Is having a 2nd home worth the stress

alalalal said:
Someone said the numbers speak for themselves...

The way I see it you spend 250 per month for an annual return of 25k+ (the capital appreciation in your property thus far), that sounds like a great savings scheme to me.
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But as we all know investments can fall in value as well as rise - at this stage even the banks are saying there's not much upward growth left for the forseeable future. You have to live and enjoy your life too and as you rightly point out being a landlord is additional stress that you probably don't need - there are just too many variables. As I told someone last night (who has just sold one an investment property), there is no point in trying to time the market, whilst there might be more gains to be made - why be greedy - sometimes you just got to sit back and smell the roses (or the nappies)!!
 
could go towards a pension plan for him - i have one with work already.
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You could put the profit or some part of it into a pension over a number of years subject to revenue rules and receive up to 48% tax refund. (only effictive provided you are both paying tax at the higher rate) You need to crunch the numbers. You can do this for both yourself and your husband. You can contribute by may of AVC.
In addition you can contribute against income for last year up to 31/10/2006.
 
What about changing to an interest only mortgage when your fixed period is up, that way repayments will be less than rent, leaving you some cash to pay for professional letting & mgt agent. You'll then have a property that is pretty much paying for itself and growing in value each year, every landlords dream.....

Good luck.
 
..but with an interest-only mortgage you still have the minor matter of the loan principal to repay. The investment is not paying for itself - the rental income is only paying for the funding...
 
alalalal said:
What about changing to an interest only mortgage when your fixed period is up
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This thread might be of relevance here:

Interest only mortgage
that way repayments will be less than rent
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Assuming 100% occupancy/no vacancy periods and that the market bears rents in excess of the mortgage repayments.
You'll then have a property that is pretty much paying for itself and growing in value each year, every landlords dream.....
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That dream may not be reality since non of this is guaranteed - it may not pay for itself and it may not appreciate in value. Nobody can say for sure a priori.

I still feel that you need to crunch the numbers to check the viability and potential risks/rewards of this property investment and get independent, professional investment advice.
 
Hi All
We could debate the merits of this till the cows come home....

I'm biased, bottom line is I believe property is a great investment option, better than a pension or a bank. I buy in Dublin only, strongest demand and strongest capital appreciation. Have been at it for 4 years, have 4 investment properties, with plans to keep on buying at last 2 a year.

Milly if you can afford it, hang on to it. Remeber to think of it as savings. At the end of each year sit down and work out what it's cost you, ie voids, repairs, shortfall in rent and weigh that up against the capital appreciation. If it costs you 5k per annum and rises by 25k great, however if your costs are 20k and it only rises by 10k then think about getting out.

I agree with the independent advice bit, but try to pick someone who's actually bought some investment property personally and knows what their talking about it.

Good luck
 
alalalal said:
We could debate the merits of this till the cows come home....

I'm biased, bottom line is I believe property is a great investment option, better than a pension or a bank.
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Well at least debate the facts would be better than a hunch.
Milly if you can afford it, hang on to it.
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I would take such advice coming from somebody with a self confessed bias towards property and does not consider the individual's overall circumstances with a grain of salt.
but try to pick someone who's actually bought some investment property personally and knows what their talking about it.
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As opposed to what exactly?

Also - treat advice from those with an explicit bias towards one form of investment over another with caution. If I told you that property was a dead end and pork bellies were the future I would hope that you would tell me where to go (second word "off"). Ditto for others simply insinuating that one asset class is "better" than all other options.
 
alalalal said:
have 4 investment properties, with plans to keep on buying at last 2 a year.
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Sounds like quite a few eggs but I only see one basket!

alalalal said:
If it costs you 5k per annum and rises by 25k great, however if your costs are 20k and it only rises by 10k then think about getting out.
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Following this reasoning, if it costs you 10k and it gains no value in a year should you start heading for the exit?

I'd say that it could quite possibly be too late at that stage to reach the exit with your shirt. If prospective buyers feel that prices will remain the same or ease off in the future you'll find a lot of people adopting the "wait and see" approach. At that point a loss making investment that can't be easily shifted will certainly start to feel like some dead weight.
 
alalalal said:
Hi All

I'm biased, bottom line is I believe property is a great investment option, better than a pension or a bank. I buy in Dublin only, strongest demand and strongest capital appreciation. Have been at it for 4 years, have 4 investment properties, with plans to keep on buying at last 2 a year.

Milly if you can afford it, hang on to it. Remeber to think of it as savings. At the end of each year sit down and work out what it's cost you, ie voids, repairs, shortfall in rent and weigh that up against the capital appreciation. If it costs you 5k per annum and rises by 25k great, however if your costs are 20k and it only rises by 10k then think about getting out.
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I agree that property can be a great investment but your reasoning is flawed.
Comparing costs (which are factual and are actually occurring) against cap appreciation that you believe is happening in the market is akin to fooling yourself.
The capital gain will only be realised and therefore real on the day you sell it. There is no guarantee about cap appreciation either now or in the future.
Secondly, costs need to be compared with income, not asset values.
P&Ls do not subtract costs from the appreciation in asset values. There is no financial statement that mixes a P&L with a balance sheet as you are effectively trying to do. It displays a lack of understanding of how the numbers work.

I also have investment properties, but i certainly do not invest by comparing my costs against possible increases in asset values that may or may not have been achieved (Remember, they're only achieved the day you sell and your money is in the bank).
To date, you have done well and my congrats to you. But i'd be concerned that if you persist assessing properties in that manner, the day will come when the appreciation stabilises or worse, falls, and unfortuantely, the costs will still exist, unlike the price appreciation. I would suggest to anyone reading this who is going to invest in property, PROTECT THE DOWNSIDE before investing.
 
milly123 said:
hi there,

Alalalal, we did originally buy for 125K but remortgaged and the loan now stands at 195K, good point about the savings scheme though !!. The mortgage repayments are 950 per month (fixed for 1 year), rental income 750 per month at the moment -

Clubman, it is rented at the mo to family who are moving out in a few weeks, so its really only now that we have to advertise it for rental tennants that we won't know. So up until now it wasn't really like I was a landlord.
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Did you release 70k in equity for a car or something? I am confussed
 
Hi Redo,

a variety of things, wedding, stamp Duty & deposit for new house, clear credit union loans etc etc.
 
It appears that every Tom dick & harry in Ireland now considers themselves property tycoons at the moment. There is money to be made from property but you need to know what you are doing, access the risks etc and go from there. I think a lot of people see other people doing it, making loads of money & thinking it is as simple as that.

I know people who are mortgaged up to the hilt on loads of investment properties & will either be loaded or bankrupt in the next few years depending on how the market goes & on how they handle their investment.

For me - I prefer an easy life but would consider one investment property but only if knew I could well afford it in the long term - ie not keep it for a few years just to sell on to make a profit. & even then you have to get the right tenant in to make it easy.

You need to ask yourself if you can afford to pay the full mortgage should you be without a tenant for a few months? If not then..........
 
Milly, I'm in a very similar situation to you. We have rented our first house out now for 2 years to 2 different tenants & the experience so far has been fine. If you really want to look on this as a long term investment you have to block out all the positive and negative predictions about the rise or fall in the asset until coming close to the time you want to sell. If you are going to sell in 20 years time it doesn't matter too much if you see a fall of say 10% in a couple of years, it is likely to come back over such a long term.
There has been some breakages in our house, but if a tenant spends €10-€12k with you in a year I think it's reasonable to allow for €500 to repair a washing machine or similar.
The key I have found is to take your time & be very selective with your tenants. Also you didn't mention location, but if it's Dublin city or a reasonably good suburb it's hard to see you having an empty house for prolonged periods.
 
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