Advice on investing €500,000

hamadaaa94

Hi
Ive been saving for a while now and have scraped about €500k and would like to invest in a property to avail of the rent.
Ive been looking in malahide so far and have found a few good properties.
Would any of your recommend somewhere else I should be searching for maximum potential resale value and rent income in dublin?
This would really help lads, thanks.

these have grabbed my attention so far:

millview-€550,000
http://www.myhome.ie/residential/brochu ... th/2617146

robswall-€510,000
http://www.myhome.ie/residential/brochu ... in/2613838

ted1

I'd look at getting several 1 bed apartments in swords or city cemtre

D3PO

if your going to rental investment(s) you would be mad using your savings to do so. Use your savings so as to get a mortgage, keep the savings in a high yield account and remember you can write 75% of the mortgage interest off your tax bill.

so if for example you got a mortgage of 8% you would essentially only be paying 2% (pre tax) yout 500k will earn you more than that in a high yield account and therefore by getting the mortgage you come out financially better.

Basically if your going to invest in property, know what your doing, know the best strategy to make your money work for you and buying a house in malahide for cash is certainly not the best way to invest in a BTL.

Being a LL is not for the feint hearted, make sure you know all your obligations and also all the processes around dealing with tenants, late or unpaid rent etc before even dreaming about buying to let.

P.S Congrats on saving 500k that's some achievement.

Pawwed Rig

I agree with D3P0 below in that you should be leveraging your money with borrowings to avail of the tax benefits. I would also advise against 1 big purchase as realistically I think you will struggle to get a decent rental yield. I would go with city centre purchases buying 2-3 (or 4) units where you will have a higher demand.
Also with that amount of cash you may be able to negotiate large discounts if purchasing multiple properties.

That said for an investment of this size I hope you are getting expert advice aswell?

murphaph

I don't think anyone "scrapes" half a million together. I think the OP can well afford some professional (independent) financial advice. Sticking all that loot into one investment property would be madness IMO. At the minimum I'd spread the risk by buying multiple apartments (also lower maintenance than a house) but I wouldn't invest it all in property either. Nice dilemna by the way! Congrats!

guttenberg

OP your barely 20, how'd you manage to save 500k in such a quick timeframe?:eek:

Fighting Irish

murphaph wrote: »

I don't think anyone "scrapes" half a million together. I think the OP can well afford some professional (independent) financial advice. Sticking all that loot into one investment property would be madness IMO. At the minimum I'd spread the risk by buying multiple apartments (also lower maintenance than a house) but I wouldn't invest it all in property either. Nice dilemna by the way! Congrats!

Some people can

riclad

I don,t see where you get a discount, unless you buy 2 or 3 apartments from the same seller.
IT s hard to find 3 units from one seller , that you might want to buy.

handlemaster

id go with spreading it out over a number of properties the yeild would be alot greater

ted1

riclad wrote: »

I don,t see where you get a discount, unless you buy 2 or 3 apartments from the same seller.
IT s hard to find 3 units from one seller , that you might want to buy.

receivor/nama/developer etc theres plenty of places out there you wouldn't buy to live in. but would attract renters

hamadaaa94

First off why was my last thread closed?

'guttenburg' i probably should have cleared that up, im using my nephew's account right now (to save me the hassle of creating a new on i guess)

'D3P0' thanks, that has given me a lot of food for thought. the problem is i already have a mortgage of €250,000 and highly doubt i can take another one out. I know that being a LL is not for the feint hearted, which is why i dont think i should purchase more than one property as many of you suggested. And D3PO, what do you mean by a high yeild account?

thanks 'murphaph' and 'D3PO'

hfallada

The northside of Dublin generally has higher margins than the southside. You can often buy a 1 bed apartment in the city of 80k that will rent for 12k a year(Which is massive return and shows rents are ridiculously high). If you want a major project, you can buy site for like 10-20 apartments fairly cheaply which you could develop and rent the apartments. There is a huge demand in the city between the canals and just beyond it. Personally I think buying in Drumcondra and Dublin 7 ( Phisboro & NCR) are near 100% safe. St Pats is getting a massive extension. Plus in Dublin 7 at Grangegorman, there will be 20,000 students in the next few years. But there is never enough accommodation built for students.

There is an unbelievable demand at the moment for accommodation in Dublin. There is thousands of foreign language students, which were not here 5 years ago(8,000 Brazilians this year and its rapidly growing, plus tons of Koreans). A majority of jobs created are in Dublin. There is thousands of 3rd level students and a lot of families are renting instead of buying. I wouldnt invest outside Dublin as I think its more risky.

D3PO

no idea why your last thread was closed but anyway. Im going to write this is the simplest way possible theres a lot more detail but I will try keep it as high level as I can.

Regarding my last comments. Essentially you want to leverage that 500k to return you the most you can.

If you bought a house for 500k for example with cash and received for example 1500 a month in rent. Lets assume no expenses (not realistic but for example its best) your yielding 3.6% of which about half will be due in tax so really your making 1.8% on your money.

Now if you leverage that 500k savings and get a mortgage for the same property instead. You could buy the house using 125k of your cash and getting the remaining 375k as a mortgage. Using AIBs latest BTL figures this mortgage would cost you 5.91% fixed for 5 years.

75% of this interest roughly 4.43% of it could be written off against tax. So the real cost of borrowing the money is circa 1.5%

Now if you went that way and instead put the 375k of cash you have left into a high yield account lets go with the most basic one a 5 year savings cert with www.statesavings.ie you would earn an AER of 2.11% tax free on that money over the same timeframe.

Essentially .61% more for your money plus as this money is tax free as opposed to the rental income that would be taxable in real terms you would have circa 1.2% per year more cash in your pocket over that timeframe.

Doesn't sound like much but over the 5 years that's about an extra 22 grand in your back pocket by leveraging your savings.

Madness not to TBH mate. Id strongly suggest if you go the BTL route you take financial advise going in without it could cost you a heap in potential earnings.

My basic example is based on the assumption you are in the higher tax bracket which to be honest if you have saved 500k is a fair assumption to make

D3PO

plus of course you would still have the 375k to invest in an additional BTL if you found being a LL worked for you and found something with a tasty yield or you could again leverage and so on so forth.

now of course over leveraging is what led to some many people being in the crapper when things turned for the worst when the bubble burst so I wouldn't advise releveraging but just letting you know the potential of leveraging and for a one property investment it absolutely should be done.

OMD

hamadaaa94 wrote: »

First off why was my last thread closed?


'

Because you are not telling the truth. You are not an uncle using your nephews newly created account.
You do not have 500,000.
You are 17 years old.
You are just starting 6th year in school. You get kicks starting this kind if thread. You have been banned for similar in the past. (Twoandahalfmen)

Victor

hamadaaa94 wrote: »

im using my nephew's account right now

This isn't allowed.

Moderator