Rental - should I keep or look to sell?

Maj15

Hi

i have a buy to let rental, interest only,

3,75% rate that ends June 2026. 

I bought flat for £138k in 2006. 

Amount I owe is £90k. 

Exact same property next door has just sold for £140k.
i bought this property19 years ago, just before the recession, so the property since has never been valued at what I paid for it - a long time in negative equity. 

I’m now looking at my options.

Current tenants have been fine with no problems, and the property is very low maintenance. 

Mortgage and service charge is around £300 a month, and I get £700 rent. 

If I was to sell the property for £140k I guess I would walk away with around £46/£47k. 

Just looking at advice as to what you would do? 

I don’t necessarily need the money as I have savings, however I am conscience of the market falling again as it’s taken almost 20 years for it to be valued around what I paid. 

Appreciate any advice. 

Bigphil1474

If it was me - if the property is bringing me a low hassle regular monthly profit which is at least paying off the mortgage, then I'd be keeping it until next year at least. See what the interest rates are like, then decide from there. 

On the other hand, if the property is a PITA, and/or the rent doesn't cover the costs, then I'd be thinking of selling up and taking the money. 

Have the tenants indicated if they'd be interested in buying? Might be a neat solution.

FlorayG

Its WAAAAY too much hassle to try to get your tenants to leave if they don't want to. If they don't want to buy it I would be waiting until they give notice and then think about selling. Meanwhile it's not actually costing you anything and in the long term prices always rise

Stubod

Sell, sell sell….is what I would do…ll

Albermarle

Probably we need to see the bigger picture with yourself, as maybe that £47K could be deployed somewhere else.

Do you have a mortgage where you live? If so how much and at what interest rate?
How old are you? Likely to retire soon? Big healthy pension ?
Would losing income of £400 a month be an issue, or do you have a good income otherwise?

It might seem like a lot of questions, but personal finance issues should be seen in the round, not just in isolation.

Maj15

Albermarle said:

Probably we need to see the bigger picture with yourself, as maybe that £47K could be deployed somewhere else.

Do you have a mortgage where you live? If so how much and at what interest rate?
How old are you? Likely to retire soon? Big healthy pension ?
Would losing income of £400 a month be an issue, or do you have a good income otherwise?

It might seem like a lot of questions, but personal finance issues should be seen in the round, not just in isolation.

Sorry for delayed response.

i have a mortgage on the property im living in.

3.15% repayment, owe £150k, property valued £240k.

I’m 40, plan to retire in my 60’s. 

Pension pot is approx only £70k.
£50k basic, plus a generous yearly bonus.

I have tend to use the £400 monthly gain on projects on the house I live in but I’m pretty much done now.

mlz1413

£700 rent - 300 outgoings is 400pm or 4800pa.
Save 2000pa for tax as you are a higher rate earner and you have £2800pa left over.

Put 47,000 in the bank at 4% and you don't quite get 2000pa.

Rent is likely to go up, savings rates are a gamble but doubtful they will shift heavily one way or the other. 

On these very very simplified figures,
I'd probably stick with the rental until the tenants decide to leave.
Invest some money back into the property to reduce your tax bill and keep the property in good condition so you can make the decision when it needs making