To sell and buy or keep and buy again

Hi all,

I own a two bedroom apartment in the South Dublin Suburbs. It is 1000 sq feet and two bedroom. When i bought the apartment the value was €520k and i put a very substantial deposit down on the apartment.

18 months later the apartment is worth €450k roughly. This is not a problem as the prices are relative.

My concern is that the first thing i lose is my equity in the apartment if i sell it.

Would it be wise if i could financially do it to keep the apartment and let it out. The rent will cover the mortgage and buy a house as my primary residence. I know nobody has the answers to this as it is related to the projection of the property market but is there anything i should be careful about irrespective of the trends of the property market?

I am confident that given time my investment will appreciate in value but i dont want to be caught out by not considering the differences between

selling the apartment now and buying a house
or
keeping the apartment and letting and buying a house

I hope this makes sense.

bagoftricks said:

My concern is that the first thing i lose is my equity in the apartment if i sell it.

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But you can then use the money to buy a chunk of equity in your new home presumably?

Would it be wise if i could financially do it to keep the apartment and let it out.

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If you rent now or before two years of ownership then a clawback of stamp duty will apply. There are obviously lots of other tax and other implications of renting out a former PPR and getting into the landlord business. These are covered at length in many other similar threads and key posts etc.

The rent will cover the mortgage and buy a house as my primary residence.

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This thread might be pertinent:

Interest only mortgage for investment property

selling the apartment now and buying a house
or
keeping the apartment and letting and buying a house

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And this one:

Sell home or keep as an investment?

The rent will cover the mortgage, but what happens if the apartment lies empty for a period of time, do you have the reserves to handle two mortgages?

plant43 said:

The rent will cover the mortgage

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I also meant to ask of the original poster meant the rent net of all taxes etc.?

Bagoftricks. I would be of a different opinion. There has never been a better time in the last ten years than now to buy a property. I think you would be best off letting out your apartment and buy a house to live in. This is the way one builds up a property portfolio. From what you have stated and without knowing the location, you should be able to let the apartment to a professional who will pay you good rent, especially to cover the mortgage and expenses.

Why do you seem to assume that (presumably) concentrating so much of one's overall wealth in a single asset class, geographic region and risk/reward profile is a good idea without reference to the specific needs ot the individual?

Ummmmm... Mercman, there's no logic in your position. Now that we have the benefit of hindsight over the last ten years, I think it's pretty obvious that ten years ago was the best time in the last ten years to buy a property - you'd have had eight years of growth in front of you (and houses were much cheaper than they are today).

Now, we don't know what's going to happen, but we know which direction it's been moving. So why on earth would now be the best time in the last ten years?

Folks

Thanks so much for all the advice, I really appreciate you all taking the time and effort to advise me.

I dont think i have thought this through properly and I need to sit back and review.

All the best
John

I understand those that are doubting.However, historically and that is all we can work upon, is that property prices continue to increase in cost and in value. Sure enough if we all knew 10 years ago what way the market was going to go we would all be smiling. But remember that most people in Ireland are working, and earning a decent wage. I agree that property is not a one way bet but in terms of assemling a long term asset porfolio the normal groups are equities or property. It is only an opinion I have offered - I don't work in selling property, although my main business is in commercial prop. Every man to his own view but I do recall living in the UK 15 years ago when it went pear shaped and I bought then.

mercman said:

I understand those that are doubting.However, historically and that is all we can work upon, is that property prices continue to increase in cost and in value.

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What planet are you living on Mercman?

Please read the OP again and come back to me.

xman said:

What planet are you living on Mercman?

Please read the OP again and come back to me.

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I fully agree with mercman.

He is clearly not suggesting over all periods but presumably referring to the average price the long term.

The OP doesn't in anyway provide evidence to contradict that.

qwertyuiop said:

He is clearly not suggesting over all periods but presumably referring to the average price the long term.

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Well that's great then. So even when prices are falling they're still rising.

I'll get my coat.

Xman, I have read the original OP again and again. I still stand by what I say. The main problem has been that property has been in the last five / seven years and easy route to make money for those who did actually nothing but buy ans sell. Property is a long term business and sure if one develops well fair enough they are allowed make a profit, but buying off plan to turn in a short period of time is what I would class as High Risk. Always take a long term view not a short fix situation.

Yet another thread ruined by mercman and xman bickering about this stuff in breach of the posting guidelines (11a).