Would this be considered madness

billyhead

I am single and amy paying a mortgae of about 85000 euro on a 3 bed house with 15 years left of 850 euro per month. I have savings of about 50000 and was thinking of (dependent if I could get a loan) buying a one bed city center or near enough appartment for about 17000 euro. I have a secure government job and earn about 40000 gross per annum. Would it be a bad idea to consider this investment. Its just with property prices so low I am thinking of it. I would try and rent outthe 3 bed and live in the apartment. Would I even get a loan from a financial institution considering I still have the other mortgage to pay off?

OMD

billyhead wrote: »

I am single and amy paying a mortgae of about 85000 euro on a 3 bed house with 15 years left of 850 euro per month. I have savings of about 50000 and was thinking of (dependent if I could get a loan) buying a one bed city center or near enough appartment for about 17000 euro. I have a secure government job and earn about 40000 gross per annum. Would it be a bad idea to consider this investment. Its just with property prices so low I am thinking of it. I would try and rent outthe 3 bed and live in the apartment. Would I even get a loan from a financial institution considering I still have the other mortgage to pay off?

Yes.
Total madness.
On many levels.

Da GOAT

do the research and you should come to the correct solution

Tigger

billyhead wrote: »

I am single and amy paying a mortgae of about 85000 euro on a 3 bed house with 15 years left of 850 euro per month. I have savings of about 50000 and was thinking of (dependent if I could get a loan) buying a one bed city center or near enough appartment for about 17000 euro. I have a secure government job and earn about 40000 gross per annum. Would it be a bad idea to consider this investment. Its just with property prices so low I am thinking of it. I would try and rent outthe 3 bed and live in the apartment. Would I even get a loan from a financial institution considering I still have the other mortgage to pay off?

17,000 yes
170,000 no

not even wrong

billyhead wrote: »

buying a one bed city center or near enough appartment for about 17000 euro.

Yes, if you have the opportunity to buy a city centre apartment in an Irish city for €17k you should jump at it.

billyhead

Sorry folks I should have said €170000:D

drunkmonkey

billyhead wrote: »

I have a secure government job

I wouldn't count on that, have you seen what's happened in Greece. 30,000 public service jobs gone. There's no job secure right now. I'd keep building on your savings and sit tight until the dust settles.

paul71

You would get a higher return in terms of reduced interest payments by paying 50,000 off your mortgage. There is no guarentee that the 170,000 value of an appartment will not be 90000 in 3 years.

phormium

Hold on til I pick myself up off the floor!

Had to check the date of the op post as thought I might be reading an old thread that was dragged up again so in answer to your question - absolute madness.

However I wouldn't worry about it, practically no lender is going to give you the money, especially for a one bedroom apartment. Hang on to your cash.

derealbadger

OP i really find it hard to belive that in 2011 anybody could put €170k and prices so low in the same paragraph as for your thread title i aint no psychiatrist but i think your diagnosis of madness is probably quite acurate

Idbatterim

where is this apartment Op, also I assume its a new build?

noxqs

Troll post?

170K for a one bed anywhere in Ireland surely is a joke. Even a good 3 bed for that price is way over the top. This can't be a serious post.

the_syco

billyhead wrote: »

buying a one bed city center

Would it be a bad idea to consider this investment.

The entire point of an investment is to gain money. One beds are not in demand, and seem to be biggest hit this side of the recession.

PhoenixParker

One beds are in demand as rentals.
They're not in demand at all as purchases, so it may be approaching a good time to buy.
Why on earth you'd pay E170,000 for a one bed I have no idea though.

Which suggests you're utterly clueless and therefore shouldn't touch the idea with a barge pole.

Idbatterim

how much have average purchase price for 1 beds in Dublin dropped as a %, now how much has rental price % dropped? I wouldnt do anything before budget if I were you though Op, especially with the rent allowance drop expected...

Snakeblood

Idbatterim wrote: »

how much have average purchase price for 1 beds in Dublin dropped as a %, now how much has rental price % dropped? I wouldnt do anything before budget if I were you though Op, especially with the rent allowance drop expected...

I believe apartment prices in Dublin dropped 6% last month alone, which would suggest anyone trying to buy now will see the value drop much further almost immediately.

PhoenixParker

Well the average asking price of a one bed in Q1 2007 in Dublin city centre was E317k
The average asking price of a one bed in Dublin City Centre, latest Daft Report is E111K

The average asking rent of a one bed in Dublin City Centre in June 2007 was around E1000
(There's no DCC category, only D1,2,7,8)
The average asking rent of a one bed in DCC in the latest Daft Report is E813.

It is worth noting that the trajectory for rents is completely different to the trajectory for property prices. Property prices rose rapidly and continuously from about 1997 to 2007, with a small blip around 2002/2003 where it slowed down. The earliest numbers for rent are 2002 from the Daft reports. Rents were the same in 2002 as they were in 2007 and they fell in between those two points. From 2007 they fell about 25% until 2009 at which point they stopped falling.

Rent allowance cuts will make an impact, how much and in what areas is anyone's guess. Does rent allowance impact one bed apartments in Dublin City Centre? I'm not sure, single people living alone and childless couples are a prime category for emigration if they're unable to find work. A lack of demand is more likely to be a problem, but that doesn't seem to have manifested itself to date.

What would worry me far more with a one bed apartment is the maintenance and fees for the block. Alot of the blocks are approaching ten years old now, the point at which first major overhauls are needed. Problem residents in the rest of the block could make your flat unlettable. There's also the risk factor, one bad tenant in your flat could require more than a years worth of rent to repair.

I think a professional with a lot of flats and the resources to manage problems could make a very nice living out of buying apartments around Dublin right now, but for one person with one flat, it's a whole lot of hassle for a not very big return.

the groutch

buying a 1 bed apartment = financial suicide

Victor

The banks won't give you a loan for a 1-bed apartment.

Assuming you are paying more on your mortgage than you are getting on your savings, it may be worthwhile reducing your mortgage. However, do keep some rainy day (week?) money.