Continue renting out property or sell it?

PGL

Hi folks

Apologies if this question has been asked before, but i could not find enough detail on it.

I am one of the many accidental landlords out there, and have just found out my tenants (of the past 4 years) will be leaving soon. I think now is a good time to take stock and consider whether I should continue renting the property or instead sell it.

After all the bills, including tax, are paid each year, I am generally out of pocket by approx €2k to €3k per annum. To make things worse, I would probably be earning €400 more rent per month if I wasn't locked in to relatively low rent due to the rent pressure zone initiative.

I would like some independent advice on what I should do next, but am a bit confused as to where I should seek this advice. Hence should I contact an accountant, solicitor or estate agent for some advice?

Thanks a mill!

Time

PGL wrote: »

Hi folks

Apologies if this question has been asked before, but i could not find enough detail on it.

I am one of the many accidental landlords out there, and have just found out my tenants (of the past 4 years) will be leaving soon. I think now is a good time to take stock and consider whether I should continue renting the property or instead sell it.

After all the bills, including tax, are paid each year, I am generally out of pocket by approx €2k to €3k per annum. To make things worse, I would probably be earning €400 more rent per month if I wasn't locked in to relatively low rent due to the rent pressure zone initiative.

I would like some independent advice on what I should do next, but am a bit confused as to where I should seek this advice. Hence should I contact an accountant, solicitor or estate agent for some advice?

Thanks a mill!

Maybe an estate agent who also deals in rentals, they can spell out your options regarding continuing to rent it out, and any exemptions you could avail of to increase your rent along with the option of selling.

hawkelady

Sell it now. Go to a few estate agents and get them to price it. They will do everything. You’d be mad to keep pumping money into it, sure you’re losing out each year. It’ll sell no problem ..
Good luck

Browney7

hawkelady wrote: »

Sell it now. Go to a few estate agents and get them to price it. They will do everything. You’d be mad to keep pumping money into it, sure you’re losing out each year. It’ll sell no problem ..
Good luck

His/her wealth is probably increasing with the increasing property value and the capital repayments being made and no doubt included in that net 2 or 3k cashflow loss (with the caveat it may be harder to sell due to rent control legislation).

OP, if you are mortgaged to the hilt and are feeling iffy about current property valuations and potential tenancy legislation then sell. If you can get a good tenant and think there's a bit of road left in this property market bull run and are comfortable with your leverage levels then keep it.

Samuel T. Cogley

You're unlikely to be losing out, you're having to invest in an apricating (at the moment) asset. You may be out of pocket cash flow-wise, but how much of the principal is being paid off each year?

That's not to say don't sell, but just don't get fixated on the cash flow. Will you be in profit, considering the payments made by rent to the principal, when you sell? If so there's no reason why now isn't a good time to get out. Personally I think we've a couple of years of rises, but a bad tenant, bad Brexit or any number of factors could wipe out those gains.

the_syco

PGL wrote: »

After all the bills, including tax, are paid each year, I am generally out of pocket by approx €2k to €3k per annum. To make things worse, I would probably be earning €400 more rent per month if I wasn't locked in to relatively low rent due to the rent pressure zone initiative.

Long term, why do you want to keep it? Is it in Negative Equity?

The_Conductor

Being locked into an artificially low rent, thanks to RPZ legislation- is what is key here (in my mind).
The cleanest and most sane thing to do- is to sell- and lock in the asset appreciation that has occurred.
The tenants are leaving anyway- you don't have a relationship with incoming tenants- who are legally entitled to the good grace and the relationship you had with the old tenants- which isn't fair or reasonable. Just sell- its not worth the risk associated with new tenants- esp. at an artifically low rent level.

JimmyMW

PGL wrote: »

Hi folks

Apologies if this question has been asked before, but i could not find enough detail on it.

I am one of the many accidental landlords out there, and have just found out my tenants (of the past 4 years) will be leaving soon. I think now is a good time to take stock and consider whether I should continue renting the property or instead sell it.

After all the bills, including tax, are paid each year, I am generally out of pocket by approx €2k to €3k per annum. To make things worse, I would probably be earning €400 more rent per month if I wasn't locked in to relatively low rent due to the rent pressure zone initiative.

I would like some independent advice on what I should do next, but am a bit confused as to where I should seek this advice. Hence should I contact an accountant, solicitor or estate agent for some advice?

Thanks a mill!

Talk to your accountant re CGT etc and see whats best financially for you given the approx current market value.

averagejoe123

How much is the property worth? What is the outstanding mortgage on it? What % rate? Do you have any other property? What is the current rental income? When was the last increase?

You will need to give a lot more information to get meaningful advice.

bluelamp

Samuel T. Cogley wrote: »

You're unlikely to be losing out, you're having to invest in an apricating (at the moment) asset. You may be out of pocket cash flow-wise, but how much of the principal is being paid off each year?

This.

When your mortgage is finished you'll own a house/apartment that tenants have paid probably two thirds of, and has cost you 2 or 3k a year.

Investments require investment.

hawkelady

Of course investments require investing. But initial investment or ongoing investment ! Op is doing the latter .. also remember that Leo will be taking 33% of the profit you make on the sale less mortgage etc .. might be more than 33% in ten years time.

Browney7

hawkelady wrote: »

Of course investments require investing. But initial investment or ongoing investment ! Op is doing the latter .. also remember that Leo will be taking 33% of the profit you make on the sale less mortgage etc .. might be more than 33% in ten years time.

That's not correct - sale price less price paid not the balance remaining on the mortgage.

The value of the OPs investment could be increasing by the order of 10k a year (repayment of capital, property appreciation) for a 3k per annum investment - hardly a one way ticket to the poor house.

It's likely the OP is still in negative equity so realising a capital loss on the property could enable the OP to realise capital gains on any shares or other investments they own.

OP should consider the current interest rate they are paying on the existing loan - possible it's on a tracker rate (if OP didn't tell bank they are no longer living there).

OP needs to sit down with a Financial Planning professional in making any decision and not rely on strangers on the internet.

serox_21

Go with AirB&B for a few months.
Should be able to get similar/higher income from renting it this way than getting stuck with a tenant.
Less hassle and total control of your property.
If all goes well you will have to rent it a few days a month to get same income as before.

Decide later if selling or renting long term is a better option. I think after six month without renting it you can ask for full market price if decided to get back on renting long term.

Claw Hammer

serox_21 wrote: »

I think after six month without renting it you can ask for full market price if decided to get back on renting long term.

That is not correct. Once stuck with a rent, that's it for ever unless there is an upgrade to the property.

amcalester

Claw Hammer wrote: »

That is not correct. Once stuck with a rent, that's it for ever unless there is an upgrade to the property.

Does it not re-set after a 2 year break in rent?

Claw Hammer

amcalester wrote: »

Does it not re-set after a 2 year break in rent?

No. When the RPZ came in, if it had been two years since the property was last let, the property was not caught by it. That does not mean that in the event of any letter two year break the cap has gone.

amcalester

Claw Hammer wrote: »

No. When the RPZ came in, if it had been two years since the property was last let, the property was not caught by it. That does not mean that in the event of any letter two year break the cap has gone.

From the RTB website

Are all rental properties covered?
Not all rental properties are covered by the 4% annual rental restriction. Properties that are new to the rental market and have not been let at any time in the previous two years and properties which have undergone a substantial change can be exempted from the measure.

Source

Claw Hammer

amcalester wrote: »

From the RTB website



Source

That was at the time the RPZ came in. If you look carefully at the wording you will see that it does not have prospective effect.

Old diesel

amcalester wrote: »

Claw Hammer wrote: »

No. When the RPZ came in, if it had been two years since the property was last let, the property was not caught by it. That does not mean that in the event of any letter two year break the cap has gone.

From the RTB website

Are all rental properties covered?
Not all rental properties are covered by the 4% annual rental restriction. Properties that are new to the rental market and have not been let at any time in the previous two years and properties which have undergone a substantial change can be exempted from the measure.

Source

Would the OPs current home they live in count as new to the market if they moved into the rental property??????.

I realise that this may not be able to work

Claw Hammer

Old diesel wrote: »

Would the OPs current home they live in count as new to the market if they moved into the rental property??????.

I realise that this may not be able to work

Yes.