Keep renting Dublin city centre v buy a good bit out?

Hi all,

I'd appreciate your advice on a big decision I have to make.

On one hand, I have a booking deposit placed on a 2 bed apartment in Dublin 5-6kms from the City Centre. I love the apartment, the finish, the layout, the size, and especially the price. I love the idea of having a place to call home and that I can furnish myself. This place ticks all the boxes except for the big one - location!

On the other hand, for the last few years, I have been renting a fantastic place in the city centre. My rent is probably below market rates now as it hasn't been increased in years, and I have never had any problems with my landlord, nor him with me. I love the location with everything central Dublin has to offer me on my doorstep, and the short stroll home after a night out. I could see myself happily renting here for another 5 years, especially if I am allowed to make it more my own. In fact if I could afford to buy it, I would.

I know you will all say renting is dead money, but I already have a buy to let mortgage elsewhere which pays for itself and balances out the rent I pay in Dublin.

Option 1 - Buy Apartment
My own place with great finish.
Mortgage Repayments €2000pm
Management fee €1650pa
Find a stranger to rent 2nd room
Curb spending & curtail social life
5-6km from City Centre

Option 2 - Stay put and keep renting
Never my own place
Rent €700pm
Currently live with great flatmate
Continue enjoying same social life
City centre


My head is saying buy now and make a home before prices head up again!!
My heart says, why give up what you have now? hold off and maybe you will find something similar closer to the City Centre.

What would you do?

Smithfielder

Could you and would you save the €1300 per month (difference between mortgage repayments and rent) + €1650 per annum (management fee) by curtailing your current lifestyle to aim towards buying a property in a preferred location in the future?

What is the price difference between buying a similar place to where you are now and the apartment you are looking at? If you waited a year or two it may be possible to get the former in this kind of market.

arry

Hopefully this won't degenerate into a where are property prices going debate, but in any case my opinions:
1. Don't think there is any rush with buying, despite what some papers are saying I don't believe prices will start going up again soon.
2. I think one should only buy if a place meets (most) of your needs, and is likely to do so for at least the next 5 years. Can you see you staying in the new apartment & renting with a stranger for that time?

I would have suggested you start renting in your intended purchase location, to see how that goes, but unfortunately it sounds like you'd be giving up your current apartment.

Instead, as suggested above, I'd stay renting for a while and keep saving.

Good luck!

If you are looking at mortgage repayments of €2k per month I presume your budget is in or around €400k. Also based on your name I am again presuming that you currently live in Smithfield. If both of these assumptions are correct then it might be worth having a look at .

Christy

I would advise that you stay where you are and continue to rent. I would also advise that you do some reading on the savings and investment forum on AAM and look at how you can start to build a nest egg for the future. One of the main reasons that people propose for buying is so that you will have assets for your old age. That’s a good idea but who says those assets have to be in the form of a house/home? There are tax advantages to owning your own home (especially if/when you sell) but that does not suit everybody. Life is about more than money, which I’m sure you realise, so have a good think about what your needs will be over the next 5-10 years and plan accordingly. Longer term planning can take the form of a good pension.

If you decide to stay where you are you should also talk to your landlord about doing the place up to your own taste. Try asking him/her if they will pay for materials if you do the painting etc.

The sentiment so far is that you shouldn't rush into a purchase just for the sake of it and I agree.

Just because you would like to make a place your own is not really enough of a reason to incur that level of mortgage, the inconvenience of renting a room out and moving to an area which you're not really connected to or much want to be in.

A few years ago, when money was so cheap and easy to get, there was a logic in taking on a mortgage because repayments were very comparable to the cost of rent. I don't think the same holds so true now and €2k is a big, big monthly repayment compared to €700 a month in rent. Think long and hard about what you must give up to pay that back.

Your rent payment gives you freedom from having to pay for things like furniture and fixtures/fittings. You can also give your notice and move without fees or hassle if you want to - sounds like you have a great arrangement now (rare enough!) so don't dis that.

Bear in mind that buying always costs more than you think. Costs associated with buying always mount up. I believe these costs are only worth it if you intend to keep the place for at least two to three years. Might your circumstances change in two or three years? You may not want the apartment then and I suggest you could be out of pocket selling it at that stage.

IMHO, I don't think apartments are very good buys at the moment and its seems like you'll be paying out a heck of a lot for something that you might find is not really such great value for money.

If I were in your shoes. I think I'd say stay renting and - instead of partying it all away - start saving a chunk of spare income with the intention of putting it to good use when you have a better reason to think about moving from where you are now.

smithfielder said:

I know you will all say renting is dead money

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Just on that statement - the interest you pay on the mortgage can be perceived as a rent too if you will. As in it too is dead money. You say your mortgage repayments are 2000pm, how much of that is principal and how much is interest? The interest goes to the bank - not to your property.

Sit down and work out how much you pay in interest in the year vs. how much you pay in rent in a year - if the former figure is higher then its certainly not worth your while to buy.

You could always buy a property to let down the country. This way you are on the property ladder while mainting your lifestyle in central Dublin.

There is some good value property out there with plenty of people looking for accomodation.

The downside is that the country house would presumably not be their PPR so the purchase would be subject to investor stamp duty.

Well, for option 1 you list one positive and 5 negatives. For option 2 you list one negative and 4 positives. Haven't you just argued in favour of option 2?

You need to examine the one positive about buying "My own place with great finish". As another poster said, "rental is dead money" is a rather simplistic way of looking at it. Of that 2K per month mortgage payment I can bet that significantly more that 700 is going on interest for a good number of years.

I've seen too many people get obsessed about having to buy a home - for purely emotional reasons -, ending up landing themselves with huge mortgages, having to cut back on their lifestyle, bringing on the burden of increased commuting times, being forced to stay in jobs they hate working overtime because they have to make the mortgage payment, etc, etc, - Rant over

In your position (without knowing your age and other circumstances) I would be staying put, saving moderately hard, and waiting for the time when a) you meet someone you will marry (who may or may not have a home already), or b) have enough to afford the home you want in the location you want.

Thanks everyone, you have all convinced me that what I feel is correct. I should continue to rent and stay in a location that I love. I think I will take your advice and approach my landlord about staying here longer, maybe doing the place up to my own taste and just enjoying it for a few more years.

Maybe I should have made it clearer that I am already on the property ladder, with a self containing buy to let so I'm not that obsessed with getting on a ladder. I just want to own and live somewhere that I love, and although maybe I cannot afford city centre right now, who knows, I may get lucky in the current climate.

Also, I enjoy my social life now, but I am saving approx €200 a month already and yes I could put more away like you say, so I will take that on board. Sometimes I think, enjoy life now, save when older and not bothered about going out or travelling. I have calmed down heaps already but I still want to enjoy life and get out there.

One last thing, as a 'gay', I don't have to worry about schools or creches, and can see myself growing old somewhere where there is a constant buzz as opposed to somewhere a bit away from it all, growing old and lonely.

My mind's made up, I'm staying put and saving more.

Thanks for your help,

Jordan

Given that the gay scene in Dublin is based in the city centre it makes your decision even clearer. I think you are doing the right thing, the only thing that is not clear is if you have a pension. If not I suggest that you get one. If you do have one then well done, you have it all sorted out; continue to enjoy life!

Niallers said:

You could always buy a property to let down the country. This way you are on the property ladder while mainting your lifestyle in central Dublin.

There is some good value property out there with plenty of people looking for accomodation.

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The OP has already stated that he has another buy-to-let property that is washing its face and is an insurance against wild appreciation in the housing market (however unlikely that may seem)

For the record, I would wholeheartedly encourage the OP to stay renting in current location. I bought my house in 2002 in while a nice area, a bit further out than I would like. We are now planning to sell to rent back in where we always wanted to live!!

Jordan, I am delighted you are staying where you are. Given that you already have a foothold in the market, I would say you are perfectly set to stay where you are for the medium term. as mentioned, given that you have a great relationship with current landlord there should be no reason why you couldn't decorate as per your own tastes. Good luck with your decision and enjoy life!

smithfielder said:

One last thing, as a 'gay', I don't have to worry about schools or creches

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I thought that 'gays' could adopt? Or is it just a case of obtaining legal guardianship of children - e.g. as in the case of Colm O'Gorman and his partner?

...and today having returned home after an extremely long intense day at work (0600-2000), I opened a letter from my landlord notifying me that I have 28 days notice that my rent increases from €635 to €975 per month. Is that even legal, I mean an increase of €340 and I only have a month's notice?

The idea of moving out to the suburbs is sounding ever more attractive.

Landlords are allowed review the rent once a year and raise it to "market rates" if they so wish. They are obliged to give tenants notice of this increase. Sounds like your landlord is doing nothing wrong, you admitted that your rent is below market rates.

Hi Smithfielder, I was just wondering, considering the mortgage repayments on the place you were considering buying were going to be 2000 a month, would you not be able to afford to buy something where you are renting at the moment. 2000 a month sounds like a pretty substantial mortgage to me.

I'm wondering too why are you not buying an apartment in smithfield or a wee house in Stoneybatter?