# Entered property investment mke in 2005 - Healthy Debt ?



## CelticReaper (16 Jan 2011)

Hi, I am new to this forum and hope it's the correct place for the following question.

I entered the property investment arena in 2005 so I paid close to top dollar for my investments. Based on the advise of a property investment consultant I release equity from my PPR at the time (since has become an investment property).  This release equity was used to purchase a house in dublin and a section 23 apartment (for tax shelter).

I was nervous at the time, but I trusted the advise I was looking long term (pension) so I decided to go for it.

Roll on 6 years to 2011. My situation is as follows:

Property 1 Mortg = 230K Interest only, Value = 220K
Property 2 Mortg = 160K Principal + Interest, Value = 140K
Property 3 Mortg = 170K Interest only, Value = cannot be valued.  Section 23 changes have killed this one.

To get to my point....  6 years on I have made absolutely NO headway. I have €560K debt, I am in negative equity, 1 property will not rent.  I am just about keeping head above water, only because the interest rates are low.

My fear, is that values will drop further, interest rates will start to climb.  There are no buyers out there and I don't seem to have a way out or light at the end of the tunnel.

I expect no one will have an answer for me.  But I would appreciate feedback  / guidance / encouragement from seasoned investors.

Thanks for your time


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## hippy1975 (16 Jan 2011)

Can you give some detail of the rent these properties are earning ?


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## CelticReaper (16 Jan 2011)

Property 1 Mortg = €1,000 per month
Property 2 Mortg = €650 per month
Property 3 Mortg = 0 for last 4 months. Lucky to get €500 per month before that.


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## millieforbes (16 Jan 2011)

Where do you live now? are you paying rent / mortgage? Could you live in property 3?


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## CelticReaper (16 Jan 2011)

Living in PPR, modest home, very small mortgage that I am hoping to have paid off by 2015.


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## Bronte (17 Jan 2011)

Can you give the full details for each property.  Value, mortgage, term,  interest rate, mortgage repayment amount, rent.  You need to post up all the figures in order to get good advice.  Where did you get the valuations from.  

In addition I recommend you do the full money makeover thread.  

You are very lucky you're first two properties are so close to mortgage to value.  We've all stepped backwards in terms of property value to mortgage amount.  Some by more than 50%.  Property two is making headway and will continue to do so as you are paying both capital and interest.  Property 3 I guess is the section 23.  Can you rent it for 400 or 300?  Where is it's general location (trying to figure out why it's so difficult to rent.  

Your observations on property prices are relevant but it only matters if you need to sell, in any case we don't discuss property prices on here.  Interest rates are likely to rise it seems.  Until you have all the figures you can't figure that out so you should add in details on whether it's a tracker/fixed and what bank.  As much detail as possible basically.


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## Bronte (17 Jan 2011)

Can you change your thread title, it's meaningless.


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## aristotle (17 Jan 2011)

Sell the first two properties at least and take a neg equity hit of 30k.

Do you have them advertised for sale?


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## Steve D (17 Jan 2011)

Have you thought about suing the property investment consultant for giving you bad advice?


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## camel (17 Jan 2011)

Steve D said:


> Have you thought about suing the property investment consultant for giving you bad advice?



I'm not in the legal profession but I wouldn't waste my time suing. How can you prove it was bad advise at the time? Even up to 2007, on the surface things looked ok.


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## zxcvbnm (19 Jan 2011)

Steve D said:


> Have you thought about suing the property investment consultant for giving you bad advice?



What kind of a comment is that? 
Do you really believe it's all someone elses fault and none of the ops fault?

He took the gamble so if he loses he must pay. 

And besides, do you really think the advisers haven't covered themselves legally?


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## Ravima (19 Jan 2011)

lets look at the thing positively.

2 are rented - why is the third not rented?  can you do something to rent this one? 

are the other two paying their way? If so, then perhaps you should hold. The one with the most income is on interest only - is the rent paying the interest and other costs? Is there a surplus - could you use that surplus to reduce the principal?

The second one would seem to be close to paying its way, as long as it stays rented. Could you reduce to interest only with your lender and then again use any surplus to reduce the  principal?

Its true that you are in neg equity and will probably be for a while, unless the properties are in urban areas, as these will take off first. 

the S23 one can reduce your taxable income, and with the reduction to 75% of allowable interest, you might be able to use it to your advantage.

There are plenty negatives to cause you sleepless nights, in common alas with many others, but there is light at the end of your tunnel. You are at least getting some income.

You mention that it was a pension you were thinking of. Did you take our a pension mortgage? Are you debt free on your PPR or where are you now living?


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