Bad Investment property

Complainer, I've exchanged many posts with you and always found your own posts genuine and informative. However in this thread I fail to understand your reasoning that pension funds (in essence the same as equity funds but with different Taxation rules) are in the main better than other Investment products. The Pension funds are hit with charges each and every year with a minimum 1.5% plus, regardless if the markets went up or down. Maybe a mix of investments but Irish Pension Funds are pretty secret with their wonderful investments.
 
mercman said:
However in this thread I fail to understand your reasoning that pension funds (in essence the same as equity funds but with different Taxation rules) are in the main better than other Investment products.
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Actually, that's not what I'm saying. In a devils advocate kind-of way, I'm challenging that traditional Irish 'property as a pension' story. I'm not saying that pension funds are generally better, but I am suggesting that there is no evidence that (as many posters here assume) pension funds are generally worse.
 
Maybe, but there is nothing worse in knowing after the event that some crowd are pulling heaps of Management fees from a fund for doing nothing, whether the value goes up or down.
 
But in general you can wait your way out of negative equity, if you end up aged 65 with a pension return of 1% you can do nothing. Most people don't watch their pensions and don't realise until the day they need them what return they will get and then it's too late.

Also in relation to property it's highly unlikely you'll owe any mortgage when you reach 65 and there you have the option of rent as pension or selling the house if you want. The point is you have options and control. I'd rather deal with the vagaries of the tax system than the secrecy of the pension 'providers'.

Just because pensions get a lot of tax breaks does not automatically mean that they are worthwhile. A lot of people make a mistake on that.
 
You've made a somewhat strange argument there. You've looked into the future and assumed a 1% return on one investment whilst you've taken another invetsment which is currently worth less than nothing (assuming deposit less than neg eq) and speculated that when it's encashed it will have made a profit.

The merits of a pension vs property is neither here nor there as far as I'm concerned, invest as you like, but here you've simply created one possible future scenario which suits your argument.
 
mercman said:
Maybe, but there is nothing worse in knowing after the event that some crowd are pulling heaps of Management fees from a fund for doing nothing, whether the value goes up or down.
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Nothing worse? How about finding that your tenant has done a runner with your couch and your table, and left you cleaning their dog faeces from your sitting room? Or worse still, how about finding that your tenant has NOT done a runner, but is squatting in the house, not paying rent, keeping their dogs in the sitting room, and ignoring all your contacts. Just look around AAM to find the nightmare scenarios from landlords in negative equity dealing with problem tenants.

Bronte said:
But in general you can wait your way out of negative equity, if you end up aged 65 with a pension return of 1% you can do nothing.
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You're not comparing like with like, as Howitzer has pointed out. A 1% return on a pension over a lifetime is unknown. You are just as likely (or unlikely) to be able to wait your way out of a bad pension return as a bad property return.

Bronte said:
Just because pensions get a lot of tax breaks does not automatically mean that they are worthwhile. A lot of people make a mistake on that.
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Agreed. People need to run the numbers to work out what is best for them. THere is no-one solution.
 
wino said:
Hi ,

I have a second property as an investment. It's on a 22 year interest only with Haven which is on the Euribor rate which is alot higher than the standard variable rates. The rent I'm recieving is only 1100 a month, a shortfall of over 220 euro a month of which I am subsidising. The property is now only worth around the same as the loan which is 300K. Do I try to get an annuity mortgage over a longer term to try and start paying off this loan and will the banks entertain me?. I'm very conscious of not being able to afford a property on an interest only loan when the rates are as low now as they wll ever be!
Any suggestions would be kindly appreciated

Wino
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It's going to cost you 100k out of your pocket to fund this property for the next 22 years and get a return. Based on

* Covering mortgage short fall
* Management fees
* Maintenance and Repairs
* Void period
* Interest rate increases
* Selling fees

Can you afford to pay this over the next 22 years ?
It's an interest only mortgage, you say the property is worth roughly loan value now, so it has to increase by 100k to break even!

If you can get out now and not loose anything do it and put the 100k you save towards your pension.

edit
Is this the same property http://www.askaboutmoney.com/showpost.php?p=502132&postcount=1
 
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