If you have a new account but are having problems posting or verifying your account, please email Niamh on [email protected] for help. Thanks :)
New AMA with a US police officer (he's back!). You can ask your questions here

To Rent or Sell

  • 24-09-2021 4:11pm
    Registered Users Posts: 451 ✭✭ sonyvision

    What would you do if this was your circumstances.

    Couple married

    Person 1 Salary Income (decent wage)

    Person 2 no income but owns a house which can be rented for 24k PA or Sell up worth approx 340k. After tax income approx 17/18k PA.

    Benefits, retain rented property down the line for kids to use or sell it as there deposit.

    Risk, none paying tenants, overholding etc... 24k PA is below market rates for the area by 2/3k.

    Sell the rented house, but what to do with 340k. Stick it in investments to earn a return or just live off the 340k as there is no income.

    Any landlords with positive experiences here? I see all the bad stories but very few who would stay in the game.


  • Registered Users Posts: 3,689 ✭✭✭ 3DataModem

    7% is a big yield for an investment. That's half your pension sorted, if you can stomach the risks.

  • Registered Users Posts: 989 ✭✭✭ snowcat

    Rent on a room by room basis. Whatever you do dont rent to a family or rent the property as a unit. Too much risk in this country. More work but potentially better return and less risk. Rent a room tenants stay max of 1-2 years before moving on. You still retain acess to common areas of property.

  • Registered Users Posts: 874 ✭✭✭ DubCount

    Just to clarify. The Implication of this post is that renting a property by the room makes the people staying there licensees in stead of tenants. If you are not actually living in the property, this is not the case and retaining access to common areas does not change this. IMHO, renting by the room just adds complication without adding any more security.

    7% yield sounds great. However, Buy2Let mortgages carry an interest rate of circa 5%, so your yield on any borrowed money is actually quite tight. Also to point out, the 7% figure is a gross yield. There's no account of insurance, LPT, maintenance, RTB registration and all the other costs that go with being a LL.

    Honestly - go ask an expert how to invest money and make a decent return without becoming an accidental LL.

  • Registered Users Posts: 989 ✭✭✭ snowcat

    The licencee thing is a grey area, not that it matters. The point to be made is that rent a roomers rarely stay for more than a year so you are never stuck with them, and you always have access so you can drop in any time to keep an eye on things. Rooms are generally single occupancy only so once they hook up with someone they either buy or rent a complete unit.

  • Advertisement
  • Registered Users Posts: 3,434 ✭✭✭ spaceHopper

    If you do nothing with it you will get 4 is percent growth in Dublin. After insurance maintenance and property tax that's not bad. Rent it on fixed term to the council but make it clear, they assume full responsibility for all upkeep and repair. You hand over the keys and get back in 10 years.

    If you air B&B it you could get a deaccent income. You could short term rent it to people who have to move out to do building work.

  • Registered Users Posts: 5,374 ✭✭✭ Wheety

    Where are you living now? In your own property?

  • Registered Users Posts: 451 ✭✭ sonyvision

    The 16k PA is after taxes and expenses. I factored in 2.5k maintaince a year which I think is excessive but suppose over time boilers, Windows, painting etc will all add up so the 16k is actually 20k gross with approx 4k tax paid and other items such as LPT/Insurance,lease fees.

    No borrowing cost on the house.

    I have looked I to the council approach, they ask what has the rent been achieved. They will pay 80/85% the price but as it's not rented I have no idea what they will offer. If they were to offer 18-19k PA for 10/15 years this would be an ideal scenario.

    I would prefer if the house was retained for the following.

    House prices go up and down in a cycle. In 20 years time kids would need a starter home, this could be theirs to sell and give 50% deposit in the same area to start again (assuming 2 kids). Regardless of what happens with prices a home is a home.

    Annual income of rent. On this person 2 would pay a PRSI class stamp 4% of the income. This all counts towards the state pension in years to go (no idea what the rate would be).

    340k is a lot of cash, very easy to start having fancy holidays, nice cars and unsure where it should be out to generate a return.

  • Registered Users Posts: 220 ✭✭ Rustyman101

    Rental income is classed as unearned income, AFAIK and is subject to different class of prsi and doesn't qualify towards state pension also issues around paying in pension funds.

  • Registered Users Posts: 451 ✭✭ sonyvision

    Looking online it says any income over 5k PRSI stamp of class S is paid which counts towards the state pension. This includes rent income/investments.

    I know you don't get tax relief on pension payments from rental income.

  • Advertisement
  • Registered Users Posts: 132 ✭✭ Fkall

    Unless you are a full time landlord, there are specific provisions in the act that exempt PRSI payments on rental income from accruing any benefit.

  • Registered Users Posts: 451 ✭✭ sonyvision

  • Registered Users Posts: 5,368 ✭✭✭ JimmyVik

    Go to an accountant and work out exactly how much you will end up with.

    Its probably not as much as you think.

    Also think about are there any risks. In 20 years will you even be allowed to sell the property. Hell, I think in 5 years you wont ever be allowed to sell it. And definitely not at full market rate.

    When you are compelled to raise the BER to an A to keep renting it (also coming in a few years), how much will that cost you.

    What if you get bad tenants. They will destroy you.

    Surely you must know some people who have rental properties. Ask them about it and ask if they are getting out or are happy the way things are.

    I reasearched this for a couple of years and could not get comfortable with the risk/reward. And things are worse now than they were then for a landlord.

    What I did was put my money into ETFs and Berkshire Hathaway and decided I would leave it there for 20 years instead.

    Well a few years on we are selling enough shares to pay us €2500 tax free each year, then buying the shares back.

    Also the initial value is going up 10 to 20% per year since we invested.

    Over the 20 years we would be happy with 4% though tbh. I never expected that high of a return so far anyway.

    But you know what? What we have done is basically fire and forget. Being a landlord is not that. Even renting long term to the council is not hands off as they say, as friends of mine have found out the hard way.

  • Registered Users Posts: 3,689 ✭✭✭ 3DataModem

    Another tip if you do decide to rent.

    Get a good agent to manage it. And by "good agent" I mean one that ensures the tenants don't know who you are, or what your mobile number is, and just handle everything. You can find good ones for 6% + VAT depending on area, and how easy it is to let your place.

  • Registered Users Posts: 989 ✭✭✭ snowcat

    I can guarantee you any "good" agent will walk away if the shot hits the prop and blame the owner. Ultimately you are responsible not the agent.

  • Registered Users Posts: 989 ✭✭✭ snowcat

    There is no such thing as a "good" agent. They are in the business to make their commision. They dont give a damn how much they rent or sell your property for. They want their commission. Should things go wrong either on a sale or rental they will blame the vendor and walk. (In reality they have no control either way). I question really what they give to the property business when their commissions are so low that they really are only benefiting themselves on a sale. They have no interest in getting best price on a commision of 2-3%. They want sales and closures not best prices.

  • Registered Users Posts: 267 ✭✭ enrique66_35

    If you do decide to sell you need to also be aware of capital gains tax at 33% on the sales price (less costs) - whatever you paid for it (+costs) which might be a significant sum if the property was bought cheaply/inherited. As mentioned above, get professional advice on the tax implications of both before making a decision.