# Help with selling house decision



## martha (6 Aug 2020)

Looking for some advice please.

My husband will probably lose his job during the pandemic. The company he worked for have told him they will not be reopening in 2020 and it's proving difficult to find a new job right now. 

I earn 200 per week minding kids in my own house and I am very happy with that and have no plans to take on anymore mindees
or try to earn any extra weekly money.

Husband getting PUP 350
So we have 550 per week coming into our house at the moment.

2 kids aged 11 and 13.

We have a house which we own with no mortgage and rent out for 800 pm (below market value). This house is worth 300,000.

We have a 2nd house which we live in which has a mortgage of 70,000. We pay 500 pm.

We owe 18,000 in loans (car loan, home improvement loan)

No savings or pensions 

I think we should sell the first house, pay off the mortgage and put the balance into savings for kids college etc.

He thinks hold tight, he will get a new job eventually and we should keep the house as a sort of pension.

I hope this all makes sense. Should we try to get the call rolling on selling the house now (ie give notice to tenants) or scrape by and hope for things to turn around and life and earnings to go back to "normal"
Thanks
Martha


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## NoRegretsCoyote (6 Aug 2020)

martha said:


> We have a house which we own with no mortgage and rent out for 800 pm (below market value). This house is worth 300,000.



Seek to raise rent if it's not in an RPZ.

A realistic rent for a €300k house is more like €1500 pcm in most parts of country.

A very low rent that can only be raised by 4% pa will really reduce the value.


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## martha (6 Aug 2020)

Thanks. We are in a RPZ unfortunately. The area only became a RPZ in the last year or 2.


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## Purple (6 Aug 2020)

I'd be thinking along the lines of selling the house, clearing the mortgage, putting a lump sum into a pension (_edit: typo read mortgage_)and putting most of the balance into an investment fund for college fees etc.
Can you sell a house with sitting tenants at the moment?


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## Sarenco (6 Aug 2020)

martha said:


> We have a house which we own with no mortgage and rent out for 800 pm (below market value). This house is worth 300,000.


That really is a terrible return - the rent must be way under market value.

In your shoes, I would sell the rental, clear all your debts and put the balance in 5-Year State Savings Certs.


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## martha (6 Aug 2020)

Thanks. The market value is about 1200. We rent it cheap to people we knew would look after it for us and they have. I think you can give notice that you are selling since 1st August. I never thought we would need to sell, hence the reason I didn't worry about increasing the rent.


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## PebbleBeach2020 (6 Aug 2020)

Depending on when you last increased the rent, you should be able to increase much more than 4%. You can always increase the rent to say 900 or whatever is permitted subject to the RPZ rules and still only collect the 800 euro from the tenants. That way your house is rented to the maximum (for resale purposes) without impact the current tenants.


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## goingforgold (6 Aug 2020)

NoRegretsCoyote said:


> Seek to raise rent if it's not in an RPZ.
> 
> A realistic rent for a €300k house is more like €1500 pcm in most parts of country.
> 
> A very low rent that can only be raised by 4% pa will really reduce the value.


I don't get this... If you sell the house then the new owner sets up a new rental agreement with existing or new tenant,ie not governed by previous rental agreement with previous owner surely? I'm pretty certain if I buy a house in a RPZ then I'm entitled to set the rent at current market rent and increase by no more than 4% thereafter. What happened previously in that property is irrelevant, hence zero impact on sale price or market value


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## Brendan Burgess (6 Aug 2020)

Let's assume your husband gets a job.

Would that change the advice here?

I don't think it would.


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## RedOnion (6 Aug 2020)

goingforgold said:


> I'm pretty certain if I buy a house in a RPZ then I'm entitled to set the rent at current market rent


No. You're wrong.
If not you'd have landlords just transferring property between spouses to get around it.
Here's a summary: https://ipoa.ie/first-time-landlord-can-i-look-for-market-rent/


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## martha (6 Aug 2020)

It's a family home with 5 bedrooms and a large garden etc and it would more than likely be bought by a family to live in and not rented out.


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## goingforgold (6 Aug 2020)

RedOnion said:


> No. You're wrong.
> If not you'd have landlords just transferring property between spouses to get around it.
> Here's a summary: https://ipoa.ie/first-time-landlord-can-i-look-for-market-rent/


Thanks for that... Who'd want to be a landlord these days, obstacles everywhere


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## goingforgold (6 Aug 2020)

PebbleBeach2020 said:


> Depending on when you last increased the rent, you should be able to increase much more than 4%. You can always increase the rent to say 900 or whatever is permitted subject to the RPZ rules and still only collect the 800 euro from the tenants. That way your house is rented to the maximum (for resale purposes) without impact the current tenants.


So are you saying to declare a higher rent and pay more tax etc, but actually collect less rent from the tenants?  Also are you saying that you can increase the rent by 8% this year if you didn't increase at all last year?


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## PebbleBeach2020 (6 Aug 2020)

goingforgold said:


> So are you saying to declare a higher rent and pay more tax etc, but actually collect less rent from the tenants?  Also are you saying that you can increase the rent by 8% this year if you didn't increase at all last year?



Check out the rtb calculator. Put in yr last rent review. And it will tell u the maximum u can increase it to now. Then increase 4% every year without fail.

Re tax. If u rent for 1000 a month. And yr tenant pays nothing. Do u think the taxman will want tax from you for no income received. Of course not. Do if yr rent per contract is 1000 s d you collect it receive 800 a month. Yr income is 800 so pay tax on that accordingly.


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## goingforgold (7 Aug 2020)

PebbleBeach2020 said:


> Check out the rtb calculator. Put in yr last rent review. And it will tell u the maximum u can increase it to now. Then increase 4% every year without fail.
> 
> Re tax. If u rent for 1000 a month. And yr tenant pays nothing. Do u think the taxman will want tax from you for no income received. Of course not. Do if yr rent per contract is 1000 s d you collect it receive 800 a month. Yr income is 800 so pay tax on that accordingly.


Some great advice there, it's getting complicated to keep up with renting rules for a landlord but above is very useful


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## Introuble83 (7 Aug 2020)

martha said:


> Thanks. The market value is about 1200. We rent it cheap to people we knew would look after it for us and they have. I think you can give notice that you are selling since 1st August. I never thought we would need to sell, hence the reason I didn't worry about increasing the rent.


Are you renting it out to someone you know and not declaring the rental income to revenue? If this is the case you should probably sell before your taxes catch up with you .


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## goingforgold (7 Aug 2020)

This seems to be very much a case of asset rich but poor cash flow right now. You have a 300k asset and debts of 88k including PPR. So you have a net worth of 210k plus your PPR!  You shouldn't be struggling day to day with that wealth... So if husband doesn't get a job soon or if cash flow situation doesn't improve sufficiently then I would sell other house immediately... Life is too short. What is value of PPR... Moving into rental and selling PPR probably not an option to free up even more equity for long term?


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## LS400 (7 Aug 2020)

What age bracket is your husband, (may have missed that in the writing somewhere) guessing with kids of that age probably in the 40s. I wouldn't be to quick to sell the rental. Not a great return, but a steady one. Not to be over looked in this dysfunctional sector.

He will pick up something im sure of that. Maybe not the same income, but you guys are in a better position than most.  I would park the rental, (which is a bonus to have). Selling that would be the last resort when all else fails. Give it time and dont spook your loyal tenants, but start the increase in rent now. This is your pension of the future and will be difficult to replace when you need it most.


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## martha (7 Aug 2020)

We know them but we are 100% declaring it and paying tax on it. We weren't relying on the rental income pre Covid and most of it went in tax.

I'm 43, husband is 40

My husband worked full time in a restaurant as a manager on good wages and also plays in a band and does some solo gigs at the weekend and some week nights. He did a lot of weddings. 

Obviously we should have saved when we had the chance but we didn't. 

We can't really pay all of our bills at the moment never mind go out for a meal or a staycation but have a house worth 300k and it's playing on my mind a lot.


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## martha (7 Aug 2020)

PPR is worth 280,000.
We don't intend to sell though, we will live here forever hopefully!!


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## Brendan Burgess (7 Aug 2020)

martha said:


> We can't really pay all of our bills at the moment never mind go out for a meal or a staycation



Then it's crystal clear. 

Sell the house

Brendan


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## goingforgold (7 Aug 2020)

Completely agree with Brendan, you've a net worth of nearly half a million, which is far more than most, yet most live far more comfortably than you! Like I said in earlier post, life is too short... Sell up and live comfortably


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## goingforgold (7 Aug 2020)

martha said:


> Obviously we should have saved when we had the chance but we didn't.


Well you are early forties and have a mortgage free second house and a v low mortgage on PPR... You must have been saving at some point?


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## luckystar (7 Aug 2020)

Don’t forget there’s likely to be capital gains tax on some of the rental property once sold. I’d sell the house. An alternative is to sell the rental property, pay off PPR mortgage and ‘invest’ the balance on another rental. Somewhere that might achieve a higher rental yield. But TBH you might need the cash for the foreseeable. The covid payment won’t last forever. Far from it. And the restaurant sector not looking great, neither is the gig scene


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## LS400 (7 Aug 2020)

My opinion is that your jumping the gun, and selling is a keejerk reaction to a situation which is still relatively new to us all. A temporary net income of €550 is not that bad in your situation and you should be able to manage for a certain amount of time.

This is really where you give yourself a time frame and if finances/prospects have not improved, Then sell, but not now . At 40 years of age, and with hunger to get on the employment ladder, he will certainly pick up something. 

Finances have changed for a lot of people, there is a lot more on less money, with bigger mortgages who dont have the safety net of a mortgage free property to fall back on. Your cashing in too early.

You should be making this decision next year when the dust should have hopefully settled a bit.


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## martha (7 Aug 2020)

Thanks everyone for the advise. It's great hearing other perspectives. 

We know how very lucky we are to have the second house. It belonged to my husband and his sister and we bought her out. We saved a lot of our money pre-kids and i was earning a much higher wage than I am now. Also the house is worth a lot more now than it was when we bought it. We rented it out, moved away and got a mortgage for the house we live in which we now have 80,000 left on.
It's just in the last few years we haven't saved anything and just spent the money as it came in.


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## Thirsty (7 Aug 2020)

I'm with @LS400  on this.

When you have assets, you have options.

I do think you need to look at ways to increase your income and / or reduce your outgoings

If your partner has more free time, can they start a veg garden, keep chickens, bake bread?

Can you take in a lodger / student?

I understand you've said you don't want to increase your childminding, but if your partner is at home, would that weigh in the balance?

Definitely do up the figures on the rental & bring it up per the RTB calculator.

I think you are in a rough patch, but I'd get creative & work out a plan.


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## AlbacoreA (13 Aug 2020)

Another option is sell the house reduce debts, then buy a cheaper place to rent, and free to set market rent. 

But you might be better selling now and buying in a couple of years of the market falls or dips. Assuming you won't burn through the money.

Have you looked at the CGT?


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## AlbacoreA (13 Aug 2020)

LS400 said:


> My opinion is that your jumping the gun, and selling is a keejerk reaction to a situation which is still relatively new to us all. ....



There is that. But perhaps the OP can see a pattern of falling income relative to outgoings that's going back longer than the current crisis. The current crisis is the tipping point for many people and businesses.


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