Irish Non-Resident buying a house in Ireland and owning from afar

Hello All

We are an Irish family of four based in Dubai for the past six years. Kids are both <3 years old.
We plan on staying in Dubai for another 6-9 years.

We are debt-free and have a liquid net worth of 400k, and are adding around 6.5k to this per month. This net worth is constituted entirely as investments in stock and bond ETFs, which can be sold at any time tax free -- and yes, I have verified this. My illiquid net worth is 30k employment gratuity, guaranteed to be paid out at the termination of my employment contract, and this increases by 500 euro every month.

My job is secure, and our cash flow is strong.

I have been looking from afar at house prices in Ireland march unrelentingly upwards. I am worried that despite my ability to save and build wealth, I will have to pay a fortune for a house in 6-9 years time when relocating to Ireland. My wife and I are thinking that now might be a good time to buy our future home, for cash.

We have found a very well built 4-bedroom detached house in a gated community about 30 minutes outside Dublin. The price is 400k -- which equals our entire liquid net worth currently.

We are thinking to cash-buy it now as a hedge against annual house price growth over the next decade. The idea would be to fill it with tenants in the interim, not to make an income necessarily, but rather to avoid it lying idle, so that when we do eventually move back to Ireland, we have our family home.

I am aware of the annoyances of being a landlord of a property that's 6500 miles away. I am aware that it's not optimal. But is it more optimal than paying 800k for the same house if we wait for 6+ years to buy?

- I would have to get an agency to handle the letting.
- I would have to pay tax on the house and on the rental income.

It would hurt me to put all my liquid net worth into one house, but with my savings rate I can build up a new 100k in liquid net worth after ca. 14 months.

I am looking for a sanity check here -- the pros, the cons, the perspectives I have not considered.

Thanks!

No one knows the future, but your plan sets you up as well as any.

As an experienced landlord, do not be tempted to rent it to good tenants at a low rent, that has never worked for me.

As a returned ex-pat, the one thing I would rethink is how coming to live in Ireland will impact your kids. Now at age <3 is a very different matter from age 10 or 12.

You'd obviously need to look at Tax implications, but if your sole aim is to hedge against price rises, why wouldn't you consider investing in a REIT?

I'm not sure I'd like to be renting out my future family home. You might get lucky with tenants, or you could end up with a house you really don't want to move into.

REITs haven't exactly mirrored property price changes, and they do have charges for management, and some are leveraged, but you could put an effective hedge in place with no hassle of being a landlord, and be completely liquid and free to buy where you want when you return.

I'm not sure how tax would work, and might render it unworkable.

RedOnion said:

You'd obviously need to look at Tax implications, but if your sole aim is to hedge against price rises, why wouldn't you consider investing in a REIT?

Click to expand...

I looked at the Hibernia and Green REITs. Now, I might be wrong, but I didn't think either of them were in any sense comparable to or likely to reflect what happens in the residential property market.

It's not an unreasonable plan to hedge against the major cost in your life i.e. housing.

But this does not seem like a good idea.

• It's very unlikely to be tax efficient given that you live in Dubai. I would guess that there are far more tax efficient investments.
• You don't know where you will be working when you come back, so you may well have a house you have to sell
  
• You have already mentioned the hassle of tenants

Red was probably thinking of iRES which is a REIT which invests in residential property

https://www.bloomberg.com/quote/IRES:ID

A diversified portfolio of equities in some tax efficient vehicle is more flexible, less hassle and over the longer term, should outperform property. But there is the risk that equities bomb and Irish property prices increase.

Brendan