# should we sell rental properties



## saintstephen (31 Mar 2010)

I posted 2 years ago.. 
http://www.askaboutmoney.com/showthread.php?t=75760 
I had already realised it was naive to get caught up in the property thing but with all the bad news lately we are starting to really panic, hopefully we can get some advice here.

*Age:* 37
*Spouse’s age:* 34

*Annual gross income from employment or profession:* 37k net
*Annual gross income of spouse:* 9k (hopefully about to get a part time job for another 9k net)

*Type of employment:* private sector

*In general we are:* saving... slowly

*Rough estimate of value of home:* 230k (house on our road has been reduced to 310k, so I think this is realistic)
*Amount outstanding on your mortgage:* 30k (48months @ 676.24)
*What interest rate are you paying :* 3.69% TSB Variable

*Other borrowings:* None

*Do you pay off your full credit card balance each month:* Yes 
*If not, what is the balance on your credit card:* 0 

*Savings :* 3.5k TSB current acc. 3.5k Credit Union

*Do you have a pension scheme:* I do 70/month since 1995 now worth 11.5k 

*Do you own any investment or other property:*
2 x 2 bedroom townhouses

House 1 ; worth ?? 130k ,mortgage for 127k, interest only (variable rate) with first active until Jan 2011 it will then go to a 20 year term. Repayment 417.72/month. At present rented €150/week.

House 2 ; worth ?? 130k (it is end of terrace, one of the terraced houses is for sale @150k but no interest) mortgage for 144k, interest only tracker rate +1.25 above ECB until Nov 2011 it will then go to a 20 year term. At present rented €150/week.

We have 1k in rental account with house insurances just paid for the year. It was a lot more but one couple, very poor tenants wiped us out, they are now gone and a case is pending with the PRTB but they have no assests and we don't believe we will get any money out of them. 

We now have good tenants in both houses.

*Ages of children:* 11 & 14 (birthdays coming up)

*Life insurance:* to cover mortgages + extra 100k


*What specific question do you have or what issues are of concern to you? *

I spend a lot of time worrying, mostly about what to do with the rental properties. I know we have all our eggs in the Irish property market which is now in the toilet. Its hard to listen to the constant negative news.

The original plan was to pay off our home mortgage in time for the rentals to come off the interest only, but we had to take pay cuts and we will now not be ready in time.
Our new plan was to approach first active in November 2010 to ask if we could continue the interest only until our own home mortgage was paid (another 3 years) or to extend the term from 20 to 30 or 35 years.

The alternative is to try to sell one or both of the rentals, but we would be taking a big hit and I feel we could risk the good tenants we now have and be left with a house that doesn't sell and no tenants.

Regarding our other finances, my wife is hopefully about to get a part time job which will bring in another 9k net. We have just bought a renault kangoo for €700 and hope to sell the gas guzzler jeep (would be delighted with 3.5k for it). We have cancelled SKY and cut back on our living expenses except we had a family holiday in March which we had committed to.

I was left 20k by my gran who died 2 years ago. It was to be given to me after the sale of her house but that sale has been held up due to a planning issue. If we recieved this money we would be OK because we could nearly pay off our home mortgage in time for the capital payments of the rental properties. It could be a long time before this is sorted. 

Our own home is really nice, it is fully finished inside and out and we can be happy here for a long time.

My main questions are..
1. Does it make sense to continue with the rental, we had always intended to hold them for 20 years but with all the terrible news coming out I am starting to loose my nerve. 
2. What are the chances of first active agreeing to extend the interest only or the length of the capital mortgage. I do not intend to approach them until November 2010 should I talk to them sooner.

I know we are in a good position compared to some at this time and am grateful for that. I have always been in a position to pay all bills but the stress of worrying about the future is starting to effect the happiness of my family.


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## z104 (23 Apr 2010)

If you have good tennants and the rentals are paying their way then I personally would keep them. If you try to sell them now then you will have to show the house with your tennants permission. This will annoy them as strangers will be poking around their home. Assuming you can sell them you will be selling at a time when people have lost their appetite for buying investment properties. Your pension contributions are low in my opinion so I would think your plan was to use the rental properties as a pension.

You do not have lifestyle debt and you appear to be on top of things financially. Your mortgage on your PPP is almost paid off.

I think alot of people would envy your position.


If you are stressed about what might happen then only you and your wife can decide. If it's too hot in the kitchen then maybe you should get out but saying that it "appears" that the worst of the recession has passed and that unemployment has levelled out.


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## saintstephen (23 Apr 2010)

Thanks for taking the time to reply. 
I do realise we are lucky, there are some people in a really bad fix. 
I know that no one can forecast what will happen in the residential market, I suppose I just don't want to throw good money after bad, and needed a couple of opinions. 
We have decided to hold on, we had always intended to go long haul with them, it was just the fact that our income has dropped and all the uncertainty around we were/are panicking.
My wife got the part time job, at the moment 12 hrs a week but hopefully will be more and the Jeep sold !!



> If it's too hot in the kitchen then maybe you should get out


 I've no choice but to stay in the kitchen..... I'm a chef.


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## Fiskar (23 Apr 2010)

The worst of the recession should be past, I think you are in a good position for the long term and should hang in there. In similar position myself.


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## z104 (26 Apr 2010)

I'm also in a similiar position . I have good tennants and the rent is paying the mortgage.

I was tempted to sell up too but have decided to hang in there. I'm becoming acclimatised to the heat.


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## saintstephen (27 Apr 2010)

Thanks for the replies, comforting to know we are not alone.
Its really the fact that the houses will be coming off the interest only in Jan and Nov next year that had worried us, at the moment it will take 3 more years to pay off our home mortgage, (if we recieve the inheritance this will not apply) 

What are the chances of First Active allowing us to remain interest only until then ? 
When is the best time to approach them ? we thought November.
Will house 2 remain on the tracker after the interest only ends, I've read the mortgage statement and it does not say ?

I realise that only the bank can answer these Q for definite however would just like to get opinions or experiences.


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## naepfchen (27 Apr 2010)

With 300000 houses uninhabited and abounding in Ireland, that leaves very little prospects in terms of the future of property growth potential in Ireland.  What makes all the difference is the location of the home/s.  If it is in a central position in a big enough city then all should be well, and even the value of the property should not sway too much in the bottoming out of the 2008 - 2009 property market crash.  Prior immigrants who would have paid rent towards the mortgages of these homes all readily leaving Ireland makes the situation all the more bleak for people considering letting out their homes.  To be honest, I'm unsure about the housing market's future in Ireland for years to come and would perhaps carefully consider selling and taking a drop in profit and perhaps look for property with more profit development potential overseas.  But you've described your personal circumstances there, and it's best to look at it from that point of view than my more general take on the whole subject.  But for myself, I'm not inclined to invest in rental properties any time soon in Ireland.  Different to your take I know, but something to consider when looking generally at the subject.


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## saintstephen (27 Apr 2010)

There is a lot of uncertainty around esp with interest rate rises expected but posting here has made us focus a little better, we are going to hang on and ask for an interest only extension if needed.


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## saintstephen (22 Dec 2010)

Just wanted to update,

This week we got an interest only extension for a further 2 years on house 1, house 2 is up next November 2011 and if needed we can apply for the same extension. 
We have now got good tenants in both houses on long term leases.
Our savings have increased because my wife got a promotion.
Our home mortgage is now down to 24k so we should have it paid off when the rentals come back on stream.

Thanks for help


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## PaddyBloggit (22 Dec 2010)

Excellent news ... thanks for the update!


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## PaddyW (23 Dec 2010)

Good work st stephen, well done


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