To sell or not to sell

Hi

I purchased an investment property in Jun 2005. It is a 2 bed terraced in Co Wicklow. The location is very close to the town center so there is not a problem renting. I paid 328000 (plus 19000 Stamp duty) with a mortgage of 266000. I am getting 1050 per month.

When I bought the house the repayments were 1080 pm. They are now 1240 per month. Another 2 rises this year and 4 next year will see payments rise to 1450 approx.

I have 20K plus my SSIA next year. By paying this 40K off the mortgage the repayments would reduce to 1100 pm.

However one thought did not occur to me when I bought. The stamp duty rates change from 3 to 6% at 381000. This is about what I would get for the house now. A near neighbouring house sold for about that a month or so ago. I am now begining to think that I have reached the max limit of the vlaue of the property for the foreseeable future because I cannot envisage anyone paying 382K or more for a 2 bed townhouse when they know it will cost them 23K in stamp duty.

So any advise. Sell or not?
Thanks

have you considered interest only mortgage for the time being?

Risky I know, but there may be some stamp duty relief in next budget , by way of increases in these thresholds.

So after all fees/taxs/interest is paid how much do you reckon you'll trouser if you sell now? Do you think you'll make more or less in 1/3/5 years? Due to high transaction costs selling property within a year of buying wouldn't, in a normal market, return a profit.

i figure i have spent 360K in total. Sell for 380K, 20K gross profit less agent/solicitor. can write off the CGT against stock losses.

make 15-16K maybe at this stage. if price doesn;t rise, and i have to keep adding money each month this will lessen i suppose.

You bought an "investment property" just over a year ago? Why are you considering selling it already. Where you not in it for the long haul?

apd said:

i figure i have spent 360K in total. Sell for 380K, 20K gross profit less agent/solicitor. can write off the CGT against stock losses.

make 15-16K maybe at this stage. if price doesn;t rise, and i have to keep adding money each month this will lessen i suppose.

Click to expand...

Ok, this works out to be a pretty thin profit. Now who do you think will buy from you at that price? Certainly not an investor as you've already outlined from your own figures that it's a non runner going forward, certainly at a 381K starting price.

Ideally you should be looking to make the investment pay for itself. Without pumping your SSIA into it I guess going IO is the only route at the moment but from your own figures you've already outlined how this may be a false economy in a year or so.

Can you increase your rental take?

Tight, very tight.