No family home - invest savings in property?

S

sadie

Registered User
Messages
677
We sold our Dublin house last year, so to be nearer my work and creche with 2 small children. Figured we'd buy again soon, due to my redundancy we are now a single income family. but have been knocked off the property ladder. We have 200k in savings but cannot afford a house in a 'nice' area of Dublin. Bank will only give us around 280 mortgage. Currently renting in a 'nice' area of Dublin. 3yr old needs to start school Sept 2007. Options are:
- do nothing, hope for a property crash
- move to border county and husband put up with long daily commute and hardly ever seeing kids.
- buy a house in a 'bad' part of Dublin
- buy an investment property in a midlands town and continue to rent in Dublin.

thanks
 
You didn't mention the possibility of moving out of Dublin and your husband getting a job outside of Dublin and owning your own house?
 
...knock off the property ladder with in around €480k available for buying a house.. Joke, right?
surely you should be able to find one in Dublin suburb for that money, no??
 
2 things here..

1) If anyone.. ANYONE doubts that the Dublin Property Market is unsustainable just look at that statement - someone with 200k in liquid cash feels unable to buy a home in a nice suburb. Astonishing.

2) Sadie.. there is another way to look at this.. however even though I know nothing about you I know the chances are remote you will look at it seriously due to the level of ingrained belief in *property_property_property* at the moment.


This is what you could do:

* Give yourself a very large pat on the back. You just cashed in to the tune of 200k net. Plenty of people have large amounts of equity in their homes, boast about it, treat it like a giant ATM, but they are cash-poor living on credit. Most of them will never actually convert this equity into hard cash ('equity release' is just a secured loan with a favourable interest rate, it's still a loan which has to be paid back).

* Realise that economies go thru cycles, while the top in ireland's current cycle may yet be another year or so away, be content that this cycle has treated you well. (un-ending greed is what will burn alot of people in this country who refuse to profit-take).

* Rent your house in a a nice safe area, enjoy actually seeing your kids as opposed to the creche route.

* With 200k, ringfence alot of it in safe inflation-beating accounts.

* Seek out professional guidance (NOT the banks) and learn to invest in other asset classes.

* This may sound silly, but truly learn to understand the power of compound interest. With 200k, gradually investing more and more of it in safe investments you could really be well on the road to one hell of a retirement nestegg.

* During this time you remain liquid, if there is a slowdown or crash or whatever you'll at least be in a position to do something about it, whereas people with credit millstones around their necks will not.
 
I would not buy an investment property as a substitute for your own home. The increase in value will be subject to Capital Gains Tax and if you are overborrowed, you may not be able to buy your own home.

I would put the money into a Quinn Life or EBS equity fund. There is a risk that it will go down in value, but this is at least balanced by the potential upside. There are no entry or exit charges, so when you do see the house you like, you will be able to move fast.

You have to balance the risk of staying out of the property market with the risk of a crash. If you are happy with the house and area you are renting, I would stay with it. You may be able to get in again cheaper in a few years, but against that you may be priced out of housing market for a long time. No one knows which way prices will go - I would say that they are as likely to go down as up.

Brendan
 
I agree with bacchus. 480K is more than enough to get a house in a suburb not too far from the city centre.

I think this is a statement of the way our society is going and how more and more people want to be seen living in the more fashionable areas.

I'd like to know what the definition of "bad" is. Obviously there are certain areas which have a high crime rate etc I but think the snobbery of people now is out of control.

Are we saying that all people who houses are less than 480K are hooligans who mug and rob and whose children have no future?
 
Thanks for the responses, makes me feel like we have not maybe not been completely trampled in the property stampede. I'm talking about southside mostly (husbands work is Ballsbridge), though the northside is fine also, but I'm just not familiar or comfortable with places like Santry, Royal Oak and Coolock or Donaghmede or Finglas which is the only places we seemingly could afford houses.
Some detail follows for those who are intested: Last week viewed a small ex-corpo house in Nutgrove, Loreto Avenue area asking 470 which went to 510k with two FTBs bidding. Across the road a girl was sweeping up the glass from her car which had had the window smashed in and the door pulled out. An ex-corpo house in Stillorgan asking 450k had offers of 520k when I rang to check viewings. I don't want to live in an ex-corpo house in D12, and call me a snob nor do I want to live in D24 either, and not many other people do either judging by the relatively low house prices there. One estate agent suggested our only options were an ex-corpo estate in Sallynoggin or else move to Bray. Anyone who has not been house-hunting recently should take a look at myhome.ie and see for yourselves, add 25k or so to the asking price to approach the sale agreed price, then add 30k+ for stamp. E.g. Ballinteer, Knocklyon, Rathfarnham - nothing under 500k asking price for a 3-bed semi. But enough about that.
Note for Culchie, we are culchies ourselves but husband is still developing his career and needs to work in Dublin. Haven't ruled out moving back to sticks in the future but with small kids once the school thing kicks in it gets tricky.
 
sadie said:
I'm talking about southside mostly (husbands work is Ballsbridge), though the northside is fine also, but I'm just not familiar or comfortable with places like Santry, Royal Oak and Coolock or Donaghmede or Finglas which is the only places we seemingly could afford houses.
Click to expand...
I think you need to stop thinking that North is bad and South is good. There are beautifull areas on the North side, and very bad one in the southside. I will not name any so that nobody is offended, and good/bad is a relative notion.
For instance, Lucan is south side and €480k gets you a nice home, and has good private bus service to Ballsbridge.

sadie said:
Last week viewed a small ex-corpo house in Nutgrove, Loreto Avenue area asking 470 which went to 510k with two FTBs bidding. An ex-corpo house in Stillorgan asking 450k had offers of 520k when I rang to check viewings. I don't want to live in an ex-corpo house in D12, and call me a snob nor do I want to live in D24 either
Click to expand...
Why did you bother visiting some if you do not want to live in ex-corpo house? desperation?

Sadie, with all respect, the place you live or will live in has nothing to do with what class of society you think you belong to or deserve to live in, but is purely related to how much cash you have to buy a house. And what i read is that you have €480k to buy a property, all inclusive...
This snobery stuff tends to infuriate me, sorry.

On a more constructive note, i think you will find it difficult to buy what you want for the money you have.
May be an option is to rent (in a nice area of course:) ) for a while? Also, have you consider getting a new job ?
 
As someone who grew up in Dublin 12 and is now living happily on the northside I found my blood pressure rising to boiling point when I read your post. If you took the time to visit (for example) Royal Oak in Santry you'd find a decent estate full of three bed semis with great access to shops, schools and the M50 - and you don't have to commute for half a day to get to the southside either. This is a mad property market but you can't afford to cut off vast swathes of the city just because of (often outdated) preconceptions.
Oh, and we have creches on the northside too.
 
that being said, I have to applaud attention to the detail of where her husband works. Personally - having lived in Santry, I wouldn't be all that enthusiastic about trying to get from there to Ballsbridge for work.

Far too many people look at the money first and the practicality afterwards. People are very inclined to go "Oh I can afford in Lusk, Clane, Athy, so I've bought a house there, anyone know what the easiest way from there to [some industrial park somewhere or other] by public transport?

sadie, what I think I would do in your position is if I could rent without dipping into the 200K, is rent in a suitable location to where your husband is working if it's handy for creches and put the 200K somewhere reasonably safe where it's earning interest. Rental/investment is a bit of a gamble at the moment, particularly given a very heavy reliance on capital appreciation, or so it seems to me. But that's just my call and I'm not much of a risktaker. I assume you have other criteria by which you decide. If you are, however, going to have to dip into the 200K, then I would not consider it a good idea to continue renting in which case you will have to compromise on your location requirements.
 
The brand new number 4 bus goes (via a bus lane) from DCU to St Vincents Hospital, passing near Ballsbridge on the way. The Number 3 goes from Whitehall to Sandymount and onto UCD. Just a coupla suggestions. I absolutely agree with you about people trying to get from Lusk to Bray or whereever, but in fairness, Santry is about 4 miles from town and Ballsbridge less than 2. (BTW I live northside and work southside)
 
The distance is actually immaterial. Look at the timetables for both routes.

The number 4 is scheduled to take 50 minutes from Ballymun to Lansdowne Road. That means that someone commuting from Santry is probably looking at something like two hours commuting every day between walking to buses, waiting on that bus and being in that bus.

Likewise, the number 3 is scheduled to take 1h15 to get to Sandymount and then onto UCD.

In short, the existence of a direct bus route doesn't buy it for me, and for someone with a family and small children, I could imagine they might not want to spend upwards of two hours in buses every day, even if it is direct.

I don't think there's any need to knock the OP for being unfamiliar with parts of the northside - she's never needed to be familiar with them, and a lack of familiarity does make people less comfortable around places. Most of my life in Dublin I've lived either in the north city or north county but there are vast swathes of it that I'd be less than certain about including parts of Blanchardstown and Finglas. Are you going to knock me for it?

At any rate, have you looked at the prices of houses in Santry at the moment? The vast majority of three bedroomed outfits come in at well over four hundred thousand euro asking prices, never mind what they "eventually" wind up going for. I think anyone would be hardpressed to have change out of 500K not including the cost of stamp duty.
 
I really don't want this to turn into a northside /southside debate, as the original poster raised lots of interesting issues unconnected with the location issue. But just to briefly address the last post;
- I wasn't 'knocking' Sadie for being unfamiliar with the northside, I was pointing that she seemed to be ruling some areas out simply because she is unfamiliar and 'not comfortable' with them. I just think that is a shortsighted approach, given the current state of the property market. I'm not even saying she should buy there! Just take an afternoon, have a drive around, become a bit more 'familiar' and then make an informed decision.
- I fully accept the commute I outlined would take an hour, or more at rush hour. However one of Sadie's original options was to move to a 'border county' - I would assume therefore that a one bus commute from Santry would be seen as a preferable alternative.
I am also aware of the price of houses in Santry however there's a Royal Oak property on myhome.ie tonight for E425,000, which even allowing for stamp duty and upward bidding may well come into her price range.

The original post raised fascinating questions about whether to sell up or not in the current market. I'd be very interesting in hearing more opinions on this issue - I just thought the few sweeping comments about 'good and bad' areas were unnecessary and didn't add to the debate.
 
I don't want to prolong this argument overly, but with the best will in the world, there will always be good areas and bad areas, and people will have different perceptions. Having your blood boil over other people's perceptions strikes me as excessively defensive.

Regarding the property in Royal Oak - in general most houses are going for between 15 and 20% above the asking price. She knows this. She's pointed it out in her posts. You'd have to be very, very lucky as a buyer for that house to come into your budget, all costs considered, if your budget was 480K.

My view is that if renting is eating into the savings then it's not really an option. If on the other hand the rent can be funded from normal income, then given lifestyle decisions involving access to schools and other services, proximity to work, etc, there is nothing wrong with continuing to rent, and putting the funds in an interest bearing account.

Unfortunately, a lot of people have a blindspot against renting, but there are, in today's property market, certain advantages to it. Certainly the one thing it does is allow you to live relatively near to work and you tend to have a far greater choice of locations to live in.

Presumably the objective is to keep reins on the funds available so that if prices come down in the future, the OP or anyone in that situation will cash in that house or use it as security on the purchase of a primary residence because property prices have come down. I'm just not sure it's a good idea to use property to do this. I would have assumed that the value of the investment property will have slid also.
 
Thanks again for all the replies, especially Calina for getting my point across far better than I ever could myself. Didn't mean to offend anyone, I've heard Santry is very nice, but it is a bit far commuting-wise. What I was really looking for was reassurance that we aren't complete eejits for continuing to rent if that what suits our current lifestyle. I'm just so sick of hearing it from people that are we mad, we should buy a house, any house, any where, just buy one now before it's too late. In actual fact, if we could afford to rent for the rest of our working lives, invested the 200k wisely we have now, in 30yrs time we'd probably have more to leave to our kids than the people I'm envying who just bought a lets be honest pretty average 3-bed semi in a 'goodish' part of a bad area for 525k!! Also we can afford to go to on some pretty decent holidays as well. Hey I'm suddenly loving this renting thing (now if only they'd buy us some new sofas...)!
 
As someone else said as long your rent isin't eating into the 200k then your grand.Sure even if you just stick it in NR or Rabo you'll have it if things go belly up.
 
You must log in or register to reply here.
Back
Top