Selling investment property - what to do with money?

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elainem

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Hi! I own my own home outright - e420k. I also have two investment properties worth e450k and e300k and an holiday home which I hope to retire to on the South East Coast worth e155k. I have e55k in savings.

Income from public sector job: 57k

Spouse: None

Dependents: 2 children aged 14 and 13.

Loans: Interest free finance on car e200 per month

Credit Card: e800

Rental Income: Property 1 - 1700 per month

Property 2 1450 per month

However, I haven't rented property 1 since last June and property 2 has just become vacant since last month - I find the stress of being a landlord too much. In property 1 - there have been issues with the water pressure in the area and despite adding a pressure booster - the tenants were on to complain about the pressure every couple of weeks - the property is very well maintained otherwise - and had a new boiler and kitchen three years ago.

Property 2 is old - needs new wiring now and plumbing - built 1962 - new fuse board but not new wiring. I love this house and would hope that we could move into it in the next two years or so after renovating it - which I estimate will cost e100k for rewiring, replumbing - installing gas heating, replastering, new kitchen, new bathroom, insulation and all new flooring and painting. Again, the last six weeks I spent every weekend with plumbers and electricians over in the house trying to sort out why the hot water didn't work - in the end it was working but the tenants said it wasn't and gave their notice - which was absolutely fine with me. The last tenants wouldn't let the gardener in to do the garden and it cost e1500 to redo it afterwards. I had letting agents both times - but felt that as soon as there was a problem they backed off and were terrified if tenant even so much as mentioned PRTB. I am a top rate tax payer and so pay top rate tax on all this!

Other income: maintenance of e940 per month from ex for children

Pension: very little - only back working in public sector since 2012. Took two years out before this and then worked part-time for another 8 years - part-time service wasn't pensionable during some of this time. Pension adviser reckons if I work full-time until 60 - started prior to 2004 - I will still only have pension of e5k form employment. I have bought back my UK State Pension and will have 30 years at 65. I have 15 years Irish contributions todate.

Life insurance: 600k with Aviva and 600k with BOI - 300K Inheritance Tax Policy - S.60 policy costs e152 per month - I find it very expensive. I think I am way overinsured. I also have death in service benefit and have income protection - 2/3 salary if I need it.

Health: Poor - autoimmune disorder which means I get very tired at times. Also, I have a strong genetic predisposition to two types of cancer - so may not live long enough for pensions.

Advice needed: 1) Should I sell this property - is finding it stressful managing two investment properties and being a landlord enough of a reason - I'm only going to sell one property and will always have another to rent if needed. Financial adviser has advised to keep both for pension - but for health reasons I feel I need to cut down on stress and I do find it stressful being a landlord probably because I work full-time and have tow children on my own.

2) If I sell property - should I buy back years of public service pension - would be 252k for 20 years and I could retire at 60, but I will have a shortfall as no State Pension until 65 when I can at least get my UK State pension.

3) Other plan - renovate house 100k - and put 120k into 10 year State savings and another 120k in 5 year State savings for my kids education - and buy shares with 50/60k remaining from sale.

Would really welcome advice as trying to destress and also not be so overexposed to property.
 
You absolutely should sell the two investment properties. You are clearly not cut out to be a landlord. Even if that were not the best financial idea, you should do it for your health.

elainem said:
Life insurance: 600k with Aviva and 600k with BOI - 300K Inheritance Tax Policy - S.60 policy costs e152 per month - I find it very expensive. I think I am way overinsured. I also have death in service benefit and have income protection - 2/3 salary if I need it.
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You have plenty of money and no mortgages, so you don't need life insurance. €1.5m is way too much. Get rid of all of it. The only peculiar thing about it is that if you took it out before you were diagnosed, it's probably good value. But you don't need it, so get rid of it. Your kids will be very well provided for when you die.

I don't know enough about the pension stuff. You need to consult an actuary to get advice on this.

If you have cash left over, invest in a broad portfolio of directly held shares. They don't complain about the heating not working or reporting you to the PRTB. While they will fall and rise in value, over the longer term, the return should be better than investment property. In any event, you have an exposure to property in your family home.
 
I agree, you seem to have nearly 1.4m in assets\cash and small debt. You do not need life insurance unless you have some reason that you think you do? If you cancel your life insurance and die the next day you still will leave a very big inheritance to your children. Do you have a will?

You don't need the hassles of being a landlord either I would suggest. Sell up and then get financial advice on what to do with all that cash. Live life and enjoy it there after.

Your children will likely be earning their own income in about 10 years time. You have enough assets to provide for them until then and their education.
 
You are over insured regards life cover but I wouldn't get rid of it all.

What is in the separation agreement with your ex regarding financial provision? Death in service in the public service is very low. Your estate will get 1 times salary. Is this enough to satisfy any obligations that you may have?

The Inheritance Tax life cover is there to pay for the inheritance tax that your kids will have on your death. It is something that you obviously wanted to look after for your kids, so why cancel it now?

If you are in poor health and think you may not even seen retirement, why buy back years? It will die with you. You can always max out your AVC's each year. When you get to retirement age, you can buy back the years then with the lump sum or invest in an ARF, which if you die young, can be passed to your kids.

But get rid of the properties if they are causing you hassle. Invest the money instead.


Steven
www.bluewaterfp.ie
 
Hi! Thanks to all of you to your advice. I'm going to sell one of the investment properties for definite. I have been a landlord for 13 years and I really hate it. I used the rental income to supplement my part-time income when the children were small. I had a S.23 property then so there was no tax due on them and I only paid tax at lower rate when due as I was working part-time - but 13 years of tenants and in the last few years working full-time has left me exhausted! Letting property has got some much more difficult, and ever increasing red tape. I made a loss on a property a couple of years ago so my investment property now would have CGT - another bonus to selling!

Steven - that sounds like good advice re AVCs and then an ARF - where does a public sector worker go to arrange AVCs that isn't Cornmarket? I can see the point of not buying back years - given mine and my family's history with the BRACA gene.
 
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