# Buy second property as my pension?



## Moneymatters202 (11 Dec 2020)

Quick question, we have a mortgage and owe about 50% still to the bank, my OH was made redundant a few years ago so have a few bob saved. He is now back working full time, im a stay at home parent with a long term illness on social welfare with no pension. We are considering using our savings to buy a second property to rent long term. This will then become my pension down the line when we hit retirement age, husband has a private pension already. What is the downside/upside  to doing this? I don't really want to use all our savings to clear our mortgage.


----------



## Pinoy adventure (11 Dec 2020)

I think you'd get better response if you fill in the money makeover template


----------



## Moneymatters202 (11 Dec 2020)

What is that? I've only just joined this group.


----------



## cremeegg (11 Dec 2020)

There are many aspects to this. Here are two questions to get you started.

What interest rate are you paying on your existing home mortgage?

Have you any experience that makes you think you could cope with the issues of being a landlord or anything else to bring to the table in that regard?


----------



## Brendan Burgess (11 Dec 2020)

Key Post - Basic information required for the "Money Makeover" forum
					

It can be difficult, but please try to use a meaningful title in your thread  For example "27 year old with mortgage arrears".  You will get a much better and much more coherent answer if you give as much information as possible in your first post. For example, if you give your mortgage rate, it...



					www.askaboutmoney.com


----------



## Moneymatters202 (11 Dec 2020)

Sorry I'm only new to posting. 3.2% on mortgage and have dealt with tenants in the past and had no issues. I should note we are still 20+ years from retirement. I just need to make sure if we purchase a second property it won't effect my social welfare payment. My OH has paid into a pension since he was a teenager so has a decent pension already. We have between us about 5k a month take home pay and have two kids


----------



## Black Sheep (11 Dec 2020)

From a Social Welfare point of view I suspect your Illness payment is based on your PRSI and therefore will continue into a pension at age 66 and will not be impacted by any property you purchase. (Who knows how pensions will be in the future)
Others will have good advice to offer re the pros and cons of becoming a landlord


----------



## Feemar5 (11 Dec 2020)

If you are receiving illness benefit based on PRSI contributions you should not have a problem but if your payment is Disability Allowance then that is means tested.    Regarding becoming a landlord it may not be the time to invest as there is a lot of talk about more rights for tenants and landlords having to sell with setting tenants. Depending on where you intend to buy the new thinking on working from home may be a factor to consider.


----------



## Saavy99 (11 Dec 2020)

I would very much agree with Feemar5, It would be my considered view not to invest in more property but rather think about setting up a personal pension fund for youself.


----------



## asdfg (12 Dec 2020)

Or maxing out your husband's pension to the maximum allowed by revenue by making avcs. He could also make an avc in 2021 and off set it against his tax paid on 2020. This must be done by October 31st 2021


----------



## Leper (12 Dec 2020)

1. I don't know how old you are and |I'm no financial whizzkid, but if there's someone opposite that I'm probably it. Thirty years ago we bought a 2nd house mainly for some investment and to aid in our retirement years hence. It was a holiday home too and OK some DIY from me involved etc. It was an old house. Back then it was work with the work and getting renters and listening to every moan and groan. We were constantly shoving money into the house to modernise it. I didn't need that in my progression to the twilight years so we sold it. All-in-all a loss, but I held onto my sanity. Buying property for rental is a little better than backing a horse, but when you win you can "win big." We didn't.

2. As an investment we bought an apartment in Spain, new, well located, guaranteed sunshine, relatively cheap. What could possibly go wrong? In all the years we've had the apartment the Covid pandemic was nearly the least of what we encountered. Property prices are recovering there, but much slower than here. And we haven't even seen the consequences of Brexit yet. 

You're not getting any younger. Eventhough you may think you can run as fast a twenty year old, you can't. The older you get you still think you can run faster than your children, but you can't. I'm not saying you're heading towards soft slippers nodding off and looking forward to Daithi on RTE 1 television at three. So cut your cloth to suit your measure.


----------



## Saavy99 (12 Dec 2020)

Leper, not meaning to detail from this thread, but would you not consider selling the spanish property at this stage. You have written about the downsides of maintaining it many times on AAM.


----------



## RentingD (13 Dec 2020)

I wouldn't recommend anyone buy an investment property to rent. You've to be ready for the unexpected expense and hassle all the time. The majority of people are fine but the bad tenant is so difficult. 

Would you consider paying some money off your mortgage? Then maybe you can get a cheaper interest rate.


----------



## Peanuts20 (13 Dec 2020)

So who would manage the property if one or both of you end up in a nursing home. ? To me, unless you have someone who can and will do this properly for you, it's going to end up an issue at some stage in your retirement


----------



## cremeegg (13 Dec 2020)

Moneymatters202 said:


> Sorry I'm only new to posting. 3.2% on mortgage and have dealt with tenants in the past and had no issues.



With a mortgage at 3.2% any repayments you make on the mortgage get a 3.2% after tax return guaranteed.

While you might expect a higher return from property, doing well you might get 8% before tax, that is not much more than 3.2% after tax if you are a higher rate taxpayer.

I take Lepers point that none of us is getting any younger


----------



## Thirsty (13 Dec 2020)

Peanuts20 said:


> So who would manage the property if one or both of you end up in a nursing home. ? To me, unless you have someone who can and will do this properly for you, it's going to end up an issue at some stage in your retirement


Crumbs, but the years from 60 to 85 went by very fast there!

If the OP needs full time care, the property can be sold; that's not a hard decision.

Someone here (@galway_blow_in I think?) bought a relatively cheap property in a modest area of Limerick and leased to the local Co. Co. From what I can recall they were getting a very nice return. It might be worth checking it out.


----------

