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Should I buy?

  • 12-10-2021 10:57pm
    Registered Users Posts: 5 Ivyleague

    Hi guys,

    I'm 30 years old and I'm living at home in Dublin with my Mother who I am her main carer. I will be living here for the foreseeable future. I've never bought a home.

    I'm not at all knowledgeable about business, investing, mortgages etc.

    I have saved almost 30k from working and I earn 60k a year.

    So I know there is the HTB scheme and I'm wondering should I take advantage of it while its there. Thinking like buying a new apartment or house and then renting it out to pay for itself. Is this a smart idea or a stupid one?

    I'd appreciate any advice whatsoever. If sensible what kind of property and where? What problems I could face or like I said any advice.

    One thing I'm thinking when I pay tax on the rent income will that income even cover the mortgage?

    I think the top end of what I could afford would be €250,000. That's including deposit and HTB.

    Thanks very much for reading.


  • Registered Users Posts: 606 ✭✭✭ houseyhouse

    There are buy to let calculators online that can help you figure out whether your rental income would cover the mortgage. I would guess not though. I have a relatively small mortgage on my rental property (previously my home) and after various expenses (management fee, annual maintenance, repairs, insurance, prtb, advertising, mortgage, tax etc.) it barely breaks even. I am building up an asset though so not complaining.

    As I understand it HTB is only for owner occupiers, too.

  • Registered Users Posts: 3,540 ✭✭✭ true-or-false

    You wont be eligible for help-to-buy unless you live in the property for five years after buying it.

    Your say you have 30k saved for a 250k apartment. If you plan on renting out the property, you could be required to have a deposit of up to 30% the value of the property. The 10% deposit rule is only for first time buyers of a residential property.

  • Registered Users Posts: 3,030 ✭✭✭ Browney7

    You won't get a new build apartment for sale in Dublin within several 100k of your budget OP. New build apartments in Dublin are for funds and REITs only right now

  • Registered Users Posts: 2,546 ✭✭✭ C14N

    If you're just trying to buy to be a landlord, I'd stay far away from this. Put your money in a managed investment fund instead. You won't get HTB unless you live there, and honestly you'd be extremely lucky to find any new builds in Co. Dublin even if you discovered a bag with an extra €100k in unmarked bills in a ditch tomorrow. Even if you did get it, buy-to-lets have higher deposit requirements from banks, and your rental income will be taxed as normal income. Since you already make €60k in your normal work, you will basically be only taking home 50% of whatever you make on the apartment, even if it all goes swimmingly well (so not counting for things like possible delinquint tenants, maintenance required, management fees owed etc.).

    If you want to buy somewhere to live, sure, that's a perfectly fine idea, but buying somewhere to rent it out just looks like a fool's errand for a one-off private landlord in this market.

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  • Registered Users Posts: 5 Ivyleague

    Thanks for all the replies.

    So consensus is its a bad idea. If I lived in the house for a few days of the week would that make any difference as the house is owner occupied then.

    I don't want to be a landlord. By virtue I will be but I'm just wanting to build an asset instead of money just sitting there doing nothing. Another thing I always heard its good to get on the property ladder. In ten years time I could have a family and want to buy a family home is it not a good idea to have some equity.

    Another thing I was looking at was forget the HTB as new builds are to expensive for my budget, (although if I bought in eg. Carlow I could afford but the rent I don't think will come close to covering the mortgage) was to buy say a 2 bed house in ballyfermot ( just an example I Iive close) 230k. The mortgage would be about 8 or 900. And I think the rent for a two bed there would be 1600+

    Does this make a difference or is it still a waste.

    Any other advice on what to do with savings would be great.

  • Registered Users Posts: 10,782 ✭✭✭✭ denartha

    It's good to get on the property ladder - instead of renting. I'd agree with that sentiment. If you are living with your mother, presumably you have little or no rent, and so the sentiment doesn't apply. By all means, invest what you have saved, but unless you need to live in it, I think property is not a good investment. Partly, because prices are very high at the moment. The price is inflated through high demand, low supply, but if that changes, you could find yourself in negative equity in years to come, so your 30k savings goes from a nice nest egg to a millstone around your neck.

  • Registered Users Posts: 3,091 ✭✭✭ Padre_Pio

    You'd be better off investing your money in shares that buying a property and hoping it will appreciate.

    Personally, I think the days of property appreciating rapidly are behind us. Wages just aren't keeping up with property prices anymore, which is part of the reason we are where we are.

    Add in the hassle and stress of being a part time landlord, and it just doesn't seem worth it.

  • Registered Users Posts: 3,540 ✭✭✭ true-or-false

    I don't want to be a landlord. By virtue I will be but I'm just wanting to build an asset instead of money just sitting there doing nothing. Another thing I always heard its good to get on the property ladder. In ten years time I could have a family and want to buy a family home is it not a good idea to have some equity.

    Have another read of what you've said here. You don't want to be a landlord. You might not want to use a property of your own for ten years. You just want to use your money for something.

    Interest rates are negligible on savings now. Rates for corporate bodies have gone negative. There just arent many things you can do with a 30k pot nowadays. Investing in an asset only really makes sense if you either have a real passion for whatever it is, or you have specialist knowledge on the subject. 30k also doesn't leave you with much of a rainy day fund if you make a risky investment.

    In an attempt to put your money to use, you're going to put yourself into hundreds of thousands of euro of debt with a mortgage, in order to own an asset that you dont have any functional interest in. You don't need it to live in and you don't have a passionate interest in being a landlord. You will have the responsibility of maintaining the property, you'll need house insurance, mortgage protection, arranging tenants, who could potentially be great or be a nightmare, and the bank will have an interest in your property.

    You'd be taking on a lot of responsibility and a lot of risk just to do something with your cash. It also doesn't sound like you have any specialist knowledge about investing. If I was you, I'd speak to a financial planner and get some investment advice, with a view to getting a nice low return, low risk, diversified investment to tide you over until you do have a use for the cash.

  • Registered Users Posts: 15,744 ✭✭✭✭ rob316

    Yes get on the property ladder but not in a inflated bubble like currently. The chances of your asset depreciating are far greater than appreciating IMO.

    900 mortgage, rent of 1600, after tax your maybe looking at about 300 month profit. Grand but then your tenant might not want to pay and you could spend 18 months and considerable legal fees trying to evict him. They trash the house? More money.

    Honestly, go speak to a financial advisor about what investments funds you could look into but you'd be mad to invest it into a house in this market.

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  • Registered Users Posts: 5 Ivyleague

    Thanks for taking the time to give that highly informative advice.

    I will definitely go see a financial adviser and see what they say.

  • Registered Users Posts: 5 Ivyleague

    Out of curiosity. Is it likely that inflated bubble is going to burst anytime soon?

  • Registered Users Posts: 8,843 ✭✭✭ Caranica

    Sorry, my crystal ball has malfunctioned. Nobody knows, it should but that doesn't mean it will and nobody can predict when.

    Property market predictions can be madly wrong, I was told in 2000 by the CEO of a major bank (I happened to be sitting next to them at an event) not to dream of buying a property until 2004/2005. Glad we didn't take his advice, a similar property to the one we bought, in the same general area, went up by 80%.

  • Registered Users Posts: 5,368 ✭✭✭ JimmyVik

    I know lots of people who bought property in 2005 - 2007.

    Then in 2008 on they and I and everyione else felt sorry for them. They were all ruined and in negative equity.

    I thought I had had a lucky escape.

    Now its 2021. All of those people are over half way through their mortgage, not in negative equity anymore and their houses are worth more than they paid for them.

    All the while anyone who didnt buy then or in the meantime is now sweating at the high rent they are payng and dying to get on the property ladder and even if they do they will have a 30 year mortgage ahead of them.

    For a good few years you would think the people who bought before the crash were the worst off.

    It seems now they are the better off.

    Moral of the story is - you just dont know what will happen over time, so if buying suits you at the moment then do it. If it doesnt then wait, but anything could happen either way

  • Registered Users Posts: 2,546 ✭✭✭ C14N

    Nobody can know this with any kind of real certainty. If it was already generally accepted that something was a bubble then people wouldn't be putting money into it in the first place. This is why I think there is no point trying to speculate on property as a lay person. If you want property for a real reason that is valuable to you (like because you want to live in it, or run your business from it) then do it, because even if the market value drops it will stay valuable to you. But when it comes to trying to guess whether to buy now or later, you'd might as well just go put money on a roulette wheel.

    Property is a risk investment, and that can be fine for big funds or banks who have so much to invest that it only makes up a portion of their portfolio, and who have PhDs doing statistical analysis to try and make sure they hedging and who can see trends faster than most people, but for an average person just trying to make their savings work better for them, it's a really bad move. It's not diversified at all, you'd be putting all of your eggs into one basket, and it requires both taking on a lot of debt (in your case at least), and regular maintenance and upkeep. It's 100% valid to be concerned that your money in the bank is not working for you, but there are safer and cheaper investment options.

    Your bank probably has a service where they will help you set up a passively managed fund of some kind that will invest in a wide array of different assets, or the likes of Goodbody or Davys can do this for you. I personally have this, and put money into it regularly. It'll invest in some combination of stocks, bonds, commodities, and other instruments and will pretty reliably increase in value over time more than a normal savings account will.

  • Registered Users Posts: 947 ✭✭✭ xper

    "... In ten years time I could have a family and want to buy a family home is it not a good idea to have some equity."

    For a future purchase, a lump sum of cold hard cash is far more flexible and accessible than equity in a mortgaged property that's rented out to a third party. I think you have already been well advised to steer away from buying property and getting professional advice.

    I was in pretty much the same situation as you describe when I was your age. I kept saving, saving, saving and that eventually stood to me when it came time to buying a home to live in. Yes, there were better options back then to make savings work for you but at least even penny you put away now will end up going towards your future purchase and not interest payments, maintenance and other landlord costs in the interim. And on 60k and with a roof over your head, you should be able to have a reasonably good life in the meantime while covering your living costs and putting substantial savings away and without the hassle and stress of being landlord.

  • Registered Users Posts: 5 Ivyleague

    Thanks for the advice. I've yet to see a financial adviser but will do.

    On investing low risk. Would anybody advise using any of the apps that you can invest with these days?

  • Registered Users Posts: 869 ✭✭✭ DubCount

    Let your financial advisor do his/her job. Stay away from apps until you've spoken with the expert. You can buy all kinds of drugs online, but I'd prefer to let a doctor advise me what ones I need.