Buy now to let, or wait + save?

B

boogaloo

Registered User
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149
hi all,

If you had a choice of (1) getting a mortgage and buying a property which you couldn't live in, but would let out, or (2) waiting another 2/3 years and saving and hopefully buy where you could live, which would you do?

At the moment, I can't afford to buy anywhere near where I live and work. However, I could buy in an adjoining county and rent out. I've done some research and the rental market in the area I could now buy in seems good/stable. Based on the amount being charged for rent there, I figure I would manage ok if the property was let out for 8/9 months a year, as in the rent would easily pay for the mortgage. I would intend holding on to the house for approx 5 years, and then selling and buying somewhere that I could live in.

I'm afraid that once the SSIA's mature, that house prices will go completely crazy and I won't be able to afford anywhere! I don't have an SSIA.

What would you do?
 
Buy now. If you have done your homework and the rent will cover the mortgage then you are pretty ok. I would also have to say that you are probably right about a bit of a surge in property buying when SSIA's mature, a lot of people maybe taking this opportunity to trade up as well as first time buy. If you're buying outside Dublin then I would say you can have a better view of a property bubble burst about to happen and since you wouldn't be living in the house could always sell quickly. Definititly a good move to buy to rent.
 
If I was a first time buyer I would think long and hard about losing my first time buyer benefits (in the form of lower rates of stamp duty and higher rates of mortgage income tax relief) by making my first purchase a rental/investment property purchase. Do your calculations on rental income versus mortgage include all expenses, tax liabilities and tax deductible expenses?
 
5 years is a relatively short time for an investment like this. The high transaction costs (legal, survey, estate agent, stamp duty) will eat into any profit on each of your transactions.
 
boogaloo said:
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I'm afraid that once the SSIA's mature, that house prices will go completely crazy and I won't be able to afford anywhere! I don't have an SSIA.
Click to expand...


I'm personally not convinced that this will be the case. You might see a surge in car sales, holidays and DIY sales. But with an average payout of €14k I can't imagine this causing a surge in house sales - let alone house prices.

Besides, Governments like to take and spend money, they don't like handing it back so you might see some generous new proposals to encourage people to continue saving after the SSIAs mature.

In addition, property may also be increasingly seen as an average or even underperforming asset and people at that time could opt to invest it elsewhere.

Take your time and don't rush and have a read of this:
10 reasons not to panic over property
http://www.unison.ie/business/stories.php3?ca=80&si=1446655
 
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