Investment Advice

[snowdragon]

Hello All,

Below is my financial situation

Age: 38
Spouse’s/Partner's age: 34

Annual gross income from employment or profession: €86K
Annual gross income of spouse: None- Stay at home mom

Monthly take-home pay - €4200/month

Type of employment: e.g. Civil Servant, self-employed - Private MNC

In general are you: Saving
(a) spending more than you earn, or
(b) saving? Yes - appx €1800/month

Rough estimate of value of home -Renting (€850/month)
Amount outstanding on your mortgage:
What interest rate are you paying?

Other borrowings – car loans/personal loans etc - No loans

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card?

Savings and investments:
Total ~€160K (Appx €50K in Shares, ~€110K in various bank savings acc)

Do you have a pension scheme? Yes, Define benefits with company (€41K/year on retirement), Contributing AVC (DC), Total maxed at 20%

Do you own any investment or other property? No

Ages of children: 2, second due in few weeks

Life insurance: None (Company in service death benefit of €340K)

Background-

We are still renting but with work we may need to move out of Ireland next year for 4-5 years. We were thinking of buying family home but we have put on hold until we are back.

We have money in savings account earning very small interest. So I have been looking at two investment properties (~50km from Dublin). Plan would be to rent out via county council on long term social lease for 10-15 years which would give fixed returns (albeit 80% of market rent but i will not have the headache of managing the property). My expectations is not capital appreciation on the property but at least give better return over next 10-15 yrs.

I have investment mortgage approval with UB @ 4.5%

Property 1- house -
Asking price €115K, expected rent €650/month
I could try to get a cash deal for €105 to 110K

Property 2- Apartment -
Asking price €140K, expected rent €950/month (excluding €500/year management fees)
I can pay €70K cash and €70K in mortgage over 25 years (€400/month repayments)

I expect to continue saving €15-18K/year for next 4-5 years

So questions are -
1. Does it make sense in purchasing buy to let investment property?
2. Which property should I go for - Cash buy Vs Mortgage
3. Should I invest in my own name or joint with wife
4. What impact buy to let property would have on a first time buyer status, if any

Apologies for a long post but want to proved as much details as possible to get a meaningful discussion and advice.

Thanks for reading.

 

[Sarenco]

Are you absolutely sure you want to start a property rental business when you are looking at leaving the country with a young family?

Bear in mind that significant numbers of experienced landlords are currently tying to exit the property rental business because they find it increasingly difficult to operate in this business on a profitable basis.

My advice would be to run the numbers very carefully before you make any decisions and make sure that you do not underestimate the ongoing costs, taxes and risks involved with residential rentals.