# Rent or sell and invest?



## smarts (12 May 2017)

I'd appreciate people's thoughts on whether I should sell or rent out my Dublin city apartment.  My situation is that I am unable to work at the moment due to ill health and I plan to move abroad in Sept. I expect to come back in 2-3 years but this could end up being sooner or much later, it's depends on how things go.  

The various figures are:
- apt valued at 295k, 70k mortgage (0.6% interest)
- potential rental profit of about 4K based on rent of €1700 (mortgage €700 per month, tax at 20%, letting fee 8%, management fee and property tax of 2k)
- savings 60k
- living costs abroad 12k annually

I had initially planned on selling and investing the money, however, after realizing how high rents have gone I am considering letting it out. Figures wise it looks good in that I cover my mortgage and make a small profit. My savings give me a buffer for rental problems however I may need this if I continue to be unable to work.

My concerns are mostly around the current discussions about how bad it is for small landlords i.e. high tax, problem tenants, maintenance costs etc. as well as the risk of a fire safety issue coming up similar to other Dublin developments. Re: tenants, I am concerned that the current market conditions could lead to increased levels of tenant disputes .

I have analysis paralysis, should I just relax and go for it or get out and invest in ETFs instead?


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## Protocol (12 May 2017)

To calculate rental profit, you deduct interest from the rent.

75% of mortgage interest is allowed as a deduction.

You don't deduct the mortgage repayment.


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## SqueezedMiddle (12 May 2017)

You don't have to look far to see all the landlords who stuck it out in the hard times finally throwing in the towel.
I'd sell and buy equities.
Ifmyou rent it you might never get it back at the rate our minister is going.


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## Brendan Burgess (12 May 2017)

Hi smarts 

It's fairly clear to me that you should retain your apartment and rent it out. 

This guarantees that when you return to Ireland, you will have a place to live. 

If you sell and house prices and rent rise dramatically in your absence, you may find it very hard to get equivalent accommodation. 

There are also huge other advantages. 

If you are in receipt of social welfare, your home is ignored in any means testing. If you had €225k in equities, it would affect the amount you get. 

I agree that the environment for renting is terrible, but the main problem has been for existing decent landlords who were renting below the market rate. 

So rent out the apartment and charge as high a rent as possible as you will be able to increase it by only 4% a year. 

Brendan


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## smarts (12 May 2017)

Protocol said:


> To calculate rental profit, you deduct interest from the rent.
> 
> 75% of mortgage interest is allowed as a deduction.
> 
> You don't deduct the mortgage repayment.


Thanks Protocol. So rental profit then is 12k which is a yield of 5.5% which is pretty good.



Brendan Burgess said:


> Hi smarts
> 
> It's fairly clear to me that you should retain your apartment and rent it out.
> ..............
> ...


Thanks Brendan, I think you are right and hopefully I can reduce some of the risks by using a good agent and keeping on top of rent increases.


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## smarts (15 Apr 2021)

Thought it might be of interest to post an update on how this worked out for me.  I ended up renting out my city centre apartment, seemed fine to begin with although it was very difficult to find a property manager.  However, the tenants ended up leaving after 18 months or so and due to the rental crisis and high rents it became impossible to find new tenants, most people lied about their income/job, lied about the number of people moving in etc.  Also the property manager turned out to be hopeless and the place was a state after the tenants.  Reducing the rent was not a good option as it impacts the value if selling to an investor.

So in the end I sold and now I am investing a portion of the money in the stock market through a low cost online broker, which so far is straightforward and way less stress.  I have some expertise in tech so figured I should put that to use in stock picking.  I've bought 25 stocks and my portfolio is up 5% in a month, not bad, will see how it goes long term.


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## Lockup (19 Apr 2021)

So with the ball of money from the sale why did you go the stocks options. I presume you looked at deposits and said nay. Also when you decided to invest what was the requirements you gave yourself in terms of investment and spread


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## smarts (19 Apr 2021)

Lockup said:


> So with the ball of money from the sale why did you go the stocks options. I presume you looked at deposits and said nay. Also when you decided to invest what was the requirements you gave yourself in terms of investment and spread


Yes putting it on deposit is not really an option.  I looked at ETFs but the exit tax is too high and I don't want to pay high fees to a fund manager etc.  I generally just aimed to have a diversity of sectors and regions and balance the risk levels by having a mix of small/large cap, high growth, value, industrial etc.  I'll track my performance and see how it goes, may end up handing over to a professional if I don't perform well.


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## OMG_OMG (22 Apr 2021)

smarts said:


> Yes putting it on deposit is not really an option.  I looked at ETFs but the exit tax is too high and I don't want to pay high fees to a fund manager etc.  I generally just aimed to have a diversity of sectors and regions and balance the risk levels by having a mix of small/large cap, high growth, value, industrial etc.  I'll track my performance and see how it goes, may end up handing over to a professional if I don't perform well.



I handed a wad of money over to Warren Buffet


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## cremeegg (22 Apr 2021)

Thanks for coming back, it is always interesting to see how things work out.

You considered selling in May 2017 at €295k, you eventually sold something more than 18 months later. 

The question that arises is not how did renting work out, but what happened to the selling figure.


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