advice for a holiday home? from 1-10, how insane are we?

[peach100]

My husband and I live in the UK and like many others have fallen in love with Ireland and hope to eventually settle there. At present, we cannot leave our jobs in London, but wish to get a foothold there in a property that we could use ourselves part-time. If we are able to let it out some of the time, all the better, but because our budget is a max of 190,500 (threshhold for obvious reasons) we're not expecting to be able to find something that is immediately rentable (we'd much rather find somewhere in a great location, location, location that needs fixing up to our own standards over time, which could eventually be let). We've done a fair bit of research, and have actually found properties in this price range that could be suitable for our needs in areas we like.
To paint a picture of our financial situation, we currently own two properties in the UK. We bought our primary home two years ago for 278k sterling with a loan of 140k on a 10 yr fixed-rate mortgage. We have a second flat which was purchased three years ago for 135k which is on an interest-only mortgage of 110k, and is being rented out for 715pm. (This doesn't provide much income, but it is in a very quickly appreciating area nearish where the Olympics will be held so we are holding on to it for the potential return on investment). We have a combined income of about 100k sterling, we have no other debts and do not have children and so have a fair bit of extra cash to play with every month, and have been putting our money into our savings accounts (about 50k), which is clearly not the best use of this money. We realise we should either be using this to try to pay our mortgage off faster on our primary home (although on our mortgage can only overpay by 10% per annum), but we'd also like to consider using this money to nestle in to an Irish community. Of course we could just spend the money on holidays over there, but heck, we want to make a home - even if part-time.
So, apologies for the rambling, and apologies if this duplicates questions from other threads, but one of the things that is looming over us is how much is the speculation about house prices stalling or falling confined to urban areas? Surely there will be knock-on for people buying in rural areas, but will these prices be affected as much? We know this whole thing might be crazy, but should we actually be institutionalised for considering this? We're happy to take some financial risks to find somewhere that will have a huge return on enjoyment, but really don't want to be complete idiots.

 

[auto320]

If you intend to use the property yourselves and even reside there for a large part of the year at some time in the future, the economics are not as critical in the short term as they might otherwise be. In other words, this is a very long-term project and should be approached as such.

Depends on where you want to invest too. Do you have family or other emotional links with ireland that might point you towards a particular area? If not, then you are maybe less dependent on what may be expensive areas like connemara and can consider cheaper alternatives with long term (stress on the long!) prospects. These would include around the lakes in Cavan and Leitrim, or parts of Mayo. Mayo has the added attraction of Knock airport with quick access to the UK. Also, if you look to the future, the western railway corridor looks like it may well be opened in another ten years, and properties near this may have added potential.

There are plenty of "fixer-uppers in Mayo, an area scarred by emigration for decades. Your best bet is to go over there for a week and stay in the target area to get a feel for what is good and bad. Take advice from everyone (except maybe agents) and then make up your own mind. Watch out for road widening schemes and other infrastructure issues that might change the look of a property.

A large scale ordnance survey map is an essential tool for this kind of search; don't waste time with ordinary road maps. I found a house for a Swiss friend a few years ago on the shore of a lake that was just out of sight of all the main roads -- I wouldn't have bothered going up the road in question if I hadn't been interested in the lake that was on the map. He now has an idyllic home looking across a small lake and he would never consider parting with it.

The coming sanity in the mainstream housing market in Ireland will also translate to these peripheral areas in the near future; at present you can find absolute rubbish on sale at crazy prices, but that will change in my view.

Finally, remember that "the day you buy is the day you sell." Buy near towns where there will be a demand in the future if you change your minds. Don't think of buying a remote property on the side of a mountain that is ten miles from a shop. It will not be of interest to a local buyer in the future, and is probably overpriced for that reason.

Some tax incentive type properties in good locations near waterways are proving hard to shift in Leitrim/Roscommon due to a glut and poor rental returns. Might be easy to talk to these promoters in another six months.

 

[lopin10]

Go to daft.ie and read 3rd quarter 2006 report this may give you an idea where property is going. I invest in propery myself and i think the next hot spot is the sunny south east prices have not gone up as much as the rest of the country over the past 10 years however this is changing fast due to new road projects been completed which means the communate time to Dublin is much faster

 

[liosban]

Re: Which Border Counties will show Largest Growth (in property prices) over next 2 Y
Folks

We have banned the discussion of house prices movements for the moment on Askaboutmoney. This applies to those who assume prices are going to rise as well as those who assume that they are going to fall.

Brendan

Cop on guys and respect the rules. You don't want us to have to do one of those horrible baton-charges, do you - most of us hate doing that! But some....

 

[Brianp]

Im not one for breaking the rules here guys but isnt the the reason for AAM is to give/get/share ideas/feelings about money and other finacial matters, esp at this time......or have i it wrong?
I will respect the ban.

 

[peach100]

My apologies if I opened a can of worms, this is my first post to AAM so didn't realise there was a ban on certain aspects of my question (although, from a practical point of view, it's hard to see how one can have a conversation about property investment without eventually getting around to the topic of prices...but hey ho).
I suppose what I really want to know is this - based on our financial profile above, are we crazy to follow our hearts, or should we be paying off our existing mortgage first? We're trying to keep the financial outlay to a minimum by starting small and investing in upgrading over the years. My fear is that if we don't get something now, we never will (and not just because of property prices - if we decide to go freelance we may not be in a position to get a new mortgage or to extend our existing mortgage).
To change the tack of the converstion slightly - if we do end up bidding on the property, we will need to make mortgage decisions (obviously...). It appears as if it would be better to get an Irish mortgage (% seems lower than UK) but will we lose out on currency exchange more than if we just increase one of our existing mortgages? Also, if a property is only rented out for part of the year, are we required to get a buy to let mortgage? Also, although interest-only is better for rentals, if we're not actually getting rental income straight away should we opt for repayment?
I hope that these topics aren't banned!
Many thanks to all for taking the time to reply. Have to say this site is pretty impressive.

 

[Marie]

Your principle private residence (PPR) in UK automatically renders your house-purchase in Ireland as an investment property even if it is solely for your use as a holiday home nor or in the future.

You can arrange your mortgage either through an Irish or UK bank but you would probably have more success with financial institutions in Ireland as the property is within their jurisdiction. You can choose whatever payment option best suits you. The "frequently-asked questions" sections of the Property Investment and Best Deals lists in AAM are a good guide.

Deciding to buy a holiday home anywhere depends entirely on your personal preferences and financial position. Your original post stated that you love Ireland and want to spend as much time as possible. In that case your plan to buy a place to come to regularly makes sense and that should be the only criterion.