# 300k to invest



## Mary17 (15 Feb 2018)

Simple situation. 300k spare cash, no other debts.  Unemployed.  Need to create an income of 250 to 300 a week from the 300k while keeping it intact as much as possible.  Is buying a rental property the way to go or are there any better choices.  No risky business please.  Thanks.


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## Boyd (15 Feb 2018)

Hi, and welcome to AAM.

If it's a simple situation, i'll give a simple answer - put it in the bank and withdrawn E250 to E300 per week.

If you want a better answer that than, you need to give much more information. You don't say how old you are, or how long you expect/hope/need this money to last. You say you are unemployed, are you ever planning to work again or is this E300K you set for life? Are you getting any other income (social welfare etc) in addition to your draw down from this? Are you renting? Do you own a house? What is your risk level e.g. what if this dropped to E150K overnight, what would you do then? "No risky business please" - what does that mean? etc. etc.


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## Mary17 (15 Feb 2018)

Hi and thanks for the quick reply.   Without saying too much the ideal situation would be to have an income from the 300k for the next 10/15 years and still have most or all of the capital intact at that stage for my retirement so I don't want to risk losing it all.  Unlikely I will work again other than maybe some small part time work.  Own my own house.  No other income at the moment.


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## Boyd (15 Feb 2018)

Mary17 said:


> Without saying too much....


 That's my point. Its hard to give reasonable advice if you are only giving breadcrumbs of details 

Taking your numbers and doing some "back of napkin calculations", you say want to draw down E300 per week, with most/all of the capital intact, for 10-15 years? That would mean you would spend E300 * 52 = E15600 per year. This is (15600 * 100) / 300000 = 5.2% of the capital being spent per annum, so to keep the capital intact, you would need an investment return of 5.2% after tax, consistently over the 10 or 15 years. IMO that is not possible, and certainly not guaranteeable.

I think you need to either revise (down) your E15K per year spending expectations, or else plan for likely hook that the E300K capital will be quite eroded in 15 years, unless you get very very favourable returns on some investment.


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## Jim2007 (15 Feb 2018)

Preserving your capital and generating the kind of income you want is just not possible.  The higher the desired income, the higher the risk involved of loosing your capital and that is a fact.

Historical evidence as opposed to Irish opinion, considers property investing to be a very risking undertaking especially if you are going to put all you your cash into one building.  General opinion would be that a well balanced portfolio of equities, bonds, property etc.. would be the lowest risk option, but even then the likely return would be somewhere between about 5% to 8% gross.  Which would be along way short of your desired after tax income.  And of course your investment would still be exposed to market risk.  A well balanced portfolio, could see a drop of as much as say 30% in a down market although generally speaking it would recover quicker that say property alone.  Never the less, if you absolutely need to get out of the market at a specific point and could not wait then you might have to accept a capital loss.

Is there a specific reason you need the capital in tact at the point of retirement?  One would assume you still need the income in retirement?


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## Mary17 (15 Feb 2018)

Thank you both, sorry to be so vague.  I appreciate your replies.  It might be best if I go and speak with an adviser, if you have any recommendations, please let me know, thanks.


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## delfio (15 Feb 2018)

Mary17

Are you living in a town or in an area where there is a shortage of rented properties. Would you consider purchasing a two bed apartment to let you and then put your remaining capital in a high interest savings account, if you can find one!
In 10 or 15 years time you can always sell it on and hopefully get your original investment back.  As you are not working, you pay minimal if no tax on the rental income. You would need to register with revenue but that would also enable you to pay PRSI contributions towards your state pension.


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## Mary17 (15 Feb 2018)

That's exactly the scenario I had in mind.  I really just wanted to see if anything else would be better.  I know the price of property could go down in that time but at least I would have some income from it and could hold on a bit longer until the time was right to sell it.  I live in Dublin so the 300k would just about buy me a 2 bed apartment now.  Only problem now is finding one that hasn't been rented previously or one that has been rented out at near market rents recently.


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## goingforgold (15 Feb 2018)

How much is your PPR worth? Would it be possible to downsize and free up some cash. Rent a room maybe also?


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## delfio (15 Feb 2018)

Mary17 said:


> That's exactly the scenario I had in mind.  I really just wanted to see if anything else would be better.  I know the price of property could go down in that time but at least I would have some income from it and could hold on a bit longer until the time was right to sell it.  I live in Dublin so the 300k would just about buy me a 2 bed apartment now.  Only problem now is finding one that hasn't been rented previously or one that has been rented out at near market rents recently.



Mary

I wouldn't spend the whole 300,000, I would look for a cheaper property for around 200,000 and keep the rest as a buffer for the future.


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## Boyd (15 Feb 2018)

Mary17 said:


> That's exactly the scenario I had in mind.  I really just wanted to see if anything else would be better.  I know the price of property could go down in that time but at least I would have some income from it and could hold on a bit longer until the time was right to sell it.  I live in Dublin so the 300k would just about buy me a 2 bed apartment now.  Only problem now is finding one that hasn't been rented previously or one that has been rented out at near market rents recently.



Investing your entire amount into a property would IMO not be a good idea, as @delfio mentioned. You need to think about the expenses after buying, such as maintenance upkeep, annual service fees, repairs and the plethora of other costs that come with being a landlord. If this is your only money until retirement, what would you do if you spent the E300K on the apartment, and then needed E2K for the anunal service fee? Then your car breaks down and you need to fix that. Or your own house needs some repairs? While admittedly unlikely in the *current* market, what if it goes un-rented for a couple of months? Honestly, I don't think sinking all your money into an illiquid asset is a good idea at all, nor is putting all your eggs into the irish property market. Landlording is not a "set it and forget it" game, to which I think alot of posters on here will testify (I am not a landlord).

As you mention For a *guaranteed* return (albeit very small), you could invest E120K (max allowed) into state savings to generate 5% return after 5 years, which is E6K. Or you could go very long and do 10 years for 16%, which is E19,200. 

Again, without having full details of the situation, have you considered getting part time job to alleviate the need to be draining the lump sum constantly?


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## jim (16 Feb 2018)

Thee seems to be a lot of negativity on AAM around being a landlord. Of course there ar costs and risks involved. However, i am a landlord and for what it is worth i enjoy it i get a very good retunr on my investment and it doesnt require a lot of my time or upkeep. I appreciate that that is just my experience and others have different experiences. My point is that being a landlord can be rewarding and enjoyable and minimal fuss.

Username you mention the plethora of costs after purchasing. Woud you mind outlining what these are please? I spend €200-€300 per yr average on upkeep/repairs. I dont have any annual “service fee” - maybe buy a house 8nstead and avoid this cost. Property tax of course is a nuisance and tax on rental income is what it is but i really do think the argument againts property investment on AAM should be more balanced.

Mary,

Buy a property (Outside of dublin) for €200k that has some growth potential and a decent prospect of steady rent. Thee are loads of properties around the country that fits this bill. Put the other €100k in the highest yielding deposit account out there. Dont invest in shares if you dont feel comfortable doing so. Thats my advice.


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## Sarenco (16 Feb 2018)

There are still plenty of 2-bed apartments in central Dublin (Dublin 7 & 8) at around the €250k mark that you would expect to throw off a net income in excess of €1,000 per month.

Obviously any rental property comes with risks but it might be the best option in this case given the parameters set by the OP.


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## cremeegg (16 Feb 2018)

Dear Mary,

Cremeegg drew my attention to your post. 

I am a 20 year old student at University in Ireland. If you loan me €200k, I will purchase a property in the estate where I am renting at the moment. €180k purchase price plus €20k for fees, furniture and minor refurb. I will use one room for myself and rent the other rooms to other students. I will charge rent of €14,000 and so avail of the rent a room relief. This is less than the prevailing rent in the area. From this I will pay you €200 per week or €10,400.

In the event that I go abroad for a period during my studies, I can ensure that the property will continue to be rented and managed.

My intention would be that when I graduate in 5 years time I will either (1) sell the house and return your €200k or (2) Remortgage the house and return your €200k, or (3) renew the arrangement for a further period.  The contract would need to allow some flexibility around the timing of this.

I am perfectly happy for you to have a charge over the property and the right to appoint a rent receiver. I am happy for you to have your own solicitor draw up the contract.

This would be an exceptionally good deal for me, giving me rent free accommodation for the 5 year term, I would be in a position to fund the cashflow due to a better return than landlords normally receive, as the rental income would be free of tax. 

It would also give you a return of 5.2% during the term and the €200k returned at the end of that time. I hope that is of interest. 

I would be delighted to hear from you.

regards

FO'C


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## Boyd (16 Feb 2018)

jim said:


> Username you mention the plethora of costs after purchasing. Woud you mind outlining what these are please? I spend €200-€300 per yr average on upkeep/repairs. I dont have any annual “service fee” - maybe buy a house 8nstead and avoid this cost. Property tax of course is a nuisance and tax on rental income is what it is but i really do think the argument againts property investment on AAM should be more balanced.


Sure, as I said, I'm not a landlord, this is only from my experience of renting and ringing landlord to say this or that is broken. Perhaps its down to my selected rental quarters! As you mentioned, the upkeep/repairs is the obvious one. To be honest, I would have thought your figure was quite a low outlay per year, considering a single washing machine/white goods replace/repair could cost that alone. Factor in any re-painting, waste charges, home insurance is another couple of hundred quid, PTRB registration. I mentioned the service fees as apartments were already being discussed in the thread. Obviously if that's not applicable, then that's not an outlay. My point was just to consider that all those _can _add up if you are on a tight budget, not that all were applicable in all scenarios.

Dealing with any sort of unruly/disruptive tenants is another thing that comes with a time/stress cost.


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## Gordon Gekko (16 Feb 2018)

On balance, a rental property wouldn’t be the worst thing in the world. A diversified REIT portfolio would be better, and diversification across asset classes would be even better. But sometimes simplicity is best.


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## Jim2007 (16 Feb 2018)

Mary17 said:


> I know the price of property could go down in that time but at least I would have some income from it and could hold on a bit longer until the time was right to sell it.



Except that the income generated will also fall and how long can you hold on? Ten years , fifteen years.... some people are still sitting on negative equity.  The fact you can not move a house means that you are 100% dependent on the market in that location and it does not matter in the slightest how the market is going else where.  In the last recession the Irish lost the most personal wealth in the EU for the simple reason that they insisted in holding one of the most risky asset classes around, holding lots of it and borrowing to do so.  If you insist on property at least by a European REIT, not one those penny stock Irish REITs.


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## Aurora (16 Feb 2018)

cremeegg said:


> Dear Mary,
> 
> Cremeegg drew my attention to your post.
> 
> ...


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## Gordon Gekko (16 Feb 2018)

Is buying yourself a home or a bigger home an option with a view to generating tax-free “Rent-a-Room” income?

That could give rise to a tax-free gain because it’s your home and tax-free income; a decent combo.


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## Aurora (16 Feb 2018)

FO’C.. Wouldn’t Mary be liable for a large tax bill annually on the interest received?


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## cremeegg (16 Feb 2018)

It appears from the original post that the OP is unemployed. Interest income of €200 per week would not give rise to significant or perhaps any tax liability.

The return of €200k at the end of the period would have no tax implication as the repayment of a loan.


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## Sarenco (16 Feb 2018)

@cremeegg 

I assumed your post was meant to be a joke.  No?


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## Mary17 (18 Feb 2018)

Thanks all for your input and @cremeegg's friend, it's a nice idea and I wish you well   I will carry on with my research before I decide what to do.  Thanks again.


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## cremeegg (18 Feb 2018)

Sarenco said:


> @cremeegg
> 
> I assumed your post was meant to be a joke.  No?



If you mean, do I seriously expect the OP to lend €200k to an anonymous poster to buy a house, then no I don't, and I wouldn't do so myself.

However, although I wrote the post myself, FO'C represents a real person and their circumstances. I wanted to see what flaws other posters might see in the proposal.


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