please help!

i know we made a very silly mistake but at the time everyone wanted to buy. neither my husband or me have a pension and we taught we could invest in property to safe gaurd or families future.

so please,i know we screwed up, i dont need to hear that anymore.

i will definately look at going interest only to help with the repayments. we have another ea who has just given us a valuation close to what we bought for. so were putting it on the market. weve lost our 40k on the stamp so hopefully thats all we lose
 
The EA valuations are largely irrelevant and there is no point calling an EA who gives a valuation below what you hope to sell it for an "idiot". The second EA could just be over optimistic and want to please you with his/her valuation. Who knows? Time will tell. What matters is what a buyer is prepared to pay for it. As I pointed out earlier the fact that these properties are now effectively pre-owned may negatively impact the value which a buyer will put on them (e.g. a non FTB because they will have to pay SD and a FTB or investor because they might prefer to buy brand spanking new directly from the developer). You seem to have decided to try to sell one one (or both?) of the properties so I take it that there's not much else that anybody here can offer by way of advice? All I would say is that you should learn something from this episode and make sure to make much better informed investment decisions in the future - with the help of professional assistance if necessary (and I reckon it is!).
 
Intrest only will drastically reduce your repayment. 300k mortgage would be about 500 less a month. Also reduces your tax liability.
Bear in mind too that if you rent the properties yourself without an agent you will be saving that fee too every month.
All might not be lost.
 
Madeline said:
Intrest only will drastically reduce your repayment. 300k mortgage would be about 500 less a month. Also reduces your tax liability.
Bear in mind too that if you rent the properties yourself without an agent you will be saving that fee too every month.
All might not be lost.
Click to expand...

And drastically increase the risk of her losing even more if the price of these properties drops in value.

It doesn't reduce her tax liability at all. She borrowed 100% to buy these places, based on releasing equity from her residence and getting mortages for the rest on the 2 places. The interest component of her mortgatges is circa €1670 (at 5.2%) per month (based on borrowings of €365k + €20k stamp per property). She'd only be getting €1000 per month rent which is no where near the cost of interest. On a repayment mortgage it would be years before this situation changes.

The constant advice from a few posters on AAM that interest only will fix everything is really really bad to the extreme. Interest only is only suitable for professional investors and only when Loan to Value ratios are suitably low to mitigate the risk. It can get people out of a hole for a small period of time such as if they are trying to sell or tempoarily out of work.

All is lost I'm afraid. What the OP needs is reality in the replies that will encourage her to seek professional financial advice and try to resolve the bad financial position she has got hereself into as quick and efficiently as possible.
 
Madeline said:
Intrest only will drastically reduce your repayment. 300k mortgage would be about 500 less a month. Also reduces your tax liability.
Bear in mind too that if you rent the properties yourself without an agent you will be saving that fee too every month.
All might not be lost.
Click to expand...

You need to crank up the oul calculator there Madeline. 5% of 300K is 15K. You must have made your calculations in November 2005, assumed the OP was getting the ECB rate of 2%, and then rounded down to the nearest 500.
 
Howitzer said:
You need to crank up the oul calculator there Madeline. 5% of 300K is 15K. You must have made your calculations in November 2005, and then rounded down to the nearest 500.
Click to expand...


500 "less" a month. Not 500 a month.
 
robd said:
The constant advice from a few posters on AAM that interest only will fix everything is really really bad to the extreme.
Click to expand...
This is totally unfair and not true as far as I can see. I don't think that anybody here or habitually elsewhere claims that this is a panacea as you suggest. It was mentioned earlier as one thing to check out. And references to it elsewhere are usually general and qualified with the usual caveats about getting professional advice etc.
 
Hedger said:
500 "less" a month. Not 500 a month.
Click to expand...
Second time today that Howitzer in this thread has had a go at somebody without actually reading in detail what they actually posted. Only this time he didn't get back in quick enough to delete his misplaced comments as he did when he mistakenly criticised something that he thought that I had posted because he didn't read my post properly.
 
pleasehelpme said:
the houses are finished and were trying to rent them but the leting agent says well only get 1000 a month witch will come no where our mortage payment.
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1000 a month seems a bit low - your bogstandard 3 bedroom out in the sticks is 1000+ a month and if you are near Cork city you should be getting more.
 
You're obviously new to this and a bit of panic has clearly set in. Ok, first relax a little. There are positives to think of:

1. Estate agent believes houses can be rented out. At €1k a month each? Doesn't fully cover mortgage, but better than paying entire mortgage yourself.

2. Despite critics, interest only is a perfect solution to short term cash flow problems. But get to work on it now, banks can be very slow changing loans.

3. Don't get emotional about investments or think you've made a mistake. You haven't. You have invested in two houses. This is a business - think of it as trading your way through a difficult period. The investment may not be performing now, but it may in the future.

4. You can get out and take a loss. They may sell for less but at least they will sell.

5. Hold your nerve, address the amount you personally pay each month. Forget about the value of this and that and the amount of rent you desire. Instead ask, how much will it personally cost you each month and how can this be reduced? That's real money - everything else is just notional.

6. If there are tenants out there willing to pay €1k or more - get them in a soon as possible. Then take it from there. And yes, do it yourself, forget about agents.
 
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thank you kendr, thats very well taught out advice.

interest only looks like its the best option to help me reduce payments, we called the bank and they have agreed in principle we can go interest only for 5 years. if we can get 1100 a month rent then we can just about break even and hold out for when the market improves.

we talked to a friend and she says this long term option would be the best way to go and we would be foolish to bail out on our investment so soon.
 
pleasehelpme said:
we talked to a friend and she says this long term option would be the best way to go and we would be foolish to bail out on our investment so soon.
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Ah right, she's a psychic.
Use your own head, do some research, and make an informed decision yourself. Many property discussions on
[broken link removed]
[broken link removed]
and of course daft.ie have discussion forums too...
 
pleasehelpme said:
thank you kendr, thats very well taught out advice.

interest only looks like its the best option to help me reduce payments, we called the bank and they have agreed in principle we can go interest only for 5 years. if we can get 1100 a month rent then we can just about break even and hold out for when the market improves.

we talked to a friend and she says this long term option would be the best way to go and we would be foolish to bail out on our investment so soon.
Click to expand...

Would sell one property and keep the other. This removes almost all of the risk.......that is you could carry one house through void periods etc.

Carrying both is rolling the dice........ Another way of putting this is that right now a bank may have difficulty in giving you a further loan of say €20k.

It is amazing that a bank would give you 800k of loans to play the property market when clearly it was inappropriate yet I guess if you had asked them for 50k for a new business venture they would still be looking at it.

They should have stress tested you etc. ......I am not familar if they have liability here. Certainly a judge would be looking at them sceptically when they tried to explain why they gave you 800k to gamble.

One other solution would be to sell your own home...€800k means it has a implied cost at 4.5% of €35k a year. You could then move into one of the houses - implied cost 400k at 4.5% = 18k - this is a saving of €17k
 
pleasehelpme said:
interest only looks like its the best option to help me reduce payments, we called the bank and they have agreed in principle we can go interest only for 5 years. if we can get 1100 a month rent then we can just about break even and hold out for when the market improves.
Click to expand...
The market may not improve for 10 years. Can you afford to take that risk?
I think Maine’s advice is good advice and you should sell one to reduce your risk. Don’t bury your head in the sand and hope things work themselves out. You cannot afford to be passive here, not when you have no pension.
Five years at interest only is a long time, ask yourself if you will be better off after paying interest for five years without any capital appreciation and no increase in rents. I’m not saying that will happen but it’s as likely as any other scenario.
You should also take into account that you will have periods when your properties are not rented (work on the basis of ten months rent a years) and that in five years you will have to refurbish both properties (you should paint every two years, at least). Assume that this will cost €5’000 per property. Take all this into account and see if the rent pays the mortgage, and all other costs, at interest only. For the purposes of your calculations do not assume any capital appreciation for at least 5 years.
When you have all that done ask your financial advisor to work out what a pension will be worth if you put the same resources into it up to retirement age.


pleasehelpme said:
we talked to a friend and she says this long term option would be the best way to go and we would be foolish to bail out on our investment so soon.
Click to expand...
The exit costs are high but don’t take any friends advice. Go and see an independent professional advisor. Only with all your private financial details can a proper assessment be made.
 
Toughest thing is to learn your lesson ...

After winning some and losing (a lot) I realize that you have to have the nerve to make a tough call. If it were me, I would definitely sell one house, and rent out the other. Holding on to both indicates that you cannot make the decision to take a finantial hit. Don't let your ego get in the way. Take a hit, sell one, live easier.
 
You have to bear in mind that it is a tough world out there and sometimes you have take tough decisions. There are no definate one-way bet investments, if there were we would all be millionairres!

Everything that you invest in carries a certain degree of risk and if you feel that the investment is no longer viable you have to be prepared to cut your losses and walk away from it. Professional investors in stock markets are always prepared to sell and cut their losses if they realise that they have made a mistake.

Anyone who thought that remortgaging their PPR to invest (instead of "invest" read "gamble") €750,000 in the property market (or any other market!) was a "no brainer" certainly needs their head examined! To me it sounds like that you have bought into the investment property market at the wrong time (the top of the cycle) and that you have paid too much for them.

If the property prices continue to fall you could end up loosing a lot more than you already have done. It is entirely your decision. I think you need some professional financial help and I suggest that you see an independent financial advisor or an accountant.
 
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