Should I buy in Cork or Dublin?

learoy

Hey guys,
I would like to get on to the property ladder as soon as possible and I need some advice. I am a first time buyer and would like to get a 100% mortgage. My budget is around 300-330k.
I am currently renting and working in Dublin. But I feel I could get better value for money if I bought a 2/3 bed house/apartment in Cork City and rent it out while I rent in Dublin in an area with easy access to the City centre..

But however I am a little concerned about renting my house to tentants for reasons like (tentants having no respect for the property and not paying rent on time etc...)

What I am asking here is should I buy a 2 bed apartment in Citywest, Saggart or Rathcoole live there and commute to city Centre for work??or continue renting as I currently am and buying a more affordable house in Cork and renting that out??

Thanks in advance for any comments
Learoy

chump

Buy a place to live in.
If you don't fancy buying in the back of beyonds but it's all you can afford, keep renting. Save as much as you can and wait until you can afford somewhere you'd like.

Did you know about stamp duty clawback for FTB's?

Do you plan to upgrade within a set number of years? Is it worth the loss of FTB status. Is it worth the fee's that go hand in hand with purchasing and selling?

Are you expecting short term capitcal appreciation?

Have you used a mortgage calculator to see what interest payments you'd be making to the bank and how they compare to rental payments?

Have you considered rising interest rates?

What's you take on a crashing Australian housing market? On a tumbling US housing market? On an expected US slump next year? On the over-reliance of the irish economy on house-building?
On stagnant rents? On 100k houses being built this year? On expected future migration trends?

learoy

Thank you for your reply Chump,
Just to give you an insite in to my financial background. I currently have about 40,000 some of which tired up in investments. I am aware of the fees of buying a home, I am buying with my bf and plan on paying the fees with this money. Our current salary together is about 60k, we r just starting our careers so this will hopefully this will rise over the next few years.

I am 23 and I have been renting for 5years and I plan on staying Dublin for another 5yrs maybe longer.

Are you expecting short term capitcal appreciation?

If we bought in Dublin we would be buying a home to live in.But we are thinking of this as an investment in the long term.

Have you used a mortgage calculator to see what interest payments you'd be making to the bank and how they compare to rental payments?

Yes I have compared these. Together we are currently paying about 1100euro a month for rent. If we were to pay off a mortgage this price would rise to roughly 1500euro a month over 35yrs. But at the end of the day we would own our own home instead of paying off someone elses mortgage.

And there is always the option of rent a room scheme if we are finding it hard to make the repayments?

Have you considered rising interest rates?

I plan on getting a 5/6year fixed rate mortgage as rising rates are Inevitable..And after working for 5years I think we would be better able to pay off any extra interest rates.

My biggest fear however is a crash in the housing market.. Is the housing market not predicted to continue for another 5-10 years especially in Dublin?
I am aware I am young and could wait for the property market to crash but there is always a chance it wont and I might have missed a great investment oppertunity.

I am early in the research phase of buying property in Dublin, So I welcome any advice or comments..

stepbar

learoy wrote:

If we bought in Dublin we would be buying a home to live in.But we are thinking of this as an investment in the long term.

Mistake, your primary residence should NEVER been seen as an investment, its a liability from day one. You will always need somewhere to live. Until the day comes when you have a cheque in your back pocket your house is NOT an asset. I think first off you should secure your future by finding a place to purchase in Dublin and not Cork. It does not make ecomonic sense considering that you would be very hard pressed to find a suitable house that would enable you to rent and meet the mortgage repayments. Unless you want to rent to students

My questions is do you absolutely have to buy in Dublin? Have you considered the surrounding counties or is this not an option with work etc?
You also need to do sums out / proper budgeting; putting aside the fact of a property crash for a moment, could you live on one salary should any one of you become unemployed / sick etc? For how long? Work out what would happen if interest rates reached 6,7,8...%. Renting a room is an option but it is never guarenteed.

One good thing ill say is that you have a good basis to start from, 40K is a nice lump sum to have. In actual fact it is a deposit. Although the 35yr mortgage will kill you in interest and may wipe out any capital appreciation.

Long and short of it is that you should never consider your primary residence to be an investment, after all you need somewhere to live and that should be your primary concern.

chump

learoy wrote:

Thank you for your reply Chump,
Just to give you an insite in to my financial background. I currently have about 40,000 some of which tired up in investments. I am aware of the fees of buying a home, I am buying with my bf and plan on paying the fees with this money. Our current salary together is about 60k, we r just starting our careers so this will hopefully this will rise over the next few years.

I am 23 and I have been renting for 5years and I plan on staying Dublin for another 5yrs maybe longer.



If we bought in Dublin we would be buying a home to live in.But we are thinking of this as an investment in the long term.


Yes I have compared these. Together we are currently paying about 1100euro a month for rent. If we were to pay off a mortgage this price would rise to roughly 1500euro a month over 35yrs. But at the end of the day we would own our own home instead of paying off someone elses mortgage.

And there is always the option of rent a room scheme if we are finding it hard to make the repayments?


I plan on getting a 5/6year fixed rate mortgage as rising rates are Inevitable..And after working for 5years I think we would be better able to pay off any extra interest rates.

My biggest fear however is a crash in the housing market.. Is the housing market not predicted to continue for another 5-10 years especially in Dublin?
I am aware I am young and could wait for the property market to crash but there is always a chance it wont and I might have missed a great investment oppertunity.

I am early in the research phase of buying property in Dublin, So I welcome any advice or comments..

Congrats on the 40k savings.

Just regarding the 5/6year fixed mortgage. Don't believe you can beat the banks in assessing how interest rates will go. Some speculation exists already out there that the Fed may well cut US interest rates around this Xmas or early 07. If Europe were to take a dip next year the ECB may do something similar.

I personally wouldn't fix but instead would be prepared for interest rate rises, say for safety sake see if on the same salaries you could afford repayments in mortgage rates spiked to say 7/8%.

I would also buy a place to live in, with no thoughts of having to rent a room. That wouldn't exactly be a pleasant scenario for a young couple.

I'd try my best to get a 30yr mortgage instead of 35.

"Is the housing market not predicted to continue for another 5-10 years especially in Dublin?"
Nobody knows, but you can be sure anyone who says something like that doesn't know.

You're still young. Will it be a wise call to get onto the 'ladder' when many people think it's peaked - nobody knows. Go with your gut. My gut says trouble ahead :eek:

I'm not in a position to buy so if anyone is likely to be a bit of a naysayer, it'll be people like me. But people who are on the ladder, or planning on getting on are hardly any more objective. Best of luck

waldo

I'm i a similiar situation. Considered buying in both Dublin (where I live with g/f) and buying in Cork. I was always a bit bearish about the market here, but the following are worth a read:

http://askaboutmoney.com/showthread.php?t=31710 (all 133 pages of the thread)

http://patrick.net/housing/crash.html

http://www.smh.com.au/news/national/housing-crash-puts-sellers-in-debt-crisis/2006/08/20/1156012414995.html

It's a risk no matter what you do, but remember how nobody saw the tech stock bubble bursting. On the other hand, its worth remembering that St Patrick drove the property crashes out of Ireland.

shnaek

I am in a position to buy but I am holding off. Renting is cheaper than repayments on a 30-35 year mortgage. I don't believe that situation will/can continue long term, and IMO it won't be rising rents that rebalance the situation. I'd advise caution, unless you have spotted your dream home in which you'd be happy to live long term.

Paraic

If you buy in Cork for 300K to rent out you would be classed as an investor and you'll have a stamp duty liability of €15,000.
Have you looked at areas on the outskirts of Dublin and neighbouring counties were prices are a little more reasonable.
The Markets predict Interest Rates to rise from 0.5% to 1% over the next 2 years after that they seem to level off, so fixing for 5years mightn't be the best course of action. 2 to 3 years fixed might be sufficient.

Regards
Paraic@obrienfinlay.ie

ice27

Paraic wrote:

If you buy in Cork for 300K to rent out you would be classed as an investor and you'll have a stamp duty liability of €15,000.
Have you looked at areas on the outskirts of Dublin and neighbouring counties were prices are a little more reasonable.
The Markets predict Interest Rates to rise from 0.5% to 1% over the next 2 years after that they seem to level off, so fixing for 5years mightn't be the best course of action. 2 to 3 years fixed might be sufficient.

Regards
Paraic@obrienfinlay.ie

I would think it extremely hard to find anything in Cork for around the 300k mark in a desirable rental location. Most new 2 bed aprtments even outside the city are going for around 330/350k, therefore not making it a very desirable investment for the small time investors who would be looking for a substantial yield. If you know of anywhere please let me know!

Reyman

The property game is nearly up.Watch for the pain when it blows.

Stay in cash and keep renting!

nimble75

learoy wrote:

Thank you for your reply Chump,
Just to give you an insite in to my financial background. I currently have about 40,000 some of which tired up in investments. I am aware of the fees of buying a home, I am buying with my bf and plan on paying the fees with this money. Our current salary together is about 60k, we r just starting our careers so this will hopefully this will rise over the next few years.

I am 23 and I have been renting for 5years and I plan on staying Dublin for another 5yrs maybe longer.



If we bought in Dublin we would be buying a home to live in.But we are thinking of this as an investment in the long term.


Yes I have compared these. Together we are currently paying about 1100euro a month for rent. If we were to pay off a mortgage this price would rise to roughly 1500euro a month over 35yrs. But at the end of the day we would own our own home instead of paying off someone elses mortgage.

And there is always the option of rent a room scheme if we are finding it hard to make the repayments?


I plan on getting a 5/6year fixed rate mortgage as rising rates are Inevitable..And after working for 5years I think we would be better able to pay off any extra interest rates.

My biggest fear however is a crash in the housing market.. Is the housing market not predicted to continue for another 5-10 years especially in Dublin?
I am aware I am young and could wait for the property market to crash but there is always a chance it wont and I might have missed a great investment oppertunity.

I am early in the research phase of buying property in Dublin, So I welcome any advice or comments..

Learoy, don't do it, the property market WILL CRASH, and sooner than you think. Read this article (link below)...you are MAD if you buy property in Ireland at the moment.

http://www.gold-eagle.com/editorials_05/saxena082206.html

antoinolachtnai

Don't just accept the word of the boards.ie soothsayers that the property market will crash. If you buy good property it will probably at least maintain its value and will grow in value at a modest rate. How many people here who are saying that property is going to drop in price have sold their own homes, paid off the mortgage and moved into a rental?

You should also look at the 'affordable' housing options. I'm not saying there will be anything in this for you, but it is definitely worth a look.

If you buy property further out from Dublin, you are just increasing the odds of being involved in a crash, not reducing it.

Don't get involved in BTL as an alternative to buying your own place unless you fully understand the tax implications and are confident that you can handle the renting-out.

It isn't altogether impossible that rents in Dublin will increase.

It's also worth saying that if this couple were to invest their lump sum and their monthly cash in anything else, the tax treatment would be a lot less favorable. (DIRT and income tax on interest or rental income, capital gains tax on property gain).

Good luck with it! I hope you are very happy with your investment

best of luck on a tough decision

educate yourself as much as you can on the biggest financial decision you will ever make

I wont advise you either way but for gods sake make sure you know what your gettin yourself into

donaghs

If you push your budget up a little you might still get a proper house in areas like Kilbarrack, Donaghmede or Clonsilla. While you can forget about walking home from town, you'll still be in Dublin City and could get the train to work in the city centre, taking a little pain out of your life. If the house is 3-bed, thats an extra room to rent.