Would you sell or would you wait it out?

Penny Dreadful

Hi, looking for a bit of advice and general opinion on this one.
I am in the lucky position of owning a house that is not in negative equity ...yet. I bought about 11 years ago and had a big deposit hence the equity and I'm not sure if prices will drop so far as to result in negative equity.
So I'm thinking of selling it. I don't live there at the moment and have it rented out so I know there will be financial implications on that front. However, even with this I would (at current asking prices in the estate) take home a reasonable chunk of money.
This money could then be put towards buying a different house in a couple of years.
What think ye?

Ray Palmer

You must remember you may not be able to borrow much even with a large deposit. You are much better off owning a property when trying to buy another. Try to eliminate any debt on the property you have.

If rent pays for the property all the better. You can also spend money improving the property and avil of tax write offs. Essential do the house up with a large discount.

What percentage of the house is mortgaged?

Penny Dreadful

Ray Palmer wrote: »

You must remember you may not be able to borrow much even with a large deposit. You are much better off owning a property when trying to buy another. Try to eliminate any debt on the property you have.

If rent pays for the property all the better. You can also spend money improving the property and avil of tax write offs. Essential do the house up with a large discount.

What percentage of the house is mortgaged?

40%.

I'm living with my boyfriend now in a house that he owns. My house is rented out. My boyfriend's house was purchased 4 years ago and is in negative equity.
The rent I get on my house covers 70% of the mortgage so I make up 30% which isn't too bad. I am renting the house at a very good price but I have nice tenants who are taking care of it so I think a bird in the hand and all that.
If I sold my house and invested (where though is another concern) the money I have left over and later used it as a deposit for a house we would buy together would (despite the negative equity) owning a second house still benefit then?

Ray Palmer

Penny Dreadful wrote: »

40%.

I'm living with my boyfriend now in a house that he owns. My house is rented out. My boyfriend's house was purchased 4 years ago and is in negative equity.
The rent I get on my house covers 70% of the mortgage so I make up 30% which isn't too bad. I am renting the house at a very good price but I have nice tenants who are taking care of it so I think a bird in the hand and all that.
If I sold my house and invested (where though is another concern) the money I have left over and later used it as a deposit for a house we would buy together would (despite the negative equity) owning a second house still benefit then?

Unless you are married don't share assets. It ends badly more so than works out. If the rent doesn't cover a 40% mortgage that is a really bad indication for the value of the property. Are you sure you have the valuation correct?
Essentially what you are talking about is selling your house to pay off his negative equity. If any thing you want to eliminate any loan you are paying interest on. Unless you are married do not take his debt. There is romance and personal finacial safety. Watch Judge Judy

Is your house terrible that you want to stay in his?

jmayo

Penny Dreadful wrote: »

Hi, looking for a bit of advice and general opinion on this one.
I am in the lucky position of owning a house that is not in negative equity ...yet. I bought about 11 years ago and had a big deposit hence the equity and I'm not sure if prices will drop so far as to result in negative equity.

Going on averages, not always good I know, but I would guess your house today is worth the nearly the same as what you paid for it, unless the area has become much more attractive to live in.
Negative equity just means that you owe more than house is worth.

You won't be in negative equity, but the value or your asset will soon be less than what you paid for it, and that doesn't even take into account what you might have invested in it through upgrades, etc.

Penny Dreadful wrote: »

So I'm thinking of selling it. I don't live there at the moment and have it rented out so I know there will be financial implications on that front. However, even with this I would (at current asking prices in the estate) take home a reasonable chunk of money.

As time goes on this reasonable chunk of cash may be lesser and lesser, even accounting for your mortgage decreasing.

Penny Dreadful wrote: »

This money could then be put towards buying a different house in a couple of years.
What think ye?

ray palmer has a point that mortgages may not be easy to get in the future, but the bigger the deposit usually the chances are better and the days of another property being good collateral have disappeared since bricks and mortar are no longer the safe bet they once were in this country.

Penny Dreadful wrote: »

40%.
I'm living with my boyfriend now in a house that he owns. My house is rented out. My boyfriend's house was purchased 4 years ago and is in negative equity.
The rent I get on my house covers 70% of the mortgage so I make up 30% which isn't too bad.

Is that 70% of your own mortgage or 70% of the boyfriends ?
If it is 70% of your own then you are having to add 30% to finance a decreasing loss making asset, so common investment sense would be to get out now and cut your losses.
Either that or hang on in there for a couple of decades.

Penny Dreadful

Ray Palmer wrote: »

Unless you are married don't share assets. It ends badly more so than works out. If the rent doesn't cover a 40% mortgage that is a really bad indication for the value of the property. Are you sure you have the valuation correct?
Essentially what you are talking about is selling your house to pay off his negative equity. If any thing you want to eliminate any loan you are paying interest on. Unless you are married do not take his debt. There is romance and personal finacial safety. Watch Judge Judy

Is your house terrible that you want to stay in his?

I won't be taking on his debt, don't worry. Extracted myself from a long term relationship a while back and was so so grateful that the house was mine, I bought it, owned it, etc etc. Would never be so silly as to share money any further than a few hundred euro each month into a separate joint account to pay for groceries and ESB, etc. My boyfriend has at no stage suggested I do this, or anything like that, these are all my own thoughts.
We will be getting married sometime next year. Its something we've discussed and agreed upon in a serious fashion. The "surprise" proposal will be when we tell everyone (and have to deal with the parent's must haves around weddings, yuck) and so selling the house will only happen then. I'm just turning it around in my head now.
I wouldn't use the money I got from the house to pay off the house we're living in right now. I'd want to go to the bank with it as a lump sum when we are ready to move from where we live now. Then we rent out the current house rather than sell something that is in negative equity.
I moved from my house to his for a few reasons, some of these were that it is closer to work, its in a nicer place, don't have to travel the M50 daily now so saved a fortune on that front too.
I could have my figures wrong re: the valuation, as I said earlier, I'm basing my figures on asking prices in the estate taken from My Home. I know the actual selling figures could well be lower. I am also more than likely, not asking enough in rent either. The lease for the people who are there is up in March and if I decide to keep it I will be increasing it so clearing or being close to clearing the monthly mortgage payment. If they leave the leave and I will be sorry to see them go as they are good tenants.
The house is in a good state of repair and there isn't a whole lot that could be done to it. It was my home for a long time, until March of this year actually and it was freshly painted (inside and out), carpets cleaned, boiler and washing machine serviced, alarm serviced, new mattresses on the beds, new curtains etc before I left. I also got the garden fully tidied back for the winter last week. I had the view as a Land Lord that I should rent out a property that I would be happy to live in myself.

Penny Dreadful

jmayo wrote: »

Going on averages, not always good I know, but I would guess your house today is worth the nearly the same as what you paid for it, unless the area has become much more attractive to live in.
Negative equity just means that you owe more than house is worth.

You won't be in negative equity, but the value or your asset will soon be less than what you paid for it, and that doesn't even take into account what you might have invested in it through upgrades, etc.



As time goes on this reasonable chunk of cash may be lesser and lesser, even accounting for your mortgage decreasing.



ray palmer has a point that mortgages may not be easy to get in the future, but the bigger the deposit usually the chances are better and the days of another property being good collateral have disappeared since bricks and mortar are no longer the safe bet they once were in this country.



Is that 70% of your own mortgage or 70% of the boyfriends ?
If it is 70% of your own then you are having to add 30% to finance a decreasing loss making asset, so common investment sense would be to get out now and cut your losses.
Either that or hang on in there for a couple of decades.

Of mine. I keep my finances and my boyfriend's separate. Apart from a shared account for food and utilities into which we both put a set amount, we don't share money at all.
There are only 14 years left on the mortgage too which is one thing that is making me think is it so bad to hang on in there.

bobbyg

Penny Dreadful wrote: »

I don't live there at the moment and have it rented out so I know there will be financial implications on that front.

I am not sure what you mean by financial implication but if you are talking about Capital Gains Tax remember yo only pay CGT on profits so if you sell for below what you originally paid for it there will be no CGT.

Ray Palmer

Penny Dreadful wrote: »

I won't be taking on his debt, don't worry. Extracted myself from a long term relationship a while back and was so so grateful that the house was mine, I bought it, owned it, etc etc. Would never be so silly as to share money any further than a few hundred euro each month into a separate joint account to pay for groceries and ESB, etc. My boyfriend has at no stage suggested I do this, or anything like that, these are all my own thoughts.
We will be getting married sometime next year. Its something we've discussed and agreed upon in a serious fashion. The "surprise" proposal will be when we tell everyone (and have to deal with the parent's must haves around weddings, yuck) and so selling the house will only happen then. I'm just turning it around in my head now.
I wouldn't use the money I got from the house to pay off the house we're living in right now. I'd want to go to the bank with it as a lump sum when we are ready to move from where we live now. Then we rent out the current house rather than sell something that is in negative equity.
I moved from my house to his for a few reasons, some of these were that it is closer to work, its in a nicer place, don't have to travel the M50 daily now so saved a fortune on that front too.
I could have my figures wrong re: the valuation, as I said earlier, I'm basing my figures on asking prices in the estate taken from My Home. I know the actual selling figures could well be lower. I am also more than likely, not asking enough in rent either. The lease for the people who are there is up in March and if I decide to keep it I will be increasing it so clearing or being close to clearing the monthly mortgage payment. If they leave the leave and I will be sorry to see them go as they are good tenants.
The house is in a good state of repair and there isn't a whole lot that could be done to it. It was my home for a long time, until March of this year actually and it was freshly painted (inside and out), carpets cleaned, boiler and washing machine serviced, alarm serviced, new mattresses on the beds, new curtains etc before I left. I also got the garden fully tidied back for the winter last week. I had the view as a Land Lord that I should rent out a property that I would be happy to live in myself.

You will be taking on his debt once you marry and buy a home together so consider that. The sums remain the same no matter what way you play with them.
There is a lot you can do with the house to improve it. External insulation means you get 4k and the extra costs can be written off against the rental income too. New bathroom, attic conversion,an extension etc... Lots can be done. I would never make a rental property the same as the quality I would want myself due to the treatment the property can get and replacement costs.

You could be charging very little rent for the property. My mother beleived she was getting good rent for years when she was about 40% below the market rate. THis is costing you money so make sure you do your research.

Negative equity remains so when a bank calculates what you can afford they consider this and will deduct the amount from your deposit value. You seem to thinking this will somehow be seen differently. There doesn't sound like a benifit to selling and holding on to the money. Whcih mortgage has the better terms i.e. tracker. You want to dump the worst mortgage as quickly as possible and try to consolidate your loans to the cheapest rate.

Penny Dreadful

Ray Palmer wrote: »

You will be taking on his debt once you marry and buy a home together so consider that. The sums remain the same no matter what way you play with them.
There is a lot you can do with the house to improve it. External insulation means you get 4k and the extra costs can be written off against the rental income too. New bathroom, attic conversion,an extension etc... Lots can be done. I would never make a rental property the same as the quality I would want myself due to the treatment the property can get and replacement costs.

You could be charging very little rent for the property. My mother beleived she was getting good rent for years when she was about 40% below the market rate. THis is costing you money so make sure you do your research.

Negative equity remains so when a bank calculates what you can afford they consider this and will deduct the amount from your deposit value. You seem to thinking this will somehow be seen differently. There doesn't sound like a benifit to selling and holding on to the money. Whcih mortgage has the better terms i.e. tracker. You want to dump the worst mortgage as quickly as possible and try to consolidate your loans to the cheapest rate.

My boyfriend has a tracker, I am on variable. Was on fixed term until relatively recently.
Maybe I should just up the rent. From what I've seen on Daft and the like after a quick search this afternoon, I could get an extra €200/250 which is a lot every month. That practially makes the rent pay for the mortgage. In that case it would be a no brainer to keep it with only 14 years left owing on the mortgage would it not?
Ray you sound fantastically on the ball about this stuff:D

Idbatterim

I think its a very general question. Where exactly is the property and what is it? ie. 3 bed semi etc? also do you rent the place out yourself or use a letting agent?

Penny Dreadful

Idbatterim wrote: »

I think its a very general question. Where exactly is the property and what is it? ie. 3 bed semi etc? also do you rent the place out yourself or use a letting agent?

3 bed semi detached in West Dublin. Rent the place out myself.

It is a general question as I've only started to toy with the idea at this stage.

Ray Palmer

Penny Dreadful wrote: »

My boyfriend has a tracker, I am on variable. Was on fixed term until relatively recently.
Maybe I should just up the rent. From what I've seen on Daft and the like after a quick search this afternoon, I could get an extra €200/250 which is a lot every month. That practially makes the rent pay for the mortgage. In that case it would be a no brainer to keep it with only 14 years left owing on the mortgage would it not?
Ray you sound fantastically on the ball about this stuff:D

You want to try and pay down your mortgage first as the tracker is the better mortgage to have. The banks lose money on them in theory. Might be worth taking any breaks on the tracker to pay more off the other quicker. Improvement are your best way to get benifits so I strongly recomend that.

Get the extra rent money, in theory you can be prosecute for not keeping in line with market rates.(crazy badly worded law) People keep saying it is hard to rent places out but I can't figure it out at all. Work colleage placed an ad and 50 people wanted to see the place and that was in Swords.

You really need to look at the full picture. Try to move any debts onto the tracker. That really means pay off other debts first and take any delays and breakers with the tracker.

Penny Dreadful

Ray Palmer wrote: »

You want to try and pay down your mortgage first as the tracker is the better mortgage to have. The banks lose money on them in theory. Might be worth taking any breaks on the tracker to pay more off the other quicker. Improvement are your best way to get benifits so I strongly recomend that.

Get the extra rent money, in theory you can be prosecute for not keeping in line with market rates.(crazy badly worded law) People keep saying it is hard to rent places out but I can't figure it out at all. Work colleage placed an ad and 50 people wanted to see the place and that was in Swords.

You really need to look at the full picture. Try to move any debts onto the tracker. That really means pay off other debts first and take any delays and breakers with the tracker.

Thanks for the advice Ray. You've given me something to think over and its good to know that there are more options than just sell it or keep it.