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Buy to let - Does it worth as an investment?

  • 09-10-2021 11:50pm
    #1
    Registered Users Posts: 46 Domicio


    I'm 33 years old and my wife is 32 years old and we are currently thinking to get a buy to let mortgage with around 4% of interest rate and we were wondering if it worth as an investment.

    Please find our current financial situation below:

    • We have a mortgage on the property that we live. The house worth today 300k and I've a 215k debt mortgage
    • I have 40k on a pension plan and I will keep adding money into it regardless the new investment
    • I have 60k in stocks
    • 60k sitting in the bank

    My plan'd be to get a buy to let mortgage up to 300k and use the 60k as a deposit and fees needed to buy the property. So I could potentially rent it out for up to 2k and I'd use it to pay both mortgages while I have two property that would be building up equity over time.

    Does it make sense as a good investment?



Comments

  • Registered Users Posts: 7,225 ✭✭✭ 893bet


    Deposit of 60k prob not enough on a buy to let. Usually need 30 percent + I think.

    Also the rent is taxable and 2k after tax is not going to service both mortgages.



  • Registered Users Posts: 17,073 ✭✭✭✭ kippy


    How secure are your jobs?

    What type of investment property are you looking at?

    Have you factored in higher interest rates and deposits for investment properties/tax on rental income/missed rental payments?

    What is the term and rate on your existing mortgage?



  • Registered Users Posts: 46 Domicio


    thanks for the quick reply. I'm flexible on shifting the current 40k in stocks into the buy to let if needed but ideally, the new house would be up to 250k.

    Buying a property by 250k with 30% as deposit would bring the monthly mortgage payment down to a rough e800. I current pay e900 on my mortgage so the 2k taxable is not going to be too far away from the goal, right?

    Also I'm currently saving 2k a month (after pension), so I'd have no problem on covering part of the second mortgage as well.



  • Registered Users Posts: 46 Domicio


    I'm not working at the public sector but both of us work for a big US tech company so I would say as long as I want to stay, it is a quite secure job.

    I would be looking for a house up to 3 beds. If it is ready to rent out is ok, otherwise I can also add an extra money to revamp it and earn money in the equity down the road. Does it answer your question?

    Higher interest rates and a missed rental payments would defo be an issue but having in mind that a house in Dublin is increasing its price by avg. 10% a year, would it not worth the risk?

    My existing mortgage is a 29 years term with 3% interested rate.



  • Registered Users Posts: 46 Domicio


    My idea is with 120k setting in the bank/stocks, through stocks I could easily get 10% of it per year that I would reinvest for sure. After 3 years, I would have 160k.

    Let's say that I bought a house for 240k with 50% as deposit (120k). After 3 years through the property market, I could sell the house for 319k (10% increase a year).

    So it means that owning a buy to let house, I would have earn the same 10% mentioned above at the same time that I would also earn 10% from the 120k that I borrowed. Therefore, after 3 years I would have 160k from my own money plus another 40k from the house valuation and this last piece is what I'm seeing as a great investment as I would have someone else paying my mortgage through the rental payments.



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  • Registered Users Posts: 11 someissues


    Snip: deleted content of duplicate post

    Post edited by someissues on


  • Registered Users Posts: 11 someissues


    The main problem at the moment is government and opposition anti sentiment to private landlords due to populism and lazy thinking. I was literally about to transact on BTL but have pulled the plug on the idea now.

    The opposition are pushing a bill through at the moment,(which the government say they will not oppose) that means a landlord cannot evict on grounds that they need to sell the property. This means you need to sell on with tenants in situ. There is a high risk the property would only sell at a significant discount.

    Also, they are talking about rent freezes for next 3 years, and making the entire country a RPZ.



  • Registered Users Posts: 11 someissues


    Also to add, having been viewing apartments, it is very very obvious lots of private landlords are currently selling up and getting out. I've come across sales of multiple apartments in the same block by the same landlord (not institutional according to the agent) being sold in 2 at a time.



  • Registered Users Posts: 21,594 ✭✭✭✭ ted1


    3% is vey high these days. I suggest the first thing you should do id to get a lower rate.



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  • Registered Users Posts: 21,594 ✭✭✭✭ ted1


    you will have capital gains tax, management fees, solicitor fees, estate agent fees (could be 5-7k). all taking away so your figures will be off. also 10% growth is very optimistic. as a rental and with fixed rent increase you wont see the gain as the yield is limited, as any potential rent is restricted.



  • Registered Users Posts: 7,641 ✭✭✭ billyhead


    Whatever about the current governments policy on renting which imo they have a self interest in keeping rental prices high if and it looks likely Sinn Fein get into power in the next Government they will be anti private landlord.



  • Registered Users Posts: 3,054 ✭✭✭ Static M.e.


    @dotsman What do you think about BTL when you rent the house to the County Council for 20 years? I have heard about it but don't know too much apart from that they pay you 80% of the going rate in the area. It seems like a good long term investment strategy if you have a second home and want to keep it by renting.



  • Registered Users Posts: 8,747 ✭✭✭ Shedite27


    If you're buying as an investment you have to think a little differently to buy to live. Essentially you want the most rental income for the least outlay. The rental market at the moment is fairly propped up by HAP, that is causing a floor. You can by a 2 bed in Balbriggan for €150k, get €1600k a month income, and have the whole house paid off in about 12 years. If you buy a €300k house somewhere, are you going to get double the income? Unlikely. How long will that last, nobody knows, if you had that in 2008 you would be stuck with it for sure.

    Example Balbriggan to buy: https://www.myhome.ie/residential/brochure/57-bremore-pastures-way-balbriggan-county-dublin/4536748

    To Rent: https://www.daft.ie/for-rent/apartment-barons-hall-grove-balbriggan-co-dublin/3566142



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


    The local authorities have suspended those long term leases ,existing ones continue but no new ones for now


    I have a house in one since 2018



  • Registered Users Posts: 3,054 ✭✭✭ Static M.e.


    Good to know, thank you, Mad_maxx.



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


    Perhaps check with you're local authority but limerick city Council have suspended new applications



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