Should I sell or keep current home as investment

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argentina

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HI,
Myself and my partner currently live in my house in Dublin 6. I paid €340 for it in 2002, they are currently selling for around €420 and seem to be moving fairly well. The mortgage outstanding is approx €150.
My partner owns a house in Blanchardstown, which is rented to a tenant on SW and is a good tenant, so he intends to keep it as the rent is good relative to the value of the house and is more then covering the mortgage.
We would like to buy our own house and have been sitting on the fence for quite some time. I had always intended keeping my house too and renting it out, but now am not so sure. The going rent on my road is approx €1200pm which is low compared to the value of the house. Just looking at whats available at the moment I could buy a 1 bed in Sandyford (e.g. Carrickmines Green for €135, Mimosa for €180). A brand new apartment which would probably yield €800-€1000 pm - a much better return on the initial investment. While my current house is in a very good area and will be easy to find tenants it is an old house and I figure it will be more hassle renting out a house then a brand new apartment. Plus by selling my house this will give us an extra €100k or so to put towards the new house.
we have a large deposit saved, are both in secure employment and should be able to afford the house we want.
Any advice on tax implications, what other people think etc are welcome;
thanks
 
the one thing that sticks out to me is if you sell your house and your relationship doesnt work out...you get left with half a house and he gets 1.5 houses...unless you get married then you'll be ok...i would just make sure you look after yourself in this case....

on second reading it looks like you plan on buying an apartemnt seperately which will also keep you safe...misread..apologies..
 
You need to do your sums on the investment in the apartment very carefully.

If you buy an apartment for 135K in Sandyford how long do you intend keeping it. You obviously think that the resale value of the apartment will not fall any further.

Will you need a mortgage to buy the apartment. Will you get one ? Is there a bank willing to give investment mortgages for apartments at the moment. Some banks dont give mortgages for 1 bed apartments at all, as they consider that there are so many for sale at the moment that the resale value will too low.

Where do you get your figures for projected rent ? Have you checked daft.ie or similar ? Have you found out if there are lots of apartments for rent in the area, and if many of them are empty ?

Which type of property do you think is a better long term investment - an old house in an established area with lots of schools, facilites and public transport, or a one bed apartment at the side of a motorway, with no grocery shops or schools near by, which have been empty for months and are being sold off because the builder went bust.

Have a think about these things and do your sums and then decide
 
thanks for the replies. I can buy the apartment in cash and wouldn't be dependent on the rent. Basically I'd like to have an investment that I can keep for 20/30 years and sell it off when I retire.
I know my own house is in a better area but the rental return is not great, its also an old house and wouldn't achieve a great BER cert, its probably could do with a new bathroom etc.
At the moment there are 10 apartments on daft in Sandyford to let, and rents range up to €1100, while there is oversupply in the area somewhere on the M50 and Luas would probably achieve €800. I'd be happy to undercut the competition as I'd have no mortgage;
thanks for the advice
 
argentina said:
thanks for the replies. I can buy the apartment in cash and wouldn't be dependent on the rent. Basically I'd like to have an investment that I can keep for 20/30 years and sell it off when I retire.
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Would you not just keep the cash on deposit and be sure of it in 20 years when you retire? Property is not the only investment worth considering. You should look into other options. Renting out an apartment also brings potential hassles as a landlord dealing with tenants, also the tax implications you would be liable for.
 
argentina said:
I can buy the apartment in cash and wouldn't be dependent on the rent.
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This very ineffecient from a tax point of view. Believe it or not, you would be better off borrowing for the apartment and getting tax relief on the interest paid. And keep your cash on deposit. Our genius Govt is encouraging you to borrow, god bless em.

argentina said:
Basically I'd like to have an investment that I can keep for 20/30 years and sell it off when I retire.
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Why are you only considering property investments? There are lots of other options available to you, with varying degrees of risk/return/hassle.
 
HI,
thanks for the responses, I had thought of alternative investments but I have been paying into a private pension for the last 10 years or so and is worth pennies compared to my contributions, would be interested in what else is a good investment.
Re the tax implications of not having a mortgage on an investment property I heard that the banks and the revenue are tightening up on this lending. Its the 'purpose of the loan' that is important. Hence if I use all my money to buy a new house and borrow for the investment property they may consider that 'the purpose of this loan' was to allow me to buy my (owner occupied) house.
Again thanks for responses
 
argentina said:
HI,
thanks for the responses, I had thought of alternative investments but I have been paying into a private pension for the last 10 years or so and is worth pennies compared to my contributions, would be interested in what else is a good investment.
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Returns on pensions over ten years are hovering around 0% (see http://www.finfacts.ie/fincentre/irishpenfunds.htm) so it should be close to the value of your contributions. If your return is dramatically lower than this, then you've been choosing the wrong funds or the wrong pension provider.

But you have to compare like with like. You'll never end up owing money on your pension investment, unlike a property investment. Your pension fund manager won't ring you up at 11pm on a Saturday night about a water leak. Being a landlord is like running a small business. Don't go into it lightly.
 
Are you not happy in your current house or is it that you want a house that both of you 'own'?
With regard to your last point there, presumably both transactions would happen at different times so the 'purpose of the loan' would not arise.
 
argentina said:
I know my own house is in a better area but the rental return is not great, its also an old house and wouldn't achieve a great BER cert, its probably could do with a new bathroom etc.
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Two great reasons for not moving into a house, in a Dublin 6 location, the big BER monster & a new bathroom required.

Seriously, would you not consider moving into this house?
 
We would like to buy a house together, that has a bigger garden, side access and is a bit bigger. we can afford a bigger mortgage and would like a place that is ours.
The BER cert and old bathroom are not the end of the world but these are just 2 examples - you'd have to think a new apartment, there the gardens, car parking are maintain separately would be easier to manage.
 
Ultimately Dublin 6 is a much better location and you will always be able to rent it out - even if its not for as much as you'd like; although from experience being a landlord to an apartment is less hassle then a house. If selling the house in Dublin 6 means you can afford a better house for the rest of your lives then I would sell.
 
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