Sell or Rent

Hi Folks
We have benefited from the kind and insightful knowledge of the pin over the past few years and are very grateful to all your help!

I am in the process of moving away from Dublin for work commitments with the 2 sprogs and the OH. We are after gutting a 3 bed semi in Churchtown, D14 and renovating it to a high standard that we planned to live in for a number of years as was planned however job opportunities etc avail!

What I am wondering the best course of action is to Sell the gaff now as there appears to be quite a lot of interest at present or wait a year and settle up the country renting for a year anyways was the plan. My fear is (not being greedy about it) is that allthough we hope to clear the mortgage on what we paid for it in 2011 and the monies borrowed we would not be walking away with too much dosh to start afresh up yonder!
Would you hold on for a year renting it out covering the mortgage and loans etc on it and then put it on the market next summer or sell now as there appears to be lots of cash buyers out there also allowing for the recent Standards and Poors report outlining that there is going to be an influx of housing stock on the market due to new central bank rules regarding repossessions further reducing the housing price in the short term.

Not too sure what to do and would be interested in your input!

Yours as ever MR T!

Usually these are intractable questions. However in your case you have a fixed timeframe – sell now, or sell in one year. In my opinion, you can answer that by deciding what you think is going to happen to the following over the next 12 months:

  • Unemployment
  • Tax rates
  • Government spending
  • The deficit
  • Repossessions of the 70k properties in arrears

Of those, only govt spending is likely to support higher property prices in the next year, and even that will be a temporary giveaway budget before we enter Bailout 2. But form your own opinions on those factors, and good luck with the move.

Plenty of timewasters out there checking what they can get for their house, why don’t you join them and make a decision then.

What would it cost you? 400-500 in EA fees?

How likely is it that you would move back in the next couple of years? Do you really want to be a landlord? Will it be wrecked when you come back to it? These are the questions I’d be asking myself, not whether or not the market will go up or down - you wouldn’t care about the latter if you were using the house, so why get bogged down in what ifs?

I’d be inclined to rent the property out for 1 year, but I’d be wary of expecting prices to increase much in Churchtown. Prices already seem high for what are very ordinary houses in an average Southside area.

Perhaps it’s worth weighing the option by looking at the monthly rent as a ratio to the sale value? As a family home, a ratio of less than 200:1 would suggest to me that the property is undervalued relative to it’s rental yield, while a ratio in excess of that would have me thinking that it might be better to sell. Just my 2 cents.

Sorry not sure what you mean by ratio of 200:1. At present rentals for similiar prop are going for 2000 per month. How would I work out the expecting selling price. I agree also about average area that churchtown is but seems to be kicking abo e its weight in the past 6 months!

Well, if you reckon it’ll rent for 2k/month then I’d say a fair value for it as a family home might be 400k. If you were to say that you could sell it for 480k, I would be inclined to think that you should sell immediately, while if you could only sell it for 320k, I’d be inclined to rent it out and consider your options again after a further year.

The only way to figure out it’s actual sale value is to look at the Property Price Register, or by putting it to the market.

My 2 cents, and I’d be interested in other opinions on this.

What will your net rent surplus be after expenses and taxes? (A lot of the responses above ignore the tax which could be 50% of any surplus)

How much of the mortgage will this cover? (I’d guess less than 80%)

Are you effectively betting on a rising market by waiting the year?

How secure is this job you’re moving for?

How do you feel about being a landlord?

I’d be inclined to try and hold on to it and rent it out if there is any decent chance of you and yours returning to Dublin in the foreseeable, T.
You would thus be saved the double hassle of a sale now and a purchase later; both of which, regardless of pure financial considerations, could take up a lot of time and create a lot of stress at times when you are trying to relocate away or relocate back. Selling and moving plus setting up a new place and starting a new job all at once - consider your precious sanity in all of this!
Renting out, given the area you are in, seems a quicker and easier course and maintains a base here for a handier potential return to Dublin based work in the future.
Good luck with it all anyway.

and the cash surplus may not even be that - only 75% on the interest is deducable.

OP get out the Excel time!

What I was getting at - do the actual figures, then you can decide better from a quantitative point of view.

Then there are the qualitative issues to consider. The security of new job/certainty of this being a long term move away being the biggest.

There might also be changes to the tax situation wrt final sale of the house. If you sell it as an owner occupier it is exempt of any capital gain. As far as I recall when faced with a similar situation if you rent it for a year then you would be subject to at least some capital gain.

How do you view actually being a landlord? Do you have anyone nearby who can deal with any “emergencies” that occur?

Good luck,
sammy :slight_smile:

Need an accountant to work out the tax but have been told as we bought in the past 2 years that tax would be small due to it being based on the interest.
Have also factored in the prtb cost per year, non residential tax, loans of 520 per month, mort rpayement of 1350 per month, services need replacing per year of 10%. I reckon the mortgage will just about cover all this giving no yield!

Yes we are betting on a rising market.

Job is fairly secure once I blooming well start.

Don’t fancy being a landlord as some fiends have told me of nightmare stories!

If renting it, there’s an allowance for wear and tear on capital expenditure on fixtures and fittings, furniture, flooring, kitchen appliances etc of 12.5% p.a. That could be a decent enough allowance if you’ve spent a few quid doing it to a high standard.

Owning one property is arguably a neutral position on property prices, whatever the current and future state of the market, since you have to live somewhere.

If it’s not your PPR that erodes the tax advantages, and if you have significant equity there is an opportunity cost vs other investments, but there is not much risk-free return anywhere.

I’ve no idea why people pay nutso money for Churchtown, but they do seem to.

Anyway, I’d be inclined to keep it as a hedge.

Never mind house prices and the economy …rent it out, you might not settel out side of dublin, will you have family near by. You might be happy but the OH could miss her family and want to come home. The job might not be what you think it is or you might not get on with your boss… If you sell and have to move back to dublin you’d be starting again. See how it goes for a year or two then if you are happy there sell the house.