What's your experience?

John_Rambo

Long time lurker here, very interesting looking at peoples theories, calculations, guesswork and analysis. Some of you put a lot of work in to this, I'm guessing some of you are professionals in the field.

I'd love to know what experience people have here when it comes to property. Particularly the ones that are so confident giving out advice, telling people when not to buy and when to buy, the ones that use terms like "dead can bounce", the ones who seem to really have their finger on the pulse.

Have you made lots of money on property? Are you mortgage free? Did you "see it all coming" and sell everything? Are you the savvy property experts?

I don't give out advice here, but it would be unfair not to divulge... I bought property in the Dublin docklands before development and the boom, sold before the burst and bought a family home in the burbs. Small mortgage to buy the house and do an extensive refurb.

What's your story? Can you put you're money where your mouth/keyboard is?

(I don't think "I would have done A B and C if I was older, had more money" etc.. is going to cut the ice. )

The Spider

Ok I'll bite, did I see it coming certainly did, didn't buy in the bubble years, actually thought it'd crash around 2001-2002, with the internet bubble going pop, it kept going, so decided to rent and save, invested in shares which performed very nicely, (still am). Bubble bursting wasn't a surprise I followed the megathread on askaboutmoney that questioned why prices were so high, when this thread was shut down, alarm bells that were already ringing got louder, the propertypin was started off the back of that thread being shut down.

In a wider sense I think people were aware that it was crazy, every time you mentioned prices would crash, you were called crazy and shouted at, both in social circles and on the internet. There was a sense abroad I think especially around 2007 that it was madness, but people didn't want to be the last fool with the house.

Eventually the crash came and went house prices collapsed everyone was gnashing their teeth and cursing themselves for not seeing it, or for seeing it and thinking they could get out in time. I continued to rent save and invest. The rent was about a grand a month in Dublin 14 it didn't go up once from 2005 to 2010.

Last year I decided to buy a house (my missus who I met in the mean time owns an apartment but that's another story) I'd watched and waited and came to the conclusion all things being equal that this was more than likely the bottom, I looked all over the good areas both north and south Dublin from Clontarf down to Cabinteely, I didn't think there was what I'd perceive as value, in hindsight it was excellent value (4 bed houses for in these areas last year were going for 330-380 with room to negotiate) I wanted a couple of things a big house and a small mortgage in a decent area, tall order, so we moved down South and commute to Dublin daily, it's actually pretty easy, and not being from Dublin helps.

So bought in a town South cashed in a lot of shares, paid over 35% up front and a tiny mortgage, have a giant detached house on 1.6 acres behind electric gates, bought at a quarter of bubble price, granted I have an hour's commute, but the lifestyle is unbelievable, I can wander out in the garden in my jocks with impunity, north, south facing isn't an issue. I'd recommend it.

Flipside to all this is that now people are shouting at you for saying the bottom has been reached, and again people sense that something is happening and those that don't want it to be true are pointing to charts, stats etc, same behaviour that was used to justify bubble prices, is now being used to justify an endless crash, trouble is sentiment has changed as has been seen by the fact that prices have risen for the first time in years.

John_Rambo

Fair enough Spider, very honest of you! Glad you are happy for now.

There's a lot more than Spider giving out advice, any of you care to share what experience you gained your knowledge from?

Pawwed Rig

Many will claim they saw it coming yet people who made money out of it are few and far between. I think most were aware that property was possibly overvalued but few could predict to any degree when the peak was reached and fewer would have expected the scale of the catastrophic collapse we have seen in the last couple of years.

John_Rambo

Pawwed Rig wrote: »

Many will claim they saw it coming yet people who made money out of it are few and far between. I think most were aware that property was possibly overvalued but few could predict to any degree when the peak was reached and fewer would have expected the scale of the catastrophic collapse we have seen in the last couple of years.

Yeah. Yet, there's a massive amount of hugely confident predictions from people on this forum! I find it fascinating, and I'd love to know where these people are coming from, what experience they have, what property dealings they have bad etc... Spiders the only one that's had the balls to come out! And his prediction was five or six years out!!

Pawwed Rig

It is probably the title of the thread that is the issue. It can be a busy forum and the title does not give any information of what the thread is about.

OMD

The Spider wrote: »

Ok I'll bite, did I see it coming certainly did, didn't buy in the bubble years, actually thought it'd crash around 2001-2002, with the internet bubble going pop, it kept going, so decided to rent and save, invested in shares which performed very nicely, (still am). Bubble bursting wasn't a surprise I followed the megathread on askaboutmoney that questioned why prices were so high, when this thread was shut down, alarm bells that were already ringing got louder, the propertypin was started off the back of that thread being shut down.

A lot of people have said on this site that they say collapse coming in 2001 and decided not to buy. Most think they were very smart. The reality is it was far smarter for most to buy in 2001 (even smarter if you got a tracker).

Forgot to add. Bought first house 1995. Bought and sold a few times in between. Had two houses at one stage. Not really planned. Sold one in 2006 and living in other. Got new mortgage each time rather than using the equity from the sale of the house. Used the gain in price in each property I sold to fund lifestyle and absolutely delighted I did. When my child was born my wife and I both had 12 months off, funded by equity. I am now still part time again using the money i made on property to continue to part fund this. Now still have one if the two houses I had in 2006. (Bought in 2003). Have tracker mortgage of 0.75 over ECB. Can easily afford repayments. Have to say I think those who think being mortgage free as the be all and end all are idiots.

The Spider

OMD wrote: »

A lot of people have said on this site that they say collapse coming in 2001 and decided not to buy. Most think they were very smart. The reality is it was far smarter for most to buy in 2001 (even smarter if you got a tracker).

Didn't say it was smart, couldnt have bought anyway, being one of the casualties of the IT bubble burst in 2002. I said I thought it would crash with IT collapsing, not that I would have bought, I would have been a good few years away from having the money for it then.

However I do agree it would have been smarter to buy in 2001, I suppose you had a case of people thinking any minute now it's going to crash, it took another 6 years. It's the same as people now saying it's going to keep on crashing when all the signs are that it won't or that massive repos will come on stream and collapse prices. (I don't know how that scenario gets any traction, it's not in the banks interests, and there's no way they'll let it happen.)

techdiver

I don't give advise here, as I don't consider myself an expert, but then again, who is? Estate Agents? Bankers? Solicitors? Economists? A large portion of these professions all got it wrong too.

All I know is that from 2003 onwards when I moved to Dublin, I had friends and family chastise me for not purchasing property and any time I explained my reasoning for it (over inflated prices, interest rates, potential crash and negative equity, etc) I was ignored. I even pointed out that our "Boom" was mainly fueled by cheap credit from external sources and that any economic correction would cause a ripple effect through the Irish economy.

I not saying I am more enlightened than the average man, but i did see it coming. I have friends who back up what I say as I said it to them at the time and remained consistent in my message. I am still flabbergasted that many believe that 4 bedroom semi detached houses in Dublin for 400,000 are a steal! Considering that we are 50% (roughly) down from bubble prices, wtf were people doing paying €800,000 for those same properties during the bubble!!!

With those figures, I surmise that it was impossible not to see it coming. The only thing that got in the way was denial.

John_Rambo

Pawwed Rig wrote: »

It is probably the title of the thread that is the issue. It can be a busy forum and the title does not give any information of what the thread is about.

Thanks Pawwed, title changed.

OMD wrote: »

Forgot to add...

Well, the additions are impressive. Well played , I was much more cautious!!

Techdiver, the thread is more about what people did rather than what they said they said! I don't mean to be rude, and of course, you aren't a self proclaimed expert doling out the advice.

air

Bought end 2005, considered price high but affordable in the long term at the time. I was (what I consider now) very young buying but had saved my own deposit and got my mortgage solo, no guarantor or any other BS.
Prices went up 20% between my purchase and the peak which cushioned the fall somewhat.
Realised myself & discussed with others well before the crash that prices were gone totally unsustainable but in Limerick they never went insane to the extent they did elsewhere. Never really considered selling and renting tbh.
Lucky that I bought a house and in an area that I would be happy in long term.

Current value approx 25% below my purchase price.
Hope to have mortgage cleared in 3-4 years max, would be unlikely to borrow again for a property in Ireland unless long term fixed rates are introduced like other countries. The current variable rate setup where rates can be unilaterally set to any level is very high risk for the borrower IMHO.

People think prices are low now but interest rates are far higher than 5-7 years ago, no trackers and variable rates going only one way.

There is a lot of talk about house prices but in reality they are only a function of interest rates and net incomes as every generation seems happy to commit to paying a similar (or increased) percentage of their salary towards their home.
High or increasing house prices are a bad thing, they mean we spend more of our lives than is necessary paying for a basic necessity and only serve to make us more uncompetitive internationally.

On this basis I believe there should be a strict limit on mortgage:income ratio set by the government. It would only help protect us from ourselves by keeping a lid on prices such that every new generation doesn't spend a huge portion of it's working life paying off debt.

whatnext

well I'm the idiot everyone hears about on Primetime and Vincent Brown etc.,
Well not quite.......

I bought an apartment in the UK in the late 90's. This was my home at the time.
I had a visit from a friend from London for the weekend, got talking and the price of my gaff came up. When I told him it nearly killed him. He'd paid 3 times what I had for a similar unit in London. We started chatting and discussed rents and buying one on the second phase of where I lived.... and that's where it started.
We bought 50/50 on a 2 bed apartment. The rent covered the mortgage and management with change. We put 6k each down to cover deposit and fitting the place out. It was too easy. In the pub again 6 months later we decided to go again. And we did.
Mortgage sorted over the phone, deposit put together over 6 months with a little (a lot) help from the Credit card. Flipped the credit card balance for 6 months interest free, got it paid off without paying any interest.
Now barely 3 years after buying my first home, I owned / part owned 3 properties.
This was so easy, I'd be retired by the time I was 50 living off a rent roll.
We have to go again......... so we went on the hunt. I came up with a few options but we couldn't make it work. We decided to try another city, we were in business again. Same gig, head down for 6 months hit the credit card too and flip the card balance for 6 months interest free. Mortgage, more or less over the phone, its too easy. Now up to 4 properties.

Around this time I decided to come back to Ireland. Pretty much penniless, but happy in the knowledge that I'd be mortgage free in less than 25 years with a nice little rent roll.

I decided to rent in Dublin and did for 5 years. Saved up a deposit for a place here, while all the time pushing to get another place in the UK. We got 1 across the hall from the last place, “only” cost us 12k in cash, 6 each the bank stumped up the mortgage for the rest.
Luckily the bloke I was going 50/50 with was smarter than me and kept saying the numbers don't stack up any more. But it was like a drug, I had to keep the momentum going. Now here's stroke of luck in that I got knocked back on a mortgage on my own on an apartment in the UK. I had 8 credit cards at this stage!!! (simply because when I paid them off I never cancelled the cards, 7 had zero balances, but it set alarm bells ringing with the banks) The market was at its height then, and I was looking at interest only.

Now some of you might have noticed I've not mentioned something.
TAX - never thought about it to be honest. Christmas drinks with my mate and he brought up the subject of his tax return. I said that sure we make feck all profit and any profit there was was paid to the bank in extra mortgage repayments. NOT SO, didn't realise that the capital repayment part of the mortgages were profit as far as the tax man was concerned. Got an accountant and went through all the figures. Its now 2006, I owe just over 15k in tax!!!!!!!!!!!!!!!! There's most of my deposit for a gaff here wiped out.

Gutted, devastated, prices were going through the roof here and I'd been set back a couple of years.

Then a ray of light. 100% mortgages, brilliant, I'm in business again, it had been ages since I'd had a fix. Got a place moved in in 2007, nice 2 bed apartment.

Then we all know what happened. BOOM, or should I say bust.
But it didn't matter to me, my mortgage is near enough the market rental level, interest rates are ok. And its my home anyway.

In the interim I got married, had a baby and now have a second on the way.
I need to move to a bigger place, but I'm in negative equity. Six figures.
But if you look at the numbers I'm a safe bet for the bank, or so I thought.

Not so, never thought about the greater tax liabilities on Irish properties, ie less write offs, also more charges.
The loans I have in the UK are not apportioned 50/50 if I'm assessed for a mortgage. The income from them is not taken into account at all. If a bank assesses me I’m insolvent!!! ie my repayments exceed my income......... not the case in reality.

I could sell up everything, but to be honest the income is worth way more than the equity.
No broker will talk to me, because rent is not income, even though its far more reliable than my salary would be as I’m in the private sector.
I have a decision to make going forward, I would love to talk to a broker face to face to see how best to position myself, but after a telephone chat its silence. I’m happy to sit it out for the moment, My first mortgage will be paid off in less than 5 years. By that stage we could be in a different world with regards to the economy.

So after all that, what's my experience?
I've learned that I was an idiot.
I'm lucky to have an intelligent close friend that understood the difference between investment and speculating.
I know a hell of a lot more now.
Burying your head in the sand is not the way forward, ever.
Property management is more stressful than anything else in my life.
A good tenant is gold dust.
A bad tenant knows the law better than most people.
The taxman will work with you if you are honest with them.

John_Rambo

Wow, fair play to you for posting whatnext, you got really into it!! Sounds like you have more experience than any of us!

ted1

I saw what was happening rented for several years, despite being pressured to buy by family and friends.
Decided to buy in killiney last year right at the lowest dip in the market.
Know have a small mortgage so only one of us have to work ( we've 2 kids)

In the mean time we got some investment properties in council areas. These have been rent constantly to RA tenants ( mo fear of job losses etc and we know what they can afford and how hard it is for them to move ) since purchased and are covering the mortgages. We'd lose about 50% if we sold them know but we don't plan to sell till we retire.

L1011

Got approved 105% for a two bed in killucan in 2006. Got cold feet and spent the next 6 years spending lots of cash on travel, cars, etc. Bought a 3 bed at >80% in Maynooth last year.

I wish I could claim it was amazing foresight but it was mostly luck...

Snakeblood

I worked since about 1998, was living at home and later renting up to 2007, at which point I bought an affordable housing property. To be honest, I didn't know what I was doing but my folks were badgering me to buy someplace as prices hadn't gone up for the first time in ages, so I figured the absolute cheapest thing I could do was affordable housing. I bought a 1 bed with the intention of living in it. The thought of flipping a place or renting it to someone gave me hives. Then I met someone and we had a kid, so in 2010, I sold it, which wiped out any savings I had but I was debt free. Been renting since and reading and understanding more. I read the property pin back before I bought the apartment but I didn't really grasp the enormity of what was going on, or the enormity of buying a house.

I'm thinking about buying a place now to support the growing family but when I do so, I say 'A quarter of a million euros' to myself while looking at a house, and imagining what else I could be spending money on if I had 250 grand.

L1011

MYOB wrote: »

>80%

<80%*, damn phone

RATM

Me and a sister of mine were mortgage approved in 2006 for a 2 bed apartment in Drumcondra, asking €470k. At the time I knew dam all about yield formulas or average prices being 3-4 times average salaries.

But what I did know was that for every €1 borrowed €2 would be repaid. So when looking around the show apartment (which was stunning, the interior designer really went to town) I thought to myself weather or not this two bed apartment which was not in the city center was worth €1m. Then something from 7 years previous dawned on me- I used to work as a barmen in Sydney for a private catering company, I'd go to wealthy people's houses and set up and run a temporary bar to serve at their parties. During that time I was in some amazing houses in Sydney and as a side interest I used to keep tabs on the high end of the Sydney property market through the property supplements. During 2000 it was possible to buy a 200sqm house in Sydney with decent gardens and a view of the Opera House and Harbour Bridge for around AUD$1m. This equated to around about €500k at the time. Houses that has an uninterrupted view and direct water access and jetties for yachts were going for AUD$1.5m and upwards.

So after viewing the 2 bed in Drumcondra my sister was insistent that we go for it. But I kept asking myself how the hell a 2 bed apartment in Drumcondra equates in price to a luxury home with a view of an iconic landmark like the Sydney Opera House. Of course there are other variables other than just price but the more I thought about it the less sense it made so as a result I got cold feet and pulled out of the purchase. It was a combination of luck and something just not feeling right, I couldn't put my finger on it but it just didn't stack up.

Now it is another 7 years on and I'm still on the fence. I agree that sentiment has changed somewhat but I personally think what we are experiencing right now is a dead cat bounce. I say this because my research has found that in a huge majority of property crashes since economists have been tracking them there has been a dead cat bounce. It is a virtual certainty that a feature of a crash will be a climb in prices and then for them to go south again. When you look at the amount of repossessions due and set that against the current slightly rising prices then it all slots right into place for me. I could be wrong on it and Ireland could buck the international trend and not have a dead cat bounce. But I find it very hard to believe that house prices can continue to rise against a backdrop of banks wanting to dispose of liabilities.

But either way I don't see any major recovery anytime soon. What I mean by that is I think that over the medioum to long term prices will track inflation and that we will be sticking to houses prices remaining to be 3-4 times average salary and for average salaries to continue to get pounded by further taxes.

whatnext

John_Rambo wrote: »

Wow, fair play to you for posting whatnext, you got really into it!! Sounds like you have more experience than any of us!

As I wrote all that I looked back at all the decisions made and I can draw a couple of retrospective conclusions.

The most important one is to differentiate between investments an your home.

The only serious mistake I made was in relation to my home.
If you are buying a home there is one factor and one factor only to be considered after affordability and that is can you remain there for the rest of your life if you have to.

All my other purchases are preforming well in their own right.

One of the things that really gets to me is how I am assessed going forward. The banks really need looking at in this regard. I could do some creative stuff from an accounting point of view and be in the exact same circumstances but pass the banks tests. Its madness.

Another point is that from an investment point of view Ireland now stacks up well if you are a cash buyer. Interest rates are low and yields are high on residential property (if you are buying now). Dead cat bounce or not, if the figures stack up they stack up. Just because they may (or may not) stack up better in the future does not mean that property is a bad investment.

Also
An interesting point made on another thread recently made a comparison of the cost of finance now relative to the boom times.
I did an analysis on where I currently live. If I was to buy the same place today, at todays market value, with a 10% down payment and the mortgage expiring on the same date as the current one I'd be saving €104 per month.
I appreciate the all the other associated side issues re neg equity but its an interesting point. If it was my home indefinitely and it was a 3 bed semi then I'd be laughing.

Villa05

techdiver wrote: »

I don't give advise here, as I don't consider myself an expert, but then again, who is? Estate Agents? Bankers? Solicitors? Economists? A large portion of these professions all got it wrong too.

This is the stand out point we all hear regularly. Were these people giving you advise for your benefit?

The truth is they were not giving you advise that would benefit you or the economy in general, they were advising you to take actions that would benefit themselves.

There is an interesting article on the New York Times why this phenomenon occurs in Ireland. It is well worth a read
http://www.nytimes.com/2013/07/28/opinion/sunday/the-psychology-of-an-irish-meltdown.html?_r=1&

Of all the professions above and I would include politicians and major property developers, do you think they have suffered or on the contrary benefited from the bust.
I am aware of many financial companies who advised clients to pile into property in the bubble and these same companies are now making a fortune out of insolvency proceedings.

How many of the above have lost their jobs and if they did where they compensated handsomely for this inconvenience?

What professions do you think are currently driving the price rises in South County Dublin?

What professions are currently cheer-leading property price rises and what do you think there motive is for doing so?

You do not need to be an expert. You just need to be very careful about the advise you take, where and who it is coming from and what is the motive of the person giving you the advise.

techdiver

Villa05 wrote: »

This is the stand out point we all hear regularly. Were these people giving you advise for your benefit?

The truth is they were not giving you advise that would benefit you or the economy in general, they were advising you to take actions that would benefit themselves.

There is an interesting article on the New York Times why this phenomenon occurs in Ireland. It is well worth a read
http://www.nytimes.com/2013/07/28/opinion/sunday/the-psychology-of-an-irish-meltdown.html?_r=1&

Of all the professions above and I would include politicians and major property developers, do you think they have suffered or on the contrary benefited from the bust.
I am aware of many financial companies who advised clients to pile into property in the bubble and these same companies are now making a fortune out of insolvency proceedings.

How many of the above have lost their jobs and if they did where they compensated handsomely for this inconvenience?

What professions do you think are currently driving the price rises in South County Dublin?

What professions are currently cheer-leading property price rises and what do you think there motive is for doing so?

You do not need to be an expert. You just need to be very careful about the advise you take, where and who it is coming from and what is the motive of the person giving you the advise.

I agree. That was the point I was trying to make also. I think from the list the obvious ones that had an interest in giving poor advise were bankers /estate agents etc. I would guess many of them were deluded into believing their own bull**** too! I also agree that the same cohort is trying to ignite bubble 2.0 at the moment. The disturbing thing is that so many people are ripe for the picking again! Lessons, unfortunately not learned!

Economists however should be different. To have so many of them ignore basic fundamentals is an embarrassment to their profession!

I am always careful as to who I accept advise from, to the point of my default setting is to never believe anything I am told until I can prove it for myself or at the very least corroborate the information reliably.

The lesson being, don't ask the turkey what they want for Christmas dinner!

Villa05

techdiver wrote: »

Economists however should be different. To have so many of them ignore basic fundamentals is an embarrassment to their profession!

The majority of economists worked for
Media outlets (wanted to ensure advertising revenue from DIY chains, property supplements etc continued undisturbed)
Banks (No explanation necessary)
Government: The biggest recipient of cash from the property bubble through various taxes.

Those that raised obvious concerns and there were quiet a few, were told to go away and commit suicide

spaceHopper

Was under huge pressure from my father to buy back in 2002, he took me to see house that if I bought them I’d be so stretched and I’d have to have tenants as well. In the end I didn’t buy. In 2007 meet and moved in with the misses, we rented for couple of years, while looking on and off. Last year we bought in Shankill, “SCD” where she’s from. We had twins this year so being near her folks is a massive help.

Too many people invested in property instead of buying a home, which is what I always wanted to do. When we bought I did a spread sheet with all the costings on it and what we could afford. Even though we went over budget on three houses we were always out bid, which has turned out to be a blessing as we found our current house which was much more affordable and go in early with a strong bid. Cost wise it’s about 100 a month more than renting but it’s a house not apartment…. so happy out.

Prices in Shankill have gone up I know of two houses on the same stree, both in need of work, one sold last for 360 the other this year for 410 or about 13% but two house is not a trend.

I think they will level off, I’m not so sure about a dead cat bounce. People don’t want to invest in property any more they are looking for a home, so they don’t want to live in apartments or boom time small house, they are after a good 3 4 bed simD in the burbs. Since there isn’t much land left for building we are looking at a short supply of older family homes, the laws of supply and demand kick in. I still think the market will slow down. Remo man will be selling mostly boom time investment property. Outside of Dublin, bounce bounce bounce.

John_Rambo

Pawwed Rig wrote: »

Many will claim they saw it coming yet people who made money out of it are few and far between. I think most were aware that property was possibly overvalued but few could predict to any degree when the peak was reached and fewer would have expected the scale of the catastrophic collapse we have seen in the last couple of years.

Well Pawwed Rig is right, lots of people "saw it coming" but didn't buy lots of property and sell it at profit in 2006 for some reason! A few on here telling us what they didn't do or buy too.

So, in all, little or no experience.