daveyboy31
Registered User
- Messages
- 14
Folks, I’m hoping to get a bit of advice on managing personal finances when becoming a landlord. My wife and I are living in a 1 bed apartment but with a young child now, it’s time for us to move on.
We’re lucky in that my wife is set to inherit money soon, which, along with our savings of about €70,000 will go a long way towards the purchase price of a family home. We will probably be borrowing about €125,000 which is the max the bank approved us for and will work out at about €570 pm based on current interest rates. I’m the main earner and the repayments at current rates equate to less than 25% of my net earnings.
So far, so good. The question we are asking ourselves is whether to hold on to the apartment and rent it out. We have low interest rate/repayments and I have done the maths on the tax and various expenses and I estimate that we would need to pay in €500 -€1000 euros a year to keep it ticking over. That’s not taking into account the cost of repairs, replacing washing machines and the like however. My wife is a stay at home mother at present and has self-employed income of about €2-3,000 a year which I’m hoping would cover any such expenses.
My concern, particularly after having read numerous horror stories on online forums, is that if we have trouble with a tenant not paying rent and we spend a year or so trying to get them out, we would not be in a position to cover both mortgages. I’m wondering do any of you have advice on the most sensible way to stress test our ability to deal with such situations? Is it generally advised that a landlord should have the ability to service both mortgages if required for a given length of time or is it enough to have a certain amount of money set aside to cover say a year’s mortgage repayments?
Another option that I considered, although I’m not sure if it is still on the go, is to lease the apartment to the local authority. They certainly used to do a scheme where they leased it for 10 years and took over all management. I’d appreciate any advice on the matter. My wife is keen on renting the property as she sees it as a long term investment /pension. I feel it’s a little risky myself but not sure if I’m being over cautious. Thanks
We’re lucky in that my wife is set to inherit money soon, which, along with our savings of about €70,000 will go a long way towards the purchase price of a family home. We will probably be borrowing about €125,000 which is the max the bank approved us for and will work out at about €570 pm based on current interest rates. I’m the main earner and the repayments at current rates equate to less than 25% of my net earnings.
So far, so good. The question we are asking ourselves is whether to hold on to the apartment and rent it out. We have low interest rate/repayments and I have done the maths on the tax and various expenses and I estimate that we would need to pay in €500 -€1000 euros a year to keep it ticking over. That’s not taking into account the cost of repairs, replacing washing machines and the like however. My wife is a stay at home mother at present and has self-employed income of about €2-3,000 a year which I’m hoping would cover any such expenses.
My concern, particularly after having read numerous horror stories on online forums, is that if we have trouble with a tenant not paying rent and we spend a year or so trying to get them out, we would not be in a position to cover both mortgages. I’m wondering do any of you have advice on the most sensible way to stress test our ability to deal with such situations? Is it generally advised that a landlord should have the ability to service both mortgages if required for a given length of time or is it enough to have a certain amount of money set aside to cover say a year’s mortgage repayments?
Another option that I considered, although I’m not sure if it is still on the go, is to lease the apartment to the local authority. They certainly used to do a scheme where they leased it for 10 years and took over all management. I’d appreciate any advice on the matter. My wife is keen on renting the property as she sees it as a long term investment /pension. I feel it’s a little risky myself but not sure if I’m being over cautious. Thanks
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