# Advice appreciated: sell up or toughen it out



## aido71 (5 Jul 2011)

Hi All....not expecting magic answer but just wondering what others might do: quick synopsis.... bought invest prop about 5 yrs ago... now worth cica 170k mortgage outstanding c163K (invested about 80K of own money so that now gone south!)....20yrs left on mort 4.75%. Great tenant .... single mom with 4yro... considers it home...redecorated at own cost. So Problem: Initial rentcovered most of monthly repayment... was contributing about 175/200ish inaddition. This i didnt mind... intention was long term investment ... however as interest rates rose and rents reduced we now find our monthly contribution up to about 450per month. (had to reduce rent other properties much cheaper around and as i said solid tenant). I am now wondering if i should just try and sell and suck up the loss as a bad experience or hang on in there and ride it out. We have 2 well paying secure jobs and own home mortgage complete in about 3 yrs or so (being overpaying from start). This will free up about 1200euro per month. On one hand doesnt make sense to throw good money after bad but if we can hang on what do you reckon? also a bit fearful if tenant got wind of intention to sell she would bail and i could be stuck with a property i may not be able to sell or even rent!! I know lots others in worse situations but any advice be appreciated....... oh to have listened to my wife 5yrs ago and put the 80K in our home mortgage... but no i knew better!!!!  Thanks


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## niceoneted (5 Jul 2011)

On the face of it and for your situation as you say I would ride it out. Things will come back round even if it takes 20 yrs. As you said your intention was long term. 
Big question is can you afford the €450 a month now and for the next 3 years until your mortgage is free. Another option would be to lengthen your own mortgage out for 5 - 7 years and use the money you free up to pay the additional needed on the rental property. 
It could take you a long time to sell. You will have lost your 80k forever. You fear tenant might bail.
It sounds like the tenant will be there for the long haul which is a major bonus. No guarantee though but it sounds it. 
SO again I would ride it out, It can be your pension fund in years to come.


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## mradaly01 (5 Jul 2011)

If you are not under too much strain re mortgages, then I would toughen it out... you are in a good position - great tenant, few yrs left in own mortgage... things will hopefully change for the better in the next 5+ years... keep telling yourself "long term.. long term"... & but the wife a bunch of flowers with a card that says "Ya, you were right all those years ago..."  Good luck with it...


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## onq (5 Jul 2011)

You tenant sounds like a dream.

There are several scenarios that could cause concern.
- tenant finds a nice someone and moves out and moves in with him.
- tenant finds a foolish someone who moves in with her and starts thrashing the place.
- tenant's financial position improves or dis-improves financially and they have to move out .

The landlord's dilemma.
There is no easy solution here.

We are precluded from commenting on house prices on AAM.
However, it was reported on RTE recently that house prices were starting to rise in the Dublin region again.
A minor increase to be sure, and perhaps not one to base a long term strategy on, and it could be a glitch, but I view it positively.

ONQ.


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## Nige (5 Jul 2011)

Presuming the €450 per month figure includes all the costs (including tax, nppr charge etc), it is costing you €5,400 per annum to keep this investment (at current interest rates).

If you cashed it in now, you'd get about €170k.

So, the question is whether in 5 years (or 10 or 20) you think you'd get more than 5 x €5,400 plus €170,000 plus the interest you'd earn?


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## niceoneted (5 Jul 2011)

If you cashed it in now, you'd get about €170k.

Nige this would not be the case as they have a mortgage of 163k to pay back.


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## Greta (5 Jul 2011)

If you bought the property as a long term investment and not in the hope of making a quick gain, why are you thinking of bailing out now? 

Long term house price falls, interest rate rises and rent reductions are only to be expected somewhere along the way. The key question is whether you can afford to ride them out and it's clear that you can, from what you say. 

The risk of losing the good tenant and still being unable to sell is a very real one, so ride it out, that's my advice.

I am in a somewhat similar situation re my previous PPR in the UK. It wasn't meant to be an investment property, though, but when we had to move, we couldn't sell it and eventually rented it out. Now we have good tenants and are reluctant to risk losing them, if we try to sell, as there is no guarantee we'll succeed. I really don't want the house to be vacant for another year, as before, so I keep renting it out


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## confusedude (6 Jul 2011)

I think the point about the good tenant is the most pertinent.


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## badbrian (7 Jul 2011)

Am in not too dissimilar a position myself. We grew out of our apartment and after initially trying to sell it (in hindsight at too high a price) we decided to rent it. 

Between the shortfall on the mortgage payments, tax, and the various other charges it now costs us about €800 a month. But that is only just more than the amount we are paying off the mortgage each month so in a sense one could consider this payment as part of savings (more likely just paying off the monthly depreciation in value).

We asked a local reputable agence who had sold an apartment in our complex and I was told that if I had a good tenant to hold on because it is difficult to sell with a tenant in situ and the apartment they had sold had only had 3 viewings and to paraphrase I was told they had caught the one fish swimming upstream. 

As my tenants are excellent that is what we have decided to do. 
However to keep my options open I am planning on doing some improvement work in case I do have to sell. I will be allowed 15% of this against my tax liability for the next few years.


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## aido71 (7 Jul 2011)

Thanks all.... I think just getting disillushioned with whole financial mess the whole place in..... and doing a bit of "what ifs.".. again practical wife is pragmatic as in no point whinging we are where we are and just get on with it. Tenant as i mentioned... considers place home.. daughter about to start school 200 m away... has bf but no immediate plans re marriage etc (so she says).... have always had good landlord/tenant relationship with her.. (my wife deals with this)... We can weather the costs overpaying by about €800 on own mortgage so have safety net. I know best option is to hang on and see where it goes... think i just needed to hear it from a few others! I know we in super position compared to others.... good jobs secure etc ...just disheartening to see costs and taxes constantly go up...anyway thanks for input... helps cheer me up as i look at our stunning summer weather!!!


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## ardman (11 Jul 2011)

Not too diissimilar position. Coming to the of a 3 year fixed rate and was tempted to flog the house but I do not know what the house is worth or how long it would be on the market. Its impossible to know the difference between asking price and the actual selling price. I paying €570 of mortgage myself. I have decided to use some savings to pay off a lump sum so repayments will reduce and will have more cashflow in the household. I also have a good tenant. I have decided to stick in there and look forward to the day when the income from the rent covers the mortgage.


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## Complainer (11 Jul 2011)

ardman said:


> look forward to the day when the income from the rent covers the mortgage.


You might be waiting a while. If the tenant could afford to pay rent that covers the mortgage, they'd be paying their own mortgage, not yours.


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## the pops (31 Jul 2011)

In a similar situation myself. Have worked out that with everything included (NPPR, Management fees, etc) that the property is costing me 6k a year.  My monthly repayments to cover the shortfall on the mortgage are about 250.  I know it is not as bad as it could be but I am on a low wage (changed jobs after company went bang) and it still takes a lot of effort to continue making these payments.  I have been very tempted to try sell and work out a deal with the bank for the shortfall, which I figure would probably be about 50k, but for starters nothing is selling and the thoughts of spending all my money paying off 50k for nothing is nightmarish.

Anyway my tennants have been in 3 years and have agreed to sign up to another 2 so I am just going to leave well enough alone and hope for the best.


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## niceoneted (31 Jul 2011)

The  Pops, 

If you look at it this way - if you sold the place and had to pay the bank the 50k that is just a little more than 8 yrs of paying the 6k a year you are already paying but you would not have the house. By paying what your paying even if it increases over teh years you still have the propoerty. In 8 yrs hopefully things will have turned around. It sounds like its a good house as you have had the same tenants for 3 yrs and a further 2.


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## Greta (2 Aug 2011)

If your tenants have signed up for 2 more years, you are right to leave it as it is. 

Also unless your mortgage is interest only, part of your 6K a year cost actually goes towards paying off the capital, so it is a sort of deferred savings.


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