House for sale @€265,000. What should we offer?

ResearchWill

StillWaters wrote: »

Because in 20 years time, the rent will be a hell of a lot higher than 800, and the op will still be paying €1100.

And in 25 years time, the renter still has to find a whack of money each month, and the op has a paid for home.
Lots of other reasons of course, but there is crux of the economics of home ownership.

The OP will still be paying €1100 as long as interest rates stay low. There are many sites who give real maths on this issue, http://www.moneyguideireland.com/renting-or-buying-a-house-pros-and-cons.html one of the hidden costs of ownership is the lack of job mobility.

Yes for some people buying is a very good idea as long as the maths add up, but being honest 1/4 of a million in Donegal is madness when you think for less than three of them you could have bought this http://www.irishtimes.com/newspaper/breaking/2012/0301/breaking39.html

MadsL

StillWaters wrote: »

Because in 20 years time, the rent will be a hell of a lot higher than 800, and the op will still be paying €1100.

And in 25 years time, the renter still has to find a whack of money each month, and the op has a paid for home.
Lots of other reasons of course, but there is crux of the economics of home ownership.

Yeah, you keep believing that. If you had a time machine, knowing what you know now, would you give the same advice to the OP if you travelled back to say, 2003?

StillWaters

MadsL wrote: »

Yeah, you keep believing that. If you had a time machine, knowing what you know now, would you give the same advice to the OP if you travelled back to say, 2003?

of course not, as it made no economic sense to buy then. I took my own advice and didn't buy any property from 2001-2011 as it was clear to me anyway maths didn't stack up during that time. I have bought before and since. Nothing scientific or contrarian about it, just simple maths.

MadsL

StillWaters wrote: »

of course not, as it made no economic sense to buy then. I took my own advice and didn't buy any property from 2001-2011 as it was clear to me anyway maths didn't stack up during that time. I have bought before and since. Nothing scientific or contrarian about it, just simple maths.

Simple maths says there is far better value in the rental market in Donegal at the moment.

What simple maths tells you it is better to buy, other than the old chestnut about 'dead money'?

engineermike

Hi OP,
Not really sure how anyone can just arbitrarily say : offer 190 or some figure.
Location, location, location are the 3 keywords to gauge your offer buy.
Level of interest in the area, review asking price and find out the sale price of a similar unit in the area, which isn't difficult in this country!

Also talking to multiple est. agents and judging by the level of work we have at present & pending - the market is on the move again without a doubt within the Dublin belt and major city's with colleges & employment (Galway, Sligo, etc.)

I personally snagged a new property yesterday in Maynooth that were being built and sold in 2009 for 590,000 in the estate - the unit I inspected yesterday in the same estate (same size and spec.) - 310,000. I don't normally ask the price of the builders foreman or client , however I was genuinely interested and felt I had to ask & I have to mention the property had the best level of finsihing I've seen in my 20 years as a construction professional.
Certain key locations / areas have reached the market 'tidal' change point in my estimation.
Mike F:)

Mr. Loverman

MadsL wrote: »

Simple maths says there is far better value in the rental market in Donegal at the moment.

What simple maths tells you it is better to buy, other than the old chestnut about 'dead money'?

If he has bought recently nothing you say will change his mind. It is one of the logical fallacies of life...

It obviously makes no sense to pay anything near ¼ million for a house in the middle of nowhere in a broke country. I do personally like Donegal but come on, it's Donegal.

StillWaters

MadsL wrote: »

StillWaters wrote: »

of course not, as it made no economic sense to buy then. I took my own advice and didn't buy any property from 2001-2011 as it was clear to me anyway maths didn't stack up during that time. I have bought before and since. Nothing scientific or contrarian about it, just simple maths.

Simple maths says there is far better value in the rental market in Donegal at the moment.

What simple maths tells you it is better to buy, other than the old chestnut about 'dead money'?

I posted the sums on another thread, basically allowing for interest rates of 7%, and rents to rise in line with inflation, who is better after 5, 10, 20 years. This ignores the obvious advantage of the homeowner not paying rent for 30 years after the mortgage is paid off.

In a lot of cases now, it makes much much more sense to buy than rent, which has old wisdom on it's head. Of course home ownership doesn't suit everyone, and there is still lots of overpriced tat out there.

However ime buyers now are a very different breed to buyers of 6 years ago. They are demanding yield, build quality and affordability, and have cash in their pockets to protect against shocks.

Edited to add, excellent NCB Report out today concurs that in certain cases it is rational to buy rather than rent. Don't attack me before reading the report!

MadsL

StillWaters wrote: »

I posted the sums on another thread, basically allowing for interest rates of 7%, and rents to rise in line with inflation, who is better after 5, 10, 20 years. This ignores the obvious advantage of the homeowner not paying rent for 30 years after the mortgage is paid off.

In a lot of cases now, it makes much much more sense to buy than rent, which has old wisdom on it's head. Of course home ownership doesn't suit everyone, and there is still lots of overpriced tat out there.

However ime buyers now are a very different breed to buyers of 6 years ago. They are demanding yield, build quality and affordability, and have cash in their pockets to protect against shocks.

Edited to add, excellent NCB Report out today concurs that in certain cases it is rational to buy rather than rent. Don't attack me before reading the report!

Let me clarify - what simple maths means it is better to buy this property. Renting at 800 a month values the property somewhere around 140K - why on earth someone would even suggest a value around 200K is beyond me.

golden lane

buying houses to rent......is a business gamble..........if there is a big mortgage attached.....

StillWaters

MadsL wrote: »

Let me clarify - what simple maths means it is better to buy this property. Renting at 800 a month values the property somewhere around 140K - why on earth someone would even suggest a value around 200K is beyond me.

No, it puts the house you linked to at €140k. Neither of us have seen the house in question.

engineermike

golden lane wrote: »

buying houses to rent......is a business gamble..........if there is a big mortgage attached.....

I don't agree that its a complete gamble, in the midlands, a Pub - bed and breakfast, chipper and 2 flats & a house with yard and sheds - in a town with 15 thousand + residents, failed to sell at auction for 350 K a few months ago.
I wonder why,
In a nut shell 350 K would buy 4 / 5 ish 3 beds in the county that are prime rent income - @ 450 - 650 dependent on location -
yes there is management,
yes there is irresponsibility involved and investment capital - however, as a business person the numbers add up for me,
also btw, p/m i'm someone looking to rent in bundorran if its that part of Donegal ?

MadsL

StillWaters wrote: »

No, it puts the house you linked to at €140k. Neither of us have seen the house in question.

Why do you think in this particular house could be worth a rental calculation of approx €1500 a month. Do you think this house could be worth almost double the one I linked. Is it made of gold?

StillWaters

Where are you getting 1500 from? No-one, bar one Tongue in cheek poster has suggested offering the asking price. You will see I suggested 160k, general consensus seems to be 160-200, which would be 1,000 rental for rational yield.

MadsL

StillWaters wrote: »

Where are you getting 1500 from? No-one, bar one Tongue in cheek poster has suggested offering the asking price. You will see I suggested 160k, general consensus seems to be 160-200, which would be 1,000 rental for rational yield.

Compared to the house I linked, t'would want to be nicely appointed to pay a 25% premium over market for it. But, as you say, no-one has seen the house.

Personally speaking I would want to be 10% under the prevailing, ie: the best value house in the most expensive neighbourhood. That doesn't apply in rural areas but again, I'd want to be aiming at getting it at 10% or under what I think it is worth, otherwise i would walk away (or rent )

Lorrainbo

http://www.daft.ie/searchsale.daft?id=564424

Here is link to view the house.

ted1

Nice. Ballyshannon is a great town, and rossnowlagh is a lovely beach.

The_Conductor

Lorrainbo wrote: »

http://www.daft.ie/searchsale.daft?id=564424

Here is link to view the house.

Popular commuter route?
That estate agent really is taking the monkey.
Its a rural property- near a scenic beach.
Its a nice house- and if it were in a different area- it probably would be worth a hell of a lot more- but suggesting because it once was 450k that it is now good value at 265k really is wishful thinking in the extreme........

I'd stand by previous post- max 210k- and not one penny more. Ideal price 160-180k.

I'm guessing they are hoping someone sees it and gets emotionally involved in buying the place and is blind to how remote it is, its lack of broadband, its lack of proximity to work etc etc etc.......

I'd love it- if I won the lottery and didn't have to work, and could rely on satellite broadband etc. However- its not an idea world- and an apartment without so much as a garden better suits my current circumstances- because its near work.........

MadsL

I also stand by putting in a very low ball offer - €135k (800*12*14) at the very most – 150k at most if you want to live in it the rest of your life. Just make sure your job is secure.

tim9002

Lorrainbo wrote: »

http://www.daft.ie/searchsale.daft?id=564424

Here is link to view the house.

What will the annual property tax be on a house this size in 2013?

The_Conductor

tim9002 wrote: »

What will the annual property tax be on a house this size in 2013?

Damn good question.......
They still haven't agreed on the equation to figure how to determine property taxes- Urban based TDs want it done on a size basis- Rural TDs want it done on a value basis. Still up in the air.......

Victor

Pkiernan wrote: »

Offer €265,000.

You will get the house if you offer this.

Keep it constructive.

While the price may not be exceeded by anyone else, getting a mortgage on it may prove impossible.

engineermike

smccarrick wrote: »

Damn good question.......
They still haven't agreed on the equation to figure how to determine property taxes- Urban based TDs want it done on a size basis- Rural TDs want it done on a value basis. Still up in the air.......

A rural property has more to worry about with Septic tank PETS assessment - and possible remedial works if issues exist with the system in place, the property tax / rates & water metering all still mostly unknowns .....

MadsL

Any update OP? Did you put in an offer?

stepbar

Lorrainbo wrote: »

http://www.daft.ie/searchsale.daft?id=564424

Here is link to view the house.

Nice house but lets call a spade a spade; Donegal is not in an area where there is a high demand for housing. On daft.ie there's 3,190 houses for sale in Donegal, of which 439 have 5 beds or more. There's also a further 577 properties for rent of which 36 of them have 5 beds or more. I think you see where this is going.... Crazy for a county with c100k residents and c20% unemployment. The market outside of the big cities won't be recovering anytime soon.

If you want my 2c.... I'd divide by 3 and start from there. Even at a rent of say 800 p.m (which is prob far too much), this property would have an economic worth of 96k (800 x 12 x 90% / 9% rent yield * 100). What I will say is don't get emotionally attached because once you do you'll be taken to the cleaners.