Extend or Buy

E

ExtendorBuy

Registered User
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1
Hi All,

My wife and I would like, longer term, to move to a larger house in a family friendly village type area.
We are wondering can we do this and rent our current house.


Married couple no dependants with savings of 100k
Joint disposable monthly net income €6500

Current house is a 3 bed terrace in Dublin 7 value €350k
Estimated extension cost around 50k for around 20 sq metres extension and restructuring of internal load bearing walls.
Current mortgage is €1100 per month with 12 years left and around €130K gross

A local estate agent tells us we can rent the house in current state of €900 per month but if we extend and freshen up we can get €1300 per month


Hope for purchases:

3 bed (perferrably a 4 if within budget) semi detached perferably on dart/luas lines or bus routes that are perferrably less then 1 hour to Dublin city centre where we both work. Estimated cost 450K


Can we afford to keep our current house now or in the long term as potential retirement income?

If yes

Should we extend and wait 2, 3 years before purchasing?

Rent immediately (€900 a month) and look to buy immediately?

Extend for rental (€1300) in 2014 and look to buy immediately?


Thanks
 
Well it's going to be hard for any of us to tell you what is best for you. What would you like?

First thing to find out is will a bank allow you to become an investor and give you a second home loan. Watch out your current loan may have a clause that increases the interest if it is no longer a home loan.

I wouldn't do the extension now, you can always do it later, better to see if you 'like' being a landlord. Sure if the 50K addition will add value for a sale price then it might be worthwhile.

Also a good idea to see if you like living further out, might not work out, but then you can always come back and do the extension. Would it be an idea to rent before buying.

If you do the extension to rent, make sure you borrow the money.
 
Hi, you should sell the house in dublin 7 now and buy the house you want now for following reasons,

1. Selling at 370K leaves you with 220K towards your new house plus your 100k savings giving you great options for new house.
2. Rental return on existing house is very poor versus value.
3. Extenting will eat up at least 50% of savings making it tougher to buy new house.
4. There are much better investment property opptunities. For example sale price of 200K giving 1300 monthly rent. This compares to extented value of your house of 420K returning same monthly rental.

Good luck!
 
You don't mention your age or whether you intend having children...this may impact the urgency of your situation?
 
Not sure how it should affect your decision, but I think your EA is mental and your house would rent for much more in its current state.

Where in D7 are you? There's three 3-bed houses for rent on daft in D7, ranging from €1225 to €1850. If your house is valued at 350k, I'm sure it would compare to the houses at the higher end of that bracket.

http://www.daft.ie/searchrental.daf...pe]=rental&s[refreshmap]=1&search_type=rental

Having said that, I'm not sure which option I'd go for (rent or sell). Both have their obvious advantages - you're in a pretty enviable position.
 
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