Should we invest in Cois Abhainn, Clane, Co. Kildare for 2 bed apartment.

[rkks]

Hello all,

We want to get into property investment. We are looking at Cois Abhainn development in Clane, Co. Kildare for 2 bed apartment. Just want to find out if it is worthwhile 'cause we don't know much about the area. Any suggestions would be very welcome.
The link to the above development is [broken link removed]

thanx in advance

 

[bacchus]

Re: Should we invest in Cois Abhainn

Few questions to get you started:
How much it is going to cost you in total?
How are you going to finance it?
How much are you going to rent the appartment for?
What's the yield?
Are you more interested in rental income or long-term capital appreciation?

and finally:
why do you want to get into property investment?

 

[rkks]

Hello Bacchus

We(my husband, I am currently unemployed) want to get into property investment for the fact that we want to make money, not rental income but gain on the appreciation value in the long term.
Current Mortgage = 213500 (for the house we live in)
Value of the house = approx. 300000
Savings = 23000
Clane 2 bed apartment = 236000 (the one we want to buy)
Husband's income = approx 50,000/annum

We are looking for a top-up on our current mortgage+savings to cover our initial deposit, furnishing of the flat etc. We are planning to rent out the apartment. The rent in the area is about 800 euro for 2 bed aprtment.
Keeping in mind the above facts:
1. will we be able to get an investment mortgage?
2. Are we doing the right thing? How much risk is involved?

I am pretty nervous at this stage because we are not sure towards which direction the property market is headed.

Any advice will be highly appreciated.

 

[bacchus]

We(my husband, I am currently unemployed) want to get into property investment for the fact that we want to make money, not rental income but gain on the appreciation value in the long term.

OK, but in the mean time, you need to pay for this appartment every month and this may generate cash flow problems...the appreciation is long term and you will only get this money when you sell..

Current Mortgage = 213500 (for the house we live in)
Value of the house = approx. 300000
Savings = 23000
Clane 2 bed apartment = 236000 (the one we want to buy)
Husband's income = approx 50,000/annum
1. will we be able to get an investment mortgage?

The questions in my original post were mainly for you to gather & analyse the figures, not for me b'cos i l always get it wrong.. But there are people on AAM like Sarah W who are very good at it..
You have to accept that you still have a substancialy large mortgage to repay and the familly income is lowish....
But consider this: do you plan to go back to work? if you were , how much would you be making?

2. Are we doing the right thing? How much risk is involved?

This is really you to decide.
Personnaly, i would not buy an investment property at the moment as the yield (€250k invested - Return €450 net per month - Yield = 2.2% roughly ) far to low for the risk (overvalued market - limited appreciation) .. But this is only my personal point of view, and i could be wrong...
Risk = very high i think.

I am pretty nervous at this stage because we are not sure towards which direction the property market is headed.

well, if anybody knew....
Again, this is my personal view, but i do not see the market going much higher, may be an other 10/15% over the next 2/3 years and no more.


Not sure if all of that helps, but i hope there is at least some material to explore further
Good luck

 

[steelblue]

Hi

I think that you should not invest in property with your current financial position.

Your 23k will be eaten up with stamp duty, fit out and solicitors fee. These will cost approx 15-20k. Therefore you will have to do equity release to cover the deposit. Alot of lender will only advance 80% for an investment property.

Do you realise that even on interest only you would be very close to subsidising this apt. 236k is approx 690 pm. Add in yearly maintenance charge, content insurance and any unforeseen event and you are subsidising. Rent of 800pm doen't look to good now.

You must also weight up future family plans.

 

[Duplex]

Hi RKKS


I tend to agree that the poor rental yield available on many Irish residential investments at current prices makes this type of investment risky. It seems that many investors no longer require their rental properties to ‘wash their face’ i.e. pay for themselves as investments. You suggest that the growth in capital value will compensate you for any shortfall in income initially, and in the current market this may well be the case, however if we witness even a slowing of house price inflation to low single digits your investment risks becoming a financial burden.

Rental values are pretty much stagnant at present and we are likely to see a further 80,000 homes being built this year (many of these will be bought by investors) so the immediate prospects for rental growth are minimal. If the market turns you might wish to realise the equity in the property and sell, however any change in market sentiment might/will result in a flood of similar properties hitting the market and given that many investors at present are buying with capital growth in mind it seems reasonable that many will be either inclined or forced to sell in a downturn, and who will they sell to? well not investors looking for capital growth, or investors looking for a good yield the most likely market for these unwanted investments will be first time buyers with little or no equity relying on the fickle lending policies of banks.


On a general point; no one in Ireland knows what risk premium to attach to Irish residential investment, least of all Irish investors. The Celtic Tiger, mass immigration, Alan Greenspan’s chairmanship of the Federal Reserve and globalisation have resulted in yields of 2.5 to 3% for rental properties. Will investors be buying at 2.5 to 3% in five years time is the question you have to ask yourself?

 

[rkks]

Dear all,
Thanx a lot for all the advice. You all have given me a lot to think about and thank God for such forums where we get to learn so much and share so much.
Will let you all know what we decide to do.
I am unemployed not because i don't want to work but because I am not getting work as I don't have the right permit(am on dependent visa). I have foreign graduate and post grad degrees and some work experience but alas can't get a job in the field that i want. Its a vicious cycle. Govt. will give me premit if i find a job, but employers don't want to get into the hassle of applying for work permits (although free of cost). So the cycle continues. I hope and pray that i find work soon.
Lets see how it all goes.
thanx for everything once again