Options while waiting for recently vacated investment property to sell

76544567

So just today I unexpectedly got early possession of one of my rentals properties that I intend to sell.

Now I know the new rules have put a lock on the rent and this will reduce the value but I'm not sure what the value is yet.

What are my options?

Im thinking they are.

Put it on the market for the normal market price in the area and just wait it out for a non investor to bid my price, since an investor really won't be interested. This could take ages. Years even.

So while I'm waiting to sell should I put it on airbnb or similar and make some money while waiting to sell it.

Or can I get tenants in on Short term leases eg 5 months and get them to leave after their short lease is up?

Or do I just leave it empty until either it sells.

How long does it have to be empty to get the lock taken off the rent and allow it to be marketed to investors also?

I'm having to think this over over the weekend as I want to start into whatever strategy I decide on next week.

I'm not actually too fussed whether this one sells or not, but if I get decent price for it I'll let it go. If not I'll just leave it on the market until I do get the price I want, even if that's years.

If it has to be empty so be it, but I think short term leases or airbnb or even mixture will bring enough money while it's waiting to sell at a good price. What I don't want to do is get into a situation anymore where I'm not the one calling the shots with the property.

How do people think I should proceed? Just looking for the best options here, since normal letting is no longer worth it.

RasTa

Airbnb

76544567

Yeah thats what I was thinking.
Id have to pay an agent for that though, already discussed it with them actually, as its too much hassle to look after it myself.
Thats why I was thinking maybe 5 month leases from now on. But for that the rent is locked at nearly 50% below market rent, so thats a waste.

I must find out how long it has to be on sale for before the lock on the rent comes off, because I doubt there will be too many bids from investors with the rent locked, so its a matter of waiting it out to get the best price for it, but really should be getting an income from it while its waiting, or its just sitting there.

It has a tracker mortgage at 0.5% above ECB, so I might chance my arm and approach the lender and see if theyll give me 40% for winding it up and see what happens.

newacc2015

Airbnb is generally only quality properties. You need to have a property with a decent standard to do well on Airbnb. Some people think an apartment you brought in the 1980s and painted once since is grand for Airbnb, but it isnt. There is also the fact you wont really get good bookings until you have a few reviews.

I would put it on short term lets on daft.ie. The lettings are as lucrative as Airbnb, but it is less work ie you might get someone for months rather than a weekend.

It has be two years since there was a tenancy for the rent cap to expire.

76544567

newacc2015 wrote: »

Airbnb is generally only quality properties. You need to have a property with a decent standard to do well on Airbnb. Some people think an apartment you brought in the 1980s and painted once since is grand for Airbnb, but it isnt. There is also the fact you wont really get good bookings until you have a few reviews.

I would put it on short term lets on daft.ie. The lettings are as lucrative as Airbnb, but it is less work ie you might get someone for months rather than a weekend.

It has be two years since there was a tenancy for the rent cap to expire.

It is a quality property. Only done up to a high standard a year ago. More wasted money with the rental lock.

4ensic15

The obvious thing to do is put it on the market and see what the reaction is. Some purchasers don't appear to be very clued in and are bidding away as if there was no rent lock.

Victor

76544567 wrote: »

Or do I just leave it empty until either it sells.

This may affect your insurance policy.

Mrs OBumble

Victor wrote: »

This may affect your insurance policy.

So will doing airbnb.

OP even with 5 month tenancies, theres a risk of over holding. Especially if lots of LLs exit the market making it ever-harder to find somewhere to move to.

size5

4ensic15 wrote: »

The obvious thing to do is put it on the market and see what the reaction is. Some purchasers don't appear to be very clued in and are bidding away as if there was no rent lock.

Agree on the above-Not sure where your location is. But I just put a BTL apartment on the market 2 weeks ago plenty of interest and biddings there is huge interest out there.

Return appears low on money in bank so people are now investing in property and no one appears to have questioned the rent lock.

I would put on the market, wait 3 weeks and if not then turn to Airbnb.

Though is there not a chance by going Airbnb that other apartments in the block will kick up?

newacc2015

Mrs OBumble wrote: »

So will doing airbnb.

OP even with 5 month tenancies, theres a risk of over holding. Especially if lots of LLs exit the market making it ever-harder to find somewhere to move to.

Some insurers offer Airbnb insurance. Even vanilla brokers are able to find underwriters who offer it.

There is no risk of overholding if OP doesn't offer a tenancy ie he gives short term lets a licensee agreement and has a monthly/biweekly cleaning to show they didn't have exclusive use of the property.

OP if you think your property is good, then you will have no issue finding booking on Airbnb.

76544567

Thanks for all your suggestions.
It's given me food for thought.

Here's what I'm thinking this morning.
The apartment is in swords. I know other people doing airbnb and they are doing extremely well with it. But want to do it while its on the market. I want the money back for the refurb I recently did that I can't get back via rent increase, so I want a very good price for it so it will be on at a price higher than the ones currently on the market there and if it doesn't get any offers at or above that I'm not too bothered. I'm willing to wait the market out. And I have to wait for a good offer because CGT is so high too. So I want or making money while it's on the market.

If I do airbnb or short term let's while its for sale that should use up the 2 years if it doesn't sell and then investors will be in the market for it after that unless they are all gone which wouldn't surprise me. Even if they aren't in the market I can relet it at market rate then when the lock is gone ..... Maybe.

Actually thinking about it, I won't be reletting it long term ever again. There are just all down sides to that and no upsides. I will never get locked into another tenancy under such one way conditions, which I fully expect to get even worse for investors soon enough too.

If it's empty I've plenty of relatives and friends who will use it now and again. Even I will. So it won't be unoccupied.

Even airbnb for 90 days or so a year would bring in more than it does in a year now with the rent lock. Airbnb requires more work and hands on though which requires an agent. So maybe a mixture of airbnb and short term let's. Or possibly longer term let's via airbnb. Eg put the price down to the market daily rate plus airbnb s commission. And let anyone renting keep referring through airbnb. That's probably not possible though.

Lots to think about but it has to go on the market and will only sell it at the price I need to cover outrageous CGT and the refurb that I spent the time and money on. But definitely won't be getting into a tenancy situation ever again, so that's out.

4ensic15

You seem quite confused. You are either selling and willing to accept market value or you are not. History is history and what you spent in the past is gone. No good crying about it. Taxes are inevitable on a sale unless you lose. leaving a property empty means you lose even more money which means the price will have to rise even further to justify it and of course since this takes longer you will have to leave the apartment empty for even longer and of course the whole cycle begins again. Leave empty, wait for price rise, ad infinitum. This is not businesslike in approach.

Wesser

What rent lock are we talking about here?

James 007

Wesser wrote: »

What rent lock are we talking about here?

Assume its in connection with the rent pressure zones, max 4% rent increase per annum.

Wesser

So surely you can start the rent at whatever level you want , with only 4 % increases, until house prices rise you a level that you want. Then serve the correct notice?

76544567

Wesser wrote: »

So surely you can start the rent at whatever level you want , with only 4 % increases, until house prices rise you a level that you want. Then serve the correct notice?

That would be fair wouldn't it.

76544567

4ensic15 wrote: »

You seem quite confused. You are either selling and willing to accept market value or you are not. History is history and what you spent in the past is gone. No good crying about it. Taxes are inevitable on a sale unless you lose. leaving a property empty means you lose even more money which means the price will have to rise even further to justify it and of course since this takes longer you will have to leave the apartment empty for even longer and of course the whole cycle begins again. Leave empty, wait for price rise, ad infinitum. This is not businesslike in approach.

Not confused. Covering all possible options to mitigate a bad situation forced on me by the new rules.
I wouldn't say I was under any pressure. Just trying to make the best out of it while not leaving myself open to the whims of the RTB should they become interested.

Victor

Wesser wrote: »

So surely you can start the rent at whatever level you want , with only 4 % increases, until house prices rise you a level that you want. Then serve the correct notice?

If I understand things correctly, the 4% is linked to the current rent, not market rent.

April 73

How did you gain vacant possession of the property? Did the tenants choose to move out?

76544567

April 73 wrote: »

How did you gain vacant possession of the property? Did the tenants choose to move out?

I gave them notice when the new rules came in but they moved out early.

April 73

76544567 wrote: »

I gave them notice when the new rules came in but they moved out early.

Was the reason for you giving notice that you wanted to sell? If you did then you could find yourself in trouble if you Air BnB with no intention of selling.

If you put it on the market I wonder how many potential investors will ask what the rent was or will feel bound to charge only that plus 4%? Who would even know if they decided not to. I'm not advocating breaking the law but this stuff is almost unpoliceable at the moment.

You wanted to sell to exit the renting market. It sounds like you might have changed your mind?

76544567

April 73 wrote: »

Was the reason for you giving notice that you wanted to sell? If you did then you could find yourself in trouble if you Air BnB with no intention of selling.

If you put it on the market I wonder how many potential investors will ask what the rent was or will feel bound to charge only that plus 4%? Who would even know if they decided not to. I'm not advocating breaking the law but this stuff is almost unpoliceable at the moment.

You wanted to sell to exit the renting market. It sounds like you might have changed your mind?

The reason was that it is going on the market.
I gave notice to the tenants in each of my properties. These tenants are the first to move out.
The only only thing I want out of is tenancies that the government can interfere with.
If I have to sell I have to sell, but I have a figure I have to sell at. While they are waiting to sell I will try to make money out of them.
Even if they don't sell I won't be going into tenancies ever again because I might never get them back if any other rules come in which probably will. I'll just let them tick over or possibly even make more from short term let's.

The bulk of the profit in them at the moment and I expect it to increase is the capital gain. And I'm to talk to the lenders about a discount for clearing the tracker too. If I got 40% off them I'd clear it in the morning. Otherwise they cost me nothing really the tracker is so low Those discussions will be interesting.

That's a good point you make about a don't ask don't tell situation with buyers.

April 73

Were you making money with your properties? I've read what you've been saying since the new legislation came in & I agree with a lot of your points about losing control of your property.
I think it depends on what you want though.
I'm sticking it out after making a decision that property investment was for long-term pension planning. its a roll of the dice to an extent whichever way you go.

76544567

April 73 wrote: »

Were you making money with your properties? I've read what you've been saying since the new legislation came in & I agree with a lot of your points about losing control of your property.
I think it depends on what you want though.
I'm sticking it out after making a decision that property investment was for long-term pension planning. its a roll of the dice to an extent whichever way you go.

They were making money, but any rule change could and has had a massive negative effect on future earnings and also control. For that reason I'm trying to separate my investments from regular rentals. All of my properties were rented at between 30 and 50% below current market rates. Now I can't even recover the costs of updates even if the tenants change.
Add to that that a couple who used to be the best tenants ever turned into the tenants from hell on being told I was selling and tenancies are just no go in these properties now.

I'm not really bothered if they end up on the market for a couple of years as long as there is money being made from short terms.
But I am really interested to see what the lenders say when I approach them about the tracker discount. That could be a game changer.

76544567

If anyone is interested im just off the phone to the lender about getting a discount for giving up the tracker on this property.
I can eother pay the cash off it, remortgage or agree to sell it and clear down the mortgage.
While it sounded very positive i have to meet a higher up in the chain person on Wednesday to make a deal, so i'l let you know how that went after Wednesday.
I already told them that if I dont get 40% knocked off the loan, I wont be making any deal and will just leave it for the remainder of the term.

Bandana boy

I think you will struggle to get bookings on Air BnB for Swords .Most of the volume is tourists and what tourist wants to stay in Swords ?

76544567

Bandana boy wrote: »

I think you will struggle to get bookings on Air BnB for Swords .Most of the volume is tourists and what tourist wants to stay in Swords ?

I know a few people with them. One of them was showing me his Airbnb account for an apartment in Swords. 60% occupancy for the rest of this year booked already. It looks good to me.
His other property is in Rush and that had just over 50% occupancy booked for the rest of the year.
Im not worried about the occupancy, as from what ive seen its there. I am worried about the amount of work though, so it will have to be an agent looking after it for me.

Bandana boy

76544567 wrote: »

I know a few people with them. One of them was showing me his Airbnb account for an apartment in Swords. 60% occupancy for the rest of this year booked already. It looks good to me.
His other property is in Rush and that had just over 50% occupancy booked for the rest of the year.
Im not worried about the occupancy, as from what ive seen its there. I am worried about the amount of work though, so it will have to be an agent looking after it for me.

60% occupancy booked for 2017 in Swords before end of Feb !!!!

Well I am amazed , do you mind asking what rate he is charging ?

Cuddlesworth

76544567 wrote: »

If anyone is interested im just off the phone to the lender about getting a discount for giving up the tracker on this property.
I can eother pay the cash off it, remortgage or agree to sell it and clear down the mortgage.
While it sounded very positive i have to meet a higher up in the chain person on Wednesday to make a deal, so i'l let you know how that went after Wednesday.
I already told them that if I dont get 40% knocked off the loan, I wont be making any deal and will just leave it for the remainder of the term.

You submitted notice to a tennat with intent to sell. You are leaving yourself in a world of hurt if you don't either sell or offer the property back to the tennant first.

76544567

Cuddlesworth wrote: »

You submitted notice to a tennat with intent to sell. You are leaving yourself in a world of hurt if you don't either sell or offer the property back to the tennant first.

I'm pretty sure these two were already onto the prtb. They told me as much.
I intend to sell. But at a good price.
And the effort to sell might go on a couple of years after the new rules have knocked investors out of the bidding for my property.
And if I get 40% off for clearing the mortgage I will be selling g quickly, even at a slightly lower price than I want.

76544567

Bandana boy wrote: »

60% occupancy booked for 2017 in Swords before end of Feb !!!!

Well I am amazed , do you mind asking what rate he is charging ?

One bed apartment.
He had different prices for summer and weekends, but if memory serves he was saying he charges an average of €70 per night.
The whole summer was booked already as far as I remember. I think I only saw a few nights vacant in august but he says they'll all be gone soon enough.
I think also he charges €10 a night extra after the first two. And I can't remember how much he charges for cleaning. Think it's 30 or thereabouts. I'll be taking to him again next week.

I've a friend in donegal who does it and he says he gets June, July and august booked solid every years, but hardly any bookings the rest for the year. Maybe a total of 2 months for the entire rest of the year. I guess it depends where you are and what your market is.

pilly

What makes you think it will take a long time to sell?

76544567

pilly wrote: »

What makes you think it will take a long time to sell?

3 one bed apartments for sale in Swords.
lowest is €140,000 and will probably sell for a bit more.
Highest is about €175,000.
Ill be putting mine on at €175,000 since its been done up to a high standard recently and to cover CGT I need a good price.
Im also happy to wait it out to see if i can take advantage of the tracker.
If i get 175 ill let it go. If not i'll be waiting it out just because i can. I doubt ill get that for some time while the rent controls have the rent for it so low, keeping investors from even considering it.

So everything is going against it being an easy sale at that price, but I'll take my chances. As long as i figure out a way to make over €3000 (thats what the rent control allows me to make) after taxes and expenses a year from it while its for sale im happy to take my time selling. And the indications are that that will be entirely possible to make.

Bandana boy

76544567 wrote: »

One bed apartment.
He had different prices for summer and weekends, but if memory serves he was saying he charges an average of €70 per night.
The whole summer was booked already as far as I remember. I think I only saw a few nights vacant in august but he says they'll all be gone soon enough.
I think also he charges €10 a night extra after the first two. And I can't remember how much he charges for cleaning. Think it's 30 or thereabouts. I'll be taking to him again next week.

I've a friend in donegal who does it and he says he gets June, July and august booked solid every years, but hardly any bookings the rest for the year. Maybe a total of 2 months for the entire rest of the year. I guess it depends where you are and what your market is.

Not sure any of that makes sense ,Dublin city apartments average about 20% occupancy >90 days , Swords is an awful location for Dublin Tourists other than being close to the Airport it has no real redeeming factor and has very competitive Hotels in the area ,and while rate is pretty competitive for Dublin its not really giving it away which you would expect for that level of booking in such a bad location.

I have a buddy with an really nice apartment on Bolton street on Air BnB , he hits >90% occupancy a year and his booking over 90 days rarely beats 30%.


I suspect either he is spinning you a story or has got his numbers wrong

lcwill

76544567 wrote: »

the rent is locked at nearly 50% below market rent.

I'll take it off your hands, for just 40% below the market price!

Landlords with the stomach to take a risk and sit it out until these crazy rules get changed should be able to pick up some bargains over the next couple of years.

76544567

Bandana boy wrote: »

Not sure any of that makes sense ,Dublin city apartments average about 20% occupancy >90 days , Swords is an awful location for Dublin Tourists other than being close to the Airport it has no real redeeming factor and has very competitive Hotels in the area ,and while rate is pretty competitive for Dublin its not really giving it away which you would expect for that level of booking in such a bad location.

I have a buddy with an really nice apartment on Bolton street on Air BnB , he hits >90% occupancy a year and his booking over 90 days rarely beats 30%.


I suspect either he is spinning you a story or has got his numbers wrong

He's my brother in law and I was looking at his account as he was explaining it to me, so I believe him. Sure if I got even a quarter of that I'd be making more than I can with the rent control and tenancies controlled by the RTB just aren't for me anymore.
I'm hopeful about selling off the tracker though more than anything.
The good thing is that I have options anyway.
No harm to discuss it and get other ideas here though.

76544567

lcwill wrote: »

I'll take it off your hands, for just 40% below the market price!

Landlords with the stomach to take a risk and sit it out until these crazy rules get changed should be able to pick up some bargains over the next couple of years.

It will be me hopefully selling a tracker mortgage back to the lender for 40%.
Eg if I owe 100000, I pay them 60000 to come off the tracker.
I approached them about something like that ages few years ago and they basically told me to get lost. Seems to be a different attitude now though and the recent news about them might be changing things too.
Fingers crossed.

April 73

76544567 wrote: »

It will be me hopefully selling a tracker mortgage back to the lender for 40%.
Eg if I owe 100000, I pay them 60000 to come off the tracker.
I approached them about something like that ages few years ago and they basically told me to get lost. Seems to be a different attitude now though and the recent news about them might be changing things too.
Fingers crossed.

That would be some deal if you get it!!! Let us know.

76544567

April 73 wrote: »

That would be some deal if you get it!!! Let us know.

The meeting was very positive.
The guy said that they are doing such deals and would be willing to do one with me. He will call me Friday with an offer and said that it will be at least 30% if he can.orgamize it.
I said no deal of it's not 40% and he said he will see what he can do.
So have to wait until tomorrow for.nea on whether i get a deal or not.

I have another property on a tracker with another lender so will approach them also soon.
This property is back under my control now so I'm in a position to lay out all the options.
Eg sell it cheap, leave it on the market for a couple of years at a good price, airbnb it, short term rent it, his pay off the mortgage with cash reserves and leave it sitting there. I tolld him I was most likely to choose a strategy that let him holding the tracker and losing money on it so it's in his interest to deal. He agreed.

ongarboy

76544567 wrote: »

It will be me hopefully selling a tracker mortgage back to the lender for 40%.
Eg if I owe 100000, I pay them 60000 to come off the tracker.
I approached them about something like that ages few years ago and they basically told me to get lost. Seems to be a different attitude now though and the recent news about them might be changing things too.
Fingers crossed.

Do you mean you'll sell your tracker if the bank write off 40% of the principal so that you move onto a new 60k mortgage at a variable rate? I can't see how any bank profits by just writing off 40% or any % of a mortgage and not getting anything in return. I know they make a loss from many trackers but surely not more than 5 or 10% of the principal amount at most so why would they write off more than that?

If so, let us know the outcome as I'll happily negotiate same as I'm also on the same tracker rate as you although it's my principal residence.

Edit: This article I found reinforces my understanding about write down refusals on trackers. I eagerly await OP's response!!

http://www.independent.ie/business/personal-finance/will-my-bank-give-me-a-bonus-if-i-pay-a-lump-sum-off-my-tracker-30992647.html

pilly

ongarboy wrote: »

Do you mean you'll sell your tracker if the bank write off 40% of the principal so that you move onto a new 60k mortgage at a variable rate? I can't see how any bank profits by just writing off 40% or any % of a mortgage and not getting anything in return. I know they make a loss from many trackers but surely not more than 5 or 10% of the principal amount at most so why would they write off more than that?

If so, let us know the outcome as I'll happily negotiate same as I'm also on the same tracker rate as you although it's my principal residence.

I don't quite understand why the bank would go as far as writing off 40% either. Be very interested to know if they did.

76544567

There were write ups a few weeks ago in the papers about vulture funds doing it so that's where I got the idea to make the approach.
The deal I offered is that I either remortgage the full amount elsewhere, pay it all off by selling or by paying cash. They don't really care how as long as they get off the hook for the tracker.
I'll let you know how it goes.

76544567

Got the call with an offer today.
They said 40% off I'd I remortgage the balance with their investor rate and 35% for clearing the mortgage.
I could take the 40% and remortgage and then clear the mortgage next year.
I think I'll probably go with the 35% straight up while the offer is there though before its gone.

Aemtler

That's very interesting 76544567. Do you mind saying which bank you are with?

Bandana boy

40% haircut on property in Dublin where the payments are not under stress
60% occupancy for the Year on an apartment in Swords with Air BnB

There is a definite Walter Mitty feel off these numbers you are quoting

Bets of luck to you , that is an unbelievable achievement , and as such I do not believe you !

76544567

Mortgage was originally with first active. Changed to tracker after about 2 years.
Now it's Ulster Bank.

All FA mortgages went to UBS as far as I know.

They seemed a lot more amenable from.my first enquiries this time than the last time I approached them a few years ago. Something has changed.

pilly

76544567 wrote: »

Got the call with an offer today.
They said 40% off I'd I remortgage the balance with their investor rate and 35% for clearing the mortgage.
I could take the 40% and remortgage and then clear the mortgage next year.
I think I'll probably go with the 35% straight up while the offer is there though before its gone.

So you only have to pay 60% of the balance outstanding?

pilly

Bandana boy wrote: »

40% haircut on property in Dublin where the payments are not under stress
60% occupancy for the Year on an apartment in Swords with Air BnB

There is a definite Walter Mitty feel off these numbers you are quoting

Bets of luck to you , that is an unbelievable achievement , and as such I do not believe you !

I'm a little bit suspect myself but what does OP have to gain by spoofing?

76544567

Fair enough.
Not bothered if you believe me at all.
Was just trying to I form people that may be in the same position.
I will remain silent on the matter from here on then.
To the people who pmd me, I will send you the docs I said I would, and the number and email of the people I contacted to get the ball rolling, but I won't be sending or responding on it from here on as I honestly don't think its appreciated at all.
So after you get those details you'll just have e to follow it up yourselves. Best of luck with it.
But back to my op, if anyone has any suggestions that haven't been given that would put the thread back on topic.

Nothing wrong with what he has done at all so don't know why you think he is a chancer. He is looking after himself and his business unlike a lot of LLs out there.

76544567

Kallie Elegant Livestock wrote: »

Nothing wrong with what he has done at all so don't know why you think he is a chancer. He is looking after himself and his business unlike a lot of LL out there.

Thankfully.
I was beginning to think there was noone who understands what the point of an investment is.
As far as I'm concerned you have to explore every single opportunity to make it pay. Which is exactly what I did and continue to do.
I've decided to take the deal, pay off the mortgage, put the property on the market and airbnb it while it sits waiting for a sale. If it doesn't sell and still makes some money on airbnb that's what I'm happy with.
If it isn't making money eyes and.not selling for the price I want ill rethink it again, but it looks like that's my best option for now anyway. When the other properties tenants leave I'll rethink it again.