Opinions on investment

[Ishindar]

Im looking for opinions on weither you would consider this a good investment or not. any information appreciated.

My sister bought a house (3 bed end or terrace) in derry 5 years ago for 94K euro.
the house is currently vauled at 240k euro
the rental income is approx 660e per month

she offered me 50% share for 120k euro.
a standard morgage would cost me 800 euro a month so the shortfall is
approx 470e a month.
I would would like to turn a respectable profit over a five year period. Is this possible?

 

[CCOVICH]

Re: Opinions on investemnt

Say the rental shortfall continues top be €470 per month. The total rental loss would be €28,200 over the period. To cover this, the value of the property would have to increase to around €300,000 (a 25% increase on current value)-and there would have to be a buyer at that price.

And that would leave you in a no gain/loss position-you would need to define 'respectable' and see if you think that a 25%+ capital appreciation in the property is realistic.

I would be very doubtful myself, but I don't have a crystal ball.

The above analysis ignores taxes, repairs etc.-when these are factored in, it could make it much harder to turn a respectable profit over a relatively short timeframe.

 

[Ishindar]

Re: Opinions on investemnt

Say the rental shortfall continues top be €470 per month. The total rental loss would be €28,200 over the period. To cover this, the value of the property would have to increase to around €300,000 (a 25% increase on current value)-and there would have to be a buyer at that price.

And that would leave you in a no gain/loss position-you would need to define 'respectable' and see if you think that a 25%+ capital appreciation in the property is realistic.

I would be very doubtful myself, but I don't have a crystal ball.

The above analysis ignores taxes, repairs etc.-when these are factored in, it could make it much harder to turn a respectable profit over a relatively short timeframe.

my thoughts exactly! thks for taking the time! today i find out I can get an interset only morgage which would cost about 470e a month, so subtracting the rental income of 300e and the shortfall is about 200e a month which is 12,000 over 5 years. this would mean the property would have to increase in value to 264,000e which is 10% growth over 5 years.
This makes it look like a good posability, any other opinions?

 

[auto320]

I would look at this in a broader way. Firstly, the gains in this market have mostly already been made, and there is even a risk of prices dropping. Therefore the possibility of making windfall gains (as your sister has already done) in the furure are slim.

The second issue is the one of buying in partnership with anyone else, even family members (or maybe particularly in the case of family members). How do you get out in the future if she wants to hang on, or vice versa. Are there other people involved -- has she a partner who might take a different view etc?

My own instinct, given the family complications and the slim margins available here, would be to avoid this one altogether and go somewhere else with your capital.

 

[Ishindar]

I would look at this in a broader way. Firstly, the gains in this market have mostly already been made, and there is even a risk of prices dropping. Therefore the possibility of making windfall gains (as your sister has already done) in the furure are slim.

The second issue is the one of buying in partnership with anyone else, even family members (or maybe particularly in the case of family members). How do you get out in the future if she wants to hang on, or vice versa. Are there other people involved -- has she a partner who might take a different view etc?

My own instinct, given the family complications and the slim margins available here, would be to avoid this one altogether and go somewhere else with your capital.

very good points, u convinced me to against going for it, thks!