What would you do in my somewhat unique situation?

newboard

Hi all,
My situation is a little bit unique and am hoping to get your advice on what the best way forward is.

I'm currently renting in a house share in Dublin and in order to see my child regularly enough, I'm also renting a house in a different county, so I live between the two.

It's likely I'll be living between these two locations for at least the next 5 years. The county is a lot more affordable to buy than Dublin, so naturally I'm considering buying a place there as my first property, maybe in the range of 150-200k.

This would be temporary as I would plan on settling in Dublin in the future.

Does this seem a like a good move to you? Anything else I should consider? Buying in Dublin isn't going to happen any time soon, so this could be a good way of gaining value from the current circumstances and getting onto the property ladder, so to speak.

I'm self employed, and currently pay myself 50k/year. I could probably increase this to 60k+ within about a year.

Many thanks

ED E

Buying a property for the short term is usually considered a very poor idea.

newboard

Thanks for the reply.

ED E wrote: »

Buying a property for the short term is usually considered a very poor idea.

Why is that? If it's my only option to buy at the moment (can't afford Dublin) and the alternative is renting for that same duration (e.g 5 years) that's 50k+ in rent that I'll have spent.

Caranica

You'd be ruling yourself out of any supports for first time buyers in Dublin if you buy in the country first. I think any supports would be much more valuable in Dublin.

dotsman

Avoid buying for short-term. As Caranica said, you would miss out on any first-time buyer support.

Think about it:

• in 5 years time, you would need a 20% deposit for Dublin rather than 10%.
• What if there is a decrease in house prices? You would be stuck in negative equity in your country home. You could even have a situation where Dublin prices rise while the price in the area you buy remains stagnant or decreases. Instead of "getting on the property ladder" and "gaining value", your country house could be moving in the wrong direction.
• Depending on how "rural" the country home is, you may have a lot of difficulty shifting it. You may even have to take a hit to the price and lose money on it just to sell it in a timely manner.
• The legal and EA fees involved in buying and selling.
• Moving fees
• Cost of doing up the country house (furniture/paint/repairs etc) that would be mainly throw-away in 5 year's time.

It's a tough one. Obviously, if it was only for a year or two, not buying would be extremely obvious. On the other hand, if it was closer to 10 years, then, yes, buying the rural property would make sense. But at 5 years, it really is too short to safely expect any return, but does mean 5 years of additional rent which is a bummer. Are you in a position to buy in Dublin in 2-3 years? That would be the optimum?

newboard

dotsman wrote: »

Avoid buying for short-term. As Caranica said, you would miss out on any first-time buyer support.

Think about it:

• in 5 years time, you would need a 20% deposit for Dublin rather than 10%.
• What if there is a decrease in house prices? You would be stuck in negative equity in your country home. You could even have a situation where Dublin prices rise while the price in the area you buy remains stagnant or decreases. Instead of "getting on the property ladder" and "gaining value", your country house could be moving in the wrong direction.
• Depending on how "rural" the country home is, you may have a lot of difficulty shifting it. You may even have to take a hit to the price and lose money on it just to sell it in a timely manner.
• The legal and EA fees involved in buying and selling.
• Moving fees
• Cost of doing up the country house (furniture/paint/repairs etc) that would be mainly throw-away in 5 year's time.

It's a tough one. Obviously, if it was only for a year or two, not buying would be extremely obvious. On the other hand, if it was closer to 10 years, then, yes, buying the rural property would make sense. But at 5 years, it really is too short to safely expect any return, but does mean 5 years of additional rent which is a bummer. Are you in a position to buy in Dublin in 2-3 years? That would be the optimum?

Thanks very much. Sorry, I should have specified that it's another county, but it's not rural it's actually a decent sized town that would be one of the more desirable non-Dublin places I'd imagine. There are new developments in the works in the area too so I could probably get a property through the rebuilding Ireland scheme etc (meaning no big outlays on renovations etc).

Regarding needing the 20% for the 2nd buy, if I were to sell the first place, couldn't I use those funds towards the 20% deposit? That's assuming the property doesn't lose more than the equivalent in the meantime, which I'd doubt unless that was the situation across the market.

I can't confidently expect to be in a position to buy in Dublin in 2-3 years - if I was on eg 60k that doesn't leave me with many options at all in Dublin just going by today's prices. It would be ideal though, as I could rent out a room (I'd be expecting to house share anyway if I bought in the other county).

Thanks again

Why is it a secret where the house is? If you name the town people will give you a much better idea where you stand.

newboard

Deleted User wrote: »

Why is it a secret where the house is? If you name the town people will give you a much better idea where you stand.

Not a secret! It'd be Wexford (town and surrounds)

Unfortunately I don't know a whole heap about Wexford itself. I don't think it'll benefit from dublin commuters anytime soon as it's a bit too far away, but it's on the 'right' side of the country, so i wouldn't anticipate it'd drop in value by any huge amount. Obviously this reply is very generic as I don't know the specific house, but i cant imagine it being likely that you'd lose money on it (or at least not more than any other part of the country, if a massive recession was to come upon us again).

Mrs OBumble

What are you going to do if your ex meets someone from another county (worst case, Donegal!) moves there?

guitarhappy

Instead of renting a house in Wexford to see your child, could you just rent a room or stay in a guesthouse a CPL nights a week (lockdown aside)? Or, a caravan?

Renting one house is a place to live. Renting 2 houses doesn't make much financial sense unless you rent out enough rooms to get others to cover your costs. A precarious house of cards.

ztoical

Is there no where half way between Dublin and Wexford you could rent and have one place rather than two and save quicker to buy somewhere in Dublin?

skooterblue2

I would go with Sun Tzu, you cant fight a war on two fronts. they will break you paying for twice the services mortgages etc etc etc.

the_syco

newboard wrote: »

This would be temporary as I would plan on settling in Dublin in the future.

When the kid turns 18? Or what's the difference in buying the house in Dublin if not?

newboard

guitarhappy wrote: »

Instead of renting a house in Wexford to see your child, could you just rent a room or stay in a guesthouse a CPL nights a week (lockdown aside)? Or, a caravan?

Renting one house is a place to live. Renting 2 houses doesn't make much financial sense unless you rent out enough rooms to get others to cover your costs. A precarious house of cards.

A guesthouse or caravan wouldn't be suitable for overnights, etc. Problem indeed is that this is a very non-ideal financial scenario, however it has given me this opportunity to purchase a house as Wexford is significantly cheaper than Dublin, so it's about trying to make the best out of a bad situation.

ztoical wrote: »

Is there no where half way between Dublin and Wexford you could rent and have one place rather than two and save quicker to buy somewhere in Dublin?

I thought about this, but to make it practical as regards the school runs it can't be too far from Wexford, and too close to Wexford leaves me with a killer commute for work. Then the commute costs would take a chunk out of those savings and that combined with higher rent because of closer to Dublin would start to defeat the purpose.

the_syco wrote: »

When the kid turns 18? Or what's the difference in buying the house in Dublin if not?

Yeah eventually they'll be old enough that overnights won't be as much of a thing. But until then I want to be around as much as I can be.

Eric Cartman

is the only reason to be in wexford the affordability ? or is it for work.

Your better bet might be getting an apartment somewhere on the green luas line like carrickmines for now and when the kid is 15-16 you could sell it and buy in wexford and they can get the train down to see you.

newboard

Eric Cartman wrote: »

is the only reason to be in wexford the affordability ? or is it for work.

Your better bet might be getting an apartment somewhere on the green luas line like carrickmines for now and when the kid is 15-16 you could sell it and buy in wexford and they can get the train down to see you.

Well, I wish to settle in Dublin eventually. The reason to rent in Wexford is because my daughter has moved there and it's the only way to see her regularly enough. It looks like buying in Carrickmines etc is out of the budget for the foreseeable. So my idea is to use this opportunity to purchase somewhere I can afford (ie in Wexford) in order to get out of the rent trap and then once my kid is 15-18 (6-9 years from now) I'll have no reason to stay in Wexford (likely fewer overnights, then college etc) at which point I could sell and buy somewhere suitable in Dublin.

The ideal would be if I had the funds to purchase a 2 bed place in Dublin and rent out the spare room. This would be perfect since I'm sharing in Dublin currently anyway. But I can't see how I can do that unless I buy in a bad area, which I don't want to do.

Claw Hammer

Buying a property of some kind probably makes sense but if you want to use it as a springboard to another property you have to buy with capital appreciation in mind. Ex council houses in settled areas tend to appreciate best of all. Apartments tend to appreciate worst of all. Growing towns will appreciate better than shrinking towns.

newboard

Claw Hammer wrote: »

Buying a property of some kind probably makes sense but if you want to use it as a springboard to another property you have to buy with capital appreciation in mind. Ex council houses in settled areas tend to appreciate best of all. Apartments tend to appreciate worst of all. Growing towns will appreciate better than shrinking towns.

Thanks for the reply. My two main considerations at the moment would be an apartment close to the centre of town, or a new build property a little bit outside the town. I reckon both would have good prospects to increase in value. I'm very inexperienced in all of this though.

Claw Hammer

newboard wrote: »

Thanks for the reply. My two main considerations at the moment would be an apartment close to the centre of town, or a new build property a little bit outside the town. I reckon both would have good prospects to increase in value. I'm very inexperienced in all of this though.

Apartments generally appreciate less than houses particularly at the lower price levels. New builds attract a premium when new but as the scheme matures things can go badly wrong.

newboard

Claw Hammer wrote: »

Apartments generally appreciate less than houses particularly at the lower price levels. New builds attract a premium when new but as the scheme matures things can go badly wrong.

Thanks - I'd be happy so long as whatever property I end up with doesn't reduce in value. My main objective is to not sink an unnecessarily high amount of money into rent over the next 5-10 years, and get myself somewhat established on the property ladder.

FHFM50

Mind me asking what your business is? You said you're self employed

newboard

FHFM50 wrote: »

Mind me asking what your business is? You said you're self employed

I'd rather not give too much personal info, but it's one that would be deemed fairly low risk from a bank's perspective.

FHFM50

No worries.

From your original post I thought you're daughter was on the other side of the country and that's why you were renting two places. As someone mentioned previously, it's probably best to get one place in-between Dublin and Wexford. Two sets of bills must be a real pain.

Vikings

newboard wrote: »

I'd rather not give too much personal info, but it's one that would be deemed fairly low risk from a bank's perspective.

Would you qualify for the help to buy scheme?

You need to weigh up a lot of figures to see how wise this would be!

Example:

New build eligible for HTB priced at €200k

HTB @ 10% will give you 20k towards it. If you had another 10% deposit together you'll only need to borrow 160k - should have no problem borrowing this on your current salary. First calculator threw up a 5 year fixed rate of 2.6% giving you a €640 monthly repayment.

After 5 years the mortgage balance will be approx €142.5k

Let's say in 5 years you can still sell that property for 200k - which is far from a guarantee.

You'll have 58k (ish) in equity. This would be 20% of 290k and would cover the deposit for a property around that value. (All other costs excluded)

Legal expenses for conveyancing and estate agent fees etc could run you to 10-15k for the sale and purchase of another property in 5 years.

You'll have the added expenses associated with owning your own home. Upkeep, property tax etc.

I think for me without digging into the nitty gritty, this would depend on whether you can avail of the help to buy and get 10% of the new build property paid for you. There are 2 criteria for that you must satisfy - keep it for 5 years and live in it as your main home.