First time buyer questions

gerry87

I'm looking to get a foot on the property ladder and i want to ask some questions here, but i'm not really sure what questions i should be asking. Basically i'm just looking for random tidbits of advice.

What I'd like to do is get a loan to buy a fairly small apartment to rent out for a few years, and have the rent service the loan. I've been thinking maybe one near a college to rent to students, but then it wouldnt likely be occupied all year round.

What sort of loans are available to first time buyers? Are there any special tax considerations?

Also i'm a student now, would it be more difficult getting borrowings now as opposed to when i get my degree?

Well, thats enough rambling. Any advice on any of this greatly appriciated.

Idleater

First of all, if you are buying to let it out then there are completely different tax conditions to buying to live (primary residence).

I would suggest you sit down and think seriously what you are planning on doing first of all and then come back with specific questions.

In the calculations that you do, make sure to factor in that what you will recieve in rental income will NOT cover the mortgage.

L.

Sarn

You'd get a better response in Accommodation/Property, also there's a good bit of info there.

I'll give a bit of advice (subject to correction). You need an income to get a mortgage so as a student it would be extremely difficult to get a mortgage. Basically you get a multiple of your salary (or it can be calculated on your disposable income). A multiple of 5 times your salary would be about normal (varies from institution to institution). Normally lenders don't want your repayments to be higher than ~35% of disposable income and this is stress tested with 2% onto the existing rate i.e. can you afford the repayments if rates go up by 2%. The higher the rate the less you can borrow.

Your parents would definitely have to be on it. With rates and prices the way they are it is unlikely that you would get rent to cover your repayments especially in a location near a college. Buying on your own even with a decent salaried job can be pretty difficult unless you're willing to buy a shoebox or outside urban areas. Check out some of the lending institutions websites, they have mortgage repayment calculators to give you an idea how much cash you need to get a loan of a certain size.

FTB's don't pay stamp duty on second-hand properties up to €317,500 and there is no stamp duty on new properties up to 125 sq. m. (I think that's the right size) provided you live in them.

ircoha

gerry87 wrote:

I'm looking to get a foot on the property ladder and i want to ask some questions here, but i'm not really sure what questions i should be asking. Basically i'm just looking for random tidbits of advice.

What I'd like to do is get a loan to buy a fairly small apartment to rent out for a few years, and have the rent service the loan. I've been thinking maybe one near a college to rent to students, but then it wouldnt likely be occupied all year round.

What sort of loans are available to first time buyers? Are there any special tax considerations?

Also i'm a student now, would it be more difficult getting borrowings now as opposed to when i get my degree?

Well, thats enough rambling. Any advice on any of this greatly appriciated.

The content of this post,combined with the occupation of the OP and the time of posting, 0230 hrs reminds me of the road sign in UTAH: Why drink and drive when you can smoke and fly?

To be blunt, as a student, with I presume no declarable income, you have no chance of getting on the property ladder along the lines of your post.

BTW, having the degree is not the issue, getting a job is.

As noted elsewhere, if the salary multiple is 5 times for a single income deal and the average price of a place is 350k, then u need a salary of 70k to contemplate buying on your own, hence the suggestion of parental support.

Riviera

It amazes me how little investors think about foreign property as an investment, relative to Investor's concept of Irish property.

People don't realise the value there is to be found abroad. You can buy more, for alot cheaper. And the prices rise. For a first time buyer trying to get on the property market, it seems like a logical strategy to purchase somewhere:

-you can afford
-with decent returns (rent and capital appreciation)
-with a predictable market and well-regulated buying process

Don't go for trends in property abroad. Half of Eastern Europe is worth the investment, half is not (and can be very volatile).

Look outside Ireland.

But before all this, nobody will give money to a student. Get a stable and lucrative job. Horse before the cart, as they say.

gerry87

Naturally i dont expect to go out tomorrow and be aproved for a loan. I'm just curious about how people go about starting to invest in property. For example i had no idea about that 5x your salary. Also i assumed rent on an appartment would usually cover mortgage re-payments, probably pretty naive i suppose, but i pretty much know nothing about any of this.

And if i did decide to start looking around for a place, would abroad be more realistic?

dunkamania

gerry87 wrote:

Also i assumed rent on an appartment would usually cover mortgage re-payments, probably pretty naive i suppose, but i pretty much know nothing about any of this.

And if i did decide to start looking around for a place, would abroad be more realistic?

Unfortunately,there are very few residential properties in Ireland whose rent would cover their mortgages(maybe a few at interest only)

Just because the amount of capital is less for investment abroad,usually,doesnt mean you are more likely to get it.
You will be expected to put up a considerable amount yourself,maybe 20%

chump

gerry87 wrote:

Naturally i dont expect to go out tomorrow and be aproved for a loan. I'm just curious about how people go about starting to invest in property. For example i had no idea about that 5x your salary. Also i assumed rent on an appartment would usually cover mortgage re-payments, probably pretty naive i suppose, but i pretty much know nothing about any of this.

And if i did decide to start looking around for a place, would abroad be more realistic?

In the last few years people like you, with no great grasp of the markets, have taken the plunge and done well for themselves. They saw it as the easiest money they've ever made, and they spread the word - property.

I personally don't think it will be that easy in the future. In fact I think quite the opposite. Just because some people got lucky in the past, doesn't mean you're going to get lucky now.

If someone told you that your investment had a 50% chance of losing money, would you take the gamble? What about 40%, 30%, 20%, 10%, 5% ?

Access

This would be a good topic to sticky

gerry87

chump wrote:

If someone told you that your investment had a 50% chance of losing money, would you take the gamble? What about 40%, 30%, 20%, 10%, 5% ?

you can't really answer that. If 50% of this time it loses 5% in value and 50% of the time it gains 10% then thats a reasonable gamble. I don't see what you mean by that, of course most investments have risks you'd have to weigh up the cost benifit of each one investment.

But the property itself is never likely be worth nothing, and how much value could it lose?

You say people who had no grasp of markets did this, but now they would have a reasonable grasp of markets. How else can you get a grasp of markets?

chump

By reading the positive and the negative. By researching until you're numb. By weighing up alternatives.

Of course you're right about the magnitude of any 'loss' being very important, but the magnitude of a gain is also important, and also unknown.

What if there was a 30% chance that the value was going to lose 15%, and a 70% chance it was going to gain 10%.(in 1 year) And there were no other variables or options. Would you go for it?

(I'm just trying to find out if you're REALLY prepared for the real possibility of making a loss, I don't think many people even think it's possible in housing)

gerry87

chump wrote:

By reading the positive and the negative. By researching until you're numb. By weighing up alternatives.

I'll be the first to say i dont know much about any of this, and really this thread was my first step into researching this. I have no idea where else to start the researching.

chump wrote:

Of course you're right about the magnitude of any 'loss' being very important, but the magnitude of a gain is also important, and also unknown.

What if there was a 30% chance that the value was going to lose 15%, and a 70% chance it was going to gain 10%.(in 1 year) And there were no other variables or options. Would you go for it?

Depending on the size of the investment, odds wise your expected value would be +2.5%, still positive, but if you had a +10% expected value option, then you mightn't go for the 2.5% one. But as you say you cant actually quantify the % of time you gain or lose value.

chump wrote:

(I'm just trying to find out if you're REALLY prepared for the real possibility of making a loss, I don't think many people even think it's possible in housing)

i do understand it's not a get rich quick scheme, but while it's possible to lose money, it is possible to own properties and make money from them, and naturally i'd like to find out as much as i can to help me be the latter.

I'm just trying to find out as much as i can here, and where to go to find out more.

chump

http://www.askaboutmoney.com/ is a good irish discussion group

pay particular attention to Property Investment, and the Great Financial Debates forums... good luck


oh and look at the Stickied threads at the top of the forums in AskAboutMoney before posting new threads. I'd say go through each forum and read them all before you do... They hate repeating themselves!

gerry87

ok, will do, thanks!