Do you believe rent is "dead money"?

Kipperhell

ntlbell wrote: »

you would be living in a cheaper country on the same money no?

e.g. your pension? state or otherwise

If that country stays cheaper while you are retired and the Brits discovered this is not the case in Spain. You are not instantly able to get your state pension paid to another country either. Retired means fixed income generally. There are people who moved to Ireland to retire and they have be crucified over the last few years

When you are older you might find you need more medical attention so I hope that great country where it is sunny and cheap eternally also has a good medical service! That is not even considering family and friends. I find retired people like to be close to their children, grand children and life long friends. It sounds like youth not considering the practicalities of such plans. Very akin to the brickie who leaves school at 16.

Electric Sheep

Kipperhell wrote: »

I would consider a 25 year mortgage to be standard so that puts the age limit at around 40 and pushing it to 45 if you can afford a 20 year mortgage. Some people will be finished their mortgages by that point and not have paid money on rent. If you intend on buying rent can be seen as dead money. I saw quite a few people in their 30s very worried about missing the chance to buy.

I bet they are laughing now though. Within another year they will be able to buy a place at half the price of 3 years ago, on a 15 year mortgage if they have any sense, have it paid off in 15-20 years, while the mugs with the 40 year mortgages are paying for their house for the rest of their lives!

Kipperhell wrote: »

The recent market volatility in the market has pretty much wiped the value of most pensions. As Allen Carr said " Anybody out there retiring in the next few years, let me tell you that you aren't" That was one of the reasons why so many people went for property investment as it gives a more tangible investment they felt in control of. Even subsidising renting property can seem like a better pension plan.

And again, those who went in for property investment as a retirement strategy are even more ruined than those whose pensions fell. The illusion of control is not much good when you are stuck with property you can neither rent nor sell. Not such a good strategy after all..

ntlbell

Kipperhell wrote: »

If that country stays cheaper while you are retired and the Brits discovered this is not the case in Spain. You are not instantly able to get your state pension paid to another country either. Retired means fixed income generally. There are people who moved to Ireland to retire and they have be crucified over the last few years

When you are older you might find you need more medical attention so I hope that great country where it is sunny and cheap eternally also has a good medical service! That is not even considering family and friends. I find retired people like to be close to their children, grand children and life long friends. It sounds like youth not considering the practicalities of such plans. Very akin to the brickie who leaves school at 16.

I don't think there's many that could be worse than the rip of republic, but granted.

I would also imagine it would be _really_ difficult to find somewhere that has worse medical care than here.

you're talking about a country that stopped sending sample's to get tested leaving people to die to save a very small amount of money.

kippy

ntlbell wrote: »

I don't think there's many that could be worse than the rip of republic, but granted.

I would also imagine it would be _really_ difficult to find somewhere that has worse medical care than here.

you're talking about a country that stopped sending sample's to get tested leaving people to die to save a very small amount of money.

Just gonna pull you up on one point:
There are literally hundreds of countries with much worse medical care than here. We're by no means the best but by God we are a long way from the bottom.

faceman

kippy wrote: »

Just gonna pull you up on one point:
There are literally hundreds of countries with much worse medical care than here.

True, its called the third world!

DJDC

I already have but I will reiterate: flexibility.

Restricting oneself to one place at a yougn age impairs earnings and experience. To do so is both a failure of foresight and ambition.

Salvelinus

The fact that Ireland had an unsustainable, crazy property market should be taken into account.

Kipperhell

Electric Sheep wrote: »

I bet they are laughing now though. Within another year they will be able to buy a place at half the price of 3 years ago, on a 15 year mortgage if they have any sense, have it paid off in 15-20 years, while the mugs with the 40 year mortgages are paying for their house for the rest of their lives!

No they aren't laughing because they now see that they will never own a property. They see that the reality is they can't borrow the money now either. People can service mortgages but can't get the money. There maybe people with 40 year mortgages but it is far from normal

Electric Sheep wrote: »

And again, those who went in for property investment as a retirement strategy are even more ruined than those whose pensions fell. The illusion of control is not much good when you are stuck with property you can neither rent nor sell. Not such a good strategy after all..

Actually completely wrong! It is a long term investment and it is the people who bought them as short term who are ruined. If you can own a property for less than a 100 a month over 20 years the chances are it will be worth more than investing the money in shares. There are people who made bad investments but there is nothing wrong with the strategy. You don't say the whole stock market is pointless because people invested in bank shares and lost a fortune. I would still rather have a property with revenue coming in and be in negative equity rather than simply have lost the money. If you bought the right property you will always be able to rent it. Once you own a rental property out right the revenue from it tends to stay in line with inflation unlike most pensions.

ntlbell

kippy wrote: »

Just gonna pull you up on one point:
There are literally hundreds of countries with much worse medical care than here. We're by no means the best but by God we are a long way from the bottom.

There is, how many of them are popular destination's for irish OAP's tho?

Salvelinus

Kipperhell wrote: »

No they aren't laughing because they now see that they will never own a property. They see that the reality is they can't borrow the money now either. People can service mortgages but can't get the money. There maybe people with 40 year mortgages but it is far from normal



Actually completely wrong! It is a long term investment and it is the people who bought them as short term who are ruined. If you can own a property for less than a 100 a month over 20 years the chances are it will be worth more than investing the money in shares. There are people who made bad investments but there is nothing wrong with the strategy. You don't say the whole stock market is pointless because people invested in bank shares and lost a fortune. I would still rather have a property with revenue coming in and be in negative equity rather than simply have lost the money. If you bought the right property you will always be able to rent it. Once you own a rental property out right the revenue from it tends to stay in line with inflation unlike most pensions.

But had they bought at the height of the pyramid wouldn't they be in a crap situation, who wants to retire in a crap apartment? I know the point you're trying to make and it's valid in a normal economy, Ireland didn't have that.

kippy

ntlbell wrote: »

There is, how many of them are popular destination's for irish OAP's tho?

Okay, was just pulling you up on your sweeping statement.
That said, the States aint cheap to get looked after in.

Kipperhell

Salvelinus wrote: »

But had they bought at the height of the pyramid wouldn't they be in a crap situation, who wants to retire in a crap apartment? I know the point you're trying to make and it's valid in a normal economy, Ireland didn't have that.

But how many people did buy at the top of the "pyramid"? Good business sense on an investment property would consider both drops in rent and reduction in property value in the market. Long term view was vital. How many people are actually stuck in crappy apartments until retirement?

People are confusing the hight of the market with everybody who bought property over the last 10 years. Only a relatively small portion of people are in trouble because in the last two year the entire property stock did not get bought and sold. Ireland's economy was not that unusual and has acted as generally expected so is/was normal. I said it already but people think the present will not change but also don't expect it to keep on going as is.

I lived through the 80s and will live through this. The world wide recession is different as there is no where to run. I know people who took the profit from property sales and then lost it on the stock market. There is a very limited view being expressed on these pages.

Salvelinus

Kipperhell wrote: »

But how many people did buy at the top of the "pyramid"? Good business sense on an investment property would consider both drops in rent and reduction in property value in the market. Long term view was vital. How many people are actually stuck in crappy apartments until retirement?

People are confusing the hight of the market with everybody who bought property over the last 10 years. Only a relatively small portion of people are in trouble because in the last two year the entire property stock did not get bought and sold. Ireland's economy was not that unusual and has acted as generally expected so is/was normal. I said it already but people think the present will not change but also don't expect it to keep on going as is.

I lived through the 80s and will live through this. The world wide recession is different as there is no where to run. I know people who took the profit from property sales and then lost it on the stock market. There is a very limited view being expressed on these pages.

I'd say more than a small proprtion are in trouble. You said earlier that alot of people rented because they couldn't afford to buy not because they predicted the collapse; that's true but the reason they couldn't buy was the ridiculous bubble.

The_Conductor

Guys- we have a very liberal moderating policy in this forum- based on the presumption that regardless of whether we agree with each other or not, we respect each other as individuals. Be polite and considerate towards each other. If you disagree with another posters point of view- refute the post, without getting personal. If you cannot live with this simple tenent, do not post in this forum. I will unilaterly ban people who are incapable of following this simple rule.

bladebrew

i would love to own a property,but at the moment for me and the g/f renting makes sense,it is a lot of money to pay out but as people said it gives a certain freedom,im 24 and not exactly rich so i doubt i could even get a mortgage if i wanted to!
people who own their own homes that keep saying "rent is dead money" drive me mad!!
paying for a hotel is technically dead money aswell!,you leave the next day down a few quid with nothing to show for it!,

davyby

Quote from the website propertypin.ie

Remember the good ol' days when you could buy a house and tell everyone who would listen that you made thousands since you bought it, and that it was definitely the right decision to buy when you did as the second phase was more expensive.

Typical conversation at the time with Barny bloggs, before he learned to only speak about property when spoken to at social gatherings.

Me: But this is a manic bubble, it's gonna crash.

Them: You're just jealous you didn't get on the ladder in good time, besides look at you, you're paying someone else's mortgage and rent is dead money.

Me: Ah, but my rent is x amount less than your mortgage and the money I'm saving goes towards stocks that pay a healthy dividend, pension and other non property fund.

Them: You just want to stop me making money and making something of my life, you just want a crash so you can buy a house for nothing.

Me: Yeah, that's the plan, buy a house mortgage free, I'm expecting falls of 50% and more in some places.

Them: I suppose a stopped clock is right twice a day, you're going to be waiting a long time, no, there will be a soft landing, the banks and government won't let a crash happen, they can't.

Me: Nah, they will be powerless to do anything about it, always happens, housing bubbles last about 15/18 years and ours is getting long in the tooth.

Them: You're just a doom-monger.

Me: Sure, we'll have to agree to differ then, anyway how is Mary...{changes subject fast}

These days no-one mentions property any more....I suppose people never talk about losses. Barny bloggs learned the hard way about investing having had most of his gains wiped out in the dot com crash.

Electric Sheep

davyby wrote: »

These days no-one mentions property any more....I suppose people never talk about losses.

And thank god for that. Irish people had become the most boring in the world, incapable of carrying on a conversation about anything else.

London Irish

Kipperhell wrote: »

Take the person who has been renting for 7 years was 25 when they first rented. So they are 32 now probably best to wait another 2 years making them 34 when they get a 25 year mortgage if they are lucky.59 when they pay off their mortgage but others will be 50 having 15 years to increase their pension fund versus 6. I guess you could be saving the whole time but we know most don't do this.

This is exactly the situation I'm in! And I rent.

This was the exact dilemma I faced back in 2002. I had a substantial amount of money from a redundancy payment that I got from a dot-com bust company. Shall I travel, I wondered ,or finally buy a house? I bought my backpack and left the country. I didn't do the Thailand-Oz route - instead spent months in China, went to the far end of Laos and trekked all over Nepal, amongst other things.

Why? Because i felt that there was very little point in having a house in Ireland when I felt there was a substantial risk that things would go tits up - and take the economy with it. Oh I could done a BTL, but there seemed little point - interest rates were historically low, crazily so in the context of the long term. Of course, I didn't know that the current economic situation would happen, only that I felt it was very highly likely after looking at other examples in the world.

So I wanted to see just what was so special about China as an economy, and other things. And when I stopped traveling, I worked.

So now I have a varied CV that shows flexibility and international experience. If I was back in Ireland, I'd be 7 years into my mortgage, looking at my industry being decimated in Ireland over the next 5 years, and competing with everyone else who is heading for the exit, with a CV that had a big "I ONLY EVER WORKED IN IRELAND" stamp on it. I might make it ok. I might not.

It really is down to how you look at the situation, opportunities and risks in front of you. I felt renting allowed me the flexibility to get to where I am today. And in the next 2-3 years I'll probably buy.

One other more simple way to look at your example. In 2002 I earned x euros. In 2009 I earn 2x euros (excepting fx variations...).

But at both points in time the house in your example is costing the same 100K.

But I have now a big deposit ("I guess you could be saving the whole time but we know most don't do this"). So I might go for a 20 year mortgage with low repayments relative to my disposable income.

If I had stayed in Ireland, I could have bought in 2002 for 100k and now be earning 2x too. But can I now re-mortgage to shorten my 25-30-35 year mortgage? What deposit did I have at the time? What was my original LTV?
Did I trade up?

There's a whole range of answers here and for some people your example about is going to hurt a lot and bring home the renting-vs-buying situation to them, when they look at their situation. And for others, they won't blink an eye.

davyby

Too true E sheep.. we our now the now proudest owners of of neg equity morgages in europe..sumtin to chat over at BBqs ..:)

dearg lady

davyby wrote: »

Remember the good ol' days when you could buy a house and tell everyone who would listen that you made thousands since you bought it, and that it was definitely the right decision to buy when you did as the second phase was more expensive.

Agreed, incredibly annoying!!! But I think it's equally silly people saying, well I didn't buy, instead I rented and by doing this I've saved myself x amount. Unless it's money in your pocket ya aint saved nothin!! And that goes for both situations

The_Conductor

dearg lady wrote: »

Agreed, incredibly annoying!!! But I think it's equally silly people saying, well I didn't buy, instead I rented and by doing this I've saved myself x amount. Unless it's money in your pocket ya aint saved nothin!! And that goes for both situations

I agree it is silly.
What is very astute though- is renting property that you could never aspire to own- and thus by renting, having a standard of living far superior to that you could normally aspire to on whatever your salary might be.

dearg lady

smccarrick wrote: »

I agree it is silly.
What is very astute though- is renting property that you could never aspire to own- and thus by renting, having a standard of living far superior to that you could normally aspire to on whatever your salary might be.

Definitely, it's about weighing up the pros and cons for yourself isn't it.
For me the deal breaker was livin a reasonable distance from the city centre, which I do. But now I kinda wanna live closer again! So I do have some regrets about buyin but probably 95% of the time I'm happy with my decision. But I can understand why people like the flexibility so much. I hope when my contract in work finishes to be able to rent the place out and have some flexibility myself. Owning is definitely not the holy grail, but it works for some people, and as much as renters shouldn't be berated with the 'rent is dead money' stick people who bought and had bad luck shouldn't be sneered at either.

The_Conductor

dearg lady wrote: »

Definitely, it's about weighing up the pros and cons for yourself isn't it.
For me the deal breaker was livin a reasonable distance from the city centre, which I do. But now I kinda wanna live closer again! So I do have some regrets about buyin but probably 95% of the time I'm happy with my decision. But I can understand why people like the flexibility so much. I hope when my contract in work finishes to be able to rent the place out and have some flexibility myself. Owning is definitely not the holy grail, but it works for some people, and as much as renters shouldn't be berated with the 'rent is dead money' stick people who bought and had bad luck shouldn't be sneered at either.

Unfortunately the Irish in particular, have a particular fascination with property ownership- probably dating back to our historic dispossession and the plantations etc- I know its 400-500 years ago- but the psychological impacts of it, are alive and well in the mindsets of many. People will beat up with the renters- with the 'dead money' argument- and owners will not admit that their 2 hour commute morning and evening is slowly killing them- people are like sheep- and do not like to stand out from the crowd.

mental07

It's not dead money to me. It gives me a roof over my head and my independence. That's enough for me for the moment.

nohatnoswim

whizzbang wrote: »

Airplane flights are dead money, why are you paying the airlines loan repayments?

Absolutely !

Instead of buying a flight, you should get a mortgage and buy your own airplane. The, buy an oil company to put petrol in it cause buying petrol is dead money too. Then buy a service company to keep the whole thing running. The buy the airport authority so you don't pay them fees for storing the airplane and using the runways. Mortgage the lot of it......otherwise, you'll be paying for the flight - and that's just dead money.

Buying any service is just that - buying the service. The concept of needint to own the service itself is hardly always the best option ?

I've been living in houses worth 1m+ for the past 2 years, renting. Why would we live in a shoebox in Ongar with what we could mortgage on and have similar mortgate payments to our current rental payments ?

lol !

The_Conductor

nohatnoswim wrote: »

Buying any service is just that - buying the service. The concept of needint to own the service itself is hardly always the best option ?

The problem is the average Irish person has aspirations of being Richard Branson- and they most probably do aspire to owning their own airline, their own railway, their own chain of music stores, etc. Few are familiar with some of the less auspicious speed bumps along his journey- such as his conviction for tax evasion early on in his career.

Those who did not have to live through our bankruptcy in the 80s- and do not remember our previous status as a one step above 3rd world banana republic whose principle export was its people, have all sorts of expectations of wrongs being righted, and illusions of Ireland as an inherently wealthy country simply fallen on bad times who is going to get off its knees and be restored to its rightful place alongside Leichtenstein, Switzerland, Luxembourg and other erstewhile tax havens again.......

Ireland is going to have to reinvent itself- and rebuild itself from the bottom up. We certainly have the capacity to do this- but do we have the willpower?

Sir Oxman

Long time renter here too - and it suits me down to the ground.

I've heard every shade of the 'dead money' crap over the past decade or so, mainly from excitable late 20's-30's people who couldn't believe their luck the banks had offered them 100% mortgages over 40 years for a shoebox in that always exclusive development withing commuting distance (ie 2hours) of the city.

There was no talking to the poor suckers, and I do feel sorry for them.

PS This is not a put down to those who own, I have absolutely no interest in owning since selling up 12 years ago and travelling about.
But I am sick of hearing this 'dead money' lark - away with yis!

di2772

I bought my house in 1995. Its all paid off long ago. We had a 25 year mortgage but had it paid off in 15.

I would have always thought of rent as dead money.

Its great to not have to shell out for rent every month, and to be told to move by a landlord at any time.

But i suppose if renting suits you then you wouldnt think of it as dead money at all. Its different for us all.
I loved renting when i was young, free and single with no kids.

Try having kids at school and renting.


Owning home Pros for me:
I dont have to pay rent at all.
The kids have a home that they wont have to move out at a landlords whim. And they have a 15 minute walk to school.
You can decorate whatever way you want.
You can buy whatever appliances you need yourself instead of a landlords cheap stuff.
Never have to write 50 letters again telling companies where i have moved to.


Cons.
There is maintenance. About €1000 a year when i averaged it out over the years.
Mowing the lawn. I hate that.
Probably property taxes to come in.

Sir Oxman

That's great - you actually own your home, I would guess the majority of mortgage holders don't (some never will) plus the majority have to shell out monthly just as renters do.

I have a mate and his wife who are just 5 years from owning their home - I think it's great and they think it's great that I rent and that it suits me completely.

We could pro and con all day, but as other posters have said it is what best suits an individual or individuals (single/partners/family etc)

I don't know where you get the 'told to move at a landlords whim' bit from - there are rules and regulations governing leases.
Also, I've rented all over Dublin, Holland, Germany and never took a place that had cheap landlord tat as furnishings (I know what you mean though - there are people with mortgages who furnish their place with tat too!)

I can pick and choose (yes, even in the 'good' times) and in this day and age, also follow the jobs if needs be.

di2772

gambiaman wrote: »

That's great - you actually own your home, I would guess the majority of mortgage holders don't (some never will) plus the majority have to shell out monthly just as renters do.

I have a mate and his wife who are just 5 years from owning their home - I think it's great and they think it's great that I rent and that it suits me completely.

We could pro and con all day, but as other posters have said it is what best suits an individual or individuals (single/partners/family etc)

I don't know where you get the 'told to move at a landlords whim' bit from - there are rules and regulations governing leases.
Also, I've rented all over Dublin, Holland, Germany and never took a place that had cheap landlord tat as furnishings (I know what you mean though - there are people with mortgages who furnish their place with tat too!)

I can pick and choose (yes, even in the 'good' times) and in this day and age, also follow the jobs if needs be.

I thought the majority of home-owners actually do own their own homes outright, with no mortgage left at all. And another huge chunk of them dont have very little outstanding on their mortgage.

Why does everyone think that most people bought their houses in the last 5 or 6 years?

Its recent buyers, recent investors and people who topped up that are going to be struggling.

If your landlord wants you to move, you'll be moving. Reading the rules and regulations you are talking about will reveal this to you.

You are right about picking and choosing though. Id love to be able to do that.
With a zero mortgage you would think i would be able to do that, but i cant. I have a family.