Investment Advice - Should I invest in this buy to let property

newinvest

New Member
Messages
2
I am 40, self-employed, married, with no kids or pension. Joint income is €150K, and mortgage is €250K with 25 years left to run.

I have recently come into some money of €200K, and I'm interested in purchasing a property in Dublin that has come on the market.
Asking price is €390K, and I'm confident of renting it out for €2,200 a month. I am planning on investing €150K of my own money with the rest
secured from a buy to let 25 yr mortgage at 3.75%, costing approx. €1,300/month. I plan to sell at the end of the 25 years and put the
money into my pension.

Has anyone any opinion on this as an investment strategy or would I be better looking at funds/etfs/etc. as a long term investment?
 

moneymakeover

Frequent Poster
Messages
555
The return doesn't look great

And when you factor in 3.75% interest rate

The only one profiting is the bank!
 

newinvest

New Member
Messages
2
I think you would be better off setting up a private pension, maximising your annual pension contributions for 2019 and going forward and then using the balance of the €200k to pay down your home mortgage.
Thanks for this. If we assume that the rent pays for the mortgage do the following figures look roughly right (although I would expect lower than this with selling fee, etc.). Of course I accept that the sales price is a big assumption.

25 Years - Sale Price
500,000​
Purchased Price
388,000​
Profit
112,000​
Less CGT @ 33%
36,960​
Balance
463,040
 

TheBig40

New Member
Messages
4
If you use the 200k to pay a lump off the current mortgage if your interest rate is around 3% you will save 100K in interest payments over the next 25 years. You could use the salary to contribute to your pension and get a chunk of that tax free also.

Lots of options for your 200K
 

cremeegg

Frequent Poster
Messages
3,179
Thanks for this. If we assume that the rent pays for the mortgage do the following figures look roughly right (although I would expect lower than this with selling fee, etc.). Of course I accept that the sales price is a big assumption.

25 Years - Sale Price
500,000​
Purchased Price
388,000​
Profit
112,000​
Less CGT @ 33%
36,960​
Balance
463,040
The above isn't addressing the correct question.

No one knows what the sale price in terms of 2020 euros will be in 2045.

Start doing your sums on the profit you expect from the letting.


If we assume that the rent pays for the mortgage
Dont assume that. Work out the income and expenses of the letting.
 

KOW

Frequent Poster
Messages
345
I am 40, self-employed, married, with no kids or pension. Joint income is €150K, and mortgage is €250K with 25 years left to run.

I have recently come into some money of €200K, and I'm interested in purchasing a property in Dublin that has come on the market.
Asking price is €390K, and I'm confident of renting it out for €2,200 a month. I am planning on investing €150K of my own money with the rest
secured from a buy to let 25 yr mortgage at 3.75%, costing approx. €1,300/month. I plan to sell at the end of the 25 years and put the
money into my pension.

Has anyone any opinion on this as an investment strategy or would I be better looking at funds/etfs/etc. as a long term investment?
Hi NewInvest, Roughly

Say you borrow in around 250k to buy furnish etc. Your paying back 1300 per month,

Rent say you get your 2200 X 12= 26400 per year


Say you can offset interest and other allowances of 11400 per year. So tax will be around 7800pa.

So your paying out 1300 X 12=15600+7800=23400 PA.


Thats if everything goes right and no problems. That just not happen in the rental game.

Pay off your house with the 200k. Or if your not happy with that 100k house 100k pension.
 
Last edited by a moderator:

Baby boomer

Registered User
Messages
56
The yield on your proposed purchase isn't great, 6.6% by my calculations. You could do better with a cheaper purchase. Say a Dublin apartment for about 200k. Rental would be 1400pm upwards. You'd have no mortgage, yield of about 8% plus any growth in value. With your income, you could easily hit the ceiling for pension fund value anyway so no harm to have an investment property in your portfolio.
 
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