up more money and so on.
It will lead to bad things and people falling out.
Also AirBnb income (not that it will be profitable either) could be wiped out at the next whim of the government.

If you rent it the return is going to be so bad that it will also cost you money.

I would be away from this in a shot OP. I dont see any upside at all.