Clever Investment or Asking for Trouble?

darby5250

I've been renting accommodation for the last 3 years, but I know want to get a place of my own.

I have savings and investments of around €180k and this is the money I was planning to use when buying my own place, but I recently saw a small development site for sale in a nice location of my home town with Full Planning Permission for 2 large apartments and one 4 bed house with an asking price of €50k. I spoke to a local architect and he told me I could possibly get planning permission for 4 to 6 apartments on the site in place of the original planning application. So I'm thinking I could live in 1 apartment and let the others out to pay off the mortgage I would have to take out.

I know I'll have to pay Taxes, Maintenance, Insurance etc, but I think this could be a good investment in the long term as a posed to just spending my €180k on a one off house for myself.

I know I will have to get professional advice on this matter if I decide to go ahead with it, but I would just like to get general feedback from you guys to see this is a good idea or not.

Thanks in advance

jimmycrackcorm

There are towns and villages all overt Ireland with ghost estates and apartments because people thought the same. Why would yours be any different?

darby5250

Where I'm living there is a big demand for quality apartments. It's a commuter town of Dublin and doesn't have ghost estates like the midlands of Ireland.

Most of the apartments were built in the last 15 years. 80% of them are very badly built, poorly insulted and noisy to live in. To answer your question about why my apartments would be different. New building regs are now in place, so the apartments that I build would be a lot more comfortable to live in and therefore get a higher rent.

dearg lady

I would have thought for most people the point of moving to a commuter town would be because they could afford a bigger place, a house. I wonder would people be happy to live in apartments there?

Trhiggy83

These new apartments will also now cost you a lot more to build because of the new regulations you mention. The man on the street doesn't care about the new regulations or how an apartment was built ......they will just look at it like any other apartment block ......so I can't see you getting any more than the market rate for the area.

darby5250

The market rate has come way up in price because of the demand for apartments. So if I was going ahead with the project I'd be happy with receiving market rate.

Trhiggy83 wrote: »

These new apartments will also now cost you a lot more to build because of the new regulations you mention. The man on the street doesn't care about the new regulations or how an apartment was built ......they will just look at it like any other apartment block ......so I can't see you getting any more than the market rate for the area.

Mrs OBumble

darby5250 wrote: »

.... I could possibly get planning permission for 4 to 6 apartments on the site in place of the original planning application. So I'm thinking I could live in 1 apartment and let the others out to pay off the mortgage I would have to take out.

You need to explore a lot more about whether you really could get PP for 4-6 apartments, and also the cost of construction.

Then you need to think about your lifestyle plans: do you really want to be an on-site LL for a small complex? Could you see thru eviction proceedings for a family with cute kids but who just didn't pay any rent. Or deal with a wiseguy who starts running a brothel from your property? How would you react to being woken at 3am 'cos someone locked themselves out?

What would your work-commute be like, and what would the options be if you lost your current job and had to find another.

And the construction management work: normally it would be a property developer who's doing a build like this (only larger) as part of their day job. Would be doing it yourself, without any relevant experience, or would you paying someone - which would alter the finances a bit.

If there is a rental market in the area, then this could be a really good plan to set you up for life, and longer term remove you from being totally dependent on paid work to make a living.

But on the other hand it could turn into a nightmare, and cost you way more thank 50k.

If it were me, I think I'd be buying a house in the suburbs.

But maybe these are risks you're prepared to take.

darby5250

Mrs OBumble wrote: »

You need to explore a lot more about whether you really could get PP for 4-6 apartments, and also the cost of construction.

Then you need to think about your lifestyle plans: do you really want to be an on-site LL for a small complex? Could you see thru eviction proceedings for a family with cute kids but who just didn't pay any rent. Or deal with a wiseguy who starts running a brothel from your property? How would you react to being woken at 3am 'cos someone locked themselves out?

What would your work-commute be like, and what would the options be if you lost your current job and had to find another.

And the construction management work: normally it would be a property developer who's doing a build like this (only larger) as part of their day job. Would be doing it yourself, without any relevant experience, or would you paying someone - which would alter the finances a bit.

If there is a rental market in the area, then this could be a really good plan to set you up for life, and longer term remove you from being totally dependent on paid work to make a living.

But on the other hand it could turn into a nightmare, and cost you way more thank 50k.

If it were me, I think I'd be buying a house in the suburbs.

But maybe these are risks you're prepared to take.

Hi Mrs OBumble

I won't be the landlord. A local auctioneer or management company would look after tenants.

About my Job: I'm a director of a small successful local business (in business 9 years). We have been lucky enough to have not been effected a hole lot by the rescission. So my weekly work income in pretty safe.

About my work commute: My workshop / office is less 5 minutes drive from the potential site I'm looking at.

The hole construction process would be carried out by a main contractor. And there is definitely a demand for apartments in the area.

MouseTail

The biggest barrier I suspect will be access to finance. You're talking a lot of cash to construct the development under the new regulations. Have you got an idea of cost of construction, and have you spoken to any financiers?

aido79

dearg lady wrote: »

I would have thought for most people the point of moving to a commuter town would be because they could afford a bigger place, a house. I wonder would people be happy to live in apartments there?

Believe it or not there are people in these commuter towns who don't commute and live there because they like living there. These people may be looking for a small apartment rather than a big house..

dearg lady

aido79 wrote: »

Believe it or not there are people in these commuter towns who don't commute and live there because they like living there. These people may be looking for a small apartment rather than a big house..

Bit defensive there?! As I said, most, not all. OP has replied that there is a demand for apartments, I was just making the point they would want to be sure there is demand for apartments

NIMAN

I'd say the second option. Like the man in the cow field, tread carefully.

aido79

dearg lady wrote: »

Bit defensive there?! As I said, most, not all. OP has replied that there is a demand for apartments, I was just making the point they would want to be sure there is demand for apartments

And I was just making the point that there is life outside Dublin:)

kippy

TBH, for the 180K in savings you have you could probably buy a decent house, potentially with a bit of land mortgage free in a lot of areas. If you wanted you could get a small mortgage of 100K or so and have 280 K to buy.
Indeed you might get away with spending less than your savings - depending on the area.
That's how I'd look at it and how I'd do it as:
1. I amn't a developer, I have never built anything and would be reliant on other professionals (which costs money) to get the work done that you are taking about. I wouldn't be comfortable taking on a project that is reliant completely on others and that I've no idea of the costs involved.
2. I wouldn't fancy being a landlord of said development, being via an agent or otherwise as there will invariably be times when you've issues.

Theres a lot to be said for living mortgage/rent free.
Get that bit sorted first and then maybe look to get into the development game.

jarvis_c82

As a person who has built my own house, you are not going to get very far with 130k. The bank is not going to finance a person who has little to no experience in building construction. If you do manage to get financing, the max the bank will offer would be around 500 to 600k. That is not going to build the development that you are thinking of doing.

nc19

Why not build 2 houses. sell 1 and live in the other or sell both and buy somewhere else??

dearg lady

aido79 wrote: »

And I was just making the point that there is life outside Dublin:)

Of course there is! I never suggested otherwise

RainyDay

It's a huge risk for your €180k. And you're not just risking your €180k - you're also risking whatever you're going to borrow €500k-ish? Do you know much about project managing residential construction builds? Do you know much about fire safety, or site safety?

If you don't have a background in engineering or construction, would you really want to take a risk in the unknown? Think about how much you know about your own job/profession, and how little the average man in the street knows about your job/profession. Would you really recommend that the average joe puts the best part of €1m on the line on something he knows little about?

Buy a house, and enjoy life with little or no mortgage. If you have money left over to invest, invest in something that would lose borrowed money.

darby5250

MouseTail wrote: »

The biggest barrier I suspect will be access to finance. You're talking a lot of cash to construct the development under the new regulations. Have you got an idea of cost of construction, and have you spoken to any financiers?

No, I haven't spoken to any financiers yet. I'm still very much at the early stages of looking into this idea. I'm hoping to talk to a builder that i do some work for from time to time - I'm thinking he might be able to give me an idea on the cost of building 4 to 6 Two Bedroom Apartments.

I have been looking a Modular Steel Frame Apartment Build - which is built off site, then assembled on site. I looks a lot quicker then a traditional build.

darby5250

kippy wrote: »

TBH, for the 180K in savings you have you could probably buy a decent house, potentially with a bit of land mortgage free in a lot of areas. If you wanted you could get a small mortgage of 100K or so and have 280 K to buy.
Indeed you might get away with spending less than your savings - depending on the area.
That's how I'd look at it and how I'd do it as:
1. I amn't a developer, I have never built anything and would be reliant on other professionals (which costs money) to get the work done that you are taking about. I wouldn't be comfortable taking on a project that is reliant completely on others and that I've no idea of the costs involved.
2. I wouldn't fancy being a landlord of said development, being via an agent or otherwise as there will invariably be times when you've issues.

Theres a lot to be said for living mortgage/rent free.
Get that bit sorted first and then maybe look to get into the development game.

Thanks for the post

You're definitely right in saying there's a lot to be said for living mortgage / rent free

darby5250

RainyDay wrote: »

It's a huge risk for your €180k. And you're not just risking your €180k - you're also risking whatever you're going to borrow €500k-ish? Do you know much about project managing residential construction builds? Do you know much about fire safety, or site safety?

If you don't have a background in engineering or construction, would you really want to take a risk in the unknown? Think about how much you know about your own job/profession, and how little the average man in the street knows about your job/profession. Would you really recommend that the average joe puts the best part of €1m on the line on something he knows little about?

Buy a house, and enjoy life with little or no mortgage. If you have money left over to invest, invest in something that would lose borrowed money.

If I spoke to a professional contractor and they said the project was going to cost close to €1m I'd forget about the hole thing. I have an idea in my head of what I thought it might cost, but going on some of the posts - I'm starting to think my figure is pretty unrealistic!

darby5250

nc19 wrote: »

Why not build 2 houses. sell 1 and live in the other or sell both and buy somewhere else??

Thanks nc19,

TBH I'm not looking to make a fast buck on this. It's more of a long term investment. The reason I'd like to build the 4 / 6 apartments is I'd get a better return on letting the apartments

Outkast_IRE

Quality Apartments with good parking, sound proofing & good management are few and far between.

As long as the location is right there would be no issue.

The only advice i would give you is not to over reach. Quality not quantity. For the right quality homes people will fight each other tooth and nail.

Unfortunately i know far too many people who could of made a nice tidy sum building a few houses or apartments but got greedy and the investment needed spiraled and they put them into enormous debt that is as good as unrecoverable.

MrMorooka

Note that we are in a rental bubble right now. If things change and construction in Dublin starts again, denser accommodation is built in Dublin, infrastructure in Dublin is improved- it is possible that a lot of people currently living out in your home town could move to the city, where their jobs are. Then you will have trouble filling the apartments.

rovertom

How about buying the site, building 2 good houses instead of messing with apartments and all the crap that goes with them.

Eric Cartman

if you cant get to the m50, cork, galway waterford or limerick city centers in 15 mins via public transport then no, do not buy / build an apartment there.

Apartments are high density housing for cities, not for the suburbs, portlaoise / leitrim or anywhere else that isnt a massive population center.