steo_magra wrote: » As Jim stated above property is the worst investment you can make but on the flipside I'll be buying a house in the coming years as I will need somewhere to live and grow a family. At the moment what you need is patience. Take all the good advice you can get. Question though, Do you plan on meeting someone in the future and possibly starting a family ? Is that a possibility ?
Pussyhands wrote: » I was even looking at if interests rates went to 6% (not done so since 2000) and the interest payments would be less than 1100 a month. The example apartment I was looking at was fetching rent of 1300 a month for the full apartment.
SteM wrote: » Things don't happen in a bubble though. If mortgage rates go up and the economy is hit by something major like a disastrous brexit then jobs will start to be lost. You're talking like you can absorb an increase to 6% but that's only if your (and your tenant's) circumstances don't change. You're also pointing out that average rates have not been at 6% since 2000 but they were pretty bloody close in 2007 & 2008 when people were losing their jobs. You talk about people that have gotten wealthy from property. Landlords that can buy with cash or small loans during a recession when prices are low, rent out the property for the long term or sell after a recovery are the ones making money. I'm not aware of many single landlords property that are getting rich from their property, especially ones that bought at high prices. Most small landlords look to be getting out of the business from what I can see here.
Pussyhands wrote: » Do you see a fall in house prices from current levels happening?
Pussyhands wrote: » So basically you're saying the only way to make money on property is in a recession. How is there so many wealthy people due to property then? As Kenny Rodgers says - "every hand's a winner and every hand's a loser". Bank fraud was systematic all over. Lehmans, AIB etc. Stocks really aren't appealing to me as much as property seeing we're at an ATH andCGT is 33%. BTW do you mind me asking how much you are worth?
dubliner999 wrote: » but houses seem to be going up just as fast....
Jim2007 wrote: » The figures say otherwise. And when you consider the additional risks I have already outlined when investing in property, it is actually a pretty poor return.
dubliner999 wrote: » Interesting, thanks. But when you've a significantly less amount of savings compared to the value of a property, sometimes it feels like you're missing out. I do hope you're right and things start to drop though.
Pussyhands wrote: » The thing about buying a house for me is I get other people to contribute paying off my mortgage as well as a probable increase in value. I also don't pay tax on profit when I eventually sell. (I wouldn't plan on living in it forever but after 4 years I'd have at least 80k saved again to go for another mortgage or something.
Pussyhands wrote: » Stocks profits are subject to 33% tax.
Pussyhands wrote: » Also the stock market is at an ATH and seems unsustainable while housing in Dublin and commuter areas will always manage to get someone in to rent.
Jim2007 wrote: » Of course at the end of the day it is your call, but you are now make the same arguments as people were making in 2005 - 2007 and look how that worked out. In four or five years time you could be sitting on negative equity and spend the following decade waiting for it to recover. And during that time your wealth will not be be growing. Equities have always recovered faster. Ah yes what I call the great Irish argument for avoiding equities, if I made a profit I'd have to pay taxes... make the profit and then worry about the taxes! Look at the diagrams above, you could pay a lot of taxes and still be ahead of property. So how often do you thing people said that during the periods covered by the diagrams??? You should not try to time the markets in any case. I have seen this play out several times now, the Swiss way, keep property very low and concentrate on equities hammer the Irish approach hands down. In a recession they can be far more flexible because their financial commitments is to the next three months rent and their investments recover far quicker than property. Based on what I've seen working in the industry, you can expect the average craft worker to retire with 750k - 1m in assets.
Pussyhands wrote: » The thing about buying a house for me is I get other people to contribute paying off my mortgage as well as a probable increase in value. I also don't pay tax on profit when I eventually sell. (I wouldn't plan on living in it forever but after 4 years I'd have at least 80k saved again to go for another mortgage or something. Stocks profits are subject to 33% tax. Also the stock market is at an ATH and seems unsustainable while housing in Dublin and commuter areas will always manage to get someone in to rent.
Pussyhands wrote: » and if the stock market crashes like a few years ago you'll wait years to make it into the positive again.
dubliner999 wrote: » I'd be doing the same. Would work out about 1k a month mortgage and I'd probably get about 700 quid for renting a room. It's tempting.
EmptyTree wrote: » It's tempting, but that's assuming that you'll always get 700 (or more) for the room. In 2, 5, 7 years time? Who knows. House prices go up. House prices go down. Interest goes up. Interest goes down. Over the lifetime of a mortgage you could well see a bit of everything. But we can't assume it'll stay this way forever.
smacl wrote: » Additionally, houses cost money to maintain in addition to the mortgage. I've my own home and another house that I bought for my dad which I have rented out since he passed on. Total cost of the second house after the refurbishment was more than it has been worth since and the rent doesn't quite cover the outstanding mortgage. White goods go on the blink, you need to get them fixed. Plumbing or heating glitch, you need to get it fixed, etc... Redecorating is needed a number of times over the length of the mortgage, you pay. Advertising the place costs, and you receive no income for any vacant periods (or defaulting tenants) but you still pay the bank. Over a twenty five year mortgage, chances are you're going to hit at least one major recession, so you will have some lean rental period when you're least likely to be able cope with it. For all that, buying a house and renting a room out to help pay the mortgage isn't a bad idea if you think you can afford the inevitable shortfalls. My experience has been that you get ~9-10 months rent that contributes to the mortgage for a 12 month period after costs. Personally, I'd hang out for the next downturn and be the person renting the room until then unless you've got a family.
Cute Hoor wrote: » BTW imo you're also in a great position to be paying into a pension fund, the earlier you start the better the returns long term, max the 40% tax element, your employer will (I presume) contribute as well, a no-brainer imo.
Pussyhands wrote: » You see I have 60k in my account now and although my rent is low I'm saving approx 18k a year. If I go for say a 40k deposit, I can get a 30 year mortgage for about 750...I could get someone in the room for at least 500 a month. So I'd still be saving 18/19k a year. Even if the interest rates went up 400€ a month that's 5k a year..I'd still save 15k a year. I could even put 60 into the deposit and pay a 650 pm mortgage. I'm thinking of waiting it out while my rent is good for a couple of years and seeing what happens with prices but I still need to make my money grow...it's losing value every year.
smacl wrote: » First off, I'd tend to go for a shorter time frame on the mortgage. At thirty years you're paying a disproportionate amount of interest versus capital. You also have to look at the risks, in terms of the possibilities of not having an income for some period of the mortgage or not having a tenant. I certainly wouldn't sink all your cash into a deposit as you need a buffer for these times, as with a mortgage you're essentially in what can be an unforgiving debt here. If you have low rent and the chance to save, you also have to ask yourself if we're currently in a property bubble and if now is the right time to buy? My feeling is that we're in the boom part of a regular boom/bust cycle and if you can hang onto equity, I'd wait it out until the next bust.
sKeith wrote: » If you get a 30 year mortgage, you can arrange to pay it off at the rate of the shorter period mortgage (10, 15, 25 , whatever), then you will only pay the interest of the shorter period mortgage. If you come on hard times, or have a struggle, you can always, unpenalized, drop back to normal repayments, which will be lower than the original amount, as you have been overpaying. This is an advantage you cannot do, if you get the mortgage at the shorter term.
smacl wrote: » Though if you do this, you can get stung for an early repayment charge. We went for 20 years on both of our mortgages and looked at paying one of them down at an accelerated rate. After doing the sums it made better sense to throw the surplus into the pension.
Cute Hoor wrote: » OP You started the thread on 27th May. If you had gone out the following morning and bought €60k worth of VTI (Vanguard Total Stock Market ETF), your €60k would now be worth €64k (appreciation + dividend) give or take a few cent, it would have cost you virtually nothing to buy or sell, there would have been no maintenance costs or headaches, and it could all have been done with indenting a few keys on the puter. You would have to pay tax on your profits and dividend of course, but sure isn't it grand to have profits in the first place to pay tax on. One could of course pick many more stocks, some that would have yielded far better results, some that would have yielded far poorer results.
Pussyhands wrote: » Show me where I buy it so.
smacl wrote: » As Dougal might say, 'Careful now!' Very easy in hindsight to point out something that would have been a great investment three months ago. e.g. the crypto market is built on that type of logic. Before spending your hard earned, DYOR and do it well.
Pussyhands wrote: » Show me exactly where I could have bought the investment you mentioned. By the way, if I had bought a house in May I'd have earned at least 2k from rent, 400 in my own rent (plus sending the extra money into my house thus like saving it) and whatever increase in house value....tax free.
Pussyhands wrote: » By the way, if I had bought a house in May I'd have earned at least 2k from rent, 400 in my own rent (plus sending the extra money into my house thus like saving it) and whatever increase in house value....tax free.
