Apartment in Clontarf. Is it a good time to sell?

kell1

Hi Everybody,Bought a two bed ground floor apartment on the Clontarf Road almost twenty years ago and it's currently rented.I'm very fortunate in that I've just cleared the mortgage,the tennant is brilliant so rent has not changed for 11 years. I know I could get another €350 a month but I'm not greedy! Anyway,I'm seriously thinking of selling as I was never cut out to be a landlord,tax and related expenses are just not not worth it.Anything I earn from potential sale is going into educational fund for my three children.Are apartments selling in the area? Is there a demand for two bed apartments? Should I hold out or cash in?

Would really appreciate some feed back.

Thank You

athtrasna

The key thing now is value v purchase price. Capital Gains tax is 33% and could seriously eat into any profit.

Larbre34

No doubt the current value looks like monopoly money compared to what you purchased it for, but I think you'd be as well off letting it appreciate further, it will only either stabilise at current levels or increase. If I were you id forget the 350 and add 450 instead to the rent and leave it rented and maybe it could become equity for your children's first homes rather than a college fund.

Santa Cruz

While I see the reasoning for having an educational fund you wont need this until kids are going to college. You have cleared the mortgage so now you will be getting an income every month which could be invested towards a fund anyway. However I feel that you should give a lot of thought about the tenancy situation. Of course the tenant is great when he/she is getting a property at 2003 rates. You are doing yourself no favours. If you want to keep this arrangement going I suggest that you have a good discussion with the tenant, say that you have to increase the rent, perhaps not to current rates if the tenant is remaining and maybe it is time for a refurbishment also. I would also make enquiries to establish whether or not this long term tenant has additional rights as regards occupation, notice etc.
Make sure that you are up to date with tax situation also. If the tenant moves on I recommend a complete refurb and then charge the market rate.
Selling and investing the proceeds won't give as good a return. As regards Capital Gains I would check with an accountant on that.

Eldarion

Twenty years... :eek:

You'll be making bank no matter what you do in this situation OP. It really just depends on your personal preference, current financial situation and risk tolerance. I would really suggest not trying to "time the market" especially when it comes to property.

I'm speculating here now but I imagine you also have your own home where you live meaning you have 2 of your more than likely largest assets tied directly to the Irish property market. I seem to be in the minority amongst my Irish countrymen in thinking this is excessive exposure to one market but still my advice would be to sell the apartment and diversify the funds into a similar yielding investment.

hfallada

OP i would up the rent at least €200-250. Its still below market rate(personally I would have it at 2014 levels because do you seriously think that the tenant is earning a 2003 wage?). There is nopoint selling the apapartment and having a few hundred thousand in the bank being eroded every year by inflation. As there is very few, if any interest rates offered by the back which after dirt cover inflation.

I would hold onto the apartment. If you save enough of the rent every month you will have a decent education fund for your children. The apartment could be an excellent pension which is something to consider seeing how poor the state pension is for middle income earners.

hfallada

OP i would up the rent at least €200-250. Its still below market rate(personally I would have it at 2014 levels because do you seriously think that the tenant is earning a 2003 wage?). There is nopoint selling the apapartment and having a few hundred thousand in the bank being eroded every year by inflation. As there is very few, if any interest rates offered by the back which after dirt cover inflation.

I would hold onto the apartment. If you save enough of the rent every month you will have a decent education fund for your children. The apartment could be an excellent pension which is something to consider seeing how poor the state pension is for middle income earners.

the_syco

OP; where do you live now? Do you still live in or near Dublin? If you don't live near Dublin, you could save yourself a massive amount of money having the kids "rent" the rooms in the house when they goto college.

kell1

Hi Everybody,I genuinely appreciate your replies which have been most helpful.

Thank You

marathonic

The way I would look at this is that most apartments today are being snapped up by investors.

With that in mind, and plucking some sample figures out of the air (may be TOTALLY inaccurate but just using these for simplicities sake):

If you purchased the apartment for €50,000 and it's now worth €250,000, you'd have a €200,000 profit. On this, you'd have a bit over €65,000 CGT to pay.

Now, ask yourself, if this apartment is worth €250,000 to another investor as a new income stream, is that same income stream worth €185,000 to you (€250,000 proceeds less €65,000 tax)?