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500k in savings .. what to do?

  • 18-12-2017 5:24pm
    #1
    Registered Users, Registered Users 2 Posts: 15


    Hey,


    I am in my early 30's and have savings of ~500k

    I currently have no mortgage or investments to my name


    I am looking at purchasing an apartment (receiver sale) for 300k to rent out for one or two years and then live in it for a 2-3 years, might rent out property again after that.

    Current rental yield would be roughly 5% after management fees when renting


    I was wondering what is the best option :

    - Purchase property outright with cash (receiver sales usually perfer cash buyer)

    - Or purchase property with cash now and get mortgage later to free up cash for future investment?

    - Get mortgage now and hope receiver accepts mortgage financed offer


    Thanks


Comments

  • Registered Users, Registered Users 2 Posts: 2,091 ✭✭✭catrionanic


    Just out of interest, why aren’t you wanting to use it towards a more long-term home for yourself? Much safer long-term. You can rent a room tax-free up to 14k, so it may even work out more profitable than an apartment with a 5% yield.


  • Registered Users, Registered Users 2 Posts: 53,063 ✭✭✭✭tayto lover


    Savings of 500K you say .... hmmmm.

    Yes indeed.


  • Registered Users, Registered Users 2 Posts: 15 dancarter8


    Just out of interest, why aren’t you wanting to use it towards a more long-term home for yourself? Much safer long-term. You can rent a room tax-free up to 14k, so it may even work out more profitable than an apartment with a 5% yield.

    I currently live abroad.


  • Closed Accounts Posts: 70 ✭✭Dagenham Dave


    Should cover a round in Temple Bar


  • Closed Accounts Posts: 849 ✭✭✭Tenigate


    Wait til the next property crash and buy 4 apartments for the same price.


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  • Registered Users, Registered Users 2 Posts: 14,357 ✭✭✭✭SteelyDanJalapeno


    dancarter8 wrote: »
    I currently live abroad.

    Still playing Rugger?


  • Registered Users, Registered Users 2 Posts: 696 ✭✭✭fungie


    Bitcoin is a solid bet!!


  • Registered Users, Registered Users 2 Posts: 101 ✭✭VonBeanie


    OP. Firstly, well done on reaching 500k in savings in your early 30's. That's impressive !!

    You badly need to talk to a financial advisor. This is a lot of money to manage yourself. Making rental income pay with a mortgage is difficult to make the maths work. 5% may be a good return, but you may be better off investing in something other than property in the short term depending on your views on future property prices etc. Perhaps you would be better buying 2 properties with a mortgage. Only a detailed review with a good financial advisor will answer this.

    Also, there are additional tax issues for a non-resident landlord that you need to consider.

    Good luck !!


  • Registered Users, Registered Users 2 Posts: 37,316 ✭✭✭✭the_syco


    VonBeanie wrote: »
    Making rental income pay with a mortgage is difficult to make the maths work. 5% may be a good return, but you may be better off investing in something other than property in the short term depending on your views on future property prices etc.
    5% if nothing goes wrong. If the tenants don't decide to stop paying rent. If nothing needs fixing in the house, etc, etc.

    As said, talk to a financial adviser. Preferably one that is recommended by someone that you trust, as opposed to an internet search.


  • Registered Users, Registered Users 2 Posts: 782 ✭✭✭Cunning Alias


    Are these bots or something? Seems to be a few of these threads around lately. Buying forum has had a few.


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  • Registered Users, Registered Users 2 Posts: 15 dancarter8


    the_syco wrote: »
    5% if nothing goes wrong. If the tenants don't decide to stop paying rent. If nothing needs fixing in the house, etc, etc.

    As said, talk to a financial adviser. Preferably one that is recommended by someone that you trust, as opposed to an internet search.

    Thanks beanie and syco for your comments.

    Do you know of any independent financial advisers in the dublin area that you could PM me. Thanks


  • Posts: 0 [Deleted User]


    500k in savings, and it sounds like a good idea to ask complete strangers on an Internet forum what to do with it

    If you have that much money, get professional advice


  • Closed Accounts Posts: 2,436 ✭✭✭One_Of_Shanks


    So yer man was right all along. No telling how much you can save when you cut back on the avocados!


  • Registered Users, Registered Users 2 Posts: 259 ✭✭lcwill


    I was in a similar position to you. Will be very hard to get a mortgage, and even harder to remortgage once you have bought them if you want to get your cash back out. Banks are just not interested.

    Don't be in a rush to invest all your money now. House prices have recovered a lot since the crash, and there is a wobble on the way and lots of uncertainty with Brexit.

    If you want to get some of it invested maybe start with one apartment - you can get a nice one bed or even two bed in some very lettable parts of Dublin city centre for 250k. Find something low maintenance you can hand off to an agent and just enjoy the cash coming in every month. Even with no mortgage assume you will keep about 60-70% of the gross rent after all costs and taxes (this has been my experience on average over the last 5 years)

    Then take your time with the other 250k. All asset prices have been rising fast the last 5 or 6 years, no need to rush into the market. Maybe you will want it to buy you own place in a few years. If not you will have had time to learn a bit more about investing and managing property fromage distance and will be able to make a better decision on what to do next.


  • Registered Users, Registered Users 2 Posts: 37,316 ✭✭✭✭the_syco


    dancarter8 wrote: »
    I currently live abroad.
    If in the EU, perhaps look for a local financial adviser. If not, I don't know of any financial advisers in Dublin myself personally, and tbh and recommendations from here could be from the person themselves.

    Davy Stockbrokers comes to mind, but only because I used to go past their building whilst working in a summer job on Dawson Street.


  • Registered Users, Registered Users 2 Posts: 8,085 ✭✭✭Grumpypants


    You don't have to answer but was the 500k saved up via wages or an inheritance?

    I ask because if you are earning enough to save that amount, then you will likely be able to save that amount again in the next 10-15 years and retire. Why do you want to risk it on a very risky and stressful investment. Just enjoy the money.

    If it was an inheritance and you are worried about it slowly trickling away over the next 10 years and you being left with nothing, then i'd consider buying.

    But realistically unless you plan to live there in the future i see no point in buying. There are much less stressful investments that give a much better/safer return.


  • Registered Users, Registered Users 2 Posts: 151 ✭✭JustShay


    dancarter8 wrote: »

    I am in my early 30's and have savings of ~500k
    ..
    I was wondering what is the best option:

    Eat.
    Drink.
    Rave.
    Repeat.

    Oh, and maybe buy an apartment or two!


  • Closed Accounts Posts: 849 ✭✭✭Tenigate


    JustShay wrote: »
    If the latter, marry your best mate (man or woman) to avoid that inheritance tax!

    so stupid


  • Registered Users, Registered Users 2 Posts: 1,357 ✭✭✭hawkelady


    Tenigate wrote: »
    JustShay wrote: »
    If the latter, marry your best mate (man or woman) to avoid that inheritance tax!

    so stupid


    You should really chill out pal


  • Closed Accounts Posts: 1,198 ✭✭✭testicles


    This post has been deleted.


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  • Registered Users, Registered Users 2 Posts: 15 dancarter8


    I ask because if you are earning enough to save that amount, then you will likely be able to save that amount again in the next 10-15 years and retire.
    ..
    But realistically unless you plan to live there in the future i see no point in buying. There are much less stressful investments that give a much better/safer return.

    Thanks for the input Grmpypants

    Savings is from a business I operate.

    What would be an alternative investment option with 5-8% yield that would be safer/less stressful?

    The stock market looks frothy at the moment.


  • Registered Users, Registered Users 2 Posts: 605 ✭✭✭Captain Snow


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  • Moderators, Motoring & Transport Moderators, Music Moderators Posts: 12,781 Mod ✭✭✭✭Zascar


    Definitely put some into Cryptocurrecnies - If you are new to it you can invest in a type of crypto hedge fund - one is www.iconomi.net - getting very substantial gains so far. Come to the crypto forum for more info


  • Posts: 0 [Deleted User]


    You have liquid assets now. Dont underestimate this. Property is illiquid.

    5% rental return is only about 3% after tax (you have no mortgage and, as non resident, you will be taxed in Ireland without any personal allowances).

    Unless you are buying a house that you intend to have for yourself, you would be better to invest in stocks and shares. Long term they are the best and you should be able to get international blue chip shares that will outpace Irish property, and you can cash in any amount of the shares in a few days... not like six months for property.

    Also consider the tax situation in the country you now live in. Most countries have better tax arrangements for personal investments (lower income and CGT rates, sometimes no CGT at all) than in Ireland. You pay tax on shares in the country you reside in but for Irish property you pay tax here, at your highest rate..


  • Registered Users, Registered Users 2 Posts: 472 ✭✭Turbohymac


    Well with regard to your past posts if you managed to sell a b&b. And 9 month's ago was considering purchasing a creche. Well I'm not sure there would be too many people on boards capable of keeping up with your portfolio..even difficult for a good financial advisor oh and there hard to find.. as previous posters mentioned would either buy abroad or wait for the next crash and at least get value.
    If you're early 30s & 500k saved. Well fair play to that .. either keep it or invest wisely.


  • Registered Users, Registered Users 2 Posts: 8,085 ✭✭✭Grumpypants


    dancarter8 wrote: »
    Thanks for the input Grmpypants

    Savings is from a business I operate.

    What would be an alternative investment option with 5-8% yield that would be safer/less stressful?

    The stock market looks frothy at the moment.

    I'd be more inclined to ask why am i investing it at all? It is a huge gamble for little return. Most people want to invest to have a nest egg for retirement. You have that and a nice one at that.

    A 5% return is 25k a year. Knock about 50% off for tax and you are looking at 12k or 250 euro a week.

    And that is provided the tenant keeps paying rent. You don't have to invest much in the upkeep, and the rental market and property value stays stable.

    Maybe if everything works out and you keep getting rent and making 5% a year, in about 35 years you will have 500k and a house in Dublin you don't want.

    From the sounds of things the business is doing good.

    Buy a house, live in it and keep tipping away at the business.


  • Registered Users, Registered Users 2 Posts: 31,223 ✭✭✭✭Lumen


    There is no safe way to get a 5% yield with interest rates around zero unless you are actively managing the investment, in which case you are earning money from labour rather than capital.

    There are only risky ways that look good or bad in hindsight.

    Diversify and consider your investment horizons. Once you own one property around the value of something you could live in forever then focus on pension.

    Aim for 2m pension pot on retirement. That may only pay you 60k/year.


  • Moderators, Motoring & Transport Moderators, Music Moderators Posts: 12,781 Mod ✭✭✭✭Zascar




  • Registered Users, Registered Users 2 Posts: 31,223 ✭✭✭✭Lumen


    Zascar wrote: »
    You'd be mad not to put at least a small chunk in one of these
    Or alternatively: run in the opposite direction as fast as your legs will carry you.


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  • Closed Accounts Posts: 5,482 ✭✭✭Hollister11


    Zascar wrote: »

    If everyone is investing in something, do the opposite.


  • Registered Users, Registered Users 2 Posts: 30,443 ✭✭✭✭Wanderer78


    If everyone is investing in something, do the opposite.

    invest in everything?


  • Registered Users, Registered Users 2 Posts: 7,248 ✭✭✭shamrock55


    I've 600,000 saved any ideas for me
    (Edit) I ment 600


  • Closed Accounts Posts: 2,436 ✭✭✭One_Of_Shanks


    I can understand the logic behind asking forums for advice, it can't hurt (well it can but only if you follow it)

    But looking at this rationally you must have earned circa 100k per year since your late 20's (after tax) ? Would that be right?

    So in order to reach that level you must surely have a good accountant and a good financial advisor?

    So what did they advise?

    I don't mean to be rude, and I fully appreciate the asking around thing, but you don't get too many people who can whip up half a mill in savings by early 30's who take to Boards to seek financial advice about what to do next.


  • Banned (with Prison Access) Posts: 16,620 ✭✭✭✭dr.fuzzenstein


    500k in savings, and it sounds like a good idea to ask complete strangers on an Internet forum what to do with it

    If you have that much money, get professional advice

    I'm just passing through and this post caught my eye.
    My thinking would be that every "professional" advisor you go to has an agenda and a product to sell. None of them are truly independent, but all of them have one goal, their profit margin.
    How many people were told to invest in property 5 minutes before the crash because the advisor was either A: the typical cowboy just peddling his particular product to make a quick buck and no clue beyond that or B: were unscrupulous sharks who knew what was coming but were out to make a few more quid before the sh1t the fan.
    When faced with the above, I'd go with randomers on the internet any day. Way too many so called "professionals" promised a soft landing and "the cheapest bailout ever" back in 2008.


  • Closed Accounts Posts: 5,482 ✭✭✭Hollister11


    Wanderer78 wrote: »
    invest in everything?

    As in everyone is investing in Bitcoin, so don't.


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  • Registered Users, Registered Users 2 Posts: 30,293 ✭✭✭✭AndrewJRenko


    I'm just passing through and this post caught my eye.
    My thinking would be that every "professional" advisor you go to has an agenda and a product to sell. None of them are truly independent, but all of them have one goal, their profit margin.
    Sorry, but that's not true. Authorised advisors give fee-based independent financial advice based on the client's individual circumstances.

    https://www.ccpc.ie/consumers/money/getting-financial-advice/choosing-a-financial-adviser/

    http://www.thejournal.ie/readme/financial-advice-ireland-917956-May2013/


  • Registered Users, Registered Users 2 Posts: 14,357 ✭✭✭✭SteelyDanJalapeno


    As in everyone is investing in Bitcoin, so don't.

    Wise words today


  • Closed Accounts Posts: 2,436 ✭✭✭One_Of_Shanks


    I'm just passing through and this post caught my eye.
    My thinking would be that every "professional" advisor you go to has an agenda and a product to sell. None of them are truly independent, but all of them have one goal, their profit margin.
    How many people were told to invest in property 5 minutes before the crash because the advisor was either A: the typical cowboy just peddling his particular product to make a quick buck and no clue beyond that or B: were unscrupulous sharks who knew what was coming but were out to make a few more quid before the sh1t the fan.
    When faced with the above, I'd go with randomers on the internet any day. Way too many so called "professionals" promised a soft landing and "the cheapest bailout ever" back in 2008.

    True to a small degree but isn't that how the entire world works?

    Drop your dog into the vet, you're trusting the vet

    Kids into doctors, you're trusting the doctors.

    Kids at school, you're trusting teachers.

    Bad vets exist, doctors are only human, and then there's teachers.

    Financial advisers are the same. They come in all forms.

    But at least they're qualified and should have more of a notion than me and tom and harry, which is what you're getting when you seek advice on the web

    Or just DIY. Nobody to blame then.


  • Posts: 0 [Deleted User]


    Invest in the dairy industry like everybody


  • Registered Users, Registered Users 2 Posts: 1,409 ✭✭✭Nomis21


    Buy a new Volkswagen California Campervan for 75K

    Join Couchsurfing. Invite nice people to travel with you.

    Head South in Winter and North in Summer.

    You will look back on the 10 fun filled years you will have and know you invested wisely.


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  • Registered Users, Registered Users 2 Posts: 36,908 ✭✭✭✭BorneTobyWilde


    You must only be working for few years, what is it you do to save that much so fast. Lots of people can make a lot of money, but then spend it on living.


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