To buy or to hold off

Melbourne2013

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I'm currently looking to buy a property in kilmainham area. There is 2 bed property (59 sq metre) for 225k . It looks as though My offer may be accepted. Although there are nice views and I like the apt, I'm concerned at size...both bedrooms are quite small with limited space ( one double and one single). The max price I can pay for a property now is 225k- I'm 32 and single and want get on the property ladder. My mortgage would be approx 900 per month so was thinking if I rent out room for say 400-450, would make sense to buy to protect against rising rental prices. I have check property price register and these apt were around 125k in 2010. I wonder should I hold off until I can afford a bigger place or two bedroom house that might hold its value. I guess my question is to buy or not- any advice appreciated. The property mgt fee is 1100 and it needs some work in terms of carpet, painting etc.
 
i think may be too close to discussing property prices.......which is against the rules. so you may not get an answer on this.
 
There is no correct answer to this question.

A person wants to get on the property ladder and rent out a room.

Currently your paying €600 per month for a house share.

You can buy an eqivelant property and the mortgage is €900 and get rent in of €600. Seems a no brainer.

Or so lots of people thought in 2005-2008! and now look at them negative equity renting their own house and paying rent on a bigger house.

I'm assuming it's €180k loan at 3.5% over 25 years.

What if you don't like having a tenant in your own house? What if you can't get a tenant? What if house prices go down? What if interest rates go up?

You need to view this in your own circumstances rather than there being a right answer.
 
i think may be too close to discussing property prices.......which is against the rules. so you may not get an answer on this.

Just to clarify the rules.

A reply such as "Don't buy now as house prices are overvalued " would be against the Posting Guidelines.

A reply such as :

"If you buy now and prices fall, then you will lose . If prices rise, you will be delighted." is ok.

So Joe's reply is useful and well within the guidelines.

Brendan
 
Financially this does seem straightforward. However your personal circumstances may change, in 5 years time you may have 2 kids. A small central apartment won't suit you then.

In the past that wouldn't have mattered as you could sell the apartment and take the increased equity to a larger home.

As Joe points out above this wasn't possible for those who bought at the height of the boom. However it has been possible for purchasers at almost any other time.

You say that you could "hold off until you can afford a bigger place", this suggests that even at present, i.e. paying rent yourself and no tenant, you are saving. If you buy now will you be able to "afford a bigger place" even sooner than if you continued renting.

Finally Apartments can have problems, and that €1,100 service charge is a bigger issue than you might imagine. Capitalise it at the 3.5% of your mortgage and you get €31,400. An the service charge is eternal and possibly increasing, so it is at least a €31,400 issue.

That caveat aside. If the apartment provides suitable living accommodation for you for at least 3 years then it seems a good idea to me. You can't live your life in fear.
 
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