Family Home Advice

Johouse

Desperately need some property wisdom.

Bought an apartment in 2007. Considering whether to sell now and realize a loss. Rent is 2k and mort is 1300 on a tracker.

We had to move out and rent a house a number of years ago when 2 small children came along. We both work and have good salaries... how ever we intend for one of us to stay at home with the children as soon as we purchase a family home ( trying to find one is another story in south Dublin!).

What factors should we consider when making this decision. Keeping the apart would really stretch us. Should we wait another 6 months -1year in hope prices rise. Apart is in Dublin 8

Any advice greatly appreciated

Gumbo

Carpal gains tax payment. Make sure you allow for it in your sums.

awec

Surely depends on how much of a loss you are talking about?

Johouse

So loss would be about 60k ( when compared to what we paid originally). But we have paid down the mortgage since so would be close to break even in those terms.

bluelamp

Johouse wrote: »

So loss would be about 60k ( when compared to what we paid originally). But we have paid down the mortgage since so would be close to break even in those terms.

You've had tenants paying a good portion of your mortgage the last few years, so you wouldn't exactly be 60k out of pocket yourselves.

I'd be inclined to sell this year if you're going to be left without any debt on it. Prices will probably continue to rise for another year or two, but if things do take a turn for the worst, an apartment in Dublin 8 won't be an easy sell - but right now it will sell within a few weeks.

I don't see apartments in Dublin 8 reaching the prices they sold for in 2007 during this upswing, and holding onto it is going to affect your new mortgage application.

I wouldn't want to take the chance of carrying it through another downturn.

catrionanic

Cut your losses and get on with your life. Time spent with your young family in your own home is precious, and even moreso if one of you is waiting on this decision in order to give up work.

If you can get out and move on and be comfortable, take the money and run. Life’s too short.

April 73

What difference do you think hanging on to it for 6 or 12 months will realistically make to you? If you’re near to breakeven point & holding the apartment will be a stretch & potentially prevent you from getting the mortgage you need for a family home - sell it now.

Johouse

Thanks so much for the replies. A lot of food for thought.

My husband is reluctant to sell right now as he believes the extra rent we receive is helping subsidize the large rent where we live. Think however after tax, management fees etc. it’s probably not as much as we believe.

Another compilation we have the possibility to move down the country and be relatively mortgage free how ever it would mean leaving the Dublin jobs market and lifestyle so right now trying to weigh up all the option to get to best decision. If we moved down the country would it be worth keeping the apartment long term.... (about 20 year term left - yes made the mistake of a 30 year mortg in our youth! And did not overpay).

We are also nervous about taking out a big mortgage to stay in Dublin but as mentioned a family home is important.

bluelamp

Remember that while rent is high now, it won't always be that way. There were two bedroom apartments in D8 renting for 600 quid in 2011.

Add in a higher interest rate and you could be left in a very bad position.

Personally I'd sell up and buy somewhere nice for the family, without being left too exposed to the property market again.

Samuel T. Cogley

April 73 wrote: »

What difference do you think hanging on to it for 6 or 12 months will realistically make to you? If you’re near to breakeven point & holding the apartment will be a stretch & potentially prevent you from getting the mortgage you need for a family home - sell it now.

Could be 20K plus in fairness. Apartments are rising at an incredible rate.

It also depends greatly on where in D8. D8 has some of the worst and some very desirable areas. Given the mortgage of 1300 on a tracker this seems to be in the latter.

Johouse

Samuel T. Cogley wrote: »

Could be 20K plus in fairness. Apartments are rising at an incredible rate.

It also depends greatly on where in D8. D8 has some of the worst and some very desirable areas. Given the mortgage of 1300 on a tracker this seems to be in the latter.

Thanks again - Interest rates a good point too.
Apartment is close to Heuston station so probably not the worst area.

PhoenixParker

Since you plan to buy a house now there's no difference really between waiting or selling now.

Apartment sells for 300k now and house bought for 500k or wait 6 months and apartment sells for 330k and house bought for 550k (10% increase).

I'd wonder at your estimates a little. You've been paying a mortgage for 11 years and prices now aren't far off 2007. I think you'll come out with more then you think.

I think overall you need to sit down and do the maths on all your different scenarios. For instance if one of you give a up work, the tax implications of the rent will change a lot.

Glass fused light

Johouse wrote: »

Thanks so much for the replies. A lot of food for thought.

My husband is reluctant to sell right now as he believes the extra rent we receive is helping subsidize the large rent where we live. Think however after tax, management fees etc. it’s probably not as much as we believe.

Another compilation we have the possibility to move down the country and be relatively mortgage free how ever it would mean leaving the Dublin jobs market and lifestyle so right now trying to weigh up all the option to get to best decision. If we moved down the country would it be worth keeping the apartment long term.... (about 20 year term left - yes made the mistake of a 30 year mortg in our youth! And did not overpay).

We are also nervous about taking out a big mortgage to stay in Dublin but as mentioned a family home is important.

You need to do a budget projection which separates cashflow from 'profit' for each option.
Take the rental work out costs and income and tax as a business
Look at the mv against the loan.
Work out your current rent against cost for each proposed property costs (all not just loan)
Estimate the loan options
Add in the change in jobs
And you should get a better idea of what you could afford.
If you can't do the maths it would be worth while paying someone to do up an excel spreadsheet.

As for the country move if you are not willing to move out of south Dublin for a Dublin family home how do you really think that moving down the country will work out?

Catlady76

Johouse wrote: »

Desperately need some property wisdom.

Bought an apartment in 2007. Considering whether to sell now and realize a loss. Rent is 2k and mort is 1300 on a tracker.

We had to move out and rent a house a number of years ago when 2 small children came along. We both work and have good salaries... how ever we intend for one of us to stay at home with the children as soon as we purchase a family home ( trying to find one is another story in south Dublin!).

What factors should we consider when making this decision. Keeping the apart would really stretch us. Should we wait another 6 months -1year in hope prices rise. Apart is in Dublin 8

Any advice greatly appreciated

How much is owing on the mortgage? how much are other apartments in the same area going for ? remember to factor in if you haven't paid your taxes also legal fees and if you owe maintenance fees. I sold my apartment which was an affordable housing purchase in 2017, I bought in 2008 but ended up having to pay all of the money I made on it out between, paying council back, income tax, legal fees, and maintenance company plus the apt was empty for 6 months at the request of the people buying it as they wanted in asap but then delayed the sale.
Do your figures out on an excel spreadsheet if you can so there are no surprises.

steamsey

If the apartment would prevent you from getting mortgage for new family home, then obvious answer is to sell.

If not - i.e. you can get your new home and keep the apartment, then you have to consider a few things:

- Have you enjoyed being a landlord? Any bad tenants, expensive work required for the apartment? Law is heavily in favour of tenants and over course of the mortgage, you'll probably get a nightmare tenant at some point. Laws also continuing to move in this tenant favoured direction

- Sounds like you make 700 per month on the apartment. After taxes, maintenance costs, management fees etc - it's probably actually next to nothing. Plus the hassle of self assessment for the tax returns

- Until the mortgage is paid, you won't really make a lot of rental profit each month - but someone is paying the mortgage off for you - could be a good one for retirement as in keep it and sell / rent for pension pot

- IMO keeping the apartment only works as a very long term thing - if you're not interested in keeping until it's paid off, then probably best to sell. BUT - on the long term thing, 20 years is long term to own an apartment for - think of all the possible issues that could come up that you would have to pay for (structural, new lifts, fire safety issues, balconies needing to be rebuilt)

- I would hate to sell and have to pay the negative equity - if you are in break even - might be time to run. If in neg equity, I would consider holding if I could until at break even. Any profits on the sale will be CGT'd plus costs of sale so I would probably forget about making profit on sale in the short / medium term

- Stress / hassle of being landlord with young kids etc - it's not fun

- As others have said - prices are good at the moment. Might be wise to get out when you can

In short - if it were a manageable house, I'd prob say keep it if I could for retirement. With all of the stuff than can go wrong with an apartment, I'd be getting out ASAP

Catlady76

steamsey wrote: »

If the apartment would prevent you from getting mortgage for new family home, then obvious answer is to sell.

If not - i.e. you can get your new home and keep the apartment, then you have to consider a few things:

- Have you enjoyed being a landlord? Any bad tenants, expensive work required for the apartment? Law is heavily in favour of tenants and over course of the mortgage, you'll probably get a nightmare tenant at some point. Laws also continuing to move in this tenant favoured direction

- Sounds like you make 700 per month on the apartment. After taxes, maintenance costs, management fees etc - it's probably actually next to nothing. Plus the hassle of self assessment for the tax returns

- Until the mortgage is paid, you won't really make a lot of rental profit each month - but someone is paying the mortgage off for you - could be a good one for retirement as in keep it and sell / rent for pension pot

- IMO keeping the apartment only works as a very long term thing - if you're not interested in keeping until it's paid off, then probably best to sell. BUT - on the long term thing, 20 years is long term to own an apartment for - think of all the possible issues that could come up that you would have to pay for (structural, new lifts, fire safety issues, balconies needing to be rebuilt)

- I would hate to sell and have to pay the negative equity - if you are in break even - might be time to run. If in neg equity, I would consider holding if I could until at break even. Any profits on the sale will be CGT'd plus costs of sale so I would probably forget about making profit on sale in the short / medium term

- Stress / hassle of being landlord with young kids etc - it's not fun

- As others have said - prices are good at the moment. Might be wise to get out when you can

In short - if it were a manageable house, I'd prob say keep it if I could for retirement. With all of the stuff than can go wrong with an apartment, I'd be getting out ASAP

Good advice ! I became a LL when I moved out of my apt in 2012 its was a nightmare. One set of horrible tenants and one great tenant but sold in 2017 didn't want the hassle of being a LL.

Johouse

Catlady76 wrote: »

Good advice ! I became a LL when I moved out of my apt in 2012 its was a nightmare. One set of horrible tenants and one great tenant but sold in 2017 didn't want the hassle of being a LL.

Great advice - lots of things to consider which we had not thought of. Going to do the figures now but edging towards selling.

Also if we stay in Dublin open to anywhere which offers good value to raise a family. schools are important but doesn’t have to be south Dublin. No particular ties yet. Any suggestions very much welcome!We both work in the ifsc at moment. Budget up to 500k but would prefer to keep lower.....

Johouse

Should add we’re looking at Bray, Sandyford, Leopardstown, Raheny ...... we’re not from Dublin so any tips or wisdom would be very much appreciated.

PhoenixParker

If you're both working in the IFSC consider looking along the docklands train-line especially where it overlaps with the Maynooth line (Broombridge to Clonsilla)

The train to docklands avoids Connolly so it's very fast in. Overlapping with the Maynooth line gives you more options if you move workplace or just another route home if you stay put.

4ensic15

kceire wrote: »

Carpal gains tax payment. Make sure you allow for it in your sums.

How can there be a capital gain on a loss?

Samuel T. Cogley

Johouse wrote: »

Should add we’re looking at Bray, Sandyford, Leopardstown, Raheny ...... we’re not from Dublin so any tips or wisdom would be very much appreciated.

Raheny is ideal and is a microcosm of Dublin ranging from working class areas to some very expensive areas. Some of the schools are excellent (so I'm told). DART access would be ideal for IFSC. Value is focused in the working class areas IMHO but you'll find a nice house for around 500K in the 'nicer' areas of Raheny.

We moved from D8 to D5 and it's one of the best decisions we've made.

Edit: Detached 3 bed, near the beach and relatively close (10 minute walk) to the DART.

https://www.myhome.ie/residential/brochure/9a-foxfield-green-raheny-dublin-5/3970656

Johouse

Thanks for this detail. Need to consider schools also and cachement areas so a bit of research needed!

Dr_Kolossus

Have you considered Ratoath, some lovely detached houses between the 4-500k mark. Good schools and handy enough to town via docklands train.

Moved there ourselves 3 years ago, from Dublin and found it a great move