# Should I buy or keep saving?



## allenk (22 Jun 2011)

Hi all,

It is my first time posting so in advance I would like to thank you all for any advise.

Just a brief summary of my current life/financial details.

I was lucky enough when I left college after 6 years that I landed myself a pretty good job in the engineering world (15 months ago). I'm 26 and from Cork. I started working in Doha, Qatar (Tax free) for around 32k/year. I have now got myself a position in a pretty remote place in the world also tax free on 43k. I have saved 20k in my first 15 months and I plan on saving 30k in the next year (fingers crossed). I have put 7k so far into 2 BOI savings accounts and I am waiting for the exchange rate to go my way and I will send the remaining money in the Qatar bank home to the green isle.

So here is my query, I was thinking in a year of buying a house for aroung 150-200k in around the Douglas area in Cork. If I do this I would like to have the mortgage paid off in around 6-8 years to avoid paying the banks massive amounts of interest. My sister is currently renting with one of her friends and will be for the forseen future so I can give her my place at a good rate and having family staying there will be convenient.

1. If I pump my own cash along with some of the rent into the mortgage it should be paid off in a pretty short time frame. The rent itself will cover the interest and if I put a bit aside monthly I will cover maintanance etc.

2. Should I hang on and wait untill I have the cash in hand to buy the house outright and take the risk that the housing market will not start to rise again.

Any advice will be greatly appreciated.

Kind Regards,

Allenk


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## lionstour (22 Jun 2011)

why do you want to buy a house that you dont intend living in?  Investment? 
You would be completly and utterly mad. 
Keep saving your money and get some financial advice or do some research about investing etc.


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## niceoneted (22 Jun 2011)

I would keep saving and monitor the situation with house prices. When you are buying I would buy one that you will intend or want to live in when you return to Ire if you ever do.


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## allenk (22 Jun 2011)

*Regular savings to get mortgage approval*

I have briefly looked into other investments such as bonds, savings accounts etc. but I think this will be my best option as I could in the next few years  move back to Ireland and this is why I am choosing the location before picking the right house. 

Another reason is that I can guarentee my sister a house at a reasonable rent that she could call hers if I never move back. I'd have a nice asset under my belt and also a regular income I could fall back on if things went bad.  

Further Query: To have any chance of getting a mortgage should I be putting in regular savings or will I be ok to put in lump sums every 2-3 months? 

Cheers again for the feedback.


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## Brendan Burgess (22 Jun 2011)

It's generally not a good idea to buy a house unless you plan to live there. 

From time to time, there are advantages for first time buyers and you would forfeit those if you buy an investment property.

if you want to buy a house somewhere else, the fact that you have already got a mortgage would be a disadvantage. 

Brendan


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## allenk (22 Jun 2011)

Brendan,

Say for example I am def going to buy a house in Ireland. What would you recommend then? 

If I have a house or a plan to buy a house in the near future it will prevent me from spending foolishly over the next few years. Another thing is that I would rather have my money in something I can physically see and monitor rather than shares or something that could potentially collapse.

Regards,

Ken


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## Mommah (22 Jun 2011)

Well I don't think you are wrong in considering buying a house.
Whether you would get a mortgage based on a foreign income is probably your stumbling block.

The people same people who rushed to buy property at the top are now advising shying away from it in the valley.  We are in a more reasonable place price wise, although it still has bit to fall before it reaches 1996 levels when I bought my first property. You are young so you are likely to benefit from some capital appreciation in the long term.(say 20 years)

There is still alot of uncertainty in the property market.
But as Warren Buffet says "you pay a high price for certainty."


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## lionstour (23 Jun 2011)

Mommah said:


> The people same people who rushed to buy property at the top are now advising shying away from it in the valley."


 
Im advising against it and I did not buy at the top of the market.  In his circumstances I think it would be a really bad idea.  

Point made re loosing first time buyer status is important.

Also the house he buys now will certainly not be the house he wants to settle down in with kids etc later on.  having an "investment property" might be like a noose around his neck in years to come when trying to secure another mortgage.


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## lionstour (23 Jun 2011)

allenk said:


> Brendan,
> Another thing is that I would rather have my money in something I can physically see and monitor *rather than* shares or *something that could potentially collapse*.


 
How long have you been out of this country again?


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## allenk (23 Jun 2011)

Hi Lionstour,

I've been living abroad for 15 months.

I will potentially live in the house that I purchase but it will depend if I return to Ireland or not.


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## Greta (23 Jun 2011)

There was a thread here somewhere from a person in a similar situation - wanting to get a mortgage to buy a property in Ireland while she was still living abroad. She got absolutely nowhere with mortgages and in the end decided to buy a cheaper property outright.

So I think you might have no choice but to keep saving until you can buy outright.

In general, I think your idea to buy a property in Ireland that will be available to you if you return and that will provide rental income until you do, is a good one.


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## allenk (25 Jun 2011)

Guys,

Thank you for all you advice. 

Going back to main question. Assume that no matter what I am going to purchase a house. Wether I am going to live in it or not is irelevant. Do you think I should by early if I have a guarenteed renter or hang on for a few years and try to buy one outright but take the risk of property prices going back up?

I suppose no one can predict property prices going back up or not but if I could earn a few extra euros towards the mortgage I think its not a bad idea but I've no experience in property. I do know that there is a 100 and 1 things to take into consideration such as refuse charges, tax, what if things break etc. but I can cross that road when and if I come to it.

Regards,

Allen


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## lionstour (25 Jun 2011)

allenk said:


> Guys,
> 
> Thank you for all you advice.
> 
> ...


 
I think house price speculation in not allowed on this site. Go ahead buy that house now use all your savings in the process, let your sister benefit from the "investment" and you can pick up the pieces when you come back to Ireland.

It will be a costly lesson for you. But I suppose you can cross that bridge when you come to it,


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## milliejones (26 Jun 2011)

'Fraid I agree with lionstour - i detect a young man getting his hands on a few (well-earned) quid but just a little too eager to have 'something to show' for it. I also get the feeling that he is too long out of the country to be aware of exactly what's been going on here (he didn't get lion's irony back there!). His thinking reminds me of all the nervous hype a few short years ago about getting a foot on the property ladder at whatever cost, and my god, what a cost that turned out to be...
Keep your money allenk - wait till you can buy something nearly outright - meantime relax and enjoy yourself...


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## allenk (27 Jun 2011)

Fair point, and I think you are all right. I'm just trying to look at my option for 12 months down the line.

I appreciate all the input, cheers.


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## Greta (28 Jun 2011)

Allenk, I suggest you begin by asking a few banks for a mortgage, while you are out of Ireland. See how far you get, no point wondering if you should buy now or not if you can't get a mortgage.

If - by any chance - you find a bank willing to give you a mortgage, then go ahead and buy. Otherwise keep saving and buy when you have saved enough to buy outright.


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## lionstour (28 Jun 2011)

Greta said:


> If - by any chance - you find a bank willing to give you a mortgage, then go ahead and buy. Otherwise keep saving and buy when you have saved enough to buy outright.


 


> I think your idea to buy a property in Ireland that will be available to you if you return and that will provide rental income until you do, is a good one.


 
What evidence do you have for making the above comments and advice?


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## Complainer (28 Jun 2011)

I think you should leave your sister out of the equation. Do your sums on the assumption that you'll be renting the property on the open market, with 1 or 2 vacant months each year, and a property agent to pay to look after the property.

Your sister has her own life to live, and may well have a relationship change or a job change or have a child on a schedule that doesn't suit your rental arrangements. Family and business don't mix well.


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## DerKaiser (28 Jun 2011)

milliejones said:


> 'Fraid I agree with lionstour - i detect a young man getting his hands on a few (well-earned) quid but just a little too eager to have 'something to show' for it. I also get the feeling that he is too long out of the country to be aware of exactly what's been going on here (he didn't get lion's irony back there!). His thinking reminds me of all the nervous hype a few short years ago about getting a foot on the property ladder at whatever cost, and my god, what a cost that turned out to be...
> Keep your money allenk - wait till you can buy something nearly outright - meantime relax and enjoy yourself...


 

If he had a guaranteed rent to cover the interest (though heed the advice about making sure the rental yield would be realistic on the open market), a sizeable deposit and a definite plan to return to live in the house, I see nothing wrong with what he is suggesting.

First time buyer status isn't what it used to be and probably won't be anything at all in a couple of years so losing it is no big deal.  

And you can't just assume from now on that everyone who buys a house will be faced with a negative equity trap if they try sell it. 

You can't project the realities of a 2003-2008 buyer onto the purchaser of today.  His decision should not be based on the fact we have had a property crash.

Despite all this I'd advise against buying yet as you're very young, haven't been working long and have no guarantee of a job to come back for.


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## Greta (29 Jun 2011)

lionstour said:


> What evidence do you have for making the above comments and advice?



I wrote that *I think* that it's a good idea to buy a property that will be available to OP, that is, it's my personal opinion, I don't need to "have evidence" to prove an opinion, do I?

As to the advice to "go ahead and buy" if OP can secure a mortgage now, I was being a bit ironic, considering the fact that he seems to be ignoring the fact that it's extremely difficult or impossible to get a mortgage while he is abroad! 

Really what he needs to do is find out IF he can buy now (i.e. IF he can get a mortgage), then take it from there, hence my advice to go find a mortgage first It's pointless wondering about to buy or not to buy if he just can't buy (at least not for a while, until he saves enough to buy outright).


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## lionstour (30 Jun 2011)

Greta said:


> I wrote that *I think* that it's a good idea to buy a property that will be available to OP, that is, it's my personal opinion, I don't need to "have evidence" to prove an opinion, do I?
> 
> As to the advice to "go ahead and buy" if OP can secure a mortgage now, I was being a bit ironic, considering the fact that he seems to be ignoring the fact that it's extremely difficult or impossible to get a mortgage while he is abroad!
> 
> Really what he needs to do is find out IF he can buy now (i.e. IF he can get a mortgage), then take it from there, hence my advice to go find a mortgage first It's pointless wondering about to buy or not to buy if he just can't buy (at least not for a while, until he saves enough to buy outright).


 
The fact 





> that it's extremely difficult or impossible to get a mortgage while he is abroad!


is really not important
Even if he could secure a mortgage in those conditions now; he still would be crazy to buy in his circumstances.


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## Greta (1 Jul 2011)

lionstour said:


> The fact
> is really not important
> Even if he could secure a mortgage in those conditions now; he still would be crazy to buy in his circumstances.



Well, I think this fact - that he'll be unable to get a mortgage - is very important, as it's a FACT, not just an opinion, in that it makes the whole discussion - to buy now or not to buy - pointless, as he CAN'T buy now, whether it's crazy or not. Period.


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## lionstour (1 Jul 2011)

Greta said:


> Well, I think this fact - that he'll be unable to get a mortgage - is very important, as it's a FACT, not just an opinion, in that it makes the whole discussion - to buy now or not to buy - pointless, as he CAN'T buy now, whether it's crazy or not. Period.


 
Earlier you advised him to go ahead and buy.  Buying now in his circumstances would be madness.  That is the only fact.


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## Greta (1 Jul 2011)

lionstour said:


> Earlier you advised him to go ahead and buy.  Buying now in his circumstances would be madness.  That is the only fact.



I have already explained to you what I meant, obviously you don't get it, so I don't see any point explaining further, let's just drop it and remain each with our own opinion and facts


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## lionstour (1 Jul 2011)

Greta said:


> If - by any chance - you find a bank willing to give you a mortgage, then go ahead and buy.


 
A terrible piece of advice given his circumstances


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## Mommah (2 Jul 2011)

lionstour said:


> A terrible piece of advice given his circumstances


 
That is purely speculation on your behalf.
There is no "evidence" as your assumptions are based on your prediction of the future.

Any decision by the OP carries risk.
You think the risk is unwarranted. Greta and I think it might be worth considering....however we feel he is unlikely to secure the necessary mortgage so it is a theorectical debate.

Just because we have had a terrible property crash AND remain very financially unstable does not mean that cash rich buyers should not consider investing in property as long as they understand ALL the risks.


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## Oscaresque (3 Jul 2011)

Complainer said:


> I think you should leave your sister out of the equation. Do your sums on the assumption that you'll be renting the property on the open market, with 1 or 2 vacant months each year, and a property agent to pay to look after the property.
> 
> Your sister has her own life to live, and may well have a relationship change or a job change or have a child on a schedule that doesn't suit your rental arrangements. Family and business don't mix well.



Exactly what I was thinking. Your sister will be your tenant and as such can leave the property if her circumstances change. So you may find yourself renting it to strangers at some stage. Would you be ok with this?

Also, you're 26, while you might think now that you know you'll settle in Douglas, assuming you return to Ireland, this may change. Imagine you meet a lovely girl from Galway, fall in love, get married but she is hell bent on living where she grew up?

It is admirable that you want to use your good fortune and financial situation to also help your sister but you should consider how you would manage the set up it circumstances changed for you or her.


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## theoptomist (3 Jul 2011)

No alarm bells will sound when property prices hit the bottom, its up to the individual to make up their own minds.
Considering the price of some properties are priced below the cost of materials and labour to build excluding site costs. and the price of materials is only going up (in the last month kingspan up 10% concrete7% and all metals soaring [China] )
I think the origional poster should buy on todays prices rental yields are over 10%.


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## allenk (5 Jul 2011)

Again all points appreciated. 

I wouldn't mind if I had to rent out to strangers, sure strangers will have lived in the house previously unless I purchase a new one.

It sounds pretty inviting considering some of the points that theoptimist has stated.

I am going to start making regular savings into my BOI account and in around a year I will reassess the situation, I suppose as I am under no pressure to purchase I should wait for the ideal situation, price etc. 

It is interesting to see peoples different opinions on the matter but all information and opinions are greatly appreciated.

It seems that my main problem is getting approved for a mortgage but hopefully having around 30% of the house value they will consider me.

Kind Regards,

Allen


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## lionstour (5 Jul 2011)

Mommah said:


> That is purely speculation on your behalf.
> There is no "evidence" as your assumptions are based on your prediction of the future.
> 
> 
> ...


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## Complainer (5 Jul 2011)

allenk said:


> I am going to start making regular savings into my BOI account and in around a year I will reassess the situation,


Just FYI, many Irish people are going to great lenghts to move their savings away from Irish banks, and there's yourself, sending it all back home.

You might like to think about reducing your risk by keeping some of your savings in safer institutions or countries.


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## lionstour (5 Jul 2011)

theoptomist said:


> I think the origional poster should buy on todays prices rental yields are over 10%.


 

Where are rental yields over 10% IN the location the OP wants to buy? Can you give an example?


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## lionstour (5 Jul 2011)

duplicate


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## allenk (5 Jul 2011)

Complainer,

Funnilly enough I was just talking to one of my managers today who just recently opened an Australian Bank Account which is offering just over 6% interest on its savings account. I am going to look into it tomorrow and see can I open one if I am not a resident and without a working visa. Looks pretty attractive to me and every bank seems to offer similar rates. I will be in Australia every 6 weeks so it might just be possible.

I am putting regular savings into by BOI account so I might have a chance of getting a mortgage down the road. The money going in will not be massive so If it does go pearr shaped in Ireland then I won't lose everything I have.

Lionstour,

I know your not my personal financial advisor but do you think I should do with my money?


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## lionstour (5 Jul 2011)

allenk said:


> Lionstour,
> I know your not my personal financial advisor but do you think I should do with my money?


 
I have no idea. Askaboutmoney has good threads about investing small sums.


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## zen (5 Jul 2011)

I have to agree with Lionstour.  
You would be insane to invest in a house here.  I get really annoyed when I hear the phrase " house prices are x% down from the peak of the boom" which really translates that prices are down from the pinacle of insanity.  Prices should never be compared to the peak, they should be compared to the actual value of the property or show the price it was originally paid for THEN and only then will you see if you are getting a bargain....or use the 2.5/3 times your salary ratio as a rule of thumb.  No offence allenk but you are doing well where you are.  You are where most of us young people would like to be! The grass aint any greener here, its turning to hay and by the time the greeks default who knows what will happen.
I dont give advice,,.. but if I was in your situation, I'd sit tight and keep my eye on things.  When you can, buy outright dont give those banks anything and dont secure any loan on your prized posession, your home.


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## melchris1000 (5 Jul 2011)

can anybody help me ,i cant post a thread


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## theoptomist (5 Jul 2011)

lionstour said:


> Where are rental yields over 10% IN the location the OP wants to buy? Can you give an example?


 
Some areas of clondalkin, decent houses 130k or 140k.
Monthly rent for family 1050.
Roughly 9% to 10%.
Considering buying one myself as i know if i had a site here for nothing i could not build a house for this money.
THis just an example there are plenty other areas.


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## lionstour (6 Jul 2011)

theoptomist said:


> Some areas of clondalkin, decent houses 130k or 140k.
> Monthly rent for family 1050.
> Roughly 9% to 10%.
> Considering buying one myself as i know if i had a site here for nothing i could not build a house for this money.
> THis just an example there are plenty other areas.


 
Thats great; just 140 miles away from Dogulas Co Cork.

And I would question your numbers on clondalkin.  A lot of properties for rent there and I doubt there is that much demand,


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## serotoninsid (6 Jul 2011)

theoptomist said:


> Considering buying one myself as i know if i had a site here for nothing i could not build a house for this money.


I hope i'm not steering this off in another direction (i'm pretty sure i'm not as it's related to the general theme of the thread thus far) but would this be a general consensus? ie. 130-140 would be the build cost for a typical 3 bed semi (assuming this is what theoptimist was referring to)??


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## theoptomist (7 Jul 2011)

lionstour said:


> Thats great; just 140 miles away from Dogulas Co Cork.
> 
> And I would question your numbers on clondalkin. A lot of properties for rent there and I doubt there is that much demand,


 
Sorry i was just giving a general example.
I have six properties let in clondalkin all for around this amount , never empty . Bought at different times in last eight years.


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## theoptomist (7 Jul 2011)

serotoninsid said:


> I hope i'm not steering this off in another direction (i'm pretty sure i'm not as it's related to the general theme of the thread thus far) but would this be a general consensus? ie. 130-140 would be the build cost for a typical 3 bed semi (assuming this is what theoptimist was referring to)??


 
Yes it would cost this amount considering the local council will want 15K to 20k contributions.IMO


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## serotoninsid (7 Jul 2011)

..





theoptomist said:


> Yes it would cost this amount considering the local council will want 15K to 20k contributions.IMO





			
				serotoninsid said:
			
		

> would this be the general _*consensus*_..


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## SFOasia (6 Jan 2012)

You must keep you eye on the property which you want to buy and work for few moths more and pay all the money cash so there won't be too much of interest and no hassle as well.But look for a place which is safe and genuinely vacant.


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## allenk (9 Jan 2012)

Still saving and a house that I am interested in is over 50% less than its peak... Fingers crossed it keeps dropping!!


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## BOBSKINS (9 Jan 2012)

If you want to invest money's and let your sister use the investment  try diamonds they are a really good investment. They go up in value every year in excess of any bank interest rate and property(still descending in value). You should also get some irish tax advise before lodging large amounts of money into an irish bank account, the government and revenue are constantly changing the tax laws and you may be liable for Irish tax?


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## allenk (9 Jan 2012)

Hi Bobskins,

The house that I'm currently looking at is one which I could see myself living in later on in life if I ever come to Ireland full time, I wouldn't see myself wearing diamonds . Its a large 4 bed detatched in a nice quiet housing estate.

I have been thinking about it and I won't be buying unless the market settles somewhat or something really catches my eye. 

In relation to the irish tax, I am aware of the good chance of the laws changing to screw us earning outside of the republic but I assume their will be plenty of notice and they will have to apply a cut off date for tax free lodgings??



Cheers,

Allen


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## BOBSKINS (10 Jan 2012)

Ya 4 bed fully detached houses have pretty much halfed in value since the peak in 2007. Im sale agreed on one in galway. I have about 130k negative equity in my current house. I wouldn't be in any rush Into the property market if you don't need to. Personal circumstance change all the time and you never know what's round the corner.


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## Bronte (10 Jan 2012)

allenk said:


> I have been thinking about it and I won't be buying unless the market settles somewhat or something really catches my eye.


 
Nobody can call the market.  You have to remain detached.  You wish to buy in Douglas because you are from that area and you maybe miss home and this would give you a link and because Irish people need to have bricks and mortar.  As you are not going to live there any time soon if ever you need to have a very cold clinical business mind to make this decision.  Involving your sister is pointless, within 6 months she might be off to Oz, married or having a baby, you don't know what might happen there and your careful plan will be in shreds.  If you do up all the figures, cost of buying, stamp duty, legal fees and mortgage amount and term, plus interest rate with a 3% swing and projected rent we can look at the figures and see if it will give you a good return.  Also being far away makes it really difficult to manage renting a property.  Anyone will tell you the professsionals are fairly useless in this, but you have a better chance with a sound house in a location that will always rent.  And use a family member to collect the rent and manage the property for you, a competant reliabable person who you pay for the service as you would a professional and your plan can be viable and I don't see why it wouldn't be a good investment.  First off though can you find out from the banks will they actually lend to you and you would be better off getting a large mortgage rather than owning it outright from a tax planning point of view.


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## allenk (10 Jan 2012)

Hi Bronte,

I'd be looking at a house for around 200k where I would require a 75% mortgage. I'm currently saving 2-2.5k/month so 25-30k/annum. Rent in the area would get me at least €800/month (friend renting 2 bed in same area for €750/month). I spoke with 2 people in the BOI mortgage department over xmas and they seemed pretty confident I should have no problem but I won't take it as gospel. 

why would I be better off going for a large mortgage?  Because I could offset the rental income tax against interest paid? 

Cheers.


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## BOBSKINS (10 Jan 2012)

It would be the other way around regarding the offset. 75% of the mortgage interest is allowed as an expense against rental income, the remainder less other exp's is subject to irish tax and prsi and usc as its an irish situated asset. Also the tenant is obliged under irish tax law to withold 20% of the rent and pay it over to revenue as you would be considered a non resident landlord.Banks will only give 20 year mortgage on an investment property too. You may have an exposure to stamp duty at 1% if it's an investment property. But TRS runs out for new buyers at the end of 2012.


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## allenk (11 Jan 2012)

As I'm working outside of Ireland and not paying any Irish Tax I don't believe I'd qualify for TRS but can anyone confirm please? 

One of the reasons that I am renting to my sister is so I would not have to declare it an investment property. I'll give her the house for free and if she feels obliged she can gift me some money in return on a monthly basis


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## Bronte (11 Jan 2012)

Oh dear AllenK what you are proposing is oh so not worth it.

Instead of TRS you will be entitled to the much better landlord mortgage relief whereby you can write off 75% of mortgage interest against rent each year.


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## 44brendan (11 Jan 2012)

Quick comment. currently foreign residency & income source would preclude consideration of property finance from any Irish based Bank or BS. If you don't have the cash available to buy the property, its not a runner, don't waste time applying for a mortgage.


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## BOBSKINS (11 Jan 2012)

Hi

TRS is not available to you, that is correct, sorry bout that had to look it up. If you give your sister the free use of your property there is a deemed gift element there around 8% of market value which adds up even if you take the €3000 annual tax free gift away. The sibling treshoulds for gift tax were reduced in the most recent budget so just another element to think about.


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## Troy McClure (13 Jan 2012)

All things aside. I think it's highly unlikely a bank will give you a mortgage from what you say.


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