Investment property abroad or first Irish home

Hi,

Just wonder what the general thinking is regarding investing in property abroad from the point of view of somebody who doesn't own property in Ireland?

We have come across an opportunity to invest in an apartment complex at 'buying from the plans' stage. We were introduced to it by a good source that has experience in this area. Price is about 200K in a marina development in Prague. 15% paid by September with balance on completion in about 2 years. Rental yield expected at around 6% - would probably off-load at completion though. One would expect a stronger capital gain in that part of the world than you would get in Ireland.

Presently, we are renting (850 pm) with a cumulative salary of about €90K plus about €60K in savings. Should we forget about the possibility of a stronger return elsewhere and concentrate on the Irish market for the time being. Perhaps we are way of the mark with not buying here first. Any feedback would be appreciated.

Thanks

Don't invest in anything without doing independent research.

It's your choice really but you should be aware that if you buy anywhere, you lose your first time buyer status in Ireland.

"Flipping" has been mention on AAM before but there is no guarantee that you'll be able to sell the Prague property before completion. If you are forced to complete the sale and rental yield is not as high as expected, where does that leave you?

If you put all your money into this investment, where do you stand on having a home of your own, i.e. if your personal circumstances change, are you still happy to rent where you are at present?

These are just some of the questions I would ask myself if I were in your position.

Crazy house prices in Ireland are prompting some FTBs to take on considerable risks in order to generate some equity. You say that you would expect stronger capital gain in Prague over Ireland - what make you so sure that this will happen? What will happen to you if you buy in Prague but cannot flip it and are forced to rent for a yield below the promised 6%?.

Buying your first place overseas as a hedge against Irish price inflation is quite a risky undertaking. Is your good source a family friend or relative? Have you been out to that part of the world to investigate the property market for yourself. What would €200k buy in other parts of the city?

If property markets were to fall in Ireland & the Czech Republic where do you think that you would be better off owning a property?

liteweight said:

It's your choice really but you should be aware that if you buy anywhere, you lose your first time buyer status in Ireland.

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But what is it worth anyway? I have held off buying abroad myself as I didn't want to lose my FTB status, but now I am wondering why I held off at all as FTB status isn't really worth a lot.
Anyway - I am considering investing in Germany even though I have no PPR here. I have been looking but I can't see the value here and I see many clouds on the horizon (in both the economy and housing market).
Like RainyDay said - do the research. It is time consuming, but you are only gambling if you don't invest in proper research.

shnaek said:

But what is it worth anyway?

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FTB status is worth quite a bit though, is it not? There is a huge difference in particular in the amount of stamp duty that you'd have to pay. For example, on a property costing €317,500 the difference would be €15,875. You also get higher mortgage interest relief as a FTB as well as other benefits such as being more likely to get a 100% mortgage with some institutions.

Thanks for all the replies.

RainyDay said:

Don't invest in anything without doing independent research.

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Of course this isn't a decision we would take lightly. Alot of time and thought is going into this.

Is your good source a family friend or relative?

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The source is a senior accountant who deals with foregin property quite regularly through their own investments and through their clients.

I take all your points and thank you again for them

One more point BankRobber, make sure that anyone giving you advice does not have a vested interest in what they're recommending. Not casting any aspersions.....just a lot of sharks in them there waters!!!

BankRobbers said:

Hi,
Rental yield expected at around 6% - would probably off-load at completion though.

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All the other investors/flippers may have the same idea.