Sell house and invest?

AlpineAdventurer

Looks like a great forum here, I have a question I'm hoping you can share your thoughts on.

I'm almost 40 and have two properties in my name. One is in Dublin and another is rural. With everything that's happened the last two years, wife and I have been considering some options.

We also have two small kids.

Our Dublin house is worth approx 700-750K Euro and we owe 80K on the mortgage.

The rural house down South is worth about 250K, there's no mortgage on it.

We were considering changing our lifestyle, selling our Dublin house and moving to the rural location.

The plan would be to pay off mortgage, take the 600-650K and buy a 3 bed apartment from a relative in south Dublin and rent it out, approx 350-400k I'd say and then invest the remaining 250-300K. The apartment could rent for about 2500-3000 Euro a month.

We would both intend to work but goal if we made the move would be to leave our high stress, higher paid roles in Dublin and embrace a slower but more active lifestyle.

I currently earn >120K and wife earns approx 80K. Honestly, at this stage, a combined salary of 4000 a month would be ideal for us if we were to make the move.

We also both have a pension of 200K currently and no debts apart from mortgage.

Would love your thoughts!

Shedite27

Sounds like you've plenty of options anyway, I don't think your decision needs financial advice really, the finances will work for whatever you decide you want.

Figure out if

(1) you definitely want to live "down south" fulltime. Are you there normally on holidays but will it be different when that's home for 12 months of the year.

(2) what you'd like to work at, 4k a month income needs one of ye to work a 90k job in a rural location, is that really going to be less stressful that a 120k Dublin job?

Treppen

It'd might be ideal to get the kids set up if they ever wanted to live in Dublin. We've had to move to Dublin for work and scrape our way up a property "ladder" for years, cost a lot, and will be paying for another few decades.

So I look around and see friends and colleagues who inherited a house in Dublin (or are due to in future) , they're not particularly wealthy but live in a really nice area , parks/schools/short travel to college/work and have or will have no mortgage.

I can't really see house prices in Dublin going down, and I presume your house is in a good area. So once you sell it , it's not just the money but future potential it offers for kids.

But if you are going to leave it to kids in will, think carefully about who gets it or maybe stipulate a straight split.

Also rural with 2 small kids and you might find its full on taxi time for the kids to do anything hobbies or meet friends. Whereas in Dublin they can just leave the house and call on friends to go to local park or into town. When they leave school for college that's a significant cost too coming from rural area, although maybe you could use the apartment you buy in Dublin!

As mentioned above, your own finances are pretty much looked after, so maybe look further forward to when kids are starting out.

Maybe not so much about money, but an "easy life".

A few things to think about:

1. Protection whatever benefits/protection you might have with current work/jobs will be gone if you move to lesser jobs- just keep that in mind- I.e life cover/ critical illness cover-if currently part of employment benefits, you may have to pay for these yourselves if down grading your work roles so keep that in mind as a cost
2. Pension- this is one of the most tex efficient ways to save for the future- you need to start building a nest for the future- you have something there but you’ve a long way to go yet.
3. Becoming a landlord - right now properties are in huge demand and command high prices- especially apartments - many people are getting out of the landlord game because there’s too many challenges for them like over-stay tenants, damage to property, savings eroded etc - be careful around firstly what you’d be paying for his apartment right now vs what it might be worth if property market cooled, what improvements you may need to make before renting it out, what management fees you need to pay annually and what tax you’ll be paying on the rental income etc- so lots to think about there- I.e go in to this with your eyes wide open- you say buying apartment from a relative?
4. Buying the apartment from a relative? I dunno, there’s alarm bells going off inside my head and I don’t know why- “what’s wrong with the apartment?” is probably my first reaction. Your house is often your biggest asset and when selling you usually want to sell for the most you can get - are you quite sure whatever you intend to pay for this apartment is at or below market price? Also have you got a surveyor in to check everything? I was once about to go sold on a top floor apartment until my surveyors report came back stating the current owners made a mess of the attic and have hacked away roof struts - leaving the roof dangerous - I ran a mile!!!
5. Living down the country- where? What about amenities are they close by? Friends left behind, family further away? Just a few things to think about which you may have done already

Patsy167

Do your research before moving to the countryside would be my advice. Speak to as many people as possible who have made the move. I know several who moved to the country during the pandemic and are now regretting. Rent for the first year at least before committing to a permanent change.

backwards_man

https://www.boards.ie/discussion/2058237089/sell-house-and-invest

Kids are your biggest expense and putting them through college will be expensive if they are going to live away from home. You say both of you will work lesser paid, less stressful jobs but I am not sure that will be the case. Unless it is a chilled job you love, all jobs are stressful and with both of you planning on working you will need childcare Do not under estimate how stressful any job can be, it doesnt matter the salary, there will always be something that causes you to not want to get up on a Monday morning and face work. If one of you opts to not work the other one needs to bring in 90K+ if you are to max pension contributions and still bring home 4k pm.

I am in a similar situation financially to yourself although we are about 8 years older than you. We are both very stressed, literally our job is a paycheck. Our kids go to private school so that is our biggest financial commitment outside of day to day living. and we are grinding through the work BUT we plan to retire early in 6-8 years. The one thing that stops me quitting now is the ability to max pension contributions and my stock which vests continually over a rolling 2 years. We have thought about what you are considering but I would rather leave work in a few yrs than work in a lesser paid job for the next 15-20yrs. We could have another 40 rs left on this planet and we need money!!

I came back to write something similar to what backwards_man has just said.

In my view you’re probably still a bit young for doing back to basics/simpler life gig.

Unless you’re both about to have a heart attack or something, you’re actually in prime earning age and given both your salaries looks like you’re doing ok - I’m a good bit older than you- but still working-my focus is early retirement- saving as much towards pension now so that I might retire or at least semi retire 4-5 years earlier than my official retirement age. Then I can decide what I want to do such as down size work part time etc

You’re closing off too many options for you in the future in my view right now- oh and yeah, excellent point about kids education etc- and remember we’re going to be in a high inflation economy for the forceable future so everything is going to cost more.

I don’t at all mean to be negative though- if you still think it’s right for you go for it - but there may actually be a time in the future that you lose this earning capacity if yours so making hay while the sun shines is no bad advice

dxhound2005

https://www.boards.ie/discussion/comment/118777663#Comment_118777663

How did you go about doing your research? I wouldn't know anyone who made the move. Did you find many who were happy with their move?

https://www.boards.ie/discussion/comment/118777907#Comment_118777907

I know a few people who did- one was working in the civil service so he’s totally happy out- his wife is mainly a stay at home mother but does earn a small wage herself with a cottage industry type business. They actually moved closer to family by moving down the country - live now in a huge house and love it

I think security of future employment is probably the biggest consideration - after that it’s hobbies and interests I.E will you be able to pursue these in your new location or indeed do you have any? Rural living can be quite stressful if you don’t have interests outside work especially in winter time.

Finally family and support network-,if you’re not good at building your social network then you’re going to struggle living down the country if family and friends are far away.

If you’re into the usual suspects - GAA, Golf, outdoor pursuits etc you’ll meet people quickly by joining community clubs and whatnot but if you’re not into that sort of thing I’d say it would be tough enough surviving

AlpineAdventurer

Thanks all for the different opinions and things to think about.

I do really appreciate it so please keep them coming. If anything, it may help other people at a later date too if they're thinking something similar through.

Yes the move would be 100% lifestyle focused, we love exercise and outdoor hobbies and would be both social people, not insanely social but love people for sure and can build a network I'd say . Like we would introduce ourselves to everyone etc.

I did forget to mention we have an investment fund for the kids education which by the time they're of college age will be enough to fund them through college etc. The goal of buying the apartment/property in Dublin would be to ensure they can use it during college years. I'd also be encouraging them to rent a room or two out so there's still a revenue stream of some sort. We also have a buffer to cover private education for secondary school but if we made the move, we wouldn't need to send them to private school which is another interesting factor.

Regarding where the other property is, it's 90 minutes away from Dublin so not inaccessible for the kids or indeed my wife or I to still see friends and family. One of the reasons we were actually considering is we don't have a huge amount of family anymore living near us so it wouldn't make a huge difference tbh. It's absolutely a place we could live as we would still be so close to Dublin and family and friends. There's also a lot more space as it's detached on some land.

Re: Pension, yes the whole goal of buying the Dublin property would be to remain connected and the goal would be for that to act as our pension also. I guess we don't know what work would look like yet but we would both be keen to leave our high stress, high responsibility jobs if we can afford to! Maybe one of us will work and continue hybridly/remotely but I suspect we would totally change careers. One to think about.

Property prices are crazy high and there's a very good opportunity to capitalise on this. I suppose another option would be selling the house in Dublin, taking the cash and investing it all via stocks and shares or a fund as opposed to buying a property in Dublin...not too sure though

Edit: I guess another option could be keeping the house and renting it out instead?

Hope that detail is useful, please keep the ideas coming!

Patsy167

https://www.boards.ie/discussion/comment/118777907#Comment_118777907

Try the regional forums here or reddit.

https://www.reddit.com/r/ireland/comments/q5xpt7/the_sheer_loneliness_of_growing_up_in_rural/

Looks as though you’ve thought of a lot OP in fairness to you. Keeping the house vs investments etc is all about the level of personal risk you’re looking to taken on so a good financial adviser would help you there. You’ve repeated that you’re both stressed so obviously it’s coming to a tipping point for you.

You sound like you’re willing to take a risk and seriously look at a different career with some excitement nearly- that’s also a positive sign as you’re young enough to make that change

Best of luck - I hope it all works out for you but you sound like you’ve a good head on your shoulders there which should help you cope with any challenges as you make that transition

ballyharpat

After looking at your post, and looking from my perspective, I enjoy a stress free life, retired, for the most part, 5 years ago at 40.

If I ever get bored, or need money, my experience allows me to earn money again. There are lots of options and even working for a low wage in a job, is very stress free when you are not counting on the money to meet mortgage and basic essentials. You have the opportunity to pick and choose jobs and an ideal work ratio is about 25 hours a week, in my opinion.

Regarding buying and renting a property in dublin, if you are getting it at a discount from your relative, it could be a good idea, but, as a landlord, for the p/e, you may be better off looking at a property or 2 down near your home property, so you can keep an eye on it and if you are any way handy, you can do the basic maintenance etc.

Living in a city is not a good quality of life in my opinion, I think one is more comfortable and a family has a better quality of life in a town. Less traffic, so the kids can cycle to school, if you want to go for coffee or lunch, you dont need a taxi and you do not need to be stuck in traffic for a long time.

Does your current work skills give you anything that you could use outside of your job, that you could use to start up a small business in your new country location?

Having lived in New York and Cork, I can honestly say, for me, living in a city is the equivalent of wasting my life, but I love outdoor activities, cycling, hiking, walking the dog etc.

You are fortunate to have so many options, whatever you decide, best of luck with it!

ocallagh

https://www.boards.ie/discussion/comment/118777663#Comment_118777663

Agree. Live in the rural and rent out your Dublin house for a year. If it works out, great, and you can continue with your plan. If not, you have a house to go back to.

Shedite27

https://www.boards.ie/discussion/comment/118804109#Comment_118804109

You have to be careful with this approach. If you move to rural for more that 12 months it becomes your principal private residence, and your dublin home becomes an Investment Property. The dublin home when sold would then be liable to CGT.

ocallagh

https://www.boards.ie/discussion/comment/118804604#Comment_118804604

Very good point, and OP would be best to talk to an advisor about this.

As far as I know, and I am not an expert in this regard, but CGT relief should be available for the years you did live there and you won't lose that. Or in other words, if you move out for more than 12 months, CGT is only payable for future gains?

Also, if you do move out, be careful of how the house is valued for a specific date. You want as much of the gains locked in for the period you were living there. It might be worth getting a valuation and making sure your property tax payments reflect this. Many are using the estimate bands which come in lower than the actual value. I am not sure if Revenue can use property tax payments as a guide for historic valuation in this regard, but for the sake of a few hundred a year I don't think it's worth the risk, especially in the absence of an independent valuation.

All of the above is not advice, just my own take on the situation, and I may have some information wrong. Pay an advisor 1k or 2 - it will be the best money you spend.

AlpineAdventurer

Thanks a lot, I'm still here reading every reply and taking all points of view onboard! Appreciate it

Treppen

https://www.boards.ie/discussion/comment/118807683#Comment_118807683

Have you heard about this "Bitcoin" thing going on? Supposedly the next sliced bread.

ballyharpat

https://www.boards.ie/discussion/comment/118808055#Comment_118808055

Are you for real?

Bitcoin is a speculation, not an investment, it has paid off for people that got in early, but right now, even if it were to give a return, there are lots of solid stocks that offer a much better return and they actually have a business rather than a pyramid scheme.

suilegorma

Op speak to a tax advisor or accountant re cgt....you can't lock in a valuation when you move out, the calculation is done on bought & sold price, not anything in between. Make sure you properly understand those rules if planning to rent our your Dublin house.

suilegorma

Op I would also seriously urge you to make the move a temp one first. Figure out the tax implications of renting your now ppr, as a year less time to sell and close is probably not enough time to make your mind up fully, eg you won't do all four seasons, and winter is very different in a rural setting. Make sure you are realistic about rural life...I've lived both rural and urban and can objectively see the difference, good and bad of each. There's no one perfect life. Will your work stress just transfer to something else ie are you able to manage stress? Could you do the career slowdown while staying in Dublin & spending lots of time in your country home, even just for a year by taking a career break? How would you see retirement rurally v where you currently live? Would you be ok with your kids settling back in Dublin and not seeing your grandkids regularly?