HollyHobby
Registered User
- Messages
- 17
Partner has a pension. I don't. We paid €295,000
Sorry would you explain in layman's terms, your last point to me? I haven't a notion what that means! (The 3.8 debt to income bit) Sorry & thanks a lot!
And you should be able to borrow at 3.1%, not the 3.5% used in the examples above.
The best variable rate for LTVs over 80% that I'm aware of is 3.5%.
Your estimated after-tax return of 6% looks optimistic to me but, in any event, that's a leveraged return - it's not really comparing apples-to-apples.
Personally, I think a DTI ratio of 3.85 is actually pretty high for a couple is their 40s. Not excessive, perhaps, but higher than I would be comfortable with.
I would suggest that the relative CGT "shelter" is a pretty minor consideration on these facts and will obviously fade over time.
You are absolutely right that HobbyHolly would fall on the right side of Minister Coveney's rent control lottery (assuming the property is in a RPZ), which is certainly a real advantage, but that highlights another material risk of property investing - possible future government interference.
I personally think that maintaining a material cash reserve is critical to running a successful long-term rental business. HollyHobby's family would exhaust all their cash reserves if they buy a new PPR without cashing out their home equity. That seems excessively risky to me.
Strongly agree with your advice re maximising pension contributions which raises another issue - cash-flow. The rental will almost certainly be cash flow negative on an after-tax basis - will that inhibit HollyHobby's ability to make maximum use of tax-deferred pension vehicles?
Just my 2 cent - I'm not suggesting that there's a "right" answer here.
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