Clear loans before buying overseas property?

S

Spec

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I have an €9000 college debt. I am now earning 20k to 25k per year and paying rent in Dublin. I would like to jump on the property ladder by finding some cheap overseas property with good investment potential. Am I crazy thinking of buying property when I have a college loan?
 
To be honest, you are kidding yourself if you think you will get a mortgage to buy any kind of property in your current situation. Either way, it generally makes sense to clear loans before investing.

As a matter of interest, how much did you plan to invest overseas?
 
I was thinking €20,000 in some eastern european country where the economy is growing.
 
Clear your loan and then consider it again. Remember that buying a site is, in the first instance, a liability. It doesn't bring you any income and if you have to borrow again (over and above your current debt) then it is no solution at all!
 


Its your call, i have heard of people taking more risk that this. if it pays off and you make a buck or two great if it doesnt you could owe 3, 4 or 5 times the debt you have now.
 
Buying a site might not be such a crazy idea in your situation. If you buy a good site in a good area, you won't have to be woried about issues like repairs, insurance, utiliites, furniture etc. If you are in such a tight financial situation, a site won't cost any more than a good car; stay on public transport for a couple of years and you have a good asset that can then be leveraged locally to move yourself up the ladder a bit more.

Be careful though, lots of land for sale in central and eastern europe that seems cheap to our eyes, but it is worthless in terms of investment potential.

As a general rule at this level of money you need to be looking at sites on the edge of towns but no farther out, with access to all services and utilities.
 

This sounds to me very similar to putting money on a horse. It's all hope and maybes, no certainty. You're just as likely to end up with a piece of farmland in the middle of nowhere that you've paid over the odds for for the rest of your life.

If your money is so tight I would firstly pay off debts, secondly build up a reserve/rainy day fund, thirdly start a pension, fourthly build up some money in a conservative blue chip fund and only then would I speculate with a small (say 5 to 10%) proportion of my assets.
 
I'm still firmly of the belief that you should pay off your debts and then think about investing in a site. Look, 9k is not a whole heap of hay. you should be able to clear it in a couple of years and not adversely affect your lifestyle.

I'd agree that in many countries, particularly eastern european ones, you should be able to buy a decent sized site for 20 - 25k. As auto says the best place to buy is within say a 10km radius of a major town. The problem with these sites , in my experience at least (and i've been at this for a while now), much of the capital gains have been had on sites closer to the major urban centres. That's not to say that they won't continue to increase in value but the 'boom' has, in many cases, already been had out of them. As these sites get more expensive per sqr. metre other areas/suburbs/zones become more attractive where it is cheaper to buy. Each area, effectively, has it's boom time before being superseeded by the next. The trick is to forecast where the next boom area will manifest itself but you need a lot of experience, or a lot of luck to be successful at this particular game.

It's not blindly betting on a horse but if you haven't studied the form of that particular horse then you are gambling too wildly to be safe.

You really are going to have to study this for a year or 2 before jumping in and I'd suggest that you use the intervening time to cancel that loan.
 
hmmm said:
This sounds to me very similar to putting money on a horse. It's all hope and maybes, no certainty. You're just as likely to end up with a piece of farmland in the middle of nowhere that you've paid over the odds for for the rest of your life..
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I agree, buying a piece of farmland in the middle of nowhere is certainly akin to putting it all on a horse, but that's not what I am suggesting. Buy only land that is rezoned inside a town boundary, and preferrably where houses are built more or less up to your boundary. Never buy from some "expert" who has "inside knowledge" that the land he is selling is going to be rezoned at some time in the future -- that's one sure way to lose your stake.
And of course, buy in a town that is growing, not one that is dying!
 
I hate to say this... but if someone with no assets, a 9k debt and a 25k income is looking to invest in the property market, it's a sure sign that the bubble is bursting (if it hasn't already).
 
extopia said:
I hate to say this... but if someone with no assets, a 9k debt and a 25k income is looking to invest in the property market, it's a sure sign that the bubble is bursting (if it hasn't already).
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That's probably prophetic!!

I am always reminded of JFK's father, who was one of the few investors to survive the Wall Street crash. The story goes that he was on his way to work and stopped for a shoeshine. The kid shining his shoes was going on about what shares were best, and what he was going to buy next. Kennedy reckoned that if the pyramid had gotten that close to the bottom, it was time to get out and he offloaded everything, a few weeks before the crash.

Story may be something of an urban myth, but the principle is the same either way.
 
It's probably true. New York cabbies and barbers were allegedly giving share tips (and day trading in their spare time) just before the dotcom crash.
 

It was spun in a different way during the DotBomb days: wasn't the shoeshine guy, but the 'Fella in the Lift' who was giving stock advice

incidently, they said that having a Fountain in the Foyer of your office was also a sure sign that the bubble was bursting )

EDIT: also said if you have the word 'Strategic' in your title; to keep a look over your sholder.
 
Seems to me to be more than a little cruel to write-off someone on the basis of their income or percieved assets. In fact it seems downright misguided!

Perhaps the chap in question has done his homework and made the necessary calculations. Even Donald Trump had to start somewhere and probably without a wallet full of cash!

Even so. I'd counsel extreme caution in his position. That, however, doesn't preclude his succeeding.
 
paddyd said:
incidently, they said that having a Fountain in the Foyer of your office was also a sure sign that the bubble was bursting )

.
Click to expand...

there is a founain in the very stunning Foyer of the Capel Building, The same building of which Rhodes D7 is part!
 
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