I get the impression, based on my reading, that 6%-7% is a more common assumption for the returns on an equity portfolio.
I get the impression, based on my reading, that 6%-7% is a more common assumption for the returns on an equity portfolio.And the annualised return of an equity portfolio is around 8%-9% over the same period.
Even if that is what you feel comfortable with it 50% more than the original return of about 3%.I get the impression, based on my reading, that 6%-7% is a more common assumption for the returns on an equity portfolio.
If you start out with an under estimate I guess 3%/4% on a single property is OK then. But if we returned 3% - 4% we'd loose the client.As far as i can remember from reading "the cult of the equity" on askaboutmoney a cuple of years ago the annualised return of an equity portfolio in real terms is around 3 to 4 % over a good number of years say 40 years or more.[Just an observation]
And the annualised return of an equity portfolio is around 8%-9% over the same period.
Does the 8%-9% annualised return account for inflation?I get the impression, based on my reading, that 6%-7% is a more common assumption for the returns on an equity portfolio.
Its complicated & it assumes that the next 25 years will look a lot like most of the past 50.Thanks to the mods for moving this.
I'm not doubting for a second that holding onto a house for 25 years will not make a return on an investment. Far from it.
However my point is that someone with 29 years left on their mortgage and a debt of €275K and who has a lump sum available seems to instinctively think that another property and more debt is a better idea than running down the balance of what they currently owe. It also completely ignores life's normal risks of unemployment/ill health etc. I don't believe it is a wise or prudent course of action.
Actually on a re-read it is even worse. The lump sum is only €20K!! To use as a deposit to get into further debt of €250K to owe over half a million...
Perhaps I'm just old fashioned...
Just looking at your first point that the Central Bank is more accountable for regulation? My own observation is that there are a large number of ‘trophy cars’ on the road and parked outside very modest homes. Is this personal borrowing or remortgaged money?Its complicated & it assumes that the next 25 years will look a lot like most of the past 50.
If people are willing to be realistic about what kinds of returns they can make, and stick to original plans, its still a good investment for a patient investor. However, I've seen so many rental units on the market that were remortgaged 2 and 3 times in 20 years I can only assume that its too easy to get caught up in hubristic ideas about the sector & assume that what went well 10 years ago still applies. (The "landlords have to flee the market now" is in many ways a reversal of the "what can possibly go wrong" of the height of the Tiger era).
That said, I would put the following learnings down:
- Central Banks more aware of accountability for regulation
- Minimum deposits far higher to avoid high risk
- greater record sharing among lenders to avoid poor credit decisions
- tax evasion has been largely eliminated from the sector
- idea that the regulations in the sector didn't need any enforcement now gone
- more balanced media (I know some will disagree) - I don't remember any time when IPOA were represented as anything but monstrous vultures in the media
- issues relating to minimum standards - when I started renting in the 90s there was a general acceptance that renters had to just "make do" with inferior conditions
- in general, the idea that tenants are somehow deserving of their situation is long gone
- but at the same time, the idea that you are morally entitled to lie to banks in order to get a mortgage at any cost is also long since gone
I think tax enforcement is one of the more underdiscussed factors in the sector and has a lot to do with many changes. (It was far easier to charge low rents and keep a low profile in the days when tax compliance was still poor).
It's probably inflated pensions due to QE and the money the owner didn't eat during the Covid lockdowns.Just looking at your first point that the Central Bank is more accountable for regulation? My own observation is that there are a large number of ‘trophy cars’ on the road and parked outside very modest homes. Is this personal borrowing or remortgaged money?
Your right. Are you sure it was due to not ‘eating’ or did you mean to say not ‘earning’?It's probably inflated pensions due to QE and the money the owner didn't eat during the Covid lockdowns.
I meant eating. Restaurants etc were closed.Your right. Are you sure it was due to not ‘eating’ or did you mean to say not ‘earning’?
I'm not sure of the relevance of this. U dont know if the house is rented, or the car leased or owned. Or if the person is into cars and not houses. Or the car is a demo and they work for the dealership. You see far more trophy cars in front of trophy houses, whatever that tells us.Just looking at your first point that the Central Bank is more accountable for regulation? My own observation is that there are a large number of ‘trophy cars’ on the road and parked outside very modest homes. Is this personal borrowing or remortgaged money?
What do you mean no cost of living crisis, my electricity bill for a large family home for the last 2 months was €59. It cannot go on like this.There is no cost of living crisis.
Irish people are still piling into property like its 2006.
A new estate just launched in Enniskerry, Wicklow. All 27 luxury houses sold on day one.
The people buying luxury homes in Enniskerry have the disposable income to absorb the everyday price increases without their lifestyle taking a hit. People who were already just about scraping by do not.There is no cost of living crisis.
Irish people are still piling into property like its 2006.
A new estate just launched in Enniskerry, Wicklow. All 27 luxury houses sold on day one.
Or they have the capital from the increase in value of their existing home or they inherited money or they have shares or they have a cash lump sun from a pension or a combination of the above.The people buying luxury homes in Enniskerry have the disposable income to absorb the everyday price increases without their lifestyle taking a hit. People who were already just about scraping by do not.
It's aa problem but not a crisis.Have you not noticed a big increase in the price of a tank of fuel or your weekly shop? I certainly have. Just because I can afford it doesn't mean it's not a huge problem.
Yep, sentiment (or panic, as it's also known).Since this thread is about property: a few of my peers (~30 year old FTB tech workers) are re-evaluating their plans to purchase this year since we're all suddenly feeling a lot less secure in our jobs.
The point that I am making is the cost of these cars would go a long way towards a good deposit on a home. Regardless of whether the car is leased or bought through a personal loan is irrelevant. An expensive car in front of an expensive home is not unusual.I'm not sure of the relevance of this. U dont know if the house is rented, or the car leased or owned. Or if the person is into cars and not houses. Or the car is a demo and they work for the dealership. You see far more trophy cars in front of trophy houses, whatever that tells us.
Exactly but also - the key figure here is "27 homes" - tiny in the greater scheme of things. If developers can make the same profit building 27 luxury piles in fancy places that has a limited market, then its a lower risk than building 800 homes in North County Dublin and hoping there are 800 buyers out there to find them. Also the level of financing required to build 27 homes is probably a lot smaller than the grand schemes of 1000+ units of the 90s.The people buying luxury homes in Enniskerry have the disposable income to absorb the everyday price increases without their lifestyle taking a hit. People who were already just about scraping by do not.
Have you not noticed a big increase in the price of a tank of fuel or your weekly shop? I certainly have. Just because I can afford it doesn't mean it's not a huge problem.
Since this thread is about property: a few of my peers (~30 year old FTB tech workers) are re-evaluating their plans to purchase this year since we're all suddenly feeling a lot less secure in our jobs.
Do they?but those who don't engage do end up before the courts and generally end up losing both the cases and their homes