House prices still falling?

lolo62

thinking of buying and have been looking around at prices

the house i rent is one of those red-brick terrace, tiny house one up one down.

checked out one for sale a couple of years ago on the road and it was 113,000

one gone up for sale there recently for 71,000

does anyone think this is an all time low or are they going to keep falling?

is now the best time to buy or should i wait?

thanks!

JCabot

I think they are gona still keep going and the reason is nama are sitting on thousands and we have massive surplus with many people leaving this country daily.

Marcus_Crassus

I agree with JCabot -- they will continue to fall.

IMO, there's still a long way to go, especially in urban areas. Some people seem to be living in 2006 with the prices that I see.

lolo62

for me this is a good thing...it means i might actually be able to afford my own place

i did the sums last night, if i was approved for a 20 year mortgage on 80,000 i would be paying at least €100 less per month for repayments than rent!

seems bananas...ive always thought of having a mortgage as being a burden not a money saving exercise!

NIMAN

lolo62 wrote: »

for me this is a good thing...it means i might actually be able to afford my own place

i did the sums last night, if i was approved for a 20 year mortgage on 80,000 i would be paying at least €100 less per month for repayments than rent!

seems bananas...ive always thought of having a mortgage as being a burden not a money saving exercise!

But if your circumstances change, such as losing your job, getting ill etc, its harder to walk away from a mortgage than it is a rented place. Always bear that in mind.

lolo62

NIMAN wrote: »

But if your circumstances change, such as losing your job, getting ill etc, its harder to walk away from a mortgage than it is a rented place. Always bear that in mind.

i know its a big step...definitely, but i figure im pretty much always going to be paying rent of at least €400 amonth so why not invest instead

if house prices keep going the way they are i could get a small place for a mortgage that wouldnt give me nightmares!

NIMAN

You do make a point, but always consider that your mortgage repayments have the potential to go up quite a bit in the future if interest rates rise. Doesn't look likely for the next few years, but no-one knows whats down the line.

But I do agree that it is a good time for buyers now, should be plenty of bargains out there if you have the means of buying. I myself am selling a house for €85k, that would have got €180k in the peak.

lolo62

NIMAN wrote: »

You do make a point, but always consider that your mortgage repayments have the potential to go up quite a bit in the future if interest rates rise. Doesn't look likely for the next few years, but no-one knows whats down the line.

But I do agree that it is a good time for buyers now, should be plenty of bargains out there if you have the means of buying. I myself am selling a house for €85k, that would have got €180k in the peak.

i know i have a lot of research to do before seriously going ahead with anything...theres insurance and all that to consider too

it doesnt feel great to think about all the people who were hard-done-by and have lost out so dramatically..kind of like cashing in on someone elses misfortune

its just great to be able to even just consider it to be honest...would never have been an option in the past (im a musician!)

iguana

lolo62 wrote: »

it doesnt feel great to think about all the people who were hard-done-by and have lost out so dramatically..kind of like cashing in on someone elses misfortune

its just great to be able to even just consider it to be honest...would never have been an option in the past (im a musician!)

It's not even slightly cashing in on someone else's misfortune. All you would be doing is buying a house for closer to it's actual value. Just bear in mind that in most cases they still aren't at actual value so bide your time and get the best for your money.

the GALL

iguana wrote: »

It's not even slightly cashing in on someone else's misfortune. All you would be doing is buying a house for closer to it's actual value. Just bear in mind that in most cases they still aren't at actual value so bide your time and get the best for your money.

Of course getting a cheap house X amount under what people paid at the height of the boom is cashing in on someones misfortune, especially when there are people who paid crazy money at the height of the boom and lost their houses/jobs through no Fault of their own and or up to their tits in debt and probably will be for the rest of the lives is cashing in on someones misfortune. Cop yourself on.
But on the flip side sure f*^k it not your problem grab a bargain while there out there, just if it goes t1ts up for you, well.........

Stavro Mueller

As far as I know, nobody put a gun to anyone's head and forced them to buy a house during the boom. I doubt either that any of these people gave those paying "dead money" a second thought as they got the keys to their wooden floored paradise.

dory

the GALL wrote: »

Of course getting a cheap house X amount under what people paid at the height of the boom is cashing in on someones misfortune, especially when there are people who paid crazy money at the height of the boom and lost their houses/jobs through no Fault of their own and or up to their tits in debt and probably will be for the rest of the lives is cashing in on someones misfortune. Cop yourself on.
But on the flip side sure f*^k it not your problem grab a bargain while there out there, just if it goes t1ts up for you, well.........

This doesn't make any sense. Are you saying we now shouldn't go buy cheaper property? Should we wait and hope another bubble is created? I was laughed at by people for not 'getting my foot on the ladder' when I didn't want to pay €365k for an apartment. Nothing wrong with seeing value and going for it.

bmaxi

cymbaline wrote: »

As far as I know, nobody put a gun to anyone's head and forced them to buy a house during the boom. I doubt either that any of these people gave those paying "dead money" a second thought as they got the keys to their wooden floored paradise.

Bit harsh there friend. You have to consider that those buying at the time may have been those very people who were paying "dead money". It may have seemed prudent as they watched their rent head for the moon.

mari2222

The "experts" opinion as per the media is that there will be double digit percentage drop in price in 2012, so at least 10% less by Christmas.

Readyhed

mari2222 wrote: »

The "experts" opinion as per the media is that there will be double digit percentage drop in price in 2012, so at least 10% less by Christmas.

No one knows and in the words of Warren Buffett anyone who tells you that a market hits the bottom is probably a fool or a salesman.

In investment terms it is called "bottom fishing".

There are no experts. Ok Nama has loads of unsold properties but "experts" will tell you that this is "priced in." Anything anyone tells you that is a reason for the market to move in the future is already "priced in" unless it is a secret that only they know.

Estate Agents will always tell you "Now in the time to buy" regardless of where you are in the cycle.

If you need a house to live in long term, can afford the mortgage and the repayments are less than the rent then buy it now and forget about investment considerations.

If you do otherwise you are simply speculating on future movements in the market just like guys did in the boom. - They thought the curve would never bend down - some now think it will never bend up. It will but no one knows when.

iguana

Readyhed wrote: »

If you do otherwise you are simply speculating on future movements in the market just like guys did in the boom. - They thought the curve would never bend down - some now think it will never bend up. It will but no one knows when.

Not really. House prices on the whole are still no where near value. In every other crash prices have not only returned to value but they have undershot. There may be the rare house out there that you could haggle to get for a fair price near it's actual value but for the most part house prices still have a long way to go to reach value using any of the traditional means of calculating value.

There are also still a number of artificial props holding up the market which are extremely unlikely to last forever. The odds are prices will eventually go up again but all the indicators say that is a long way off and there will be further falls before that happens.

preddy

So on average offer 8-15% less then asking to account for the 2012 drop?

L1011

preddy wrote: »

So on average offer 8-15% less then asking to account for the 2012 drop?

The asking is rarely what the house will sell for - even if you pay 15% less than the asking price, if prices drop 15% for that house type & area, you've still dropped 15%.

Stavro Mueller

Things aren't helped either by the lack of official information as to how much houses are actually selling for. There was talk of creating a register but that hasn't come onstream yet.

Readyhed

iguana wrote: »

Not really. House prices on the whole are still no where near value. In every other crash prices have not only returned to value but they have undershot. There may be the rare house out there that you could haggle to get for a fair price near it's actual value but for the most part house prices still have a long way to go to reach value using any of the traditional means of calculating value.

There are also still a number of artificial props holding up the market which are extremely unlikely to last forever. The odds are prices will eventually go up again but all the indicators say that is a long way off and there will be further falls before that happens.

In which case everyone should sell their house and rent for a few years. Buy again and make a profit. A few years ago I heard Patrick Honahan guiving this exact answer to the claim that house prices will continue to fall. (think ift was on "Freefall")

I have worked in the real estate industry for 25 years both here and in the UK and in europe.
I have seen bust boom cycles in the UK and in Spain/Portugal.

No one ever accurately predicted the crashes would occur. I personally predicted the Irish crash in 2004. I always said it was coming but could not say when. Nor could I say that
prices would not increase further before the fall.

No one ever guesses the bottoms correctly.If anyone could they would amass enormous wealth from this capability.

They last longer than everyone thinks and the upturn usually comes when everyone has long since given up predicting it.

Are you suggesting the OP should wait and hope to make a better deal by getting the property cheaper in a year or two?

iguana

Readyhed wrote: »

Are you suggesting the OP should wait and hope to make a better deal by getting the property cheaper in a year or two?

I think anyone wanting to buy a house should wait until they can buy one at value. There are a number of ways to calculate value so not really that hard to work out, although the artificial props to the housing market such as rent allowance needs to be accounted for or you'll end up overpaying.

And then once houses reach value, unless you have a very unique property in mind (and there ain't a lot of them) there is no harm in waiting a little longer and seeing what happens. The housing market isn't the stock market, prices don't rush back up overnight.

No one ever accurately predicted the crashes would occur.

Well that's just not true. Quite a few posters here, on AAM and then the pin quite demonstrably predicted the top correctly.

Readyhed

Well that's just not true. Quite a few posters here, on AAM and then the pin quite demonstrably predicted the top correctly.

If you keep predicting you will eventually be right. McWilliams proved this.
No one on AAM or Propertypin predicted the collapse of Lehman's or the world financial crisis. I predicted the fall in 2004 but I expected it to come from the pressure from increasing Interst Rates from the ECB whichstarted happening. I didn't stop predicting it until 2006/2007 so you could say I predicted the top of the market.

I think anyone wanting to buy a house should wait until they can buy one at value

You used the phrase "actual value" in your previous post. Others say "over-valued" and "uinder-priced" and things like this. The proper value for a house in a given place at a given time is what a buyer is prepared to pay for it.

People seem to think there is a "proper" value for their house carved in stone somewhere. The fact that they have to sell for substatially less than this is due to artificial conditions that affect the market at this moment in time. This makes no sense.

Nevertheless I fully agree that people should wait until they are sure
and there is certainly no panic. In don't think I suggested there was.


My point is treat the purchase of a house as the purchase of a home - not as an investment.

blueturnip

iguana wrote: »

I think anyone wanting to buy a house should wait until they can buy one at value. There are a number of ways to calculate value so not really that hard to work out, although the artificial props to the housing market such as rent allowance needs to be accounted for or you'll end up overpaying.

How can you calculate value? I have seen one formula based on rent in the area etc, just wondering what else you might have up your sleeve?!

iguana

blueturnip wrote: »

How can you calculate value? I have seen one formula based on rent in the area etc, just wondering what else you might have up your sleeve?!

You can also calculate it by looking at the average income of the type of person that traditionally lives in the area. Then multiplying by somewhere between 3.5 and 5 to account for a deposit and partner's salary.

Then do the rental formula and venn diagram the two lots of figures.

blueturnip

iguana wrote: »

You can also calculate it by looking at the average income of the type of person that traditionally lives in the area. Then multiplying by somewhere between 3.5 and 5 to account for a deposit and partner's salary.

Then do the rental formula and venn diagram the two lots of figures.

Thanks Iguana! Stupid question, how do I know what the average income is? Do I go along the lines of what we can afford etc. i.e. I know that we can afford to buy in certain areas rather than others, as in unfortunately we cannot afford a half million euro house! So this would mean taking our earnings as the average?

Readyhed

Just a point OP. It is perfectly possible that prices will fall more in the next year or so or they might just stay flat. It is true that any chance of a rise is really remote.

Nevertheless it takes time to find the right place (especially as you will not want to be re-selling it again for a long time) so it doesn't hurt to look
around and get a feel for the market.

Here is another view on the subject

http://www.independent.ie/business/personal-finance/property-mortgages/house-prices-have-hit-bottom-and-will-stay-there-for-years-3049095.html

Were Goodbody's the one's who suggested a "soft landing" ?

http://www.finfacts.com/irelandbusinessnews/publish/article_10007496.shtml

Zamboni

Readyhed wrote: »

Here is another view on the subject

http://www.independent.ie/business/personal-finance/property-mortgages/house-prices-have-hit-bottom-and-will-stay-there-for-years-3049095.html

Mr O'Leary said prices had now hit the bottom.

"While it would be our contention that prices are undershooting due to lack of access to credit and a weak domestic economy, this analysis suggests that residential property, at 60pc-plus from peak, is now transacting for prices very close to, or at, fair value," he said.

That report does not indicate a stablilsation of price.
Peak price has no correlation to current/future value.
Spin.

Readyhed

Zamboni wrote: »

That report does not indicate a stablilsation of price.
Peak price has no correlation to current/future value.
Spin.

Absolutely. A friend once used to say. Paper never refused ink.

Spiritofthekop

Readyhed wrote: »

Just a point OP. It is perfectly possible that prices will fall more in the next year or so or they might just stay flat. It is true that any chance of a rise is really remote.

Nevertheless it takes time to find the right place (especially as you will not want to be re-selling it again for a long time) so it doesn't hurt to look
around and get a feel for the market.

Here is another view on the subject

http://www.independent.ie/business/personal-finance/property-mortgages/house-prices-have-hit-bottom-and-will-stay-there-for-years-3049095.html

Were Goodbody's the one's who suggested a "soft landing" ?

http://www.finfacts.com/irelandbusinessnews/publish/article_10007496.shtml

The good old Irish Independent who removed the ability to leave comments on their online media spin pages as soon as they realized that nearly every single person was leaving educated comments that did not suit there obvious vested interest agenda because they are always trying desperately to lie to people that house prices are rising again and bottomed out. No surprise that their online pages hits dropped as soon as the comment ability had been removed. At least journal.ie allows people to comment on the media spin.

Never ever ever let the media make a decision for you!

A friend of my Dads was looking at a house just out of interest the other day and the DNG agent was brazenly & loudly telling everyone looking at the house that property was on the way up again! That was until a well educated man who knew he stuff put him in back in his uneducated vested interested box very quickly and he backed down very fast. It was supposedly all very red faced for the young estate agent after that.

jmayo

lolo62 wrote: »

thinking of buying and have been looking around at prices

the house i rent is one of those red-brick terrace, tiny house one up one down.

checked out one for sale a couple of years ago on the road and it was 113,000

one gone up for sale there recently for 71,000

does anyone think this is an all time low or are they going to keep falling?

No property is not AT AN ALL TIME LOW.
The prices are just lower than they were during one of the biggest property bubbles ever experienced worldwide in history.
It was definitely the biggest bubble in the history of our country.
Stop comparing current prices to bubble prices for a start.

I don't believe there are any economic indicators to lead one to believe that house/property prices in Ireland will not go down further.
We have not seen any meaningful number of repossessions of property in mortgage default, we have not seen the necessary cuts in rent allowance which provides a false bottom to a huge chunk of the rental market, we have not seen half of the necessary budgetary cuts to bring our current budget deficit back in line and that is before we ever mention interest rate increases.
Added to that look at unemployment and migration rates.

lolo62 wrote: »

is now the best time to buy or should i wait?

That is a personal decision.
If you really want your OWN place, can afford a sizable deposit, can get a necessary mortgage, can adequately afford repayment increases/salary decreases, are reasonably sure of future employment and don't mind paying more for something than it will be worth in a year or two then go ahead.

NIMAN wrote: »

But I do agree that it is a good time for buyers now, should be plenty of bargains out there if you have the means of buying. I myself am selling a house for €85k, that would have got €180k in the peak.

Every bloody thing is a bargain if you compare it to the mad prices that existed between 2002/2007.

I really wish people would stop using the bubble prices as a guide. :mad:
They were not realistic, unsustainable and so far off the norm the defies belief.

the GALL wrote: »

Of course getting a cheap house X amount under what people paid at the height of the boom is cashing in on someones misfortune, especially when there are people who paid crazy money at the height of the boom and lost their houses/jobs through no Fault of their own and or up to their tits in debt and probably will be for the rest of the lives is cashing in on someones misfortune. Cop yourself on.
But on the flip side sure f*^k it not your problem grab a bargain while there out there, just if it goes t1ts up for you, well.........

Ah FFS.
If you paid crazy money (your own words) buying at the height of the boom you were not just misfortunate, you were something else and it is your own fault not anyone elses.

The more I think about it the more I reckon the words "personal responsibility" should be tatooed on some peoples foreheads.

I just find the fact you are telling other posters to cop on slightly ironic.

Zamboni wrote: »

That report does not indicate a stablilsation of price.
Peak price has no correlation to current/future value.
Spin.

Why do people still use the peak bubble price as some sort of barometer ?

Readyhed

jmayo wrote: »

Every bloody thing is a bargain if you compare it to the mad prices that existed between 2002/2007.

I really wish people would stop using the bubble prices as a guide. :mad:
They were not realistic, unsustainable and so far off the norm the defies belief.

Why do people still use the peak bubble price as some sort of barometer ?

You are not alone !

I've been saying this for years. Using as a benchmark, prices set by lunatics in a property boom that was the most excessive in history, is just silly .(Not just Irish history - World history)

I think there was a statistics that prices per square metre in Dublin 4 were the highest on Planet Earth - Ever!

Proves people have still got a lot to learn. Even eminent economists.

Kinda like evaluating people's personality by comparing them to Jedward.

Ash.J.Williams

I think we are finally experiencing what the experts predicted all those years ago! THE SOFT LANDING!

Zamboni

jmayo wrote: »

Why do people still use the peak bubble price as some sort of barometer ?

Because they know the vast majority of the unedcuated masses in this country will accept it without challenge.
The truth is, if banks were offering out mortgages today as they did during the Celtic Delusion, people would be buying property left, right and centre.
I have no doubt in my mind that the vast majority have learned absolutely nothing from the last decade.

Tigger

Zamboni wrote: »

Because they know the vast majority of the unedcuated masses in this country will accept it without challenge.
The truth is, if banks were offering out mortgages today as they did during the Celtic Delusion, people would be buying property left, right and centre.
I have no doubt in my mind that the vast majority have learned absolutely nothing from the last decade.

I'm tempted to reg a new account so I can thank this again

Sala

If prices are not at an all time low, what was their all time low (relative to income etc)? People keep quoting things like houses are back to 1999 levels but I can't find the year by year levels.
Also, I would be curious to see other housing boom to bust statistics but I can't find them either! For example, why did people poo-poo the suggestion houses could fall 50%, now they have fallen even more, is this because a 50% fall in a bust is unusually high?

Ritchi

Sala wrote: »

If prices are not at an all time low, what was their all time low (relative to income etc)?

Here's what somebody did before, need someone to fill in the last few years...

1973 avnhp: €9,009.00 , avindw: €1,599.9 , ratio: 5.631
1974 avnhp: €10,836.00 , avindw: €1,950.4 , ratio: 5.556
1975 avnhp: €13,254.00 , avindw: €2,520.7 , ratio: 5.258
1976 avnhp: €15,564.00 , avindw: €2,921.5 , ratio: 5.327
1977 avnhp: €18,754.00 , avindw: €3,385.0 , ratio: 5.540
1978 avnhp: €24,082.00 , avindw: €3,937.2 , ratio: 6.117
1979 avnhp: €29,387.00 , avindw: €4,624.2 , ratio: 6.355
1980 avnhp: €34,967.00 , avindw: €5,506.3 , ratio: 6.350
1981 avnhp: €40,167.00 , avindw: €6,387.7 , ratio: 6.288
1982 avnhp: €44,060.00 , avindw: €7,326.9 , ratio: 6.013
1983 avnhp: €44,448.00 , avindw: €8,286.2 , ratio: 5.364
1984 avnhp: €45,419.00 , avindw: €9,261.5 , ratio: 4.904
1985 avnhp: €46,542.00 , avindw: €10,048.1 , ratio: 4.632
1986 avnhp: €48,256.00 , avindw: €10,048.1 , ratio: 4.803 **
1987 avnhp: €48,151.00 , avindw: €10,048.1 , ratio: 4.792 **
1988 avnhp: €52,450.00 , avindw: €13,707.5 , ratio: 3.826 **
1989 avnhp: €58,178.00 , avindw: €17,293.7 , ratio: 3.364 **
1990 avnhp: €65,541.00 , avindw: €17,293.7 , ratio: 3.790 **
1991 avnhp: €66,914.00 , avindw: €17,293.7 , ratio: 3.869
1992 avnhp: €69,264.00 , avindw: €18,183.7 , ratio: 3.809
1993 avnhp: €69,883.00 , avindw: €18,841.7 , ratio: 3.709
1994 avnhp: €72,732.00 , avindw: €19,481.6 , ratio: 3.733
1995 avnhp: €77,994.00 , avindw: €19,879.2 , ratio: 3.923
1996 avnhp: €87,202.00 , avindw: €20,692.2 , ratio: 4.214
1997 avnhp: €102,222.00 , avindw: €21,377.6 , ratio: 4.782
1998 avnhp: €125,302.00 , avindw: €22,868.6 , ratio: 5.479
1999 avnhp: €148,521.00 , avindw: €24,165.5 , ratio: 6.146
2000 avnhp: €169,191.00 , avindw: €25,786.0 , ratio: 6.561
2001 avnhp: €182,863.00 , avindw: €27,919.0 , ratio: 6.550
2002 avnhp: €198,087.00 , avindw: €29,872.1 , ratio: 6.631
2003 avnhp: €224,567.00 , avindw: €31,513.5 , ratio: 7.126
2004 avnhp: €249,191.00 , avindw: €33,338.3 , ratio: 7.475
2005 avnhp: €276,221.00 , avindw: €35,277.5 , ratio: 7.830
2006 avnhp: €305,637.00 , avindw: €37,477.1 , ratio: 8.155

Not sure of the exact figures for this year, but at a guess:
2012 avnhp: 150,000 , avindw: 31,000, ratio: 4.38

Kaner2004

Speaking as someone who has bought a lot of properties in the late 80's to early 90's and offloaded it all in 2003 and 2004, both in Ireland and the UK, I can see an opportunity arising here again.

Its getting very close to the point where I start to dip my toe in again.

But if anyone is thinking of doing this you really need to be a cash buyer.
And start small til you know what you are doing. The big mistake people make is not doing their research. That and betting all their money, sometimes even more money than they have, on a hunch. Research, research, accounting and accounting.

You need to look after every single penny. And know what you are spending on and what happens if it goes wrong. Basically be a businessperson and a miser at all times.

Its a risky business, but I think the numbers are starting to stack nicely to make your money work for you again in Ireland.

I've already bought 2 houses in the UK in the last year that are making nice yields. The time is approaching to take advantage in Ireland too.

I'll post some of the sums i've been doing and what method I do to make it work for me when I get a chance, if anyone is interested.

Rabidlamb

Kaner2004 wrote: »

Speaking as someone who has bought a lot of properties in the late 80's to early 90's and offloaded it all in 2003 and 2004, both in Ireland and the UK, I can see an opportunity arising here again.

Its getting very close to the point where I start to dip my toe in again.

But if anyone is thinking of doing this you really need to be a cash buyer.
And start small til you know what you are doing. The big mistake people make is not doing their research. That and betting all their money, sometimes even more money than they have, on a hunch. Research, research, accounting and accounting.

You need to look after every single penny. And know what you are spending on and what happens if it goes wrong. Basically be a businessperson and a miser at all times.

Its a risky business, but I think the numbers are starting to stack nicely to make your money work for you again in Ireland.

I've already bought 2 houses in the UK in the last year that are making nice yields. The time is approaching to take advantage in Ireland too.

I'll post some of the sums i've been doing and what method I do to make it work for me when I get a chance, if anyone is interested.

What's attracting you now at this moment, potential yield from tenant occupancy or the 0% CGT down the line ?.
I'd love to have bought when you did.

Kaner2004

Rabidlamb wrote: »

What's attracting you now at this moment, potential yield from tenant occupancy or the 0% CGT down the line ?.
I'd love to have bought when you did.

I dont care about CGT. That can change anytime at the stroke of a pen.
Low CGT is a bonus, but having to pay CGT is actually a good thing because it means you have made a profit. Now if CGT was 40 or 50% right now, I would consider that a bad sign for the future and would not be investing at all.

I would not be selling anyway until I feel that the market is about to turn for the worse again. Then im all out straight away.

Just quickly, what I do is buy something cheap, in a very rentable area (eg In Ireland, I would not touch anything outside of Dublin) that can be got to rentable state easily and cheaply.
I always invest with a partner too as it spreads the risk.

For instance, at the moment we are looking at a 1 bed (1 and 2 beds are best for rental income) apartment for €85000 in Dublin that will rent today for €750 a month easily, possibly more, and is in walk in condition.
Thats a good yield.

I'll try from memory to post rough workings below on an apartment my son has. When I get back from holidays i'll see if I can root out a proper example spreadsheet.

royaler83

Kaner2004 wrote: »

I dont care about CGT. That can change anytime at the stroke of a pen.
Low CGT is a bonus, but having to pay CGT is actually a good thing because it means you have made a profit. Now if CGT was 40 or 50% right now, I would consider that a bad sign for the future and would not be investing at all.

I would not be selling anyway until I feel that the market is about to turn for the worse again. Then im all out straight away.

Just quickly, what I do is buy something cheap, in a very rentable area (eg In Ireland, I would not touch anything outside of Dublin) that can be got to rentable state easily and cheaply.
I always invest with a partner too as it spreads the risk.

For instance, at the moment we are looking at a 1 bed (1 and 2 beds are best for rental income) apartment for €85000 in Dublin that will rent today for €750 a month easily, possibly more, and is in walk in condition.
Thats a good yield.

I'll try from memory to post rough workings below on an apartment my son has. When I get back from holidays i'll see if I can root out a proper example spreadsheet.

Thanks kaner, I would be very interested in that as I'm sure alot of posters on here would

Kaner2004

Its raining now, and im on hols at the moment so i'll type it out now, but i'll post a spreadsheet for one when I get back. Remember this is rough top of the head stuff, but as close as I can remember - and ive had a few pints. But im bored so here goes.


Each property will have an individual plan and its own bank account.
So then I open a bank account for that property (just the way I do it).
All financial dealings associated with that property go to that account (rent, maint, taxes, service charges, etc).
That way you always know whether you are above or below the line with that property.


For an example of another way to do it that works.
My son has one going on an apartment in Dublin in 1999 that he wouldnt sell when I told him, so still has it, but its still above the line for him. From memory - roughly his figures are like this (All in Euros). He also go a mortgage on it which I wouldnt do, but it worked out for him.
I was looking over it with him a few weeks ago, so roughly, from memory this is how his plan and account worked out.

Just for arguments sake im going to round outgoings up and incomings down, as i cant remember exact figures.

1999
Purchase price 130000 + expenses (135000)

Total outlay
€10 deposit + 3000 expenses + 3000 kitting out = €16K

All calculation below are rent minus expenses. Im gonna take off €1000 a month for expenses, for ease, but it averages much lower than that over the time.

Rent in year 1999 = €5050 (not a full year)
Rent in year 2000 = €8000
Rent in year 2001 = €10000
Rent in year 2002 = €11000
Rent in year 2003 = €11000
Rent in year 2004 = €11000
Rent in year 2005 = €11000
Rent in year 2006 = €11000
Rent in year 2007 = €10000
Rent in year 2008 = €9000
Rent in year 2009 = €9000
Rent in year 2010 = €8000
Rent in year 2011 = €8000

You can see how rent went up and then down.
Im going to average his mortgage at €6000 a year too (after taking out MIR), which is erring on the high side of what it really is. He has 30 year mortgage (18 left) and changed to a tracker after a few years too.

So take about 6000 from each year for paying the mortgage and you get

year 1999 = €3000 (not a full year)
year 2000 = €2000
year 2001 = €4000
year 2002 = €5000
year 2003 = €5000
year 2004 = €5000
year 2005 = €5000
year 2006 = €5000
year 2007 = €5000
year 2008 = €3000
year 2009 = €3000
year 2010 = €2000
year 2011 = €2000

Total = €45,000 thats in the property bank account.

So to sum up.
He started the account with minus €16K.
€45,000 went in after costs and mortgage.
So the account had €29K (net of taxes he had to pay) in it after 11.5 years with the mortgage payments made. He has to pay tax at his marginal rate each year so that would eat into each year, so his account ends up much lower than 29K at the end of it.

So hes positive balance, mortgage paid, and only ever dipped into his pocket for €16K at the start which is paid back to him by now.
In another 17.5 years, if things dont get any worse than they are now, he owns it outright and made his initial €16k back many years before.
Even if rents fell below where he makes a profit and he had to add one or 2 hundred a month, he just dips into the bank account belonging to the property.


Now that is just the example thats fresh in my head. The figures are a bit all over the place but you get the idea, and should do your own anyway. Dont depend on mine if you plan to invest. Actually, if you dont know already what you are doing, then i would say stay clear and leave it to people who are used to it.

With my own rules. i never get a mortgage. I pay more taxes than my son. I never borrow (but I realize that borrowing carefully can work out too). Any maintenance I can do myself or know someone who can do it. I sell it the minute it gives me a profit after all outgoings of 50% of what I bought it for. It was 100% but those days seem to be gone for now, so I think 50% is a good target to offload. And I never buy unless the yield is very good from the start and the area is very rentable (In Ireland, this basically means Dublin (Inside a circle encompassing Swords - Naas - Bray)).
So if I cant offload because I dont reach my target the yield still holds good.

And unless you have money to burn do not try this with more than one property. Im lucky to have a lot of cash spare, so can afford to make mistakes, though it kills me if I make one so im very careful before I invest. For instance I havent invested since 2005, but just started again last year. Its working out ok so far, but I wont be gearing up like I did in the past. 2 - 4 in the UK and 2 in Ireland for the moment will be my limit this time. Im old enough to be able to do it for fun and not have to worry about doing it for a living now.

Oh, and ever since I can remember people are always telling other people when to buy and when not to buy.
Ignore them all and decide what works for you.
When I bought my first house we were in the middle of a crash and people were telling me I was mad. Then in 2000 people were going mad to buy, without any plan at all and telling me I should gear up and buy more. And now we're back again to everyone having an opinion that they think is the correct one.
Never trust what anyone else says. Learn how to work out the risks and rewards first for yourself and then you can make an educated decision, whether it turns out to be right or wrong in the long run, at least you went in with your own knowledge.

the GALL

Ah FFS.
If you paid crazy money (your own words) buying at the height of the boom you were not just misfortunate, you were something else and it is your own fault not anyone elses.

The more I think about it the more I reckon the words "personal responsibility" should be tatooed on some peoples foreheads.

I just find the fact you are telling other posters to cop on slightly ironic.


I didn't pay crazy money for my House and I never said I did what I did say was that they OP was cashing in on someone else's misfortune, and the misfortune was created by someone else. Some people paid crazy money for their houses, they were lead up the garden path(forgive the pun).
So before you go quoting me read what I have said.
The neck of ya.

Spiritofthekop

Kaner2004 wrote: »

Its raining now, and im on hols at the moment so i'll type it out now, but i'll post a spreadsheet for one when I get back. Remember this is rough top of the head stuff, but as close as I can remember - and ive had a few pints. But im bored so here goes.


Each property will have an individual plan and its own bank account.
So then I open a bank account for that property (just the way I do it).
All financial dealings associated with that property go to that account (rent, maint, taxes, service charges, etc).
That way you always know whether you are above or below the line with that property.


For an example of another way to do it that works.
My son has one going on an apartment in Dublin in 1999 that he wouldnt sell when I told him, so still has it, but its still above the line for him. From memory - roughly his figures are like this (All in Euros). He also go a mortgage on it which I wouldnt do, but it worked out for him.
I was looking over it with him a few weeks ago, so roughly, from memory this is how his plan and account worked out.

Just for arguments sake im going to round outgoings up and incomings down, as i cant remember exact figures.

1999
Purchase price 130000 + expenses (135000)

Total outlay
€10 deposit + 3000 expenses + 3000 kitting out = €16K

All calculation below are rent minus expenses. Im gonna take off €1000 a month for expenses, for ease, but it averages much lower than that over the time.

Rent in year 1999 = €5050 (not a full year)
Rent in year 2000 = €8000
Rent in year 2001 = €10000
Rent in year 2002 = €11000
Rent in year 2003 = €11000
Rent in year 2004 = €11000
Rent in year 2005 = €11000
Rent in year 2006 = €11000
Rent in year 2007 = €10000
Rent in year 2008 = €9000
Rent in year 2009 = €9000
Rent in year 2010 = €8000
Rent in year 2011 = €8000

You can see how rent went up and then down.
Im going to average his mortgage at €6000 a year too (after taking out MIR), which is erring on the high side of what it really is. He has 30 year mortgage (18 left) and changed to a tracker after a few years too.

So take about 6000 from each year for paying the mortgage and you get

year 1999 = €3000 (not a full year)
year 2000 = €2000
year 2001 = €4000
year 2002 = €5000
year 2003 = €5000
year 2004 = €5000
year 2005 = €5000
year 2006 = €5000
year 2007 = €5000
year 2008 = €3000
year 2009 = €3000
year 2010 = €2000
year 2011 = €2000

Total = €45,000 thats in the property bank account.

So to sum up.
He started the account with minus €16K.
€45,000 went in after costs and mortgage.
So the account had €29K (net of taxes he had to pay) in it after 11.5 years with the mortgage payments made. He has to pay tax at his marginal rate each year so that would eat into each year, so his account ends up much lower than 29K at the end of it.

So hes positive balance, mortgage paid, and only ever dipped into his pocket for €16K at the start which is paid back to him by now.
In another 17.5 years, if things dont get any worse than they are now, he owns it outright and made his initial €16k back many years before.
Even if rents fell below where he makes a profit and he had to add one or 2 hundred a month, he just dips into the bank account belonging to the property.


Now that is just the example thats fresh in my head. The figures are a bit all over the place but you get the idea, and should do your own anyway. Dont depend on mine if you plan to invest. Actually, if you dont know already what you are doing, then i would say stay clear and leave it to people who are used to it.

With my own rules. i never get a mortgage. I pay more taxes than my son. I never borrow (but I realize that borrowing carefully can work out too). Any maintenance I can do myself or know someone who can do it. I sell it the minute it gives me a profit after all outgoings of 50% of what I bought it for. It was 100% but those days seem to be gone for now, so I think 50% is a good target to offload. And I never buy unless the yield is very good from the start and the area is very rentable (In Ireland, this basically means Dublin (Inside a circle encompassing Swords - Naas - Bray)).
So if I cant offload because I dont reach my target the yield still holds good.

And unless you have money to burn do not try this with more than one property. Im lucky to have a lot of cash spare, so can afford to make mistakes, though it kills me if I make one so im very careful before I invest. For instance I havent invested since 2005, but just started again last year. Its working out ok so far, but I wont be gearing up like I did in the past. 2 - 4 in the UK and 2 in Ireland for the moment will be my limit this time. Im old enough to be able to do it for fun and not have to worry about doing it for a living now.

Oh, and ever since I can remember people are always telling other people when to buy and when not to buy.
Ignore them all and decide what works for you.
When I bought my first house we were in the middle of a crash and people were telling me I was mad. Then in 2000 people were going mad to buy, without any plan at all and telling me I should gear up and buy more. And now we're back again to everyone having an opinion that they think is the correct one.
Never trust what anyone else says. Learn how to work out the risks and rewards first for yourself and then you can make an educated decision, whether it turns out to be right or wrong in the long run, at least you went in with your own knowledge.

Would not touch apartments yet, they are dropping in price faster than Usain Bolt

Also the hassle of renting out apartments in Dublin at the moment is not worth it imo.

Ive friends have have lost 1,000's with tenants doing runners these days on rent & also spending a fortune constantly fixing them, they talk every week about off loading them but they dont want to know about how much they have lost on them....but say they will bite the bullet soon.

Its obviously for you though you seem to know your stuff by the looks of it...

Not for me.

A nice house with a garden for the happy family

pawnacide

This idea that Nama,banks or recievers are going to start selling individual apartments needs to be put to bed. Nama will sell in bulk to developers. It's already started.

As for individuals trying to sell 2nd hand apartments I can't honestly see how they're going to be able to, unless they're in a position to absorb the losses and there cant be too many of them left. I've said it before we're heading towards , if we're not already in, a two tier market .. one for the cash rich and one for those who require a mortgage. The problem then becomes does the new market value of a property become the price paid at a bank auction by a cash buyer or the price a developer recieved for a similar property from a first time buyer with a mortgage.

Recently in the UK several cases were taken by owners of commercial properties against the Valuations office and the rateable values they were applying to certain properties as the properties were in fact bought for a lot less than the assumed prices following the 80's crash. They lost on the grounds that properties bought at discount prices following the crash did not represent the entire market and a two tier market had been formed .. (open to correction on the details but thats the gist of it)

The only way I can see for this to be avoided is for Banks to pre-approve individual buyers so they're on a level playing field.

Kaner2004

Spiritofthekop wrote: »

Would not touch apartments yet, they are dropping in price faster than a Usain Bolt

Also the hassle of renting apartments in Dublin at the moment is not worth it imo.

Ive friends have have lost 1,000's with tenants doing runners these days on rent & also spending a fortune constantly fixing them, they talk every week about off loading them but they dont want to know about how much they have lost on them....but say they will bite the bullet soon.

Its obviously for you though you seem to know your stuff by the looks of it...

Not for me.

A nice house with a garden for the happy family

I much prefer apartments for letting. Just far less trouble and less maintenance.
I would never touch a house. More rooms, more outside space, more trouble.
I suppose we are different.

Your friends may just not be suited to the game. Few are tbh.
If you get the right gear in you should have to pay very little on maintenance of an apartment.

Your friends should look at how they vet their tenants. Ive never had a tenant do a runner either. And if they dont know what heir financial position is .... well, it tells you all you need to know about how they run their "business" doesnt it.

Ive rented a couple of apartments in Dublin a few weeks ago for a friend who was on holidays. Couldnt have been easier tbf (thats what has me researching to get back in the game). What hassle are your friends having renting their apartments? Unless they are in Ballymun or some other equally desirable spot. Research, research, accounting and accounting.

Kaner2004

pawnacide wrote: »

This idea that Nama,banks or recievers are going to start selling individual apartments needs to be put to bed. Nama will sell in bulk to developers. It's already started.

As for individuals trying to sell 2nd hand apartments I can't honestly see how they're going to be able to, unless they're in a position to absorb the losses and there cant be too many of them left. I've said it before we're heading towards , if we're not already in, a two tier market .. one for the cash rich and one for those who require a mortgage.

In fairness its always the people who have the cash that get to pick the bones clean. That goes for anything that suffers a downturn.

Ask Warren Buffet what he thinks

Ireland is just getting back to normal. For a long time, people thought that everybody should have been able to afford to buy their own homes. Its never been like that and never (apart from bubble time) will be.

People earning an average wage will always be below the point where they can buy their own home and will just have to rent a home. People cannot all own their own homes as much as they think they deserve to. The more people who can buy a home, the higher prices will go, the higher wages will have to go for the next person .... Look where that went the last time.

Spiritofthekop

Kaner2004 wrote: »

In fairness its always the people who have the cash that get to pick the bones clean. That goes for anything that suffers a downturn.

Ask Warren Buffet what he thinks

Ireland is just getting back to normal. For a long time, people thought that everybody should have been able to afford to buy their own homes. Its never been like that and never (apart from bubble time) will be.

People earning an average wage will always be below the point where they can buy their own home and will just have to rent a home. People cannot all own their own homes as much as they think they deserve to. The more people who can buy a home, the higher prices will go, the higher wages will have to go for the next person .... Look where that went the last time.

Not entirely true.

House prices will eventually IMO come down to a natural bottom out value for money price just like they were back in 1994/95/96

We have just gone back into another recession.

http://businessetc.thejournal.ie/cso-gdp-gnp-recession-double-dip-economic-growth-392430-Mar2012/

Ritchi

Spiritofthekop wrote: »

Not entirely true.

House prices will eventually IMO come down to a natural bottom out value for money price just like they were back in 1994/95/96

We have just gone back into another recession.

http://businessetc.thejournal.ie/cso-gdp-gnp-recession-double-dip-economic-growth-392430-Mar2012/

If there is a levelling off in house prices at some stage, surely that will be the moment the (reported) 50,000 people sitting waiting to buy will make their move, and that will see prices head higher in certain areas for obvious reasons.

They may level off again after that, who knows.

pawnacide

House prices in general will level off and at a level higher than most people think .. simply because the huge over supply will be sold to developers who need to make a profit and while their costs have lowered there is a level where it stops making sense.There will of course be a few properties sold below these values by desperate sellers, banks etc but they will not be the norm. Of course there will always be those who will quote these exceptional sales as the true market values but what good is that if you can't actually buy what you want at those values.

indiewindy

pawnacide wrote: »

House prices in general will level off and at a level higher than most people think .. simply because the huge over supply will be sold to developers who need to make a profit and while their costs have lowered there is a level where it stops making sense.There will of course be a few properties sold below these values by desperate sellers, banks etc but they will not be the norm. Of course there will always be those who will quote these exceptional sales as the true market values but what good is that if you can't actually buy what you want at those values.[/QUOT

The fact that thousands of the oversupply of Appartments in Dublin are being kept off the market by nama is only delaying the market finding its natural level.
What do you think the developers who you say will buy the oversupply will do with it?

Spiritofthekop

pawnacide wrote: »

House prices in general will level off and at a level higher than most people think .. simply because the huge over supply will be sold to developers who need to make a profit and while their costs have lowered there is a level where it stops making sense.There will of course be a few properties sold below these values by desperate sellers, banks etc but they will not be the norm. Of course there will always be those who will quote these exceptional sales as the true market values but what good is that if you can't actually buy what you want at those values.

IN YOUR OPINION