# Ex-pat, should I buy a house in Ireland?



## Globalist (25 Nov 2015)

*Age:* 33
*Spouse’s/Partner's age:* 33

*Annual gross income from employment or profession: *EUR 116,000 (of which we see 100%)
*Annual gross income of spouse: *EUR 35,000 (of which we see 100%)

*Monthly take-home pay: *EUR 12,478 

*Type of employment: e.g. Civil Servant, self-employed: *Private sector expat in middle east 

*In general are you:*
*(a) spending more than you earn, or
(b) saving? *-- Saving 65% of income.

*Rough estimate of value of home: *We do not own a home
*Amount outstanding on your mortgage: *n/a
*What interest rate are you paying? *n/a

*Other borrowings – car loans/personal loans etc: *None

*Do you pay off your full credit card balance each month?* Yes

*Savings and investments:*

Cash: EUR 10,000 emergency fund in bank a/c earning 0.5%
European short-term government bond ETF: EUR 66,500
Vanguard Developed Europe ETF: EUR 86,000
Vanguard S&P 500 ETF: EUR 55,200
Vanguard Emerging Markets ETF: EUR 13,250
Employer Stock Purchase Plan: EUR 10,000
NET WORTH = EUR 240,000
*Do you have a pension scheme? *No

*Do you own any investment or other property?* No

*Ages of children: *First (and probably only) baby on the way

*Life insurance:* Term Life insurance worth 200,000 for both spouses, plus employer life insurance covering him for EUR 450,000 and her for EUR 80,000

Things are going well. We save around 9,500 euro per month and have no debts. We live in a tax-free country and our jobs are stable. My wife will stop working when our baby is born. We are probably only going to have one child - maximum two. My employer would cover education costs and provide full insurance for the child. Even when my wife stops working, we expect to be able to save 70,000 euro per year while the child is under 3 years. 

My question is whether I should buy a house in Ireland for cash now that I have the cash. We do ultimately want to move back there after all. The other option is to maintain our current investment strategy, which I like - but is there something to be said for buying a home now in Ireland, while prices are still relatively OK (outside Dublin, by the way)?

Thanks!


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## Monte2014 (25 Nov 2015)

Hi Globalist. I am in a similar situation to you in that I have been working overseas for the past 4 years and have accumulated a large amount of cash which I am investing in stocks and shares, government bonds etc. What area do you work in? e.g engineering, finance, IT etc. Your future job in Ireland will dictate where you live or are you looking to buy where you are originally from? I would be hesitant in putting all your cash into a house until you are settled back in Ireland. I can imagine been an overseas landlord is a nightmare. Stocks and Shares are more liquid etc.


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## Globalist (26 Nov 2015)

Monte2014 said:


> Hi Globalist. I am in a similar situation to you in that I have been working overseas for the past 4 years and have accumulated a large amount of cash which I am investing in stocks and shares, government bonds etc. What area do you work in? e.g engineering, finance, IT etc. Your future job in Ireland will dictate where you live or are you looking to buy where you are originally from? I would be hesitant in putting all your cash into a house until you are settled back in Ireland. I can imagine been an overseas landlord is a nightmare. Stocks and Shares are more liquid etc.



I work in the IT industry - I basically have two hats, one in project management / consulting, the other in software development, so I have two potential careers. I am keenly aware that what I work at would determine a lot; luckily I am generally able to work remotely.
Indeed I'm also hesitant in buying a house but now that a baby is on the way, I am thinking of security. To be clear, if I were to buy a house it would cost me ca. 200k. And over the next two to three years I could build up a fresh 220k in investments. But the temptation on the other hand is to pump it all into stocks and bonds and get some nice compounding going. I do keep quite a high percentage in bonds because as an expat "one never knows" and also because I follow the advice of Jack Bogle to keep roughly one's age in bonds. I rebalance into equities whenever there's a 20% dip.


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## 44brendan (26 Nov 2015)

You would need to define your strategy more clearly in order to receive advice. I.e. Is the proposed house purchase intended as an investment or as a pre-cursor to a move back home? Are you proposing to purchase around Dublin or in a rural/other urban location? Is the proposed purchase based on "getting on the property ladder" or is it indented to be your long term PDH? Do you intend getting a rental income from the property prior to moving back home?
You will also need to look at the potential return that can be achieved from your current portfolio v's your perception of the annual increase in the property market in your desired location!


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## so-crates (26 Nov 2015)

I would think buying a house now does not make much sense really. You have a long term plan to move home to Ireland but that is not within the next year, or (I am guessing) within the next 5 years. So you would either have a property sat empty (definitely a bad idea) or you would be renting it out. Renting a single property and managing that at a remove of a 7 hour flight is not really a good idea. It can be hard enough doing that if you are an hour's drive away. You would have to choose an area now at a remove of several years from when you actually do return - it may not suit you then so you would have to sell it at that point - would the return on the investment be worth it? As for the property itself, even if the location remains the right one and you are happy to come home to the house you will in all likelihood have to revamp the property after letting. So the only reason you would do this is because you think the property prices now represent a once in a lifetime golden opportunity. I'd not agree with that estimation. In the next two/three years you see yourself building up a fresh 220k in investments, so you will have a bigger pot coming home anyway and any property now worth 200k is unlikely to have doubled in value in 2/3 years time. Even on the very off-chance it has, you will have the capability of buying it at that point.


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## Globalist (26 Nov 2015)

44brendan said:


> You would need to define your strategy more clearly in order to receive advice. I.e. Is the proposed house purchase intended as an investment or as a pre-cursor to a move back home?


Not an investment property. It would be a precursor to moving back to Ireland.



> Are you proposing to purchase around Dublin or in a rural/other urban location?


Definitely not Dublin. Probably a satellite town of Cork city or a suburb of Cork city.



> Is the proposed purchase based on "getting on the property ladder" or is it indented to be your long term PDH?


Nothing to do with the property ladder. This is about buying a long-term home.



> Do you intend getting a rental income from the property prior to moving back home?


I could take it or leave it.



> You will also need to look at the potential return that can be achieved from your current portfolio v's your perception of the annual increase in the property market in your desired location!


The total expense ratio of a home is far higher than my portfolio. The TER of my portfolio on a weighted basis is 0.135% The cost of a home includes property tax, maintenance, and insurance. But again, the property would not be about making an investment - it would be about buying a home and the security that this entails.


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## 44brendan (26 Nov 2015)

You are not likely to pick up much by way of a reasonable PDH in Cork City or environs for €240k. A quick look through Daft.ie will give you a good idea of what is available within your price range. Given you savings rate, you might be better off postponing the decision for another year or so until you have put sufficient funds together to buy the property you want rather than the one you can afford!
A lot depends on when you want to return home. I.e. There is little point in buying now if you intend spending the next 10 years abroad ( a lot can happen in that time).
The property market here now is somewhat unusual given the scarcity of new builds. If it were me I'd continue with the savings and make the purchase decision about 12/18 months in advance of moving back. Being an absentee landlord is likely to cost you money but having a vacant property is a further risk.


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## Brendan Burgess (26 Nov 2015)

This is a really interesting question.



Globalist said:


> the property would not be about making an investment - it would be about buying a home and the security that this entails.



I don't think that it gives you any real financial security. It might, of course, give you some emotional security. I think that this is just some deep ingrained notion of "I would like to own a bit of the old sod".

From a tax point of view, if you rent it out, then it will be subject to CGT when you sell it.  So it looks like a bad investment.

Long-term, you will have housing costs in Ireland. So does buying a house now protect you against some possible bad run of luck e.g. a sharp rise in the value of Irish property combined with a sharp fall in your investment portfolio?  Such a development could mean that you come back to Ireland after 5 years and you can't afford a house. I think you would have to be very unlucky for this to happen.

What you could do as a sort of hedge against this is to buy shares in either Hibernia REIT or Green REIT.  They invest in Irish commercial property.  If house prices in Cork rise spectacularly, it's likely that these will probably rise as well.  It's not a perfect hedge, but it's the best hedge I can think of. It's a pure exposure to the Irish property market. I don't know how they would be taxed in the hands of an ex-pat,so you should check this out first.

But the rewards of owning Irish residential properties do not justify the hassles involved. As the others have pointed out, managing it from abroad would be a nightmare. Your housing needs when you come back might be very different from what you think they are today, so you might have the wrong house in the wrong place.

And, of course, you might not come back. Stay in flexible, liquid, tax-efficient investments.


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## thedaddyman (27 Nov 2015)

2 sides to this

on the one hand, if you buy a house, are you restricting yourself to where in Ireland you end up. If you buy a house in Cork and get a job in Galway then the Cork house is just a hassle. Therefore save and don't buy

On the other hand, (and I'm speaking here as a returned emigrant myself) if you do buy, will it be a magnet to draw you home as opposed to money in a bank account, will you have a greater attachement to home and does it make you more likely to return. Possibly it does which might be a reason to buy


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## Bronte (27 Nov 2015)

Here's another angle.  That sunny expat exclusive world is all very well, and I've been there and had a parent work there, but sometimes things can and do go wrong.  My OH had a colleague sent back during the Kuwaiti war at one stage, for safety.  Things like that.  Then it's nice to have and own something tangiable that you can call home.  You can buy a grand family home in Cork or Galway for under 250K.  Dublin is a different matter.  Limerick much cheaper and Waterford a steal. 

I know nothing really about shares or bonds, but you seem to have three investments in something called Vanguard.  Is that good or wise?  I think you should pay an *independent* expert and not one of those slick ones that exist out where you are for people like you.


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## Brendan Burgess (27 Nov 2015)

Bronte said:


> My OH had a colleague sent back during the Kuwaiti war at one stage, for safety. Things like that. Then it's nice to have and own something tangiable that you can call home.



It wouldn't be a whole lot of use if it were let to tenants with 2 years to go on their lease. 

Brendan


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## Bronte (28 Nov 2015)

You can legally evict tenants if you need it for yourself, with notice of course.  And shares or bonds that collapse are gone forever.


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## Boyd (28 Nov 2015)

He's not invested in Vanguard itself. They are a low cost fund provider, one of world's most well regarded. IMO no issue with his investments.


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## Globalist (11 Dec 2015)

Thank you for all the replies so far. I've decided to continue my current strategy for the next 12 months and will reassess at the start of 2017.


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## cremeegg (11 Dec 2015)

If you are looking at a home, given your situation you are hardly going to be happy in a €250k house.

I suggest you consider getting a mortgage of about €800k to €900k. The monthly repayments would be about €5,000 over 20 years. You would still have €2,000 to save each month.

In the Cork area you could probably let this to a multinational for a good price, enough to do the upkeep and pay the tax.

Set up a property alert on Daft and see if you fall in love with a house. Maybe this one.http://www.daft.ie/cork/houses-for-...ouse-castlelands-kinsale-cork-1099076/#img=17

Actually I looked on daft just now and I was surprised how little €1m buys in Cork


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## Globalist (11 Dec 2015)

cremeegg said:


> If you are looking at a home, given your situation you are hardly going to be happy in a €250k house.



Why would you assume that?



> I suggest you consider getting a mortgage of about €800k to €900k. The monthly repayments would be about €5,000 over 20 years. You would still have €2,000 to save each month.


Strikes me as a very bad use of money to be honest. The complete opposite of what I would like to do. Also, I don't intend to ever borrow for anything again if I can help it - not to mention that needlessly burdening myself with such a debt for 20 years would be utterly counter to my goal of financial independence and that I cannot be sure my income will be at such a level for 10 years, let alone 20.


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## cremeegg (11 Dec 2015)

Given your age and earning level, your idea of financial independence, and never about , borrowing again for anything strike me as a bit limiting.

I am just offering a suggestion. I agree that it may not be the best use of money in a financial sense, but I cannot see why that should be your primary concern.

You have made money, now how can you use it to make yourself happy.


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## Globalist (11 Dec 2015)

Fair enough but a big house and a huge debt won't ever make me happy.


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## cremeegg (11 Dec 2015)

But who can aspire to live in the big house if not you.


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## Globalist (11 Dec 2015)

I suppose it's just not something I aspire to at all.


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## so-crates (11 Dec 2015)

cremeegg said:


> But who can aspire to live in the big house if not you.


Can't be living vicariously through Globalist cremeegg


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