Advice on buying an investment property???

B

bilbob

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My brother and I bought a house for 250k 2 years ago, it was recently valued at 410k, we are both single professionals in our mid twentys with a combined salary of 75-80 thousand.

We now want to purchase an investment property using released equity from the house. The problem is whether to pay a fair bit more and purchase a section 23 apartment for about 350-370k or to purchase a similar 2 or 3 bed in the city for about 280-290.

Any advice would be welcome
 
That's some price rise. Do you mind saying where the house is? Did you do any work to it? Did you get the house at a discount initially?
 
I wouldn't worry about a S.23 property

You really need to have about €15-20k in rental income to justify purchasing a S.23 property which you are unlikely to have on your property

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I wouldn't touch a Section 23 in your situation. Inevitably the developer increases the price to reflect the S23 relief. Unless you're in a position to draw down the relief over a short time period (and you're not) you're just paying over the odds.

However, your basic idea is good and you should have a go. Or possibly stretch to buying 2 one-beds? Lower stamp duty, can sell separately if necessary....
 
If I was buying an apartment, I'd buy one in the city centre. I think there are far too many being construced in the suburbs. Too many investors will be chasing too few tenants.

I think houses in Dublin are a better bet. In ten or so years time when the occupiers of the apartments have a few kids, a semi-d with a garden in Dublin will be very desirable and of limited supply. Have you considered dublin West (Ballyfermot/Clondalkin)

I'd totally agree with the section 23 comments above. The developers are factoring the tax benefits into their prices.

I'm still curious about your massive house price increase!!
 
"Inevitably the developer increases the price to reflect the S23 relief. Unless you're in a position to draw down the relief over a short time period (and you're not) you're just paying over the odds."

This is certainly true in the cities, where S23 properties and non-S23 properties sit side by side, and there is a relatively limited supply of S23 property. However, the "Rural Renewal" relief applied to entire counties. This meant that it was more difficult for developers to up their prices so as to snaffle most of the gain. There is still undoubtedly a premium, but the buyer gains relatively more from the tax relief. Of course, balanced against this is the fact that places such as Longford and Carrick on Shannon now have a surplus of rental property. However, I would not write off Longford (or parts of Roscommon) as a "S.23" investment area.
 
We bought in Donneycarney, prices there are absolutely flying at the moment, we completely gutted ours, new plumbing, plastering, and electrics plus a big extension, we did it slowly over the last 2 years getting tradesmen in on nixers so paid relatively little for the work.

Thing that’s driving donneycarney house prices is that a lot of Clontarf’s twenty somethings are snapping up houses there cause they cant afford anything in Clontarf, its right on the malahide road and perfect for renting.

Ideally I’d like to buy a house in East Wall or 2 bed apartment in a kinda dodgy area in city centre where value can still be found.

My take on the property market here is that if the bubble bursts (though I don’t think we have a bubble) the first places to go will be the likes of balbriggan, lusk rush, naas, maynooth and other hastily built satellite towns followed then by 1 bed apartments in suburbs closer in to the city.
 
bilbob said:
We bought in Donneycarney, prices there are absolutely flying at the moment, we completely gutted ours, new plumbing, plastering, and electrics plus a big extension, we did it slowly over the last 2 years getting tradesmen in on nixers so paid relatively little for the work.
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Was €250K the original purchase price excluding the cost of any subsequent renoovations? If so what were the total purchase and renovation costs out of interest?
 
250 orig purchase price plus stamp duty and solicitors fees, renovation costs of about 27k.
 
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