Thinking of buying rental investment advice please?

miss choc

Hubby a bit of his own money kept by and told me that he wants to buy a small apt/house in Dublin as a buy to let (we have a house ourselves with thankfully not a severe mortgage) I think hes mad as I was made redundant from a mortgage company during the crash and I guess feel a bit relunctant in buying again as we bought in 2005.
Any financial/broker people out there in the property know? also what is the rental market like at the moment? Borrowing isnt the big prolem I just dont think its a good idea investing in property now at this time as well as bringing on extra hassle and stress, but having said that properties are rock bottom at the mo and it is a buyers market .
Any suggestions appreciated would it be a good investment for our future? It is his money but I dont want everything going belly up and him losing out
Also if buying we are torn as to rent out our older two bed house and upgrade ourselves to a newer 3 bed or stay in our house for now and buy a 2/3 bed house as a rental investment. We dont mind moving or staying in 2 bed eitherway as we dont have kids and we would be looking for property around the same area.
Any tips, advice appreciated

quozl

miss choc wrote: »

but having said that properties are rock bottom at the mo

What are you basing that on? On the surface it looks ridiculous, do you have any reasoning behind that or are you just taking it as a given for some reason?

David McWilliams and Morgon Kelly don't agree with you.
The IMF are here and we have years of austerity budgets ahead of us.
Our ten year bonds hit reconds highs yet again yesterday as the markets think we're going to be forced to default (and they're right).
Taxes are going up - if possibly through stealth taxes instead of rate raises.
We have mass emigration and mass unemployment.
Our banks are defunct and can't lend, and there's no reason to see that changing in the short term - not until a foreign bank decides to come into the market, and I'd imagine we're scaring them off with all our interventions.

What is your reasoning for thinking that houses are at rock bottom?

noxqs

Not only are prices not yet at the bottom, historical analysis indicates that RECOVERY takes decades. Which means, house prices will remain stagnant relative to inflation, even going up less than inflation for the next 20-30 years. Thus depreciating in real value.

See: Every other instance of this happening in the last 100 years. Japan for example.

Don't do it, you will get a better return on investment by buying a world market fund or a mix of bonds. You should be able to see around 8% on that.

Buying property as an investment, now, is just about the dumbest thing I've heard in weeks.

The risk of bonds and stocks in a good mix is pretty low compared to the risk of:

-> 300,000 empty properties in Ireland, who is going to rent?
-> Will you be able to rent the property for the duration of the mortgage? If no, then what is your loss during non-tenant periods?
-> Will the property rise in value over the term of the mortgage? Will it be enough to offset the loss of revenue during non-tenant periods? If it wont rise, will it be worth it?
--> Even if it goes up in price, what is this compared to inflation? Are you burning money or making money? (Hint: Probably burning).
-> Other costs?

Please for the love of all thats sane, watch:

http://www.youtube.com/watch?v=YL10H_EcB-E and part 2. Then re-think.

Rexelac

1/ Go with your husband and find a mortgage calculator online and see what your repayments will be at 7.5% and above and reconsider if the mortgage isn't too severe

2/ You already have one mortgage & you've been made redundant, and your husband want's to invest all or most his savings in an investment property, sorry but you need to have a serious talk with him, one little piece of paper will put you both between a rock and a hard place.

3/ The rental market is slowly going only one way for the next 5 years & prices haven't hit bottom yet, the banks will soon start to take the gloves off and interest rates are at record lows => defaults will only increase along with emigration. Also every .25% increase from the ECB will be doubled by the banks here, the ECB rate will hit circa 4% within the next 5 years with the irish banks adding at least 3.5% onto variable rate mortgages. Halifax was unable to sell it's branch network, competition will not re-enter until after SVR's exceed at least 7%

4/ If you can find a deposit a/c that pays a higher interest rate than you mortgage put it there, otherwise pay off your mortgage with it (keep 3 months wages on deposit)

5/ Hopefully your husband has enough savings to invest in another property outright, if he intends to borrow to invest sit him down and tell him that you will take control of the family financials, or if not i have a contact in Libya - one of Gaddafi's son's is looking to transfer the family fortune from Switxerland to Iryland and he is just the partner i've boon looking for! )

Sorry for being blunt!

Zamboni

Edited for easily offended Keno

kennyb3

Just burn the money, it will be less heartache in the long run. My god people never fail to surprise me.

keno-daytrader

Mods, please do something about the Michael J Fox post, it's really offensive, and Im not offended easily.

Zamboni

keno-daytrader wrote: »

Mods, please do something about the Michael J Fox post, it's really offensive, and Im not offended easily.

I appreciate my contribution was not constructive but it was at least a remark on how people are still living in the past in relation to the OP.
How you anything to say on the OP yourself?

keno-daytrader

Zamboni wrote: »

I appreciate my contribution was not constructive but it was at least a remark on how people are still living in the past in relation to the OP.
How you anything to say on the OP yourself?

I agree some people are still living in the past, and if it were my money, investing in Irish property at this point would never ever cross my mind.

Mr. Loverman

Rule #1: You shouldn't compare current prices with bubble prices when trying to figure out if there is value out there...

fricatus

If you're valuing property, use the equation

p=100r/y

where p is the house price, r is the yearly rent you expect to get (be conservative!) and y is the yield in percentage terms.

A typical property yield is 7%, given the higher risk of property over putting your money in the bank, which would yield 3-4%. However, you might want to run the numbers for a higher yield, up to 10% due to the economic uncertainty here.

And yes, when you get a house price of €137k from a rent of €800 pm, don't be surprised. That's pretty much an international standard measure... Now if only I'd researched this myself back in 2006 :rolleyes:

You can have fun using this equation on estate agents trying to sell you a 3-bed semi for a quarter of a mill... watch their reaction as they go like this => :eek:

The_Conductor

Interest rates are going up- it looks like we could have an April increase at the ECB monthly meeting- and the consensus is for 3 increases this year- and then 4 next year. Even for those on trackers- this represents at very least a 2% increase (and possibly more). If I were in your position- and had a lump of cash gathering dust- the most effective use I could think to make of it would be to knock a lump off the mortgage principal on the current property........?

bertie1

Have a look on daft & see how many more properties in Your area are for rent. Personally I would stay away from rented property & I am talking from experience. You end up having to nearly gut them every 7 -10 years. One bad tenant can do thousands in damage , pursuing them throught the Resential tenancy board is a waste of time. You have to pay NPPR fees, register with the tenancy board or you are not entitled to interest relief, any money you put in to do it up is not claimed against tax ( until after you have had a letting) you pay tax @ 41% ( at the moment on all rent ) then pay the mortage. There are better ways of getting a return fo your money

MagicMarker

Your husband isn't Peter Ian Staker by any chance?

Fol20

bertie1 wrote: »

you pay tax @ 41% ( at the moment on all rent ) then pay the mortage.

No you dont,its based on your total income so if your earning nothing except rent,you dont pay tax..

The_Conductor

Just to clearup any confusion-

You have a number of allowable expenses which can be deducted from your gross rental income, before determination of your taxable income. At present the largest of these expenses for most landlords- is 75% of the mortgage interest (it used to be 100% and the agreement was that this would be phased out altogether by 2017, when mortgage interest relief for owner occupiers is also due to cease).

So- you have 1000 Euro of rental income. You also have a mortgage of 1000- which (for arguments sake) is an interest only mortgage. 750 of the mortgage is an allowable expense- leaving you with 250 of reckonable income for tax purposes (its entirely possible that you may have other expenses that you can use to further decrease this- such as management charges, PRTB charges, depreciation of furniture and fittings etc.....

You have to report all income- alongside allowable deductions to the Revenue Commissioners in an annual tax return- you also have to register the tenancy etc- its exceptionally well regulated these days.

chicken fingers

miss choc wrote: »

I was made redundant from a mortgage company

quozl wrote: »

What are you basing that on? On the surface it looks ridiculous, do you have any reasoning behind that or are you just taking it as a given for some reason?

She was working in the hype, she needs to forget everything she "learned" working for the mortgage company and start fresh with solid fundamentals.

Look at the prices of houses, look at the rental yeilds, look at what price you can get a mortgage, estimate if rents will go up or down in future, and then make the decision based on sound information.
Rather than just proclaming that prices are rock bottom at the mo based on an ex-mortgage broker voodoo crystal ball that has been proven wrong in the past!!
Any sane person can only conclude that rents are going to come down, house prices will collapse, and mortgage rates will get worse.

Idbatterim

dont forget about management fees that would apply to alot of properties, if you are using a letting agent, their fees, also times when the property may be without a tenant. If your husband had cash, maybe put it into a decent interest earning account. their is no way the prices are near bottom in most cases, people who think this crisis will be over in a year or two are dillusional!