Looking for advice on Investment or not

[NoRegretsCoyote]

I say rightly and wrongly, as there are time when some folk are not in a position and should not go anywhere near an investment property, and they rightly should be steered away, but I’m glad I didn’t have that voice in my head when starting out on the property investment road.

I look at a lot of these threads.

In many cases it makes sense to hold on to an investment property if you kind of stumble into it: received an inheritance, want to hold on to a property because kids will go to college in a few years, got married and spouse had an apartment, etc, and you don't mind property management.

For most people starting out the yield just isn't worth the risk for one property especially if they are paying tax at the higher marginal rate, which nearly everyone will be.

Being a landlord makes sense at scale, with low leverage and in unfashionable locations. There are posters here who seem to have a basket of apartments in places like Limerick city where you can buy a property for not much over €100k get >10% yield. The 9.6% yield the OP hopes for seems pretty optimistic to me too for a rural property.

In @Edenbridge14 's case the business plan might work, but there is a lot of risk. As @Sarenco says you know what you are getting when you buy an AVC.

 

[POC]

You say you’re looking to maximise retirement income - you haven’t mentioned your contributory person in your calculations. Also I find it hard to believe your public service pension will be only 500. I know the schemes vary depending on when you joined, but I think you should try to understand your scheme and get a figure you can be confident in. (Early Riser on AAM is very knowledgeable.)
At the moment you seem to be financially secure. You have a child in college, another in a fee paying school, your mortgage is nearly finished, you have savings - and you’re managing this with one salary and a pension.
I definitely wouldn’t be looking at taking on another property, with all the possible tenant pitfalls and financial obligations. I‘ve read about lots of tenant issues on AAM and in the newspapers, as well as hearing plenty on Joe Duffy! I wouldn’t want the sleepless nights.....
A second property would also give you less flexibility about your own retirement age, as you would have the mortgage obligations.
If I were you, I’d be looking at retiring early to spend time with my husband, but I’d get the kids through college first.
You haven’t mentioned something very important - what does your husband think?

 

[Bronte]

Roughly:

Purchase price 150K
Mortage 110K (not sure where OP is getting 40K from as she only has 33K)
Repayments 1100 = 13200 (of which it's 4/6K interest. So worse case scenario it's capital repayments of 7K
Rent 12K

Tax is rent 12K - 6K interest - 1K running costs - depreciation 1K = 4K taxable 50% is 2K (or 4K if the interest is 4K)

So she has 12K rent, pays 1K running costs, mortgage 13K, 2K tax = 16K shortfall of 4K annually. But she ends up in 20 years with ownership of the property. Worth 150K which costs her 80K.

At age 67 she has an income of 12K rent. And she still has her capital. As her salary will be gone and she'll be on pension the tax should be a lot less as she shouldn't be hitting the higher rate then.

Meanwhile in a couple of years her children are finished education and she has more income from that costs being gone, also through salary rises and she can pay down the rental mortgage faster, saving her interest, so she will get the income sooner.

 

[Bronte]

The OP works in the public sector. There's no mystery what purchasing notional service will achieve.

My view is nothing ventured nothing gained. I've no idea what purchasing notional service will achieve so if you would inform us of that we can decide if it's a good idea or not.

 

[Sarenco]

Mortage 110K (not sure where OP is getting 40K from as she only has 33K)

The OP is proposing to re-mortgage her PPR to raise the finance.

I've no idea what purchasing notional service will achieve so if you would inform us of that we can decide if it's a good idea or not.

It will increase the OP's pension entitlements.

There is a sub-forum on public sector pensions if you are interested in learning about purchasing notional service.

 

[Bronte]

Instead of my going off looking can you tell us how much the OP could purchase in notional service, how much it would cost and what she'd get out of it.

 

[Sarenco]

Instead of my going off looking can you tell us how much the OP could purchase in notional service, how much it would cost and what she'd get out of it.

Why not read through some of the threads on purchasing notional service to educate yourself?

Nothing ventured, nothing gained.

 

[Edenbridge14]

Well i started a debate alright!
Clearly there was more than one function in purchasing this property.
The property would double up as a pension, a retirement property for us both to live in, (and rent out family home) an inheritance for children.
It had the potential to rent out weekly over the summer months and then a lease of 6 months as doing my research once a tenant has more than a 6 month rental can have more tenant rights etc etc

Anyhow a bidding war started over the weekend and it got to its maximum value of 165k where it was getting silly.
Hard to believe i wanted to buy in the same estate in 2015 for 80k. At the time I had only started in public sector 9 months and bank wouldn't give me 60k. I know my property. I know the area and I know what works. I've never made a bad decision. Just feels i'm being punished for marrying an older man
Same way when i purchased the family home, i saw the garage and the potential to convert to a granny flat and rent out and qualify for rent free income under rent a room .
Anyhow the liitle house i was trying to purchase is 60sq metres and honestly not worth 165,000 with management fees. Theres much better value on the market. So i pulled out
So i'm back to saving now all that I can - who knows what next 12 months will bring with Covid depression looming - or so they say....

 

[_OkGo_]

Its only recently I've been promoted to that salary. Prior to this was on a lower wage. And when we came back from UK in 2003 hubby decided to stop working a age of 50 to look after the kids. So honestly the granny flat was a saving grace as it always paid the mortgage. Then in the later years of kids second level education we decided to put them in fee paying schools as they showed dedication and promise - eldest lad is now in medicine in UCD with the 2nd daughter now showing the same potential. So keeping all this going on one wage, with 2 cars is a lot. Hubby is only getting his pension in last few years and thats how we have the savings built up.

I don't think you were punished for the age gap but rather judged according to your circumstances at the time. Your earlier post suggests that you were not a good candidate for a BTL loan in 2015. You were newly employed, a partner who was a stay at home dad (or recently in receipt of pension), 2 dependents in fee paying schools and further education on the horizon, a PPR mortgage that was at >€80k, minimal savings and relying on your rent a room income.

Anyhow the liitle house i was trying to purchase is 60sq metres and honestly not worth 165,000 with management fees. Theres much better value on the market. So i pulled out

You couldn't have pulled out if you were never 'in' in the first place. You don't have the min 30% deposit or mortgage approval in place so this was never a runner. And besides, if your rental projections were accurate, then €150/165k is not a deal breaker.

There is a big difference between seeing the potential in rent-a-room and making a BTL profitable. One is very low risk and very high reward, the other is high risk (when borrowing at 70%) and low reward. If buying a BTL is what you really want to do, it would be much safer for you to save for 3/4 years, reach 50% LTV and then go ahead with your plan. You are not really missing out significant rental profits in those years so why take the risk.

I've never made a bad decision

I wish I could say the same thing