Rent not covering mortgage

niceone said:
After 5% I can afford to subsidise but is that the prudent thing to do ???
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If your purchases were for long term investment and you can afford the increased mortgage payments then I would ignore movements in the property market and focus on the long term plan. If your purchase decisions were based on shorter term speculation of capital appreciation then you should make a decision now based on whether you think the factors that prompted you to purchase in the first place still exist.
 
You assume a property market with 5% annual growth so in real terms prices remain almost static given where inflation is. Moreover, these properties are barely producing any income and may soon become a cash drain - in sum limited capital appreciation and negative income in hardly a winning investment strategy.

Could you sell one and use the cash to reduce the LTV's on the remaining two?
 
whathome, you have made a comment about my writing style. What's all that about? Is that what people do on here because I don't see much of it going on? I'm glad to see that you have offered some fairly healthy advice too.
 
You assume a property market with 5% annual growth so in real terms prices remain almost static given where inflation is.
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For most people, their equity in the property in the property will be less than the value of the property so, if my assumptions are correct, they will still be making money in the above scenario. e.g. Property Value €100k, Mortgage €60k = equity of €40k. A 5% increase in the property is then the equivalent to a 12.5% return on equity.
Simple example I know - other factors are - cost of funds and maintenance vs rents received... a fall in property prices etc.
As a long-term investment I would include Irish Property in a balanced portfolio as I personally would not bet against it over the next 10 years - personal choice though.
 
Niceone,
It is probably worthwhile talking to a financial advisor about your options. Consolidating loans would seem to make sense if you are in it for the long term. Personally, I would look at selling at least the worst performing property. Would be worth talking to EA's in the area also.

P.S. We sold our home in late summer and are planning to rent for another 18 months or so to see how the property market and our family life work out. Have'nt regretted it so far. If your properties are in sought after locations, you will probably be ok in the long term. We are happy to rent in a location convenient for work and family life, so there should always be a good rental market for well located properties.
 
Niceone , what in gods name do you need 3 investment properties for?
With people like you jumping on the rising house price bandwagon, it`s no wonder first time buyers can`t afford a house.
Now you are moaning because the rent won`t cover your mortgage.Do you think you have a god given right to get your properties paid for by renters.
What about selling 2 properties and maybe paying off some of the mortgage in the remaining property.
Don`t forget about the stock mrkt..up 28% this year .....oh yes it`s called having a diversified portfolio.
 
Sunrock, welcome to this thread.

Sounds like you're the one that's moaning, I am looking for advice from like minded people. I was once a first time buyer and took the risk to invest my money, time and energy so that I could improve my lifestyle and security for the family.

Your suggestion to sell one and keep three has already been put forward. This is workable but perhaps not the best move if the property is still appreciating in value. Nonetheless I must consider this.

Good to hear your stocks are up 28% this year but not relevant in this discussion. Thanks also for clarifying the term 'Diversification'.
 

Can't understand this attitude. The country needs landlords who are dedicated and in it for the long term to provide rental properties for people who might choose to rent.
 
Sorry about my rant.Of course we need landlords even thought i like to criticise them....maybe i am envious. Don`t unfortunately own much stocks but everyone should consider diversifying their assets. What would you do if there was a property crash..your situation would be much worse.
 


welcome to credit crunch....
interest rates to rise further and inflation errodes the current capital appreciation gained, if we take that house price rises have stalled....

so you lose 5-6% of your currnet capital appreciation per annum as well as what you forgo in interest earning deposits on this amount, as well as your shortfall...

it's time to take profit and bank!
 

Exactly. This is why so many investors don't make nearly as much money as they should - they don't know when to sell.

I know a few that hung on to small cap tech stocks in 2000, hoping they would bounce back. They ended up handing back all they'd gained in previous years. I know some people will say "Ah, but it was obvious tech Stocks were overvalued", but there was still plenty of bullish stuff around in the media at the time, just like today with the property market. The parallels are spooky to say the least.

What makes the property market even worse is that it is illiquid. Many investors seem to think that when the downturn comes they will just sell up and bank their profits. Sell to who exactly?

A lesson for anyone holding an illiquid investment: Always sell into strength, otherwise you probably won't sell it at all.
 
Niceone, there has been some good advise listed above. Unless property increases by more than 5% this year in relative terms you shall be losing money even if you make a small profit with your rental yields.

Diversifying the risk might be a good option.

European shares and Irish shares have been performing well and will continue to perform well over the next 12 months. Irish & English banks have been undervalued and in my opinion its there time to come good. Investing in oil or commodity companies was yesterdays news, banks and finance related shares are steady earners.

Even if you put the money on deposit if you sold your properties would give you a greater return at the moment.
 
Perhaps it might be a good idea to sell off the poorest performing property, what sort of profit would you make on the sale of it?
 
Raskolnikov said:
Perhaps it might be a good idea to sell off the poorest performing property, what sort of profit would you make on the sale of it?
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stop talking madness man...property prices only go up, or at worst....a soft landing..

you are all heretics ;-)...questioning our heritage, our irish mantra..
 
Thanks again for all the responses !! There have been over 3,000 viewings of this thread so far. This confirms the subject 'Rent Not Covering Mortgage' is one of high interest (forgive the pun) at the moment.

If I could ask for a show of hands I reckon the majority would favour selling 1 if not all 3 properties. The property pundits would be in favour of riding the interest hikes and having something VERY valuable in 20 years (even with short/medium term negative returns)

And as one man said to me at the bar "We're here for a good time not a long time" I might sell the whole *ecking lot and go a little mad

But seriously, I am favouring the stop loss strategy and getting out of property while I am making profit. Thanks again for your advice.
 
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