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Apartment Investment

  • 02-01-2020 5:37pm
    #1
    Registered Users Posts: 1,501 ✭✭✭ Ottoman_1000


    Apologies if this topic has been discussed a millions times before. But a very quick one, myself and the wife have between us about 100k in savings. We're both mid 30's and we will be hoping to start a family soon. I am toying with the idea of spending 80k on a apartment and using that rental income as a savings for our kids futures. My wife is fairly conservative with money so any talk of investing (especially property) gets shut down fairly quickly. We both spent over 8 years in Australia due to the last recession so I suppose she has reason for her cautious mind set. I just want to know if there is anyone on here who has a similar investment and how is it working out for them?


Comments

  • Registered Users Posts: 809 ✭✭✭ 2lazytogetup


    pay off your mortgage if you havent already first. And max out pension contriubtions as well.

    Ive heard stories of difficult tenants demanding everything. you could find yourself driving to the apartment to fix some niggle. last one i heard from a tenant wanted their radiators bled for xmas. guy had to drive 10 miles round trip. took 10 seconds to bleed both radiators.

    you could do what 90% of landlords do and not register it or pay tax. but thats a risk. if you do pay tax on the rental income, you are down 50% so not really worth it.

    have you thought about investing directly in a REIT fund so you dont have to deal with tenants.

    other than that you could buy a bigger/more valuable house as you will enjoy the benefit. and any gains in principal private residence is CGT exempt.

    Its a nice problem to have


  • Registered Users Posts: 27,467 ✭✭✭✭ drunkmonkey


    Start the family, keep saving, reasses things in a few years. You might want a holiday home as opposed to a 2 bed apartment when you see the prices of foreign holidays with 3 kids.
    A mix of using Airbnb/letting agent for renting out your home along with letting it off to Homeexchange could give you some good options as a family trying to get away often without costing a fortune.


  • Registered Users Posts: 1,501 ✭✭✭ Ottoman_1000


    pay off your mortgage if you havent already first. And max out pension contriubtions as well.

    Ive heard stories of difficult tenants demanding everything. you could find yourself driving to the apartment to fix some niggle. last one i heard from a tenant wanted their radiators bled for xmas. guy had to drive 10 miles round trip. took 10 seconds to bleed both radiators.

    you could do what 90% of landlords do and not register it or pay tax. but thats a risk. if you do pay tax on the rental income, you are down 50% so not really worth it.

    have you thought about investing directly in a REIT fund so you dont have to deal with tenants.

    other than that you could buy a bigger/more valuable house as you will enjoy the benefit. and any gains in principal private residence is CGT exempt.

    Its a nice problem to have


    Thanks for the advice, I had been considering the mortgage repayments as an option to so I will look at that again.
    I was not aware of REIT funds so I will also give them a look, thanks for the tip.


  • Moderators, Business & Finance Moderators Posts: 7,834 Mod ✭✭✭✭ Jim2007


    Apologies if this topic has been discussed a millions times before. But a very quick one, myself and the wife have between us about 100k in savings. We're both mid 30's and we will be hoping to start a family soon. I am toying with the idea of spending 80k on a apartment and using that rental income as a savings for our kids futures. My wife is fairly conservative with money so any talk of investing (especially property) gets shut down fairly quickly. We both spent over 8 years in Australia due to the last recession so I suppose she has reason for her cautious mind set. I just want to know if there is anyone on here who has a similar investment and how is it working out for them?

    Too right! It seems very few people in Ireland learned the lesson, despite actual experience to back up the statistical evidence - Property is a high risk category and definitely should not exceed 7% or 8% of a portfolio and that includes REITs BTW.

    Leave the money where it is, keep adding to it and in the mean time learn all about investing and in particular risk versus return.


  • Registered Users Posts: 1,501 ✭✭✭ Ottoman_1000


    Some good sensible advise there folks. I think we will hold onto what we have and keep saving for the next few years and when our fixed term is up on our mortgage just pay a nice lump sum off it. Thanks for the feedback.


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  • Banned (with Prison Access) Posts: 1,625 ✭✭✭ Millionaire only not


    Keep ur savings going , it’s an incentive to see it there !
    property there’s enough fools out there, ur talking to one that has done it all , life’s too short to be listening to tenants on Xmas day !
    It’s in the past for me and that’s where it will stay !


  • Registered Users Posts: 14 ✭✭✭ maca007755


    be wary of bail-ins (100k cap but can be changed with a crooked pen) search "g20 bail in"
    inflation also could rear its head with the loose monetary polices being adopted the world over.
    just my 2 cents


  • Registered Users Posts: 793 ✭✭✭ newcavanman


    Depending on whether you are self employed, its possible to set up a self administered pension fund, which can buy the apartment. This allows all the rent to be invested tax free in the fund. Im 3 years into this myself at the mo. I use a letting agent to deal with the tenant. I know there are risks, but at least inthe current climate you can afford to be extremely picky about potential tenants. It has worked ok for me SO FAR


  • Registered Users Posts: 809 ✭✭✭ 2lazytogetup


    also i read that property has done alot better than the stockmarket over the last 50 years across the world. But whats that disclaimer, 'past performance is no indication of future gain. '


    if you are in the paying 40% tax bracket, i would prioritise pension payments over paying down the mortgage.


  • Registered Users Posts: 685 ✭✭✭ badboyblast


    pay off your mortgage if you havent already first. And max out pension contriubtions as well.

    Ive heard stories of difficult tenants demanding everything. you could find yourself driving to the apartment to fix some niggle. last one i heard from a tenant wanted their radiators bled for xmas. guy had to drive 10 miles round trip. took 10 seconds to bleed both radiators.

    you could do what 90% of landlords do and not register it or pay tax. but thats a risk. if you do pay tax on the rental income, you are down 50% so not really worth it.

    have you thought about investing directly in a REIT fund so you dont have to deal with tenants.

    other than that you could buy a bigger/more valuable house as you will enjoy the benefit. and any gains in principal private residence is CGT exempt.

    Its a nice problem to have

    90% dont register , shows what you know, most landlords are registered.


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  • Registered Users Posts: 12,289 ✭✭✭✭ Mad_maxx


    Jim2007 wrote: »
    Too right! It seems very few people in Ireland learned the lesson, despite actual experience to back up the statistical evidence - Property is a high risk category and definitely should not exceed 7% or 8% of a portfolio and that includes REITs BTW.

    Leave the money where it is, keep adding to it and in the mean time learn all about investing and in particular risk versus return.

    I know you take a dim view of both direct property investment and REIT, s but which is the lesser of two evils in you're opinion?

    I'm referring to cash buyers of direct property for this comparison by the way.


  • Registered Users Posts: 2,649 ✭✭✭ cooperguy


    Use Karls mortgage calculator to see how much you would save by overpaying your mortgage. Its a tax free, risk free return on your investment.


  • Registered Users Posts: 5,229 ✭✭✭ The J Stands for Jay


    Mad_maxx wrote: »
    I know you take a dim view of both direct property investment and REIT, s but which is the lesser of two evils in you're opinion?

    I'm referring to cash buyers of direct property for this comparison by the way.

    REIT is the lesser of two evils. No dealing with tenants, agents, RTB, cleaners, tradesmen. There's diversification through investing in loads of properties versus one apartment.


  • Registered Users Posts: 12,289 ✭✭✭✭ Mad_maxx


    McGaggs wrote: »
    REIT is the lesser of two evils. No dealing with tenants, agents, RTB, cleaners, tradesmen. There's diversification through investing in loads of properties versus one apartment.

    whats to stop board directors over compensating themselves ?

    the REIT,s have not tracked the ( on the ground) property market accurately at all up to now


  • Moderators, Business & Finance Moderators Posts: 7,834 Mod ✭✭✭✭ Jim2007


    Mad_maxx wrote: »
    whats to stop board directors over compensating themselves ?

    the REIT,s have not tracked the ( on the ground) property market accurately at all up to now

    Specifically which REIT are you referring? And please don’t come with one of the Irish ‘penny stock’ REITs because they are just not investing quality and have no place in investors portfolios.


  • Registered Users Posts: 5,229 ✭✭✭ The J Stands for Jay


    Mad_maxx wrote: »
    whats to stop board directors over compensating themselves ?

    the REIT,s have not tracked the ( on the ground) property market accurately at all up to now

    Is there anything on an exchange which exactly tracks the value of the underlying assets?

    As for the directors, a bit of due diligence would let you figure out if that was likely to be happening.


  • Registered Users Posts: 12,289 ✭✭✭✭ Mad_maxx


    Jim2007 wrote: »
    Specifically which REIT are you referring? And please don’t come with one of the Irish ‘penny stock’ REITs because they are just not investing quality and have no place in investors portfolios.

    According to you, every company on the iseq is a " penny stock"


  • Moderators, Business & Finance Moderators Posts: 7,834 Mod ✭✭✭✭ Jim2007


    Mad_maxx wrote: »
    According to you, every company on the iseq is a " penny stock"

    That is because they meet the criteria, the definition does not change just because you are on another exchange. Most of the investment quality REITs that I have looked at have very small tracking errors. If you put money into penny stock type stuff and it does not work out then you have no one to blame but yourself - you took a high risk and it did not work out.

    From your response I take you are whining about an Irish REIT, then???


  • Moderators, Business & Finance Moderators Posts: 7,834 Mod ✭✭✭✭ Jim2007


    McGaggs wrote: »
    Is there anything on an exchange which exactly tracks the value of the underlying assets?

    As for the directors, a bit of due diligence would let you figure out if that was likely to be happening.

    When you are talking about investment quality REITs this is less of an issue because all eyes are on them in any case. If a property is miss prices you can expect someone will do an article or investment note and arbitrage with kick in.


  • Registered Users Posts: 11,195 ✭✭✭✭ Lex Luthor


    I agree, pay off any debt you have first

    50yr old self will thank you for it

    I got into a rental property when my kids were babies, hassle after hassle with tenants that I didn’t need it
    Sold after a year and wouldn’t do it again


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  • Registered Users Posts: 12,289 ✭✭✭✭ Mad_maxx


    Jim2007 wrote: »
    That is because they meet the criteria, the definition does not change just because you are on another exchange. Most of the investment quality REITs that I have looked at have very small tracking errors. If you put money into penny stock type stuff and it does not work out then you have no one to blame but yourself - you took a high risk and it did not work out.

    From your response I take you are whining about an Irish REIT, then???

    So the following highly successful companies are "penny stocks" and have no place in any investors portfolio?

    CRH
    Smurfit kappa
    Ryanair
    Kerry


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