Should I sell - Badly need advice!!

[Sarenco]

I have to say I found that analysis particularly useful.

With respect, far more useful that your analyses involving yields, which as we have discussed elsewhere, really add very little to the discussion.

Brendan

Well, with respect, I disagree!

If the projected net yield on a property is less than the cost of financing that property then the rate of return on that property is negative, before you even take tax into account - your own figures show that. There is really nothing magical about it and net yield is the standard way that professional investors express the return on a property. The net yield figure is easy to calculate and can be applied universally. You can certainly work up a pro-forma set out accounts if you like but you're inevitably making certain assumptions about an individual's tax position.

You can also extrapolate forward into the future if you want but you have to assume that rents, property values and mortgage rates remain constant. My only point is that the further into the future you go, the more these assumptions start to look "stretched". In my opinion, it is more meaningful to simply look at the projected net yield and the cost of finance today as the basis for making a decision rather than assuming that the various factors that feed into these figures will remain constant into the future.

Hopefully we can agree that trying to predict future property values, interest rates or rents is guess work at best.

 

[Branz]

If it is a loan which will be repaid then gift tax does not apply.

Its interest free so there is a Revenue implied benefit, of possibly 8% pa, so in fact, on mature reflection, the OP would be better off getting the future FIL to charge a little interest, maybe fixed at 0.75%

 

[Sarenco]

Its interest free so there is a Revenue implied benefit, of possibly 8% pa, so in fact, on mature reflection, the OP would be better off getting the future FIL to charge a little interest, maybe fixed at 0.75%

I would have assumed that the rate that Revenue would apply in determining the implied benefit would be 4.25% but perhaps not.

Another possibility would to defer making the interest free loan until after marriage and then splitting the loan between the FIL's son and DIL (on the basis that gifts between spouses are exempt).

 

[Marshian2015]

Thank you all so much for the time invested in to giving me advice on this! Thought about it A LOT over the weekend and whilst I know it makes sense to sell, I am going to let it out for one year and see where I stand after that. hopefully my mind will be more focused once I have made the move and realise the hassle of renting out a property that is earning money for the revenue and not for me!! Again, thank you all!!!

 

[Jen Xie]

We experience the same dilemma 5 years ago after bought a new house. It was an emotional tie with the old house so it wasn't sold but let out. Now looking back, I don't feel I like to move back to the old house any more and as you said, letting it out is making money for the revenue. Regret we did not sell it. When the property price goes up a bit higher, that will be the time to sell it.

 

[Sarenco]

Best of luck with your decision.

I fully appreciate that (perfectly understandable) emotional/non-financial issues come into play in making these decisions but, from a pure investment perspective, it really is all about the numbers and nothing else.

 

[Ben Irish Home]

Hi Marshain,

Talk to your bank and see if they will do you a deal if you sell. I never like borrowing from a relative - what happens if you fall behind - can breed bad blood however close you are.

If the rent is covering the mortgage i'd keep it personally. You might want to move back or they market might improve and get you back above water.

Re: the market. It gone flat this year over the Central Bank mortgage rules but it will start picking up again. There's not enough on the market and still buyer demand. And they are not building enough new homes so the market will rise again over the next 2-5 years, perhaps not at 2014's rate but that was unsustainable.

But I could see an apartment getting back to €250,000 in no time. There has been alot of apartment sales this year as buyers switched from going from the €300,000 - €400,000 house which they now didn't qualify for a mortgage under the new rules, and have instead been buying €200 - €300,000 apartments.

Can I ask where it is?