Buying a New Home In Ireland if you are leaving in a short while

Karma93

Hi All,

Me and my wife are in our late 20s. We have both been living in Ireland for the past 3 years and plan to live for another 2-3 years max.

We are considering buying a 2 Apartment in south Dublin near carrick mines shopping center.

What we want in a property: something that is easily rentable and covers our mortgage when we are outside of Ireland, Something that is easily salable if we decide to do so 5- 10 years down the line, and someplace where we can have a comfortable stay for 2-3 years.

Factors considered for choosing this property :

The location is near to luas and Dunnes,

The rental market in the area is pretty descent and renting out the property after we leave the country would be easier,

Hoping that selling the Apartment is also easy as the location is quite in demand.

The apartment is 10 mins by luas to our place of work(Central Park).

Demerits with property: There is a bit of social housing around, we are not sure it will lower the value of the property in the future. There are about 250 buy-to-let apartments built nearby called clay farm east village, not sure if it's an impact. The apartment is priced close to 500.

Can someone suggest if what we are doing is correct looking into our situation of leaving Ireland in 2-3 years?

Edit: Also, on a high level we have spent a lot of money on rent in the last few years and we are looking to avoid the high rents at the moment.

In the wind

Are you sure you want the potential headache of managing troublesome tenants & perhaps no payment of rent when you're not even in the same country.

Landlording is demanding when you're present in the country nevermind when you're overseas. I'd consider selling on departure or renting while you're here.

Best of luck whatever you decide. 😀

herbalplants

https://www.boards.ie/discussion/2058294348/buying-a-new-home-in-ireland-if-you-are-leaving-in-a-short-while

I think you are nuts...don't mean to offend you. You want to spend close to 500k for an apartment that you may use 2 to 3 years. First of all, you don't know how the market will be in 3 years, the interest rates may keep going up which will prove quite of an expensive mortgage, the value of your apartment may go down.... Remember the value may go up or down.

Posts like yours give me the warning signs that we are riding a dangerous peak exactly like we did in 2007/2008.

DFB-D

500k for an apartment on the very outskirts of Dublin seems crazy to me.

You would basically need about 3k per month to make it a worthwhile investment, I think that is more expensive than some of the buy to rent developments rents.

AndrewJRenko

What's your overall financial position?

Do you have other significant assets?

Have you considered the risks of concentrating your personal investment strategy in the Dublin area residential market? How much of a price drop in residential property would it take for you to end up in negative equity?

Karma93

https://www.boards.ie/discussion/comment/120532205#Comment_120532205

We don't have any assets yet. We both are full-time employees with decent paycheques.

Since I get Help to Buy my upfront investment would be about 25k - 30k. I am not exactly sure what you mean by negative equity here, I believe if the value depreciates then automatically I will be in negative equity.

If I buy the house I pay the mortgage instead of rent. If I sell the house after 3 years I have to sell it for a minimum of 460K to get a break even.

Caranica

1. Help to buy includes conditions on how long you have to live there before you can rent out your property. I'm pretty sure it's longer than you are counting on.

2. The notion that rent will cover your mortgage is delusional. Yes, you will get enough money but that's before tax, USC, RTB charges, management fees, maintenance, insurance and also assumes compliant tenants who pay the rent, and don't cause damage to the property and who are not antisocial.

If you're not planning on living here long term, and don't want to sell when you leave, then don't buy. You'll save yourself a whole lot of hassle.

Del2005

https://www.boards.ie/discussion/comment/120532671#Comment_120532671

If the OP leaves the country and doesn't have an Irish resident agent collecting the rent the only tax here will be 20% the tenant is supposed to not pay and send to revenue, taxes where they move to could be extra.

OP small landlords are selling up as fast as they can and only institutional investors are buying or building rentals. With record high rents and a massive shortage of rental properties there's more people exiting than entering the landlord business, the threat of more populist laws are driving people away.

AndrewJRenko

https://www.boards.ie/discussion/comment/120532406#Comment_120532406

You need to stay in the property for five years under Help To Buy, or a clawback will apply. I don't think the purpose of the scheme is to subsidise landlords.

https://www.revenue.ie/en/property/help-to-buy-incentive/can-revenue-claw-back-a-refund.aspx

Looks like an 8% drop in property prices will leave in negative equity, is that really a risk you want to take? You're borrowing money to invest here, so you're exposure is much higher that with a non-leveraged investment. If the price drops, you'll still owe the full price to the bank.

Have you considered other investment options, that would better spread your investment in a number of regions and contracts, so you'd be less exposed to one particular market (south Dublin residential).

Caranica

https://www.boards.ie/discussion/comment/120532738#Comment_120532738

20% may not be the total tax liability, it's a down payment on liabilities. Revenue will assess total liability dependent on where the OP moves to and if there are treaties on double taxation.

LambshankRedemption

I know exactly where the apartment you are planning to buy is, and its a very rough area. Aside from the convenience to your current jobs, how well do you know the area?

On top of that, I think buying an apartment for only 2-3 years is madness.

As a matter of interest, where are you planning to move to in 3 years time?

ARJn

Omg 500k in current rates is around 2k /month mortgage payment , to break even you would have to rent at-least ~3000-3500/month Assuming you are at higher tax bracket already. Anything less than that rent will cause negative cash flow. And we have not even discussed potential rate hikes or house price falling down or the risk of managing rental from overseas and prorated return of HTB that you are going to take if you sell before 5 years

Also if this is your resident home and you leave without selling you may also be liable for capital gains if at all property price appreciates (30-40% tax on profit,no money back on loss)

Makes no sense

Girl Geraldine

Buy it ASAP. If you dither, or wait longer, you will miss your chance and could be priced out forever. So buy sooner rather than later.

And DO NOT rent it out. No-one in their right mind would become a small landlord now - one and two house landlords are leaving the market in their thousands because of the crazy topsyturvy imbalance in tenant vs landlord rights, and the fact that the laws seem to be changing as often as the weather.

Once a tenant is in they are next to impossible to remove between overholding, eviction bans and so on.

The RTB are totally tenant biased, and are useless at seeing things from the landlords side. They take forever to hear landlord cases, and even if they rule in your favour, are powerless to enforce.

Your chances of getting delinquent tenants is high.

You are better off just leaving it empty.

If you must rent, then try rent it on a commercial basis to a multinational company who provides accomodation for its workers. then it a commercial tenancy between ye and the "tenant" is not a tenant but rather are being accomdated by their employer as a benefit of their employment and could be out on their ear at a moments notice if shít is going down.

Karma93

I am thinking of renting it out only after I move out of Ireland (3-4 years down the lane) and at that point in time my tax bracket would be 20% and I would not have any other income in Ireland other than rental income.

At the moment if I don't buy the property I will have to pay rent of about 2600 euros per month to get a place like that. If I stay for at least 3 years I will spend about 94000 euros on rent. Feels like a lot of rent to pay. I dont want to move outside of Dublin as my work needs me to go to the office and I do like living in Dublin city.

Is it a good idea to buy the property now and sell it off when I leave Ireland rather than renting? Considering all the problems faced by small landlords.

Do we face a lot of problems with tenants even if we take the services of a property management company like Sherry Fitzgerald to manage the rental of the property?

Should I be considering buying a 20 year old property for a price around 350k? In this case I will not get HTB, I may have to put up with some high maintenance because of age but I will reduce my risk profile.Any thoughts?

Caranica

Using a letting agent means you get better actors when it comes to tenants. No guarantee they're good tenants. No guarantee your letting agent is telling you the truth either. I've so many horror stories so I'll say again, forget about buying a property and renting it out.

Also you are ignoring that you may have to pay tax in a second country as well as in Ireland on any rental income. It depends on treaties

3DataModem

1. If you move away, use a letting agent. In fact if you rent it out at all, use a letting agent.
2. You don't shake off Irish tax residency the minute you step on a plane. It depends somewhat on where you are going, and how long you intend staying.
3. Buying a property with an intent to sell in less than about 7 years is high risk, due to price volatility in the short term.

Two other factors;

• If you were sitting on 500k cash and were going to buy something you could confidently rent for 3k per month, that's not a bad investment. 7% yield after agent fees and management fees. This might be a good investment *for you*. I'd probably buy two 250k apartments that throw off 1500 pre month each to avoid concentration risk, but that's just me.
• If you are borrowing most of that 500k, then you are borrowing for a few years right in the teeth of a big interest rate bulge. You're going to have all of that 7% yield eaten by interest rates. You might make a bit of capital, but don't bank on that over a 3 year horizon. Or even a 7 year horizon. This is one of those things that might work out great in a few years, but might be a massive millstone around your neck for a few years.