Sell house or keep as future income?

Bronte

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You will not get 6% anywhere else and many properties achieve more.

If you sell the house, it is likely that your family will never again be able to own a property in Dublin. This is true for most families. This has been true in London for a generation, and its coming to Dublin.
What I wouldn't give to have a property in Dublin right now as I watch the prices for rents to students in Dublin right now. I'm hedged against two other university cities thank goodness. And hopefully it won't even be Ireland at all as the rents for students are astronomical.

Ironically Minister Murphys plan to cap rents caused the exact opposite as the university accommodation providers hiked their rents massively this week in response. Which is what I should have done when he brought in rent caps.
 

Brendan Burgess

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That's very much a glowing crystal ball BB.
Hi Bronte

He has two children under 5.

His investment horizon is about 14 years.

He has a house worth €320k , an €80k mortgage and €100k in the bank.

There are many possible outcomes.

House prices might outperform equities over the next 14 years to such an extent that he will not be able to afford to buy a house in Dublin.
Equities might outperform house prices over the next 14 years.

Based on history, equities outperform house prices over the long-term, so it's the most likely outcome but no one knows.

But lets say that house prices go mad and equities slump over the next 14 years. He will still have plenty of money to rent an appropriate place for his children.

So the right thing to do is to sell the property and invest in equities.
When the time comes, he can rent or buy a suitable place in a suitable location near the children's college.

Brendan
 

NoRegretsCoyote

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House prices might outperform equities over the next 14 years to such an extent that he will not be able to afford to buy a house in Dublin.
Equities might outperform house prices over the next 14 years.

.......

But lets say that house prices go mad and equities slump over the next 14 years. He will still have plenty of money to rent an appropriate place for his children.

But it is far, far more tax efficient to own a property and let your children live in it rent free.

Say you have two children about to do four-year degrees one after the other. You have €80k in cash to spend on rent for the eight years.

It would be much cheaper to buy a €160k apartment with a 50% mortgage and pay the interest. Yes, property prices can go down, but there are very few scenarios where you would be left with less than if you had just spent the €80k on rent.
 

Bronte

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But it is far, far more tax efficient to own a property and let your children live in it rent free.

Say you have two children about to do four-year degrees one after the other. You have €80k in cash to spend on rent for the eight years.

It would be much cheaper to buy a €160k apartment with a 50% mortgage and pay the interest. Yes, property prices can go down, but there are very few scenarios where you would be left with less than if you had just spent the €80k on rent.
In order to have €80K the OP has to earn double that if he's in the top income tax bracket. The OP would have zero costs for renting, only have to pay the property tax and insurance. And he has his property well looked after by his children.

As regards buying a 160K apartment, at least you're getting something rather than spending 80K. Many parents do this no doubt. Back in my day I know one guy whose parents had a house in D4 and rented all the rooms out to students because that house was their Dublin base but they actually lived elsewhere. Bet anything no rent was declared anywhere too.
 

Brendan Burgess

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But it is far, far more tax efficient to own a property and let your children live in it rent free.
Hi NRC

That is a very interesting way of looking at it. But it's a different question.

Question 1 - I have two children about to go to college in Dublin. I have the cash - should I buy a place for them or rent?
I will start a separate thread on this as it's very interesting.

Question 2 - I have a house and two kids about to start college. Should I keep it or sell it?

Question 3ish - I have a house and two kids who will start in College in 5 years?

Question 4 - The OP's question. I have a house and my kids won't be starting in college for 14 years. Should I keep it?

Brendan
 

Fat Tony

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Thanks for all the responses folks, lot of food for thought!
I don't think I'll be making decision based on possible future colleges as it's too much of an unknown and the house isn't particularly convenient for any Dublin college. Courses could be all online in 20 years time the way technology is going...
 

wheeler dealer

Registered User
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17
I can not believe that this is not an open and shut case!!!
OP has a valuable appreciating asset and some posters are arguing that he should get rid and start gambling on the stock exchange .House prices will rise and fall but share prices can dwindle to next to nothing even the Euro stock50 has gained nothing in 19 years and this is the the top 50 shares in Europe .Maybe an odd share will strike it lucky but one horse has to win the race
 

lledlledlled

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Ah ye love a good argument!

(What i mean is it's a bus journey into town or a drive to the suburban ITs.)
Suburban ITs will quite possibly all be in Grangegorman by then.

I wouldn't underestimate the hassles of being a landlord. I have very limited personal experience of this but have looked into it having considered buying an apartment to let. Too much hassle and too much tax persuaded me to go a different route.

I think Brendan's advice is the most suitable option in your circumstances.
As you are already aware, you need to address your pension situation.

As long as you are confident you'll be staying in your new house for the foreseeable future, I'd sell the Dublin property & invest in a basket of global equities. Personally I think equities look due for a correction but trying to time the market is almost impossible.
When the kids are going to college, you can then look at the Dublin property market again and consider selling the equities to fund a suitable property. You have no idea if your kids will ever want to live in Dublin. Also, you get to pick a property closer to their college if that's what they want it for.
 

cremeegg

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So one poster thinks, you should go with property because equities have done badly.

House prices will rise and fall but share prices can dwindle to next to nothing even the Euro stock50 has gained nothing in 19 years and this is the the top 50 shares in Europe.
Another poster thinks you should go with equities even though he thinks they are overvalued at present

Personally I think equities look due for a correction
Not easy to make sense of these things.:eek::eek::eek:
 
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