Is it worth it, to buy property as an investment

Hollister11

I'm 20 in college, and i'm obsessed with property. This probably comes from my working p/t with my dad in construction, and the fact my parents have a few properties.

I''m wondering is it worth it to buy 1/2 bed apartments for between 100K - 250K that currently fetch up to 1500 a month. Obviously i'm not buying now, but a few year after college.

audi12

Hollister11 wrote: »

I'm 20 in college, and i'm obsessed with property. This probably comes from my working p/t with my dad in construction, and the fact my parents have a few properties.

I''m wondering is it worth it to buy 1/2 bed apartments for between 100K - 250K that currently fetch up to 1500 a month. Obviously i'm not buying now, but a few year after college.

Im looking at properties now with a view to buying one when your looking in a few years it will all depend on the prices of properties at that time. Apartments are only good in certain areas city centre Galway Dublin etc.

jsd1004

audi12 wrote: »

Im looking at properties now with a view to buying one when your looking in a few years it will all depend on the prices of properties at that time. Apartments are only good in certain areas city centre Galway Dublin etc.

Do your sums. If you are getting 20% plus yield gross. Yes. But you need to be getting that

jsd1004

jsd1004 wrote: »

Do your sums. If you are getting 20% plus yield gross. Yes. But you need to be getting that

Never work on potential or appreciation..thats how the crash came about

Sleeper12

Hollister11 wrote:

I''m wondering is it worth it to buy 1/2 bed apartments for between 100K - 250K that currently fetch up to 1500 a month. Obviously i'm not buying now, but a few year after college.

Rents won't stay at these levels forever just as interest rates won't stay this low forever.
There's no way to know what will happen in future. More homes will be built & rents will level off. Interest rates is more difficult to guess. The longer the EU economy is stalled the longer we have low interest rates. If inflation creeps in then interest rates go up.
It would be crazy to gauge your business model solely based on what you see today.

antoinolachtnai

Unfortunately it is not possible to absorb losses and make money at the same time, no matter how rich you are.

On the whole I do not think you can make much money in the long term buying a few flats here and there. Things have just gone beyond that and scale will be far more important.

If you do invest in property you have to be ready to work really really hard. Operating property is hard work and you really need another stream of income.

riclad

Its risky borrowing say 120k, tax,es may go up,
interest rates can go up,
your main tax credit is 75 per cent of interest paid on the investment loan.
you have to pay service charges, prtb,maintenance .
property tax may go up.The standard investment loan rate is at least 4 per cent.
Theres alot of people who bought houses as investments ,now they live in them ,
As they cant sell them due to negative equity .
You get no tax credits on the capital repayment part of the loan,
therefore your tax bill may rise after 8-10 years ,
My bought a house for 80k, sold it after 8 years ,never made a single euro
on it,
the loan cost was larger than the monthly rent.
She sold it for 85k .
IT was quite stressful to deal with repairs etc on the house .
while making zero profit.

OfflerCrocGod

You have to put a 30% deposit down for a BTL mortgage, so we could be talking about €75K, which will impact your ability to buy your own home.

I'm not convinced being a landlord is worth the hassle.

4ensic15

Hollister11 wrote: »

I'm 20 in college, and i'm obsessed with property. This probably comes from my working p/t with my dad in construction, and the fact my parents have a few properties.

I''m wondering is it worth it to buy 1/2 bed apartments for between 100K - 250K that currently fetch up to 1500 a month. Obviously i'm not buying now, but a few year after college.

The property market is cyclical. The key to buying property is to do it at the right point in the cycle. That point is at the end of a downturn. I wanted to but property when I was 22 or 23. A bank manager put me off and said property is falling wait it out. The market fell for another 20 or 3 years and I continued to save. As a result i was able to buy a much better property than i could have originally. The market then surged for the next year after putting me into a very good position, with a lot of equity.

_kookie

I have several rental properties and due to the government interference and high taxes and seriously thinking about getting out altogether.
Just Google what how unfair the Irish system is to the landlord and you will find out a lot.

I'm trying one more experiment with one property. If that works out I'll do the same with them all eventually. If that doesn't work out though, ill just sell them all.

It's really stacked against the investor nowadays.

Hollister11

Hollister11 wrote: »

..........

I''m wondering is it worth it to buy 1/2 bed apartments for between 100K - 250K that currently fetch up to 1500 a month. ............

Like anything else there's for and against it.........
using crude enough figures........... on a €125k property

€25K deposit + €10k other initial costs
€100k mortgage over 25 years is €585/month at 5.2% APR (investor rate)

€190/month will be deductable expense for mortgage interest, say €100/month management fee & pretend a letting agent is charging 6% so €105 ish........ that's ....

Annual income (we'll use an 11 month let) €15400, €4740 expenses so that's €10.5k ish to be taxed income with mortgage costing €7k year so the landlord if after borrowing €100k will have €10k after tax income from it to pay €7k/annum mortgage, €1.2K management charge & €1200 letting agent fee. Basically after the €35k upfront it might all going well pay for itself going forward.

That's on a €125k property with €1400/month rental incomes.

Again, all above presumes borrowing €100K over 25 years and I've lazily done linear interest over the period as I couldn't be arsed doing it anyother way !!

Apartments for between 100K - 250K is quite a range, buy a €200k one (80% mortgaged) and it will cost you few hundred a month even when all is going well.

The main conceptual "advantage" with property is that at the end of a 20 year term the apartment I detailed the crude figures for is owned outright and will probably have appreciated in value over that of inflation from it's purchase cost, if it's gone well it would have seen small enough financial input from you over the 20 years apart from the initial €35k investment.

When it goes badly though property can be horrendous.

Even when going well the disadvantages are
- you have bought in at a particular point in time, no cost averaging
- interest rates can fluctuate severely over the 20 year period you owe money
- there can be long periods where it's not at all attractive to bail out
- there's a small to medium worry that things might not go well, this can nag at you even when they are going well
- you owe money which is also a worry, can also effect other plans that require borrowing.

If you invest the €35k in the stockmarket and over 20 years see an average 5% growth the €35k will have grown to almost €90k, bit of dividend over the years too, or €113k over 25 years.

So in that comparison, throw €35k into a €125k flat that pays for itself from rental income and in 20 years time it's probably goes to be worth €200K+, that compares well to the €90k you might have grown your €35k to on the stockmarket.

Or you might end up with double that on the stockmarket......... no one has a crystal ball.

My own view is that longterm property isn't too bad an investment all things considered while accepting that there are other options.

Back in boom times the papers were full of blocks v stocks debates, the likes of the S&P 500 and FTSE 100 recovered from the 2008 lows, Irish property prices are some way away from that but than it's important to remember that the ftse is at now what it was at in 1999 & 2007 and sterling is on the floor.

riclad

Investment loans are at 4.5 per cent approx, in 5 years time ,interest rates could go up,
You could be paying 7 or 8 per cent interest on a loan.
Buying a house is a long term investment ,can you think 20-30 years ahead.
to buy any apartment you,ll need maybe at least 20-30k deposit.
You,ll get maybe a 80-90 per cent loan,
on a house or apartment

http://www.tsb.co.uk/business/loans-and-finance/commercial-mortgage/

athtrasna

riclad wrote: »

You,ll get maybe a 80-90 per cent loan,
on a house or apartmentr

No you won't! Btl requires a 30% deposit and you quoted a UK bank site.

This, OP, is why you should do your own extensive research and not rely on strangers on an Internet forum.

athtrasna

athtrasna wrote: »

.........

This, OP, is why you should do your own extensive research and not rely on strangers on an Internet forum.

No doubt, the OP is probably just looking for want of a better word a bit of discussion and views of people in the same boat or who have gone down the property investing route so like anything else... pinch of salt where required etc

vandriver

Can you buy a 100 grand apartment that rents for 1500?Where?

Michael D Not Higgins

vandriver wrote: »

Can you buy a 100 grand apartment that rents for 1500?Where?

18% ROI? Yeah that's fairy tale stuff. However OP's range was 100-250k and up to 1500 in rent. At 250k, that's a 7% return which is more likely.

audi12

jsd1004 wrote: »

Do your sums. If you are getting 20% plus yield gross. Yes. But you need to be getting that

where are you getting 20% yield nowhere is the answer 12% is seen as a very good yield.

audi12

jsd1004 wrote: »

Never work on potential or appreciation..thats how the crash came about

Cash flow all the way if you are getting positive cash flow I dont know how anyone can knock property when you are getting that some people are against everything.

audi12

_kookie wrote: »

I have several rental properties and due to the government interference and high taxes and seriously thinking about getting out altogether.
Just Google what how unfair the Irish system is to the landlord and you will find out a lot.

I'm trying one more experiment with one property. If that works out I'll do the same with them all eventually. If that doesn't work out though, ill just sell them all.

It's really stacked against the investor nowadays.

If usc is abolished that will be a big help

vandriver

audi12 wrote: »

Cash flow all the way if you are getting positive cash flow I dont know how anyone can knock property when you are getting that some people are against everything.

I don't think +ve cash flow is possible in Dublin.