Do you think I´m mad????

The_Conductor

Lorax wrote:

WTF ??? My post was deleted because I told him to go for it?

No- I think the database is having a bad day. There is no record of your having posted on this thread. Feel free to post again. Providing its not a problematic post (Rude/Harrassment/Offtopic/Not relevant to Forum) there is no immediate reason it would deleted.

Shane

stepbar

I was recently looking at this property as a BTL - http://www.myhome.ie/search/property.asp?id=297159. Like Rick I had notions of becoming a landlord but I got a shock when I rang the auctioneer..... The latest bid as of friday for this property was.... wait for it

€348k :eek: . Yes for a bloody house in Cabra... :rolleyes:


Bit of background to the house.... Needs to be absolutely gutted.... No electricity, no heating, needs rewiring and plumbing, new kitchen, part of the ceiling in the sitting room collapsed due to damp (<cough> apparently a "builder" told the auctioneer that a few rows of tiles on the roof needed replacing and the prob would be sorted)... IMO that means new roof. In short by the time you would be finished renovating it it would be over valued by prob 100k. I was thinking a fiq of 275 - 300k would have been reasonable (In fact the auctioneer told me a builder put in a bid of 250k to start off with, I chuckled at that but maybe he was right....) but if there are people out there mad enough to pay 348k for a property that represents a glorified shed well you know the market is gone mad.....

homeOwner

rick_fantastic, was your offer accepted on the house?

I think I know what house you are talking about and it is in a fairly good location but there are a few things you should know about the area. You are about a 20 min walk to the luas station in dundrum and about 10 min walk to the 16/16A bus stops. You will be in an (ex-)council estate and there are settled travellers across the road at nutgrove. Now these things are not all bad and the area does seem ok but I looked at houses in that area and I think you are being overly optimistic in the ability to rent out rooms since not everyone will want to live in that area when there are loads of apartments closer to dundrum for a little bit more money, but then again you seem to have kept money aside for this event.

You mentioned that you will be renting out all the rooms from what you are saying and I dont see where you are going to live if that is the case (and what about 9% investor stamp duty if you are not going to live in it). Also you are talking about renting out double rooms for what seems to be alot of money for that area. If you intend to live in the house too, then what happenes in say 5 or 6 or 10 years if you have a partner and want your own place to yourselves, you wont have the extra income from tennants and the house price might not go up all that much, it will most likely stay the same or increase with inflation. Dundrum has had its boom, there is not much extra value to be had. You cant afford that mortgage without tennants and certainly not with kids unless you earn a fortune over the next few years.

You have also mentioned about an extension, unless you have already secured the money for this in the 520K you mentioned having already secured, I dont see how you are going to afford it, even if your salary doubles in the next 10 years. Extensions cant be very expensive but I am sure you have factored all this in to your calculations.

I dont think its as simple as asking yourself can you afford the mortgage now. You are at a time in your life when your expenses are at their lowest. It only gets worse from here on in especially if you intend on having a family. Whats the point in spending all your hard earned cash on a house at the expense of actually living?

Anyway good luck whatever you decide.

cormy

Rick,

To answer your question: Yes, you are mad. Why?

I've one point:

Others on this thread have analysed the nitty-gritty your plan so I wont go into it again. Now, have you considered that your *best-case scenario* (320 euro per month left-over cash), is TEN EUROS PER DAY. Let me repeat: TEN EUROS PER DAY! A cup of coffee and a sandwich per day. Seriously if you pull this off more power to you, however you WILL regret not taking off for a year (or more) and seeing some of the world, plus being a landlord in a fairly crowded place would be a hell on earth - it sounds fine in theory but you will reach the age of 45 in the space of 6 or so years if you take this on.....

All the same let us know how you get on, and if you go for it I really wish you well.

miju

surviving on a tenner a day is easy beans on toast for breakfast , lunch and dinner

godtabh

cormy wrote:

TEN EUROS PER DAY! A cup of coffee and a sandwich per day.

I could survive on that a week. You dont have to buy a cup of coffe and sandwich in an over priced spar or what ever. Bring your own lunch with you.

The_Conductor

kearnsr wrote:

I could survive on that a week. You dont have to buy a cup of coffe and sandwich in an over priced spar or what ever. Bring your own lunch with you.

Not for long you couldn't.
What happens when you run out of food with which to bring your own lunch and have to go shopping.
Or.... what happens for all those unplanned contingencies.
Bus fares, blown light bulbs, doctors visits, usual living costs...... I bought a box of laundry detergent last night- it cost me 12 Euro.......

It does not add up.
You would have extreme difficulty living on a tenner a day.

CiaranC

To be fair, he did say the 320 a month was left over for socialising, so presumably he has included groceries in his budget.

godtabh

smccarrick wrote:

Not for long you couldn't.
What happens when you run out of food with which to bring your own lunch and have to go shopping.
Or.... what happens for all those unplanned contingencies.
Bus fares, blown light bulbs, doctors visits, usual living costs...... I bought a box of laundry detergent last night- it cost me 12 Euro.......

It does not add up.
You would have extreme difficulty living on a tenner a day.

The OP stated that he had planned for food and what not and had 320 extra left over which was broken down for a tenner a day. I was just saying that if you were to make your own lunch and what not you could easily last on €10. I didnt mean that €10 a week would do for all your food, travel and other needs.

I've done a something like the OP with regards budget. I'll have approx €450 spare each month. I've included for food,travel, bills going out etc. The €450 will go towards a rainny day

tunney

Emmmmm i reckon its highly unlikely that a masters will yield a 10k pay increase.

Raskolnikov

I don't really see the problem here. If money isn't an issue for young Ricko here, then I don't see he shouldn't buy. Worst case scenario, he'll end up losing a couple thousand which his parents will take the hit on. The issue here is that is absolutely certain the the utility he will gain from buying this house (and filling it up with tenants) worth €520,000? Is this personal and economic cost great than let's say, renting your very own swish apartment in a better location for €15,000 a year? If he was even more thrifty, he could get probably get a still decent share of a room in an apartment for €5,000 a year. They are the questions that I would ask myself if I was in Rick's position.

RuggieBear

Raskolnikov wrote:

I don't really see the problem here. If money isn't an issue for young Ricko here, then I don't see he shouldn't buy. Worst case scenario, he'll end up losing a couple thousand which his parents will take the hit on. The issue here is that is absolutely certain the the utility he will gain from buying this house (and filling it up with tenants) worth €520,000? Is this personal and economic cost great than let's say, renting your very own swish apartment in a better location for €15,000 a year? If he was even more thrifty, he could get probably get a still decent share of a room in an apartment for €5,000 a year. They are the questions that I would ask myself if I was in Rick's position.

I like this reasoning.

pjbrady1

Rick fantastic,

Did you bid for that house yet? If you are succesful I imagine you will have been offered one of the largest multiples of a salary in the history of the state. Not too sure about receiving a guaranteeed 10k pay rise when you qualify. IT Companies generally only consider "relevant professional experience". Often they are far more fond of people who have qualified from places such as GMIT, WIT, SIT as these people are often far more forward about picking up relevant professional training.
If your parents are willing to help you out if any financial difficulties arise, then I suppose the financial risk is zero.

P.J.

ButtermilkJack

Paraic wrote:

Yeah 8-10 times isn't correct.
40% of net income is the general guideline.

Actually, both are correct. My mortgage fit both categories. I was on €1,800pm take home pay and took €248k mortgage.

9.5 x Salary €26k
45% appx net monthly income

That was 2 years ago.

Paraic

Recent interest rate increases have reduced these levels considerably!

Zambia

HI Rick

If your still about PM me and I will spell out a much better return for the amount of cash you are playing with here. And faster

This amount of investment in high value Property at this paticular time will do you no favours

Living with people you dont know in your house is very hard , to be honest in a few years you will want shut of the place. Plus the amount of 10 eors a day is ludricous you are presuming every day will cost you the same s a few bad weeks of no rent and car breakdowns will seriously hurt your pocket.

I applaud your fervour to make money , but your on shifting sand.

Moonbeam

ButtermilkJack - that seems like a huge mortgage for that salary.
Did you go through a broker?get someone to go gurantor?
The building society were adamant at 4x when I bought also about 2 years ago.

kmick

Basically this thing is working because your parents are taking on some risk otherwise it is like a bird without wings.

Stamp duty (7.5% x 480,000) = 36000
Solicitor = 2500
Other 1500

I am assuming that is where the extra 40,000 comes from on the loan.
1) There is no way any bank will give you 520,000 for a house that is worth 480,000.
2) The interest rate on 520,000 over 40 years on a tracker comes out at minimum 2300+ - you need to redo your figures http://www.mortgages.ie
3) Interest rates will go at least 0.5-1% higher. Can you absorb this from your 320?
4) Having 5 people in a house is a lot. Are you sure you can rent all the rooms. I rented in Sandyford for two years in a five bed and the max he ever had was 4 people. When I left he had 1 renting. Can you absorb this?

Apart from that I would say do buy somewhere. Maybe just limit your exposure a bit. The proposal above seems very ambitious. Murphys law says when something can go wrong it will.

kmick

Zambia why dont you spell out your proposal to us all you shyster.

Zambia

kmick wrote:

Zambia why dont you spell out your proposal to us all you shyster.

Cause your not all about to do something drastic...

Lets face it we all like being on the property ladder but this lad wants to hang himself from the top of it using his folks as weights