Time to invest in Property?

Ald

I read this article in today's Indo. Got me thinking about property around universities and rental income from them. Let's face it, university has become a staple feature of the society we live in. People always aspire to go. So, do you think now's a good time to buy such a property as this one?

It is within distance of DCU. Has 3 bus routes to town. Needs a bit of work but that's a positive in my view as drives price down for buyer. Could maybe knock another few grand off by negotiating. Mortgage for 75%. Rent hopefully pays off mortgage then.

I'm not planning on doing it anytime soon. But, do you think the idea is good? What obstacles am I facing? Is rental good at mo? Anybody else with similar experiences of this?

pirelli

Yes!

What he is saying is to factor in another 15% drop in house prices over the next 5 years. So if your paying 'however' much a month in rent for a similar property then you would be 5 years ahead on your mortgage if you can buy that house for an additional 16% reduction of the sale price. Not such an easy thing to do.


He gives an example of a house in Kildare for 200,000 and then goes on to say:
A couple with a €20,000 deposit who are now renting a similar property for €850 a month should buy now if they can get the price down to €183,000.

turbobaby

That place is tiny. 73m2 for a three bed house is atrocious. That kitchen isn't fit for one student let alone a few of them.

Property still has a long way to fall, and interest rates will rise over the lifetime of the mortgage.

With University fees likely to be re-introduced, there will be less students with less money to spend.

220k is way overpriced for this.

You'd want to be picking this up for €130k max.

Here's a good way to calculate the value of a property:

11 times the monthly rent you expect to receive, divided by 0.06, with 6% (which represents the minimum yield you'd like to get from your investment).

Jim2007

First of all there are a lot of assumptions underlying those calculations, so I'd be very careful about using them!

Next think about the student market, it is going to be some time before things pick up, so how will students finance their stay in college??? Next is the fact that there is an aging population and already all over Europe colleges are entering the fight to attract students. I'm on good terms with someone in the admin side of a certain university in Ireland and all I ever here about is how difficult is going to be to attract students........

Next to consider is the fact that a major part of your investments will be in a single asset, which may not be very marketable when you wish to dispose of it...

I do believe that having some property in your portfolio is a good thing, but I'm not sure that this is the way I'd go about it. Since July I have been building up a position in the FTSE/EPRA European Property Index as the property element of my portfolio.

With respect to the article referenced, I laughed when I read the author's bio: "then finally as a Director of UBS, again with responsibility for credit markets" the director title at UBS is as common as muck and I'd really love to hear the definition of "responsibility for credit markets" :rolleyes:

Jim.

strmin

Buying one old house as investment is bad idea. Property in Ireland can go down another 20% easily. Why not spread your money on REITs or property ETFs?

yosemite_sam

I would not buy anything until this NAMA nonsense starts going to market. You could end up paying 50% plus too much

Auctionmcd

turbobaby wrote: »

That place is tiny. 73m2 for a three bed house is atrocious. That kitchen isn't fit for one student let alone a few of them.

Property still has a long way to fall, and interest rates will rise over the lifetime of the mortgage.

With University fees likely to be re-introduced, there will be less students with less money to spend.

220k is way overpriced for this.

You'd want to be picking this up for €130k max.

Here's a good way to calculate the value of a property:

11 times the monthly rent you expect to receive, divided by 0.06, with 6% (which represents the minimum yield you'd like to get from your investment).

Having worked in letting for 10 years dealing with mainly student accomodation I have noticed 1 thing, the size is irrelevant it is the quality that counts now. Unfrtunately landlords have had it easy to date flogging all their run down decrepit properties to students and now this has started to change, rents are falling and it isn't enough to have a property well located it must be to a standard that is fit for habitation so what I would say is that disregard the size and location if the property is not fit for purpose unless you are willing to spend the money to bring it to a standard now required by the student population. The day of the slumlord is over.

stepbar

If students were in such plentiful supply then why do I notice so many apartments to rent / sell in the Gateway? - http://www.gatewaystudentvillage.ie/

Anyhow, I would never aim to purchase a house to rent to students.