Buying a third property but think we can afford it?

Discussion in 'Money makeover' started by aristotle, Jan 5, 2017.

  1. Brendan Burgess

    Brendan Burgess Founder

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    Presumably the house he would like to buy will fall as well?

    Of course, the stock market could fall 50%, his two current properties could fall 50% and the house he would like to buy might rise by 50% over the next two years.

    LTCM was highly leveraged. aristotle is investing €150k cash. While he has borrowings, they are at 0.5%.

    Brendan
     
  2. Sarenco

    Sarenco Frequent Poster

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    Sure but there won't be a corresponding reduction in his mortgage balances. On a net basis, he will still have lost capital - irretrievably.

    In any event, my main point is that short term gambling on stock returns is simply not a risk worth taking.
     
  3. T McGibney

    T McGibney Frequent Poster

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    No you wouldn't. Crazy advice.
     
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  4. Gordon Gekko

    Gordon Gekko Frequent Poster

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    Think about the capital gains tax position in respect of your current investment property. Is it still "underwater" relative to when you bought it?

    PPR relief, even when diluted, will help with any uplift in respect of the family home.

    I would be concerned about the effect the new rules might have on your underrented investment property. As the new rules stand, the value of your property has been devastated (as a future owner is stuck with the €900 rent). I would wait for this anamoly to be addressed before thinking about selling it.

    You do have enough exposure to Irish property though and don't need more. It's only the 0.5% mortgages and potential CGT shelters that have me thinking.
     
  5. aristotle

    aristotle Frequent Poster

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    I don't agree the value of the property has been devastated, it still has the same value to owner occupiers as it did before the rent rule changes. But I don't plan to sell it anyways unless I really need to.
     
  6. gnf_ireland

    gnf_ireland Frequent Poster

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    Correct - but it has been impacted for investors. You are basically targeting owner occupiers only when you do decide to sell.

    I think this is what the guys are challenging. Your return on the property is very poor and unless that rule is lifted, or likely to be lifted relatively soon, then it may not be the best investment for your money. However, only you can do the sums on that