Buying an apartment in Dublin, am I mad?

Piriz

sounds like an interesting scenario, nevertheless if you buy now are you content if the property price falls during the next 6 months... its very possible but its up to you to make the call on this..you say that rent is crazy money but you might lose a huge amount of money if you buy rather than spend a bit extra and rent and see what 2015 brings..

having lived in a ground floor apartment and a top floor apartment in the same building in the past i found the ground floor very cold.. also increased risk of burglary (though you note this is a gated development which is a bonus it is not a complete deterrent).

Factor in all the additional annual costs: heating, Electricity, UPC or Sky, Broadband, Property Tax, Home Insurance, Water, property maintenance, this will add a few hundred onto your monthly repayments...this might make renting more appealing if you plan to rent for six months..

Essentially, with the new CB rules and ending of CGT exception and increase in charges... it is more likely that property prices will drop than increase..if you read some other property forums it appears to be turning since October.. therefore my advice is to hold off for 6 months and rent..

Magenta

One other thing to be aware of OP:

If you want to have a dog or a cat, the vast majority of management companies do not allow them. Some will make exceptions, but it only takes one person to complain and the pet has to go.

It might be completely irrelevant to you, but it's why I won't buy an apartment.
I'd rather buy a house and make my own rules

harrymagina

What kind of company do you work for? Are they willing to increase your salary as you upskill? Is it a company that's definitly going to be around in 5 years time and having to let staff go. Do you have enough expierence to walk into other jobs?

I was full set on buying a house at 23, 80k three bed room housenot in Dublin. 26 now was working happy out in the job until the work got slacker and slacker and other companies outbid us of contracts and was left go. Now living in Dublin and earning nearly twice as much as I was in I.T than I did Waterford.

Don't rush into it is my opinion. We are young.

The_Morrigan

jeremyr MagicMarker cut out the bickering please - if you can't interact in a civil manner then I would rather you didn't post.


Thanks.

Black_Knight

fire_man wrote: »

How did you manage to save 100k on 28k per year?That's some going.

Didn't you hear, he's single!

amdublin

seanman is me wrote: »

Fare play on buying a place at 25 ! That is fare going.

How on earth did you save 80k ?

How long have you being saving?

Best of luck.

I want to know this too! How did you save 80k on €28k?! What age have you been working since?!

Do you drink?? :pac:

Well done!

Jeremyr

amdublin wrote: »

I want to know this too! How did you save 80k on €28k?! What age have you been working since?!

Do you drink?? :pac:

Well done!

Been saving since i was 14

I was on alot more in my previous job in and around the end of the boom, got made redundant then worked overseas for two years


yes i drink like a fish


Keep in mind my father died and left me around 27-28k


So i saved about 85k myself

stevedublin

the world wonders wrote: »

:rolleyes:

cocoman

Jeremyr wrote: »

Hi All,


I'm here looking for some advice, i really need to get my own place , i have been thinking about buying for the past two years now and have finally been approved for a mortgage.

Right now i am currently living with a relative but i need my own place asap and don't want to rent, i have put a bid in( 180k) which has been accepted for a two bed apartment in Dublin.


The apartment is 5 minutes drive from my job, has it's own entrance, gated community and about 15 minutes drive to the airport


I just need advice, should i go ahead with the purchase or wait it out and maybe save for a house/wait for prices to drop?? I don't mind apartments at all , so any advice is welcome


Current situation


Male, 25 years old, single

Income : 28 k

Deposit : 108k ( my father died and left me 28k he didn't have property just had that in the will, the rest i saved myself )


Mortgage : I'm borrowing 78k


Any response is much appreciated


Regards

Jeremy

I'd say go for it. Your mortgage would probably be a lot less than renting an equivalent place. Mortgage rates are fairly low at the moment too.

It might be advisable to keep back some of your savings in case you need it for emergencies such as job loss/change where you wouldn't have any money coming in. Also you might want to go travelling in the future and you would have savings to pay mortgage for a few months.

Renting out a room would be a good call but I'd do it sooner rather than later. You will probably get used to you own space and the thought of someone then sharing might not be as appealing . If you do rent out the room i'd use the rent to pay a bit extra off the mortgage rather than pi** it away - oh wait - you're 25 maybe you could pi** a bit of it away

Good luck with whatever you decide.

MouseTail

Can't see any flaws really, did the same myself when 25 and single many years ago and it worked out well. You are buying neither at the top or bottom, so its an okish time to buy imo, especially cushioned as you are by your loan to value ratio.

kitchenkid

I think an apartment is ideal for your circumstances. Later if you need to get a house for a family you can rent or sell the apartment since it is close to public transport etc.

As to value, if you would be likely to pay 10,000 per annum to rent it then it costs the equivalent of 15 years rent at a price of 150000. After the 15 years you are in "profit"..........not bothering to factor in the various pluses and minuses of ownership. So, especially if you will hold it for a while and not be under pressure to sell, then you have a nice little investment as well as a roof. But the thing that counts most, is that you can afford it and you can. best of luck!

Sala

It's not much of a risk given that you have so much cash to put into it. The mortgage would be what, 400 a month?? You could never rent a two bed for that in the complex I presume. Near work, good transport links etc mean you could rent a room and based on your saving history you could probably pay off the mortgage really quickly and own it outright so if you want to move in your 30s you can sell it or keep it and rent it out. If you had very little in savings id say you're mad at 25, but based on your financials the risk is very low. Even if prices fall you will never end up in negative equity with that type of deposit and low mortgage, so you won't be "stuck".

Only thing I would say based on apartment living (various places) I have discovered:
- some are noisy , see if you can view it around 6-7pm when people are in making dinner etc and see can you hear normal living noises. That's a red flag to me.
- parking can be a pain - check this out
- higher floors are warmer than ground floors

Most importantly, space, layout and storage are important, and a bad set up will drive you bananas. Is the master bedroom big enough for plenty of drawers, maybe overhead lockers for duvets etc? Does the kitchen have decent room on the counters for kettles toaster microwave and food prep (I have a galley kitchen, it'll be the death of me!)? Is there enough room for an average table or will you be forever pulling one out from the wall, moving things around? Lastly as you're on the ground floor, will people constantly looking in your window or are you looking onto a green space?

Mrs OBumble

OP, if you lost you job and had to move elsewhere for work, how easily would the apartment rent out? And does the management company allow you to do that?

A negative answer to these questions is the only thing that would put me off buying in your situation.

One word of advice, though. As well as allowing cash for furniture and house-stuff, you should also keep some cash back for emergencies. In this country, I recommend enough money to live on for about 12 weeks (since benefits take so long to come through). This is to cover if you get sick and cannot work, or your car blows up, or whatever.

alias no.9

One thing to consider is how long you can picture yourself living there?

If you think you might want out by the age of 30, you could chose to keep the apartment, rent it out and rent / buy somewhere else.
As things stand, only 75% of mortgage interest on the original borrowings for the purchase is allowable as an expense against rental income. Your lump sum will be tied up in this property and you'll be paying fairly high levels of tax on the rental income which isn't a great place to be.
If you wished to buy somewhere else while renting out this place, when the bank is considering your application, they will aggregate this mortgage and whatever prospective new mortgage to calculate your monthly outgoings and stress test that while ignoring any potential rental income from this property on the income side as its unproven and may not be sustainable.

Alternatively, you may chose to sell and buy. There are significant costs with buying and selling property, 1% stamp duty on purchase, maybe 2% EA fees on a sale, solicitors fees for buying and selling. Then there's any furniture and redecoration costs in this place along with management fees, insurance, interest on the mortgage, etc... all of which has to be balanced against what you might pay in rent in the years you might stay here. Sure you can rent out a room but then you're comparing it to shared rent.

Just something to consider when making your own decision, only you can make that decision.

hfallada

OP do the math on this

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?abt=0002&abg=1

Ignore the Dollar sign

i bought an apartment when i was 23,

Personally i'd wish i got a house instead so id say hold out for a house,

apartments are to restrictive and management fees can be crazy!

Dietsquirt

OP, I can't give you a huge amount of advice on the question you asked, however, having saved €85k at the age of 25 is a huge feat, congrats man

johnnyskeleton

Jeremyr wrote: »

just not nowhere near as high as i would if went out and rented an apartment for myself

Heres the skeleton method of assesing the benefits of purchasing over renting.

Ask yourself what kind of resale price that specific apartment might make in 5 years time. Be reasonable but conservative, so be conservative and look at the worst case scenario. So its a safer bet to assume a reduction. This reduction is figure Y1 (being the whole 5 years).

Stamp duty, solicitors fees etc are figure Y2. Stamp is 1,800. Solicitors can be anything from 1-3k. On the assumption it is registered land we should say 2,200 making Y2 amoubt to c. 4k

What sort of furniture do you need, less what you already have? This should be the figure of what you would need to get but would be included in a rental e.g. bed and couch, but not tv etc (youd have to buy this in both scenarios usually). If there is anything missing in the apt like fixture - new apts might not have flooring/carpet, oven etc - these can be quite expensive. Alternatively, and not to plug the sister site, but a lot of furniture can get got for free or cheaply on adverts.ie. Youre figure here is Y3.

Allow a few hundred each year for new furniture fixtures etc. A new apartment with a brand new dishwasher etc could keep for 10 years, but expect at least one thing will need replacing or ulgrading per year. This is the stuff a landlord wpuld replace. Again, Id say budget 500 p.a. but if you can less in less than ideal circumstances. Y4 is 2,500

Managment fee is 1024 pa, lets say this goes up to 1200 by year 5. Property tax would be a few hundred say 300ish p.a. ignore water charges for this calc but include mortgage protection insurance of, say 150 p.a. Allow both to increase a bit by year 5 so lets say all these mandatory charges are 1600 each year for 5 years so Y5 is 8k.

Then look at the likely interest/return on investment (after tax) your lump. Im conservative so would go for a safe savings account with very little interest, but other people may have better inestment skills. Y6 is what your 108k would be in 5 years time (exclude any extra savings you would do in this time).

So add up Y1-Y6 and get a total Y figure. This is the cost of buying

On the other side you have a simpler calculation. What would you pay in rent for 5 years in an identical property (i know in reality you could probably share or get a1 bed for less, but for the purposes of the calculation treat like with like). If you are likely to sublet or rent-a-room scheme the other room you can add (not subtract) this figure, but I think its a better calculation if you exclude this and treat it as you are going to live by yourself. This figure is X

X-Y=Z, Z being the cost of home ownership if negative, or the benefit of home ownership if positive.

So lets say that 5 years rent there is 60k, exclude renting a room/sublet. Lets say it goes down by 20k, 4k for Y2, 3k for Y3 (furniture), Y4+5 is 10.5 and say Y6 is 7k is 42.5k. So if those factors are as above then you are 17.5k better off buying and you have the intangible benefits of owning your own home. But if it goes down by 40k and you get a nice 5% after tax return on some crazy investment on an investment you would be 22.5k better off renting than buying and have the freedom of being able to move at any time.

Overall, as long as you are prepared to take the downside risks and go in with your eyes open best of luck and I hope it works out for you. Obviously if rents and property prices go through the roof and interest/investments go to pot then its a sound investment.

One piece of advice I would give you though is you shouldnt rely on your friends view of he place and should rent there yourself for a few months. If its a receiver sale it could take a long time for the sale to go through so your circumstances would probably make some renting inevitable.

Sorry about the complexity of the post but might give you a clearer idea of what to do. Make sure you run your own figures though

desertcircus

Forgive me if I'm mistaken, but my understanding is that you're in your third job as an adult, and your salary and benefits have decreased significantly. Unless there's a solid reason why your current job is a great deal more stable, I'd be wary of signing up for a mortgage. If you have to move for work and the place takes a couple of months to rent out, you could end up in a very awkward position financially.

Additionally, one thing you haven't mentioned is how much you're currently saving. If your current rent plus savings are less than the mortgage plus costs of ownership would add up to, then buying will require you to live on less.

lima

Magenta wrote: »

One other thing to be aware of OP:

If you want to have a dog or a cat, the vast majority of management companies do not allow them. Some will make exceptions, but it only takes one person to complain and the pet has to go.

It might be completely irrelevant to you, but it's why I won't buy an apartment.
I'd rather buy a house and make my own rules

That sounds like speculation. Many many management companies allow pets.

Icepick

180k seems too much for a 2 bed apt that's not in the centre.

And definitely don't use up all your savings on the deposit. Kepp at least 6 months worth of your usual expenses in the bank for the rainy day.

noodler

Considering doing something similar OP.

Sick of the Dublin rental market.

nc19

Crazy imo

there are places in dublin you could buy a 3 bed house for 180k

noodler

nc19 wrote: »

Crazy imo

there are places in dublin you could buy a 3 bed house for 180k

There are, but this place is 5 minutes from his job.

blacklilly

MagicMarker wrote: »

Don't be so precious, I'm just giving you my opinion, which you asked for when starting this thread. Most normal people aren't privileged enough to be allowed live rent free into their mid-twenties. It's not like I'm suggesting you sleep on a park bench FFS.

It's clear you're not looking for opinions that don't reinforce what you want to do, so I'm out.

Ehhhhh bit harsh don't ya think

blacklilly

Mrs OBumble wrote: »

OP, if you lost you job and had to move elsewhere for work, how easily would the apartment rent out? And does the management company allow you to do that?

There's not one OMC that I know of that doesn't allow leasholders rent their properties out, some leases have clauses in terms of short term/holidays lets but typical renting of your property is of course allowed.

Piriz

You should definitely buy op, madness paying rent when you are in a very strong position to buy.

I would borrow a bit more though and keep say 20k in savings rather than emptying it all in one go.

Piriz wrote: »

Factor in all the additional annual costs: heating, Electricity, UPC or Sky, Broadband, Property Tax, Home Insurance, Water, property maintenance, this will add a few hundred onto your monthly repayments...this might make renting more appealing if you plan to rent for six months..

The cost of the majority of the above will be the same if renting or owning.

johnnyskeleton

desertcircus wrote: »

Forgive me if I'm mistaken, but my understanding is that you're in your third job as an adult, and your salary and benefits have decreased significantly. Unless there's a solid reason why your current job is a great deal more stable, I'd be wary of signing up for a mortgage. If you have to move for work and the place takes a couple of months to rent out, you could end up in a very awkward position financially.

Additionally, one thing you haven't mentioned is how much you're currently saving. If your current rent plus savings are less than the mortgage plus costs of ownership would add up to, then buying will require you to live on less.

Well hes got a fairly large deposit to buffer his risk, if in financial trouble he could rent a room and it could probably cover the mortgage. Finally, and perhaps cynically, the Irish government has msde it be known that defaulting on your mortgage is much better than not paying your rent.

johnnyskeleton

Icepick wrote: »

180k seems too much for a 2 bed apt that's not in the centre.

I wouldnt be so sure. You wouldnt get much of a 2 bed apartment in the city centre for that and there are apartments in lots of suburbs selling for over 250k. Not saying its right or value, but thats the market at the moment

Mrs OBumble

blacklilly wrote: »

There's not one OMC that I know of that doesn't allow leasholders rent their properties out, some leases have clauses in terms of short term/holidays lets but typical renting of your property is of course allowed.

I'm glad to hear it.

In the country where I come from "company shares" complexes (in which you purchase shares in the company and a lease to occupy a particular unit) sometimes do have "no sub-leasing" or "sub-lease only to tenants approved by the management company" clauses. They're a way to keep property values up (owner-occupied complexes are usually better looked after over time), but can be restrictive if your circumstances change.