Buying an investment property in Dublin

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dminor

Registered User
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Hi , I’m looking for a bit of advice, I’m thinking of selling an asset that should give me about 250k , I want to buy in south Dublin on green luas line , will put down 250k as balance and borrow another 250 to get me hopefully a three bed apartment/house , rents seem to be around 2.5 k a month for this type property with mortgage for the 250 I borrow around 1600 a month, I know there are hidden costs ie. management fees etc . As I have a daughter moving to Dublin and if she rents then it’s money down the drain do ye think I’m making the right decision???
 
dminor said:
As I have a daughter moving to Dublin and if she rents then it’s money down the drain
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Just on this bit. Will she rent your place, or will you let her stay for free? You need to factor that into your numbers.
 
dminor said:
if she rents then it’s money down the drain
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This is a very common expression but it's nonsense.

You pay rent - you get use of property.

You pay interest on a mortgage - you get use of money.

you rent a hotel room for a weekend, is that also money down the drain?

You have an asset worth €250k. What return are you getting on it? Will you have to pay CGT when you sell it?

Most students rent a room in a house or maybe get good value on-campus accommodation.

Your daughter will be in College for 4 years. You will be stuck with an investment and all the hassles and anti-landlord policies of the government for some time.

You may well sell it at a loss. Now that would be money down the drain.

Brendan
 
Thanks for the replies, i will be letting her stay for free so obvioisly ive to factor this in , im getting no return on my asset ,bad land ,selling to forestry,no cgt to pay,i would be going to buy for longterm 20 years so if property falls i would be able to ride it out, ikow i prob will wind up paying 900 a month myself after the investment but by having a property to show for it after 20years ,my daughter starts work in a job in dublin and plans staying in Dublin for maybe 5 years
Would i be better off investing my money elsewhere that gives me some return that i put towards mydaugbters rent in Dublin is probably the advice i need , thanks again !!
 
If your daughter is moving to Dublin to work then you would hardly be paying her rent?
I think you should make the decision independent of her decisions.

She may hate Dublin, go travelling or decide to come home. Do you want to be a landlord. Does Dublin work if you do?

Do you have other children or priorities in the next few years for yourself. Her renting gives her the flexibility to move in somewhere and not to worry about maintenance . If she doesnt like it she can leave.
 
There are plenty of parts of Dublin where you could buy a decent 2-bed apartment for around €250k.

Why borrow money at a usurious rate of ~5% to buy a 3-bed when you can buy a suitable investment property for cash?
 
If you are prepared to pay out €900 a month plus costs of management fees, maintenance costs, property tax etc, why bother with long-term obligation like a 20yr mortgage on top of all that?
Why not just find a place to rent for your daughter than doesn't tie you to a such a long-term obligation. If she is working will she contribute?
I'm sure there must be easier ways to invest your money and earn a return on €250k than joining the property lottery that is purring again.
 
TheBigShort said:
I'm sure there must be easier ways to invest your money and earn a return on €250k than joining the property lottery that is purring again.
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Sure, you could earn a "return" by putting the cash on deposit. It would be a lousy return - and almost certainly negative in real terms - but it would be a return nonetheless.

I could think of worse ways of investing €250k than buying a rental apartment in Dublin for cash.
 
Sarenco said:
Sure, you could earn a "return" by putting the cash on deposit. It would be a lousy return - and almost certainly negative in real terms - but it would be a return nonetheless.

I could think of worse ways of investing €250k than buying a rental apartment in Dublin for cash.
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Yeh, but over 20yrs? Will interest rates rise or stay subdued? Anybody's guess.
For sure, historic returns on property will probably be greater over most 20yr periods, but do those returns account for all the maintenance costs, management fees, property taxes?
I wouldn't touch property with a barge-pole in this country. It is a boom-bust commodity, imo. You could be lucky and make a killing, but the pitfalls are there for everyone to see also.
 
TheBigShort said:
Yeh, but over 20yrs? Will interest rates rise or stay subdued? Anybody's guess.
For sure, historic returns on property will probably be greater over most 20yr periods, but do those returns account for all the maintenance costs, management fees, property taxes?
I wouldn't touch property with a barge-pole in this country. It is a boom-bust commodity, imo. You could be lucky and make a killing, but the pitfalls are there for everyone to see also.
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With the greatest respect, that’s just a rant.

The analysis is coloured by the fact that the OP wants to ensure that his/her daughter has a place to live.

But in any event, right now I can buy a property in a decent part of Dublin at a 6.5% yield in a world where supply is constrained and credit is tight; that’s not the worst environment in the world for an investor.
 
Gordon Gekko said:
With the greatest respect, that’s just a rant.
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Calm down Gek, its just an opinion.

Gordon Gekko said:
The analysis is coloured by the fact that the OP wants to ensure that his/her daughter has a place to live.
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Yes and is willing to forgoe rental income of €2,500pm for 5yrs.
So paying €19,200 in mortgage repayments alone over that 5yrs will cost €96,000. Add in the other costs, taxes etc and you have just spent/lost over €100k in 5yrs.
Wouldnt it just be easier to supplement the daughter €1000pm for rent, itself supplemented by a deposit rate of 1-2% on €250k?
Or as another poster pointed out, buy a property to the value of €250k?


Gordon Gekko said:
right now
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Yeh, thats great, but over 20yrs was my point.
The property I bought in 2002 for €178,000 is now valued at € 210,000. An 18% increase over 16 yrs. And I was lucky, prices eventually went to €320,000 by 2007.
Now I dont know where the property price cycle is at the moment, but with the lowest building output and record low interest rates im thinking that over a 20yr period, that is going to have to change somewhat.
For sure I could earning rent at twice the mortgage repayments but with all those other costs its marginal if I would actually making any money at all.

But its just my opinion.
 
BigShort,

I’m the first to suggest that people should be forensic with their financial analysis of a potential property investment.

However, when a property has a non-financial upside (e.g. buyer or child living there), it does dilute the financial considerations somewhat.

Gordon
 
Gordon

If the buyer is intending to live there too, that puts a whole different perspective on it.
Unfortunately it is not totally clear from the detail provided.

TBS
 
Thanks for the replies, no I don’t ever intend living in this property it’s just an idea, as I have an asset that’s giving no return , then faced with paying 1000 a month rent for my daughter who will be on very low wage at the start, I must put this assset to work someway for me , I don’t want to bury myself in a big mortgage but with other tenants helping to pay back mortgage then in twenty years I would have a valuable piece of property to sell off , what else could give me a lump sum like that in twenty years ?
 
dminor said:
Thanks for the replies, no I don’t ever intend living in this property it’s just an idea, as I have an asset that’s giving no return , then faced with paying 1000 a month rent for my daughter who will be on very low wage at the start, I must put this assset to work someway for me , I don’t want to bury myself in a big mortgage but with other tenants helping to pay back mortgage then in twenty years I would have a valuable piece of property to sell off , what else could give me a lump sum like that in twenty years ?
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You seem to have fixated on the idea of leveraging your proposed investment with expensive debt. Why?

Replacing an unproductive asset with an asset that will save you money and generate an income seems like a perfectly sensible idea to me. But leveraging that asset with an expensive mortgage seems daft to me.

Why not simply buy a 2-bed apartment for cash? Your daughter can live there with a (paying) room mate during her college years and thereafter you can rent out the entire apartment.

Over the long-term (20 years) you would reasonably expect the apartment to hold its value in real (after-inflation) terms and you could generate a rental income that is also likely to keep pace with inflation.
 
Yes , buying s two bed for cash is not ruled out, but by going three bed you have two rental incomes helping to pay mortgage and the dividend after I sell a three bed would be greater , ??
 
dminor said:
Yes , buying s two bed for cash is not ruled out, but by going three bed you have two rental incomes helping to pay mortgage and the dividend after I sell a three bed would be greater , ??
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But if you buy a 2-bed for cash you won't have a mortgage!

Aside from anything else, the yield (annual rent as a proportion of purchase price) on a smaller property is typically higher.

I really think you are approaching this the wrong way.
 
dminor said:
Yes , buying s two bed for cash is not ruled out, but by going three bed you have two rental incomes helping to pay mortgage and the dividend after I sell a three bed would be greater , ??
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I would agree with Sarenco here. All things remaining equal for 20yrs, you have on the one hand an option to buy €250,000 with an income stream putting cash in your pocket through rental, or to spend that 20yrs servicing and repaying debt from rental income. The cost of which eats into the income form rental.
In the end there may be very little difference in net worth. I know which one I think would be a lot less hassle.
 
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