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Invest in house purchase

1971child

Hi
I have a bit of money inherited.
Some if it Im using on house improvements and the rest I was going to use to buy a house which I would rent out.
Budget is 100k.
Would be buying a town house mid terrace type.
Rental Inc pm would be €700.
I know after tax the nett annual Inc would be about 6.5k approx...ish
Are houses still good investments ?
I want to do something with the money. It will whittle away in a bank account.
Any opinions welcome.

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Atlantic Dawn

I can't really see anywhere you can purchase a place for €100k and expect €700 a month rent, figures just don't make sense.

1971child

Atlantic Dawn wrote: »

I can't really see anywhere you can purchase a place for €100k and expect €700 a month rent, figures just don't make sense.

Mid Terrace. 2 bed, rural town - possible to secure a house of this kind.
It is possible to get 650 - 700pm yes...

My question - are houses still good investments or would I be better off doing something else with the money?

Mr.Frame

Do something else with your money

1971child

Mr.Frame wrote: »

Do something else with your money

What would be reasons not to invest in a house ? I'm trying to weigh up the situation but need reasons ...for / against to make sense of it

ted1

Atlantic Dawn wrote: »

I can't really see anywhere you can purchase a place for €100k and expect €700 a month rent, figures just don't make sense.

Enniscorthy has several places between 70-140k that will rent for 600+

1971child

ted1 wrote: »

Enniscorthy has several places between 70-140k that will rent for 600+

Agreed. Tralee and surrounding towns would be the same. I'm just trying to get advice on whether it would be a good move or not.

FernandoTorres

6.5% net yield is pretty good if you can actually achieve those figures. The pros are an annual income with potential for capital growth . The cons are it's a lot of effort, maintenance costs need to be factored in and you could end up with a capital loss.

If you're aware of the risks and don't need the money then I don't see why not but knowing nothing about your circumstances it's impossible for anyone here to say it's "a good investment" for you. A couple of k spent on an independent financial adviser could be worth it.

1971child

FernandoTorres wrote: »

6.5% net yield is pretty good if you can actually achieve those figures. The pros are an annual income with potential for capital growth . The cons are it's a lot of effort, maintenance costs need to be factored in and you could end up with a capital loss.

If you're aware of the risks and don't need the money then I don't see why not but knowing nothing about your circumstances it's impossible for anyone here to say it's "a good investment" for you. A couple of k spent on an independent financial adviser could be worth it.

I have this money and want to do something with it rather than leave it in bank account...where it will get spent....
I'm not wealthy by any means. Have a mortgage etc. But I think maybe in 10 years I will nearly have my investment back and still have a town centre house etc.
Of course I could put it into the mortgage but let's just say not everything's on steady ground at moment so would prefer to invest in me ( if that makes sense)

pearcider

1971child wrote: »

I have this money and want to do something with it rather than leave it in bank account...where it will get spent....
I'm not wealthy by any means. Have a mortgage etc. But I think maybe in 10 years I will nearly have my investment back and still have a town centre house etc.
Of course I could put it into the mortgage but let's just say not everything's on steady ground at moment so would prefer to invest in me ( if that makes sense)

You mean you think a divorce is on the cards? Very hard to invest these days as cash in the bank yields a negative return after inflation and both the stock market and property are at all time highs. Investments in dividend yielding stocks is normally the way to go but most stocks look overvalued. If you have debt, you should use it to pay that down.

DubCount

There is so much to consider on this its hard to know where to start.

€700 per month rent on a €100k property is an 8.4% gross yield which is not too bad. That's a gross yield however. You will have costs for insurance, RTB registration, maybe the services of a letting agent (which I would recommend if you are not fully up to speed with the raft of regulations surrounding long term letting in Ireland), void periods (periods between lettings where you are not receiving any rental income), repairs and maintenance costs (painting, replacement carpets, furniture, white goods etc. every few years plus boiler services etc. etc. etc.). After these costs, the real return will be much lower than you think.

There is significant risk if you select the wrong tenants. Removing a non-paying tenant or a tenant with antisocial behaviour can take up to 2 years and significant legal costs. Read the Accommodation and Property board here and read some RTB cases. Owning just one rental property means you have no diversification in your investment, and if things go wrong they go badly wrong. Can you afford the thousands of Euro that a rogue tenant can cost you.

Over time, will the property value in a small town increase or decrease. Property prices go down as well as up, and small towns can be heavily reliant on a few employers etc which may be positive or negative.

There are good reasons why the number of landlords in Ireland is falling, at a time when rents are at all time highs.

Do yourself a favour, find a fee based financial advisor and have a consultation. It will be the best money you ever spend. €100k is a lot of money, and something like a pension investment may give you significantly better returns. Some investment options may give you more liquidity if you ever need it (property is not a liquid asset).

Good luck !!

ballyharpat

I believe that if you can get that return, it's a great investment. As you say, you don't want it just sitting in a bank. If a house comes up at that price and is ready to rent out, I'd be jumping at it. A small town like Tralee, did not see massive price increases like the property in Killarney and other more desirable areas, so even if it does fall, it's not going to fall as much. And if property falls, everything else is going to fall anyway, most of the time, other than your '2%' in the bank. If you wanted to save a lot of headaches, you could offer it for rent to someone that is on the housing lease and get a long term lease with the council. 5 or 10 years. Then you would still get to pick your tenant , the council give you 10% below market rate rent, but youre guaranteed that income for as long as the house is on the contract.
You do still have to maintain it, eg clean the chimney, service boiler etc... but these are minor things. If there is any issue with your tenant, you can contact the council also and it means that it will be listed on their record.

Unless someone can suggest other options, I really don't see why it's a bad idea. The economy could be headed into a recession in the near future, Germany is pointing towards it today, Brexit still looming, The us trade war etc. I still am invested in the stock market, but only about 1/3 of my cash, the rest I am either waiting for a good property, or for a big drop in the stock market.

Rental property is my main income though, and has been great, even after hitting a few bumps, it's much more steady than anything else that could give me any decent return.

Just my 2c

1971child

ballyharpat wrote: »

I believe that if you can get that return, it's a great investment. As you say, you don't want it just sitting in a bank. If a house comes up at that price and is ready to rent out, I'd be jumping at it. A small town like Tralee, did not see massive price increases like the property in Killarney and other more desirable areas, so even if it does fall, it's not going to fall as much. And if property falls, everything else is going to fall anyway, most of the time, other than your '2%' in the bank. If you wanted to save a lot of headaches, you could offer it for rent to someone that is on the housing lease and get a long term lease with the council. 5 or 10 years. Then you would still get to pick your tenant , the council give you 10% below market rate rent, but youre guaranteed that income for as long as the house is on the contract.
You do still have to maintain it, eg clean the chimney, service boiler etc... but these are minor things. If there is any issue with your tenant, you can contact the council also and it means that it will be listed on their record.

Unless someone can suggest other options, I really don't see why it's a bad idea. The economy could be headed into a recession in the near future, Germany is pointing towards it today, Brexit still looming, The us trade war etc. I still am invested in the stock market, but only about 1/3 of my cash, the rest I am either waiting for a good property, or for a big drop in the stock market.

Rental property is my main income though, and has been great, even after hitting a few bumps, it's much more steady than anything else that could give me any decent return.

Just my 2c

Thank you....for a broad reply.

Mad_maxx

Atlantic Dawn wrote: »

I can't really see anywhere you can purchase a place for €100k and expect €700 a month rent, figures just don't make sense.

You can get a house or apartment in Limerick city for a hundred grand that will rent for more than 700 per month, never mind countless towns

I'd consider renting the property to the local authority, guaranteed rent and no dealings with the tenants, be warned however, the council use those arrangements to house troublemakers

NoteAgent

Atlantic Dawn wrote: »

I can't really see anywhere you can purchase a place for €100k and expect €700 a month rent, figures just don't make sense.

Well clearly by borrowing he could purchase a house worth far more than 100k :rolleyes:

The 100k would be the equity. If the LTV for a buy-to-let is 70%, he could buy a house worth 333K. Puts up 100k in equity and borrows 233K.

1971child

NoteAgent wrote: »

Well clearly by borrowing he could purchase a house worth far more than 100k :rolleyes:

The 100k would be the equity. If the LTV for a buy-to-let is 70%, he could buy a house worth 333K. Puts up 100k in equity and borrows 233K.

My offer of just over 90k was accepted.
I had deposit down. Went on my 3rd visit to house and on entering got a bad smell of damp..
So I don't need an engineer to tell me that's a problem...and it could lead to other issues.
So, I've pulled out.
There will be other houses. And maybe a recession on way. So, will wait on.

Thanks for all your replies...very appreciated.

adam88

1971child wrote: »

Agreed. Tralee and surrounding towns would be the same. I'm just trying to get advice on whether it would be a good move or not.

Are you a Tralee person, Tralee local here too. I’m in similar situation. Have been looking at a few that I can make those sort of figures work

JMMCapital

plenty of shell houses around you could do up aswell, fixer uppers as such many going for 50-60 grand

1971child

adam88 wrote: »

Are you a Tralee person, Tralee local here too. I’m in similar situation. Have been looking at a few that I can make those sort of figures work

Some very good solid advice by other posters here !

Ive PM you

1971child

JMMCapital wrote: »

plenty of shell houses around you could do up aswell, fixer uppers as such many going for 50-60 grand

True that ! There is one v close to me. But no one knows what's happening with it..

cute geoge

Are you a cash buyer???
I would be wary of buying a fixer upper unless you are a bit handy and not shy of work .I did up a few old concrete houses back in the day ,plenty of hardship especially with damaged chimneys

Mad_maxx

cute geoge wrote: »

Are you a cash buyer???
I would be wary of buying a fixer upper unless you are a bit handy and not shy of work .I did up a few old concrete houses back in the day ,plenty of hardship especially with damaged chimneys

Plus tradesmen cannot be got

1971child

cute geoge wrote: »

Are you a cash buyer???
I would be wary of buying a fixer upper unless you are a bit handy and not shy of work .I did up a few old concrete houses back in the day ,plenty of hardship especially with damaged chimneys

I am yes. Happy to sit it out for a while and watch what happens with Brexit etc. No rush. There will always be houses. Was very happy with the one I had deposit on but wasn't to be.

Taylor365

100k in $O will net you a div of 4k per year. No landlording needed.

1971child

Taylor365 wrote: »

100k in $O will net you a div of 4k per year. No landlording needed.

Sorry don't get 'no landlording needed'??

Lazy Bhoy

Taylor365 wrote: »

100k in $O will net you a div of 4k per year. No landlording needed.

What do you mean by $O ?

Taylor365

1971child wrote: »

Sorry don't get 'no landlording needed'??

You don't have to rent anything to anyone.

Lazy Bhoy wrote: »

What do you mean by $O ?

Its a ticker symbol for a REIT sold on the NYSE.

Link here!

Mach 3

Atlantic Dawn wrote: »

I can't really see anywhere you can purchase a place for €100k and expect €700 a month rent, figures just don't make sense.

Dublin. 200k or less will get you €1400. Any amount of places up for grabs. Anyone saying there is a housing crisis is off their rocker. Ask anyone who is selling...

Voltex

Statistically speaking 1 and 2 bed apartments have better yields than houses. If I had 100k in cash, I'd look at taking out 2 B2L mortgages for 2x 2 beds at 130-140k in Limerick - each yielding 12% gross.

AlwaysWrong

Voltex wrote: »

Statistically speaking 1 and 2 bed apartments have better yields than houses. If I had 100k in cash, I'd look at taking out 2 B2L mortgages for 2x 2 beds at 130-140k in Limerick - each yielding 12% gross.

Whats a B2L mortgage?

AlwaysWrong

Buy to let
jezz I'm slow!