# Am I mad to even consider buying to let?



## gebbel (6 Jun 2012)

My situation, current €70K salary in a hopefully stable long term job in private sector.

Owe €200K over the next 25 years on a property I happily live in. It's now worth about half that, so obviously up to my neck in negative equity. 

Have €45K saved, and am half considering putting an offer of €80K on a decent 2 bed apartment and renting it out for between €600 - €650 pm.

So I would need to borrow another €35K. My thinking is the rent will cover the repayments and I will own the place after maybe 10 years.

Does the above have any logic whatsoever? Would appreciate some tips as I'm not very savvy in these matters.


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## Boyd (7 Jun 2012)

If youre not very savvy why would you want to invest in a second property and become a landlord?!

You'd be using up all your savings? Sounds mad to me anyway.


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## Brendan Burgess (7 Jun 2012)

There should be a three stage approach to this question.

*Is it a good investment on its own merits? 
*You would have to do all the numbers. Allowing for the costs of furnishing, decoration, empty periods etc,, what yield are you getting? 

Are you prepared for all the hassle of being a lanlord? 

*Is there a better property or should you wait for a better deal? 
*It seems from the Allsops auctions that there are some very high yields available. 

*Is this right for you? 
*I would suggest that it isn't right for you to tie up your savings when you are in such heavy negative equity. 

Flexibility is more important than returns.  It's hard to plan and although you like your current place, things change. Relationships form and split. If you are in heavy negative equity, you wont' be able to move. 

If you have a SVR mortgage, you should probably set your savings against your mortgage. 

If you have a tracker, you should hold onto your savings to see if you get a deal at some stage for paying down the tracker early.

If some opportunity comes along and your money is all tied up in the apartment, you will regret the investment. 

Brendan


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## gebbel (7 Jun 2012)

The property I'm talking about is in a good location and very rentable so wouldn't envisage any rent free periods. The rental yield (not taking into account costs/ overheads etc.) is 9%.

Apartments in the same location made over €300K in the boom. It's hard not to be tempted at picking one up, and potentially owning it outright in under 10 years. But I'm not naive enough to make a rash decision, already did that with my own place in January 2007....when the property boom peaked. By the way I am on a tracker mortgage on my own place.


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## Brendan Burgess (7 Jun 2012)

> By the way I am on a tracker mortgage on my own place.



That would swing the decision for me. I think that people with trackers may get deals to reduce them or pay them off early. If that happens, you don't want to have your cash tied up in a property.


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## Gunn (18 Jun 2012)

*BTL in Dublin*

I have an eye on Dublin buy to let market and am likely to make a move in 12 months. In the meantime I'd be grateful for your insights on a few questions going around in my head:

- I will only buy in Dublin 1 or 2 because of less void and easier re-sell. Gross yield needs to be 8%+. Is there an optimum price level which is most likely to ensure I meet these critera? (budget is about €125k).

- What's happening to rents? Think I read recently they continue to fall in Dublin?

- Am from the UK, will an Irish bank lend to me on b-t-l?

- Auction has been mentioned. Never used auctions. Will I get a better deal? If any experience of this perhaps you can elaborate on the approach and if it did save you money.


Much appreciated.


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## oldnick (19 Jun 2012)

Gunn- you will pick up small apts and make 8% gross (meaning pre-tax) yield. There has never been a cheaper time to buy apts. BUT...
-nobody is expecting  apt prices to increase, especially small ones.  Purchasing a small apt as BTL is one thing , capital appreciation quite another.
- Ireland is a very pro-tenant country. Very little protection for landlors, despite what may be written in law. 
- makes no difference whether you buy at auction or from owner or from E.agent if you are clever and tough on bargaining. Anyway you need full cash for auction.
- Unless you have at least two of the following: - A) reasonable deposit (min25%) plus B) a track record and/or good secure job plus C) some other security then *no* chance of a loan from an Irish bank BTL.

Sorry.


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## g05l (19 Jun 2012)

Brendan Burgess said:


> That would swing the decision for me. I think that people with trackers may get deals *to reduce them* or pay them off early. If that happens, you don't want to have your cash tied up in a property.


 
*to reduce them*  - what do you mean by saying that?


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## BOXtheFOX (19 Jun 2012)

Have you thought about buying a property to use as a holiday let. Over the summer months you should get €400 per week (1 bed) reducing to €200 per week over the winter months. If it is close to the RDS, Aviva or O2 you should get a higher rent when there is a show on in town. I have been thinking about going this route myself.


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## serotoninsid (19 Jun 2012)

g05l said:


> *to reduce them*  - what do you mean by saying that?


Brendan is aluding to a potential deal that the banks may offer to get people off trackers.  i.e. if client agrees either to transfer over to variable OR to pay off the tracker mortgage, bank offers to write off X amount.


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## capitalk (19 Jun 2012)

Brendan Burgess said:


> That would swing the decision for me. I think that people with trackers may get deals to reduce them or pay them off early. If that happens, you don't want to have your cash tied up in a property.



But I think one deal could be that the bank will actually pay you to switch to a svr therefore you would not need cash to pay off the loan as such.If it is the other way you simply wont have the cash but you ll keep the tracker-all good in my view.

I would go for the property - keeping cash for what if s and deals/investments that might come along makes no sense.

It is a deal and investment right now earning you far more into your pocket/pay off property quickly than a deposit earns you.

Cheers


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