Hi Schoodles,
You haven't given enough information for anyone to work out if property is the right investment for you.
You need to identify the likely purchase price of the investment property - say €300,000.
You need to add the costs involved in buying the house (legal, stamp etc) and the cost of furniture / decoration etc - say €25,000
You need to estimate the rent you might get. At this stage a typical rental yield is about 3.5% of the purchase price - say €900 per month.
You then need to factor in annual costs and a provision for vacant periods. This adds up to say €1,800.
This gives you a total annual income of €9,000
An interest only loan over 5 years will cost €16,250 per year.
Therefore you need to be happy that you can contribure the €7,250 shortfall each year (this amount will be higher is you have a repayment mortgage)
At the end of 5 years your total investment will be €361,250 (€300,000 + 25,000 + 7,250x5)
If you assume 2.5% selling costs (legal / auctioneer etc), and 20% CGT you would need to sell the house for €386,100 to get this amount back.
Based on these figures and assumptions you would need house prices to increase by 5.2% each year over 5 years to break-even. Obviously if you hold the house for 10 years the required increase to break-even reduces to 4.1% per annum.
It is up to you to decide on these numbers and make up your own mind. Make sure however that you can afford the monthly/annual cash losses while you hold the investment.
John.