Investment Property-keep or sell plus security query

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I bought an investment property in Limerick back in 2003 - Suburban 3 bed semi.

Our current private residence was not required as security for the loan.

The house has been constantly rented out since then but rent only covers about 70% of the mortgage. Still about 17 years of loan to go around 120k.

Debating whether to sell it or not. Will obviously take a hit but would expect to clear the loan anyway. If present tenant goes would have to spend a fair few bob doing it up a bit.

Advantages of selling would be, no more costs such as €200 gov chg, insurance, bins, no more mtg payments.

Question-If tenant leaves and we cant afford the mortgage,what happens?

Can you just tell the bank, sorry we cant afford it anymore and they repossess the house? obviously I assume we might have prob getting future loans. thanks

any feedback appreciate. thanks
 
I'm not sure but I'd presume they'd make you declare bankruptcy and pursue you through the courts for whatever you owe them, if you refused to pay them and tried giving back the keys. They wouldn't just let it slide.
 
thats what I was thinking. so basically when they don't take any security for the loan it means they can go after you for everything you have.

my loan don't finish until I am 72 so dont think I will be earning enough to pay the mortgage back then!

em! Will probably flog it getting sick of doing the councils job for them providing accomodation to people and getting screwed for doing it. ie. yearly 200, Private tenants board thing,tax and various headaches re maintenance etc.. push comes to a shove i will approach the HSE to buy it...
 
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You bought the property as an investment the €200 gov fee, PRTB board, dealing with tenants, doing a tax return, is all part and parcel of doing just so. Had you not looked in to and researched the whole thing before purchase. Were you looking at long or short term investment at the time of purchase? I suspect short in that you would buy it and flip it in a year or two and make a profit or as happened not.
 

They did not exist in 2003.
 
€200 gov fee is not really such a lot, though it may go up of course. PRTB is tax deductible and is only €90 per tenancy (or per 4 years, whichever is shorter), which, again, is not such a lot to bail out of the investment. Everything else - dealing with tenants, doing a tax return, refurbishing the property in between tenants, repairs, insurance, bins - was there in 2003.

OP, just crunch your numbers to decide what is best to do, bailing out of the investment simply out of frustration that it's not going as you'd like is not a good idea. If you want to sell or rent after the current tenant leaves, you'd better refurbish the house anyway, do you have the money for that? If not, I'd suggest you start saving specifically for that NOW, while you still have your tenant.
You should also try to save an emergency fund, to pay the mortgage for a few month at least, if the tenant leaves.
 
Thanks for feedback.

The standard mortgage I have is fixed until autumn next year so may tip away till then and I have been paying it off for eight years including interest etc...so all is not bad I suppose.

Actually I think I am a good landlord and don't mind most of the stuff, I think its just the way things have gone in the country lately.

Also I think small inexperienced investors such as me were conned by the government policy in getting involved in property. Shades of Eircom shares I think! In my case for example why did the bank give me a loan which wouldn't be paid off till I was 72! Simple - because they thought the prices would keep rising.

I bet there are loads of investors in my position. The banks should do a deal with investors- say u owe 100k, settle the debt with 50k cash for example with clauses built in when selling the house later that any profit over an agreed price goes to the bank but obviously not more than you actually owed them before. probably not very well put ,but you know what I am getting at.
 
You must have thought prices would keep rising, otherwise you wouldnt have bought, a lot of folk lost money on eircom shares, but those who sold early made profits, same with property, its all about timing,reading the market and knowing when to sell. As you bought in 2003 neg equity shouldnt be too bad and you should have some of the principal paid off. Its no use blaming the banks and government, no-one forced you to buy
 

This thinking is quite extraordinary. How were you conned?
 
In laymans terms this is situation.
Bought house in 03 for 175k
Standard investment mtg fixed at moment for next 18 months
Owe at mom around 120k
Rental income is only 7800pa
mortgage payment is 11880 pa
another 16 yrs left.

i think makes sense to offload what do ye think?
 
I am wondering how the rental income is so low, as I am currently renting a 2 bed apartment in Limerick at €7,200 per year. What area is it in? Is there any way you could increase the rent (e.g. through a refurb etc.) as if you could increase the rent more in line with the mortgage it may make more sense to hold onto it.
 
Hi,
A lot of folk lost money on eircom shares, but those who sold early made profits, same with property, its all about timing reading the market and knowing when to sell. As you bought in 2003 neg equity shouldnt be too bad and you should have some of the principal paid off.
 
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