Keep house and build or sell?

V

Voodoo

Registered User
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hi all,

Ok, looking for a bit of advise. Let me explain what I am thinking of:
  • I currently own a house worth about €230k at the moment with €145k left of a mortgage.
  • ideally, we would love to build a house and this has been the dream all along.
  • Cost of site we have seen is about €170k and we think we could build the house for about €150k (has the cost of labour and materials dropped much in last 12months?)
  • Anyway, what I would like to do is to keep our current house, purchase site and build.
  • we would then rent out our current house once we have moved into the new build
Does this sound like we are crazy thinking of this? Our thought is that if the markets bounced back in 4-5yrs and the value jumped back to where it was 18 months ago (295k) then we could sell it at that stage or depending on how we are financially, keep it as our nest egg

Look forward to your thoughts.
 
A couple of thoughts:

1. If a site is worth €170k, then a house with a build cost of €150k is unlikely to do justice to the site. So either the site is way overpriced or you are planning a poor(ish) house for it.

2. Buying a site and building on it is (probably) no longer cheaper than buying a house. It is probably cheaper to buy your dream house than it is to build it, esp. if you are flexible in your dream..........


The 'sell' argument is valid perhaps: the value of 18 months ago is of historic interest only and tells you nothing about future value.

I am not so sure about the 'rent' argument. If you are buying something as your permanent home, if you find something you like and if you can afford it, then go for it.
 
MOB said:
I am not so sure about the 'rent' argument. If you are buying something as your permanent home, if you find something you like and if you can afford it, then go for it.
Click to expand...

fair enough. but the last thing you want to do is still have a declining propert and mortgage out for sire and build? so if you're going ahead and bulding said drem property, try to sell from now, and rent in between if nec.

ps. site prices well down too. hope this is factored in.
pps. can build lovely modest house even for 150k.
 
hi all,

i take your point. from what i have noticed however, site prices where i am havent come down much if at all... the price of 170k is what i believe i can get it for. he is looking for in the region of 250 for it but estate agent thinks he is unrealistic

I believe that you could build quite a modest house (in laois at least) for 250k.

I get your point on renting also, but I was thinking that if I could rent it out for between 700-750 which my estate claims it could get, then that would pay my mortgage on that anyway... I would have a contingency laid down for any months its not rented. Also, adding the 320k (from site and build) wouldnt cripple me as I have no other outgoings (except existing mortgage).

So that's really where I am coming from and looking for advise whether this is not recommended or possibly, in the future could be a good bet (I know we cannot predict the future or anything)
 
Voodoo said:
..... he is looking for in the region of 250 for it but estate agent thinks he is unrealistic.....

.............if I could rent it out for between 700-750 which my estate claims it could get, then that would pay my mortgage on that anyway...
Click to expand...

250k for a site in Laois - it must have a sea view! Watch out for sites which state "no local needs condition" as, while that may have been established by a neighbouring property or other precedent it is not a right that would have any paper value as the goal posts could move at any time leaving you with a worthless site.

Also site vendors or agents are setting a site value based on what a detached house on 1 acre are selling for in the area - less build cost of your typical modest house as you say €150,000. So that's €400,000 - are modest houses on 1 acre achieving €400,000 in sales in that area?

Remember from the rent received you may have to pay income tax and would not be allowed to claim the mortgage interest as a credit or avail of TRS. Also factor in if you do decide to sell at a future point in time Capital Gains Tax.
 
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