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Hi, wondering if anyone can give me advice on the following. I bought a small cottage 10 years ago and it generates €400 a month from rent. I dont intend to sell it but i wondered if i can borrow against it to invest.
I have no debts on the property but want it to work better for me as i intend to build a house in a few years. Do i have any options?
(already have invested in shares, property fund and a secure fund)
Any advice appreciated
Why not just invest the €400 a month? Am I missing something? Why do people always feel the need to borrow?
There are several geared funds available which might be a better bet.
Gearing just means borrowing to invest. Usually you put up some money and somebody matches or multiplies that and you invest the lot. Obviously the money borrowed has to be repaid in the future along with some form of interest. Hopefully the investment will perform to allow you to do this and to earn a profit for yourself. It's a little like buying a house. You put up the deposit and a financial institution puts up the remainder in the form of a mortgage. In that case you usually repay the mortgage interest and capital over the mortgage term. But an interest only or endowment mortgage would be similar to the general investment gearing where the capital is only repaid at the end of the mortgage term. Gearing can allow you to invest in bigger things than you might be able to do out of your own cash. However the big risk is that things don't perform as well as expected so that you lose not only your own money but also somebody else's and thus end up out of pocket and in debt.Can you explain (in idiot proof language) what a geared fund is and who does them?
Can you explain (in idiot proof language) what a geared fund is and who does them?
I don't disagree with your analysis, but it is predicated on the assumption the OP already has the free cash to invest without borrowing against the rented property.
Following on from ClubMan's explanation, there are geared funds available from several companies including New Ireland and Irish Life whereby the fund borrows to invest, rather than you borrowing to do so. In other words, you invest €10,000, the fund borrows another €10,000 and you've effectively bought €20,000 worth of the relevant fund.
For me thats Energy or specifically renewable energy, does anyone have advice on investing in this area?
Thanks guys, interesting stuff.
I should explain that the rental income from the property just about pays for the rent im paying in an apartment so essentally they are cancelling each other out. The value has obiviously gone up in 10years and as im not selling i was hoping to use the increase in equity.
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