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Investment house in negative equity - advice needed

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  • 16-12-2010 10:44am
    #1
    ricman
    Closed Accounts Posts: 1,559 ✭✭✭


    My friend has a house in ireland in negative equity, mortgage 110k, value is 80 or 90k. She has 1500 savings.She lives abroad has 2nd loan 50k, apartment worth 130k. She wants to sell the house.

    Tenant is leaving in ten days, cos theres repairs needed, builder says it, ll cost 3k. Something wrong with chimney, insulation.Theres mould in some places. shes paying just the interest on the loan at present. SO how does she sell the house. She told the bank i intend to sell the house.

    She wont be able to rent the house, unless repairs are carried out. i ll be see the house, in 7 days, i have no idea how bad it is. tenant says, i cant stay there, its effecting my health. Shes lived there for 5 years, i think problem caused by tenant drying clothes inside, bad insulation, plus theres a washing machine there, but no dryer.Tenant has 3 kids.The house is ten years old, i was in it 6 years ago. It was fine.

    House next door is on the market ten months, bank sale price 110k, nobody wants to buy it, price is too high. Sorry for error in title spelling, i cant edit it.IT should be investment house. House was bought for 80k, remortgaged to 110k. She could afford to pay about 350 per month, after the tenant is gone. Interest payments per month =550. BY the way 4 years ago the house was valued at 180k. I think she just wants to stop all payments, and put the house up for sale.

    Is that a good idea, or should she pay 300 until the house is sold. She has no wish to rent, as the house is just declining in value. I think she could claim about 1000 from insurance to pay for repairs, insurance is due for renewal in ten days.


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    #2
    mathie
    Registered Users Posts: 5,093 ✭✭✭mathie


    ricman wrote: »
    My friend has a house in ireland in negative equity, mortgage 110k, value is 80 or 90k.
    She has 1500 savings.She lives abroad has 2nd loan 50k, apartment worth 130k.
    She wants to sell the house.
    Tenant is leaving in ten days, cos theres repairs needed ,builder says it,ll cost 3k.
    Something wrong with chimney ,insulation.Theres mould in some places.
    shes paying just the interest on the loan at present.
    SO how does she sell the house.
    She told the bank i intend to sell the house.
    She wont be able to rent the house, unless repairs are carried out.
    i ll be see the house ,in 7 days, i have no idea how bad it is.
    tenant says ,i cant stay there, its effecting my health.
    Shes lived there for 5 years, i think problem caused by tenant drying clothes inside,bad insulation,
    plus theres a washing machine there, but no dryer.Tenant has 3 kids.The house is ten years old, i was in it 6 years ago.IT was fine.
    House next door is on the market ten months, bank sale price 110k,
    nobody wants to buy it, price is too high.

    How does she sell it?
    The usual methods and then she'd have to stump up the difference between the sale price and the mortgage.


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    #3
    ricman
    Closed Accounts Posts: 1,559 ✭✭✭ricman


    SO she,d have to pay around 30k, plus capital gains tax, because its an investment property ,if it sells over 80k its taxable.
    SO it could cost her 35k to sell it, legal fees 1200 approx.
    SO she would need to borrow around 35k in order to sell it.
    The present mortgage is around 870 euro per month.
    I,D presume she could borrow 35k,using the apartment as collateral .She works full time .


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    #4
    wyndham
    Registered Users Posts: 2,284 ✭✭✭wyndham


    How can she claim from the insurance for repairs? You say that the mould problem has been caused by the tenant drying clothes inside?

    She needs to scrape together the money for the repairs and continue to rent out this house. She could pay somebody to manage the rental if necessary (you?). Both an initial letting fee and possibly an ongoing management fee.
    The alternative is to look for a loan releasing equity on the apartment abroad to cover the shortfall between the sale price and the mortgage amount. This would be extremely difficult to secure.

    Whether selling or letting, the repairs should be carried out.

    A new clothes dryer can be had for c€120, less on the secondhand market for a nearly new machine.

    How much rent was she getting and how much is the mortgage repayment per month?


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    #5
    ricman
    Closed Accounts Posts: 1,559 ✭✭✭ricman


    Shes paying just the interest on the loan,550 euro at present,
    the full mortgage is 840 approx.
    Shes been told by an insurance agent she,d get 1000 from insurance if she claimed it.
    THERES mould,but theres also part of the chimney, needs to be replaced,i will inspect the house in ten days, the tenant says i,m leaving in the next 2 weeks.
    Theres no point in buying a dryer,the tenant is leaving ,she has no wish to rent
    .she was getting 550 rent, it s better to sell up ,houses outside dublin are declining in value.
    House is near longford.
    I WAS told about all this 2 weeks ago .
    The tenant has used up the deposit, shes moving into boyfriends house,
    that house is in breach on health and safety rules.
    the rent was being paid on RAS scheme by county council.
    ALL I know is builder gave 3k quote for repairs.Tenant is on welfare, i do not trust her at all.
    I have never met her, an agent deals with her.
    She just told tenant,
    i cannot afford 3k repairs,it might be better to leave, as its causing
    health problems.
    House is semi detached, the house next door is empty,for sale for 110k by the bank.
    ITS a joke, its for sale, it hasnt been cleaned properly, theres books,toys etc stuff lying on the floor,
    the bank hasnt got 30 euro to pay a cleaner before putting it up for sale.
    I want her to sell the house ,otherwise she,ll end up paying 220k on the loan,
    while the house declines in value, a few miles away theres 1 bed apartments going for 60k.
    AND she pays insurance ,maintenance etc for another 25 years.
    SHE cannot claim any tax credits for anything because she,s making ZERO profit.
    if you borrow 110k from bank, it costs you at least 220k to pay em back,
    and you still have to pay for maintenance.
    She should have sold it 4 years ago before prices declined.


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    #6
    silja
    Registered Users Posts: 2,921 ✭✭✭silja


    Thge thing is, she cannot just sell and forget about the shortfall. If she sells now, she'll have to pay back the bank the 35'000 or whatever she'll still owe on the mortgage, and won't have a house.


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    #7
    ricman
    Closed Accounts Posts: 1,559 ✭✭✭ricman


    The house is an investment property ,she does not live there.She lives in another country,in a apartment ,mortgage 50k, apartment value 130k.
    IT costs here about 350 to cover the mortgage,the rent is much lower than the monthly mortgage,difference =350 [per month.

    SHE has no desire to holdon to the house.
    The bank says put it on the market, see what offers you get.


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