To sell or not to sell?

To sell or not to sell?

14:05 PM, 28th November 2013, About 10 years ago 41

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First of all thank you for all your suggestions and opinions. I have a property in negative equity, which I don’t live in, in a different area of country to where I am now located. I owe the mortgage lender £130,000 and I have it on sale now for £103,000. I have a buyer and I am now 5 months in to the process. However, I am considering withdrawing because it has taken this long to get to this point in sale ans we still have not exchanged contracts. This is mainly due to everyone assuming I have an abundance of time at my expense. I have been paying out about £700 a month in mortgage and council tax. To Sell or Not To Sell

The property itself is a 2 bed which lets at about £550 a month. It is near a good school, hospital, small shopping area, 15 minutes drive from a big ASDA. Decent local transport links as it is in the West Midlands. It is a nice area near a big park, 15 minutes drive to a motor way which you cannot see or hear from the property. It has private parking. The main issues is that there is probably an excess of similar properties in the area.

Running costs are £1,000 a year management fees, £150 a year ground rent, £650 a year consent to let fees as the mortgage lender does not do BTL mortgages and won’t cut me a special deal so far.

If I sell I probably stand to personally lose £20,000 to £30,000. If I keep it I’ll lose £3,000 a year, possibly more if maintenance is needed. I have lost about £5,000 (over 6 months) so far just in the process of this current sale as currently there are no tenants as the estate agents don’t sell with a tenant in-situ.

I know the markets will recover eventually….. well maybe.

The question is should I just get rid of it or keep it and hope for the best?

Thanks

Dan


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Comments

Colin Childs

23:40 PM, 28th November 2013, About 10 years ago

Reply to the comment left by "Dan Grainger" at "28/11/2013 - 23:29":

Then selling the property seems to be the logical choice if you have the funds to clear the debt.

Ben George

23:48 PM, 28th November 2013, About 10 years ago

Reply to the comment left by "Ian Ringrose" at "28/11/2013 - 16:13":

My mortgage is out of contract and I have not renewed it as it is a 3.99% mortgage, on repayment. The mortgage lender wont go to interest only as it is in negative equity. The cash shortfall s about £140 a month. Plus I have to pay the mortgage lender £650 every year for permission to rent.

Mark Alexander - Founder of Property118

23:51 PM, 28th November 2013, About 10 years ago

Reply to the comment left by "Colin Childs" at "28/11/2013 - 23:40":

I can't follow that logic, please explain.
.

Ben George

23:51 PM, 28th November 2013, About 10 years ago

Reply to the comment left by "Colin Childs" at "28/11/2013 - 18:22":

The buyer knows I want a quick sale but I have not specified why. I do have the money for the shortfall, but why lose £30,000 quickly, when you maybe able to grow it. The mortgage lender is under the impression that I am barely hanging on but just making my payments with help from others........ oops. They are willing for me to pay the shortfall over time at last discussion with them

Ben George

23:55 PM, 28th November 2013, About 10 years ago

Reply to the comment left by "Edwin Cowper" at "28/11/2013 - 20:45":

I am in the process of negotiating paying the shortfall over time. Will try for a discount, but my lawyer is less than worth the cost of ............. not sure what to write but they are crap and if I didn't think it would delay things more, I would get rid. The lender knows nothing of my other funds.

Ben George

23:58 PM, 28th November 2013, About 10 years ago

Reply to the comment left by "Mark Alexander" at "28/11/2013 - 23:51":

As I am out of contract, if the sale goes through I do not have to pay any early repayment mortgage fees which would amount to about £4000.

Ben George

0:01 AM, 29th November 2013, About 10 years ago

Reply to the comment left by "Julie Brant" at "28/11/2013 - 22:27":

I do want to hold. However if I can talk the mortgage lenders into taking £10,000 (from me), £103,000 (from the buyer), then pay the rest of slowly or just right it off then I will definitely sell

Ben George

0:05 AM, 29th November 2013, About 10 years ago

Just wanted to say a quick thank you to all those who have chimed in with some advice. I am going to the property in the morning for the 1st time in 6 months to look around and see if the walls talk to me. As always I am grateful for all advice/feedback going

Mark Alexander - Founder of Property118

7:44 AM, 29th November 2013, About 10 years ago

Reply to the comment left by "Dan Grainger" at "29/11/2013 - 00:05":

Hi Dan

You have received quite a lot of conflicting advice here so I'm going to share a small part of my life story to explain why I think you should hold rather than sell.

In 1989 I purchased a bungalow for £73k with the benefit of a £55k mortgage, I was 21. I also got married that year and was always ahead of my years. I started my commercial mortgage business the year after in 1990 and OMG was it tough! Property values were collapsing and lenders were withdrawing from the market daily. By 1992 my bungalow was worth £45,000 ish and interest rates had peaked at 15%. I was in negative equity. My business was still struggling and my wife gave up work because we had a baby. We could barely afford to feed our daughter, never mind ourselves. Many concerned "friends" advised us to hand the keys back to our property to the Building Society and declare bankruptcy but that would also have ended my career in financial services. I simply could not allow that to happen. To make things even tougher my parents were standing as guarantors for £24,000 of additional unsecured debt I had built up getting my business off the ground. They are normal working folk and my financial demise would have also been those.

So as you can see, I have been in a much darker place than you are now. I worked every hour and I worked smart to get myself out of that position. I remember thinking to myself that it would be a fantastic time to buy more property as opposed to selling but nobody agreed with me because they could only reflect on the economic position at that time. Very few could imagine how things could change but they did.

I still own that bungalow. My work ethic to get through the most difficult part of my life never left me either. I retired from broking in 1989 at the age of 41 and now live off my rental income.

If you would like to read more about my journey I have documented it here >>> http://www.property118.com/landlords-buy-to-let-property-investment-strategy/my-first-buy-to-let-property-investment/
.

9:39 AM, 29th November 2013, About 10 years ago

Reply to the comment left by "Dan Grainger" at "28/11/2013 - 23:40":

If it's Birmingham, have a chat with Sally Lawson about your letting options. She's very creative, I believe.

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