200k Investment - sell property or not and then invest?

[NEW ORDER]

Hi,
What would you do?

Am owner of rented property. Now mortgage free with tenants moving out in Summer. Worth 200k ish ( bought for 185k in 2003) ,needs 10k spent on upgrading kitchen ect ..rents circa 1000k per month in my area. I am 60, steady job, no financial issues..I have been very lucky with tenants, 20 years, never a problem. Looking for advice on to stick renting or sell..only problem on selling I see is the return I would get on my 200k if invested.

Gut feeling is to sell, had a good run. Seems to be hard to make money work for you at the moment though, rent would bring in 12k before the usual deductions and hassles. New incoming Government may be nasty to landlords.....

Any advice appreciated, Thanks, Martin.

 

[Original]

I own and rent a property in an RPZ in Dublin. I pondered selling also, particularly since house prices were up. My last tenants were a nightmare and was just added stress. That being said, they moved out and I made the decision to not sell and continue to keep renting. I found a new tenant. Hopefully all will go well. Depending on the outcome of this tenant, I will decide for once and for all whether to sell or keep renting.

Gov are already too strict on some landlords who are complying with far too many ever changing rules. What comes down the road from a new gov worries me. RPZs are far too restrictive and need to be reset every 5 years or so. The joke that is the RTB are far too tenant focused.

That said, selling will probably result for you in little profit, given that any CGT and conveyancing expenses will need to be taken into account. on the flip side, the relief and lack of stress from having to deal with issues related to tenants and the house itself must also be very appealing.

 

[Zenith63]

I sold an apartment a few years back for similar reasons and put the money in an ETF. I have not dreamed of being a landlord again for a single moment.

The S&P500 had an average return of 11% over the last 50 years, which may not be quite as good as your apartment when you factor in capital appreciation but it is virtually set-and-forget. Even with a good property and good tenants, you’re always waiting for that call about a leaking dishwasher while you’re on holidays. Factor in the current issues with holdovers and future political instability in this area and the stock market to me is a lower risk bet requiring much less work.

Sell it, you won’t look back.

 

[NEW ORDER]

I sold an apartment a few years back for similar reasons and put the money in an ETF. I have not dreamed of being a landlord again for a single moment.

The S&P500 had an average return of 11% over the last 50 years, which may not be quite as good as your apartment when you factor in capital appreciation but it is virtually set-and-forget. Even with a good property and good tenants, you’re always waiting for that call about a leaking dishwasher while you’re on holidays. Factor in the current issues with holdovers and future political instability in this area and the stock market to me is a lower risk bet requiring much less work.

Sell it, you won’t look back.

Thanks for the response Zenith63: selling was my gut feeling..future political instability in this area is a worry alright. getting too old for all the hassle anyway Cheers.,.

 

[lff12]

Hi,
What would you do?

Am owner of rented property. Now mortgage free with tenants moving out in Summer. Worth 200k ish ( bought for 185k in 2003) ,needs 10k spent on upgrading kitchen ect ..rents circa 1000k per month in my area. I am 60, steady job, no financial issues..I have been very lucky with tenants, 20 years, never a problem. Looking for advice on to stick renting or sell..only problem on selling I see is the return I would get on my 200k if invested.

Gut feeling is to sell, had a good run. Seems to be hard to make money work for you at the moment though, rent would bring in 12k before the usual deductions and hassles. New incoming Government may be nasty to landlords.....

Any advice appreciated, Thanks, Martin.

1. 10k is NOTHING compared to what an awful lot of 20 year old+ properties need - I looked at ex rentals for sale 2 years ago that had fitted new bathrooms and kitchens just to get the sale!
2. There's plenty of tenants out there and you probably can find someone ok via word of mouth at that price rather than advertise it.
3. I'd agree RE change of government - however, they are not at 40%+ and won't have a majority, & given that they fish in the same voter sea & the performative left they'll probably cannibalise the latter & be forced into government with far more right wing partners.
However they could put down rolling eviction bans or rent freezes that could be problematic if you are already likely to be renting out at the lower end of scale. They were very adamant for example on continuing the eviction ban in 2023. This would definitely be an issue
4. I would say that if I was in your position and your age, I'd probably be wanting to enjoy the profit for as long as I'm still alive rather than have it wrapped up in an active investment.

 

[lff12]

I own and rent a property in an RPZ in Dublin. I pondered selling also, particularly since house prices were up. My last tenants were a nightmare and was just added stress. That being said, they moved out and I made the decision to not sell and continue to keep renting. I found a new tenant. Hopefully all will go well. Depending on the outcome of this tenant, I will decide for once and for all whether to sell or keep renting.

Gov are already too strict on some landlords who are complying with far too many ever changing rules. What comes down the road from a new gov worries me. RPZs are far too restrictive and need to be reset every 5 years or so. The joke that is the RTB are far too tenant focused.

That said, selling will probably result for you in little profit, given that any CGT and conveyancing expenses will need to be taken into account. on the flip side, the relief and lack of stress from having to deal with issues related to tenants and the house itself must also be very appealing.

The problem with RPZ is that they effectively lock the rental rates at the rate the last tenant paid - which might not take into account years where the rents were not raised or that the rent was set at a lower level perhaps 2012 or so when the rental market was also at its bottom point. A lot of landlords in the past, in the days where most tenants just stayed 6 months to 2-3 years, only raised the rents between tenancies.

 

[Sammy Wilson]

I sold an apartment a few years back for similar reasons and put the money in an ETF. I have not dreamed of being a landlord again for a single moment.

The S&P500 had an average return of 11% over the last 50 years, which may not be quite as good as your apartment when you factor in capital appreciation but it is virtually set-and-forget. Even with a good property and good tenants, you’re always waiting for that call about a leaking dishwasher while you’re on holidays. Factor in the current issues with holdovers and future political instability in this area and the stock market to me is a lower risk bet requiring much less work.

Sell it, you won’t look back.

The ETF has a 41% guaranteed exit tax and DD every 8 years, vs the income tax rates on rental income which may be 20%, depending on other income. You can also offset other costs such as mortgage interest relief against the tax on rental income. I'm not sure it's good advice, other than the fact it's 'headache free'. Direct stocks or Investment Trusts are a better comparison.

 

[Zenith63]

The ETF has a 41% guaranteed exit tax and DD every 8 years, vs the income tax rates on rental income which may be 20%, depending on other income. You can also offset other costs such as mortgage interest relief against the tax on rental income. I'm not sure it's good advice, other than the fact it's 'headache free'. Direct stocks or Investment Trusts are a better comparison.

There are other great threads on the forum discussing ETFs vs direct shares/ITs, probably best to keep the discussion there as I and others would not necessarily agree, but as you say it depends.

 

[Calico]

Selling and investing in an ETF all well and good, but could you handle your ETF falling 40% in one year and taking 5+ years to recover? You might find that a lot more stressful and upsetting than buying a new washing machine or whatever.

Have you considered letting it to people fleeing the war in Ukraine? The government will pay you €800 per month tax-free.

I am currently doing it and it's going very well.

 

[Zenith63]

Selling and investing in an ETF all well and good, but could you handle your ETF falling 40% in one year and taking 5+ years to recover? You might find that a lot more stressful and upsetting than buying a new washing machine or whatever.

Dublin house prices dropped 56% in the 2008 crash and recovered 15 years later. Apartments were down 65%, did not check if they’re yet to recover, probably not.

 

[Calico]

Dublin house prices dropped 56% in the 2008 crash and recovered 15 years later. Apartments were down 65%, did not check if they’re yet to recover, probably not.

I am not sure we're comparing like for like.

The property/banking crash of 2008 was a once in a lifetime event.

However ETFs regularly go up and down by c.40% in one year.

 

[Zenith63]

I am not sure we're comparing like for like.

The timelines are different - property doesn’t fall in value too often but can stay down a long time, the stock market falls fairly frequently but recovers quickly (<1 year for the S&P500) - but personally I’d weigh the risks of capital loss with both investments about equal, neither should overly concern people over a long investment period.

 

[NEW ORDER]

1. 10k is NOTHING compared to what an awful lot of 20 year old+ properties need - I looked at ex rentals for sale 2 years ago that had fitted new bathrooms and kitchens just to get the sale!
2. There's plenty of tenants out there and you probably can find someone ok via word of mouth at that price rather than advertise it.
3. I'd agree RE change of government - however, they are not at 40%+ and won't have a majority, & given that they fish in the same voter sea & the performative left they'll probably cannibalise the latter & be forced into government with far more right wing partners.
However they could put down rolling eviction bans or rent freezes that could be problematic if you are already likely to be renting out at the lower end of scale. They were very adamant for example on continuing the eviction ban in 2023. This would definitely be an issue
4. I would say that if I was in your position and your age, I'd probably be wanting to enjoy the profit for as long as I'm still alive rather than have it wrapped up in an active investment.

Thanks Iff12:...will sell in Summer & hopefully live long enough to enjoy my few bob. Shame the body politic are so anti landlord, but there you go!