Investment Property Advice

R

redmarker

Guest
Im thinking of buying an investment property for about 120k. It should easily rent for about 1,000 per month in rental income and the cost of the mortgage from what i can see is about €680/700 per month over a 20year term(assuming deposit of 13k). Im 27 and curently have no other borrowings. Similar properties in the area have been sold for around 120k recently.

Am i mad to be considering this or do you think it is a worthwhile investment? Or should i expand my ideas and look to investing elsewhere?
 
Do you own your own home?

"investing" in your own home makes much more sense. Any gains will be exempt from CGT.

If you have borrowings for an investment property, you will find it difficult to get a mortgage later if you do want to buy your own home.

Brendan
 
redmarker said:
It should easily rent for about 1,000 per month in rental income
Click to expand...


If it rented easily everyone would have one. Trust me when I say there is nothing easy about the rental market.

You also have to factor in the additional costs of:

Management Company if in an apartment complex
Advertising / Letting Fees / Legals
Upkeep and Maintenance of the property (heating system etc)
Insurance (Property and Mortgage Protection)
Bank Charges
Property Taxes ( incl the €100 and also the Non Principal Property Tax)
Property Taxes coming down the line
Accounting and Tax Returns
YOUR OWN TIME

and the biggest cost of them all is the cost of an empty apartment

You could be lucky and have the best of tenants who decide to rent from you for 5/10 years and nothing ever breaks and they give you no problems at all but then you could also be lucky enough to win the lotto!!!

Like all investments there is risk and you have to weigh it up.

As they say the value of your investment may fall aswell as rise.....
 
Brendan Burgess said:
Do you own your own home?

"investing" in your own home makes much more sense. Any gains will be exempt from CGT.

If you have borrowings for an investment property, you will find it difficult to get a mortgage later if you do want to buy your own home.

Brendan
Click to expand...

Thanks for the info, no currently single & renting so no issues with affording that. I have a site back home so plan on building in the next couple of years so wont need a massive mortgage for that hopefully. Will the €110k i borrow affect me much in a few years time if its rented and say i needed another 150k for my own home?? Salary of about 38-40k at moment may go up a bit in next few years
 
kkelliher said:
If it rented easily everyone would have one. Trust me when I say there is nothing easy about the rental market.

You also have to factor in the additional costs of:

Management Company if in an apartment complex
Advertising / Letting Fees / Legals
Upkeep and Maintenance of the property (heating system etc)
Insurance (Property and Mortgage Protection)
Bank Charges
Property Taxes ( incl the €100 and also the Non Principal Property Tax)
Property Taxes coming down the line
Accounting and Tax Returns
YOUR OWN TIME

and the biggest cost of them all is the cost of an empty apartment

You could be lucky and have the best of tenants who decide to rent from you for 5/10 years and nothing ever breaks and they give you no problems at all but then you could also be lucky enough to win the lotto!!!

Like all investments there is risk and you have to weigh it up.

As they say the value of your investment may fall aswell as rise.....
Click to expand...


Thanks Kkeliher, ive done most of the sums myself and still think at worst it will look after itself. The proprty in question is a duplex apartment. Do you think i would be better waiting another while to see? I cant see the house prices rising at a rapid rate anytime soon??
 
A very interesting post as I am thinking of doing the same thing but from a very different starting point. Thanks for your thoughtful reply kkelliher.

I'm considering availing of voluntary redundancy at the end of this year. This will afford me a lump sum around €100k.

I'm 37, own my own home (no mortgage), no plans to move for the foreseeable future and enough savings to see me through a couple of years of frugal living post-redundancy if required. Though my immediate post-redundancy plans may take a while to produce an income (possibly years depending on what option I choose), my husband is earning too, so we won't have an immediate need of the lump sum.

My first instinct was to turf the lump sum into the post office in three-year bonds while I come up with a better plan for it. With the general heebie-jeebies about the euro however I'm wondering whether a more tangible asset may make more sense should something horrible happen to the euro/Irish economy (more horrible than has already happened that is!) The obvious tangilble asset would be bricks and mortar.

Would buying a rental property be bonkers for this purpose? What would you do with the lump sum if you were me, given my circumstances. As a noob landlord what do I need to consider ... aka could someone please elaborate on kkelliher's informative post above? Is there a decent, Irish, 'how to be a landlord' guide somewhere? At this stage I don't have a notion what's involved in being a landlord so any AAM sage advice would be most gratefully received to help me evaluate this option. I'm sure there's a key post or similar lurking about on just this topic that I haven't managed to winkle out of the archives.
 
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