1 Bedroom Apt - am I crazy or not?

thierry14

CurlyWurly_ wrote: »

We are renting at the moment at 1,150.
Mortgage, insurance, maintenance fee works out around 860 so 430 each.

Never look at it like this, ever

Maintaining a home is bloody expensive, always something to do/buy

It will seriously surprise you.

A difference of 290e will be eaten up in no time

Market is starting to stagnante too imo

Waiting might not be the worst idea ever

sbsquarepants

Remember anecdote is not the same as evidence - but I've spent the best part of the past 18 months looking for a house to buy and I have not seen any trace of this stagnation.

JimmyMW

CurlyWurly_ wrote: »

We are renting at the moment at 1,150.
Mortgage, insurance, maintenance fee works out around 860 so 430 each.

Also worth bearing in mind that the €860 a month you have estimated is not including the €120k of savings you have put into the purchase.

CurlyWurly_

The_Conductor wrote: »

Bad as it is here- its pretty much an identical picture in several other EU markets- Denmark, The Netherlands and Belgium come to immediate mind as poster boys for housing bubbles..........

The Economist magazine do an annual house price bubble issue with commentary on the various markets- its very scary reading.......

In short- the improbably low interest rate regime we've been in for some time- is wholly out of sync with fundamentals- and reading between the lines- the ECB are predicting significant price falls once rates begin to normalise again (they are still saying an ECB overnight rate of 4.5% is rate 'normalisation'- which would blow pretty much any stress test any Irish lending institution conducts out of the water).

One way or another- if you cannot see yourself living in a 1 bed apartment long term- unless its in a seriously high demand area where you'll have a queue of prospective tenants whenever it comes available- I don't think you should buy.

I can see where people are coming from with their suggestions of getting a 2 bed semi in D15 or elsewhere- as you're future proofing your purchase- I'm not entirely sure I agree with that assessment either though.

You have shown a proven track record of saving- I'd suggest continue renting- and build your savings further.

The Dublin market is already doing funny things- despite its obvious and glaring shortages. The lions share of national price rises last year- occurred outside of the greater Dublin area (Dublin did grow- but it was an entirely different kettle of fish to the rest of the country).

I'd also as an aside- seriously advise against buying a property (anywhere) with the express intention of becoming a landlord. The regulatory environment, not to mention the tax regime, is onerous, time consuming- and damn expensive. If a tenant overholds or decides to stop paying their rent- you will be months with no income, but continued outgoings. All the time- the regulatory regime is becoming more and more onerous on landlords- while landlords are pilloried in the media- and proverbially tarred and feathered.

Being a landlord- is not for the faint hearted- you might get lucky- or you might have a world of hurt- you simply don't know from day to day.

I always thought that Netherlands have an issue because it's a small country, very highly populated per km (most in EU) hence, houses are very small and it's difficult to build new units.

Also, what they are experiencing now is that loads of older cash buyers make it very difficult for first time buyers to get on a property ladder.

They are also way more into apartment living that people in Ireland.

Finally, they have an excellent transport system! You can get by train to most places. Here we build houses in the middle of nowhere, where noone wants to live because there are no good transport links.

I'm not sure if we should be comparing Irish and Dutch markets tbh. Correct me if I'm wrong.

PS Holland is very close to my heart

CurlyWurly_

CurlyWurly_ wrote: »

I always thought that Netherlands have an issue because it's a small country, very highly populated per km (most in EU) hence, houses are very small and it's difficult to build new units. Also, what they are experiencing now is that loads of older cash buyers make it very difficult for first time buyers to get on a property ladder. They are also way more into apartment living that people in Ireland. I'm not sure if we should be comparing Irish and Dutch market. Correct me if I'm wrong.

Also, would it be difficult to get a second mortgage in a few years and keep 1bed as an investment? Mortgage on it won't be huge and my salary should be going up year on year. How do banks look at that?

The_Conductor

CurlyWurly_ wrote: »

I always thought that Netherlands have an issue because it's a small country, very highly populated per km (most in EU) hence, houses are very small and it's difficult to build new units. Also, what they are experiencing now is that loads of older cash buyers make it very difficult for first time buyers to get on a property ladder. They are also way more into apartment living that people in Ireland. I'm not sure if we should be comparing Irish and Dutch market. Correct me if I'm wrong.

The issue in a not insignificant number of European countries- is rock bottom (or even negative) interest rates- alongside a dearth of investment opportunities for prospective investors. German pensioners are the most vocal in this respect. For the first time ever- there are improbable number of people piling into property as an investment- where historically its not something they would ever have considered.

Sweden has taken particularly tough action to try and dampen demand- Denmark have acknowledged they have a serious problem- on a cost basis- The Netherlands and Belgium have fallen badly out of fundamentals- and then you have the erstwhile PIGS- who are climbing out of the depths of despair thanks to improbably low interest rates- however, while its helping some segments of their economies- its crucifying others.

Low interest rates- are not normal- and should not be viewed as normal.
Investors have not priced historical interest rates into their equations.
If inflation, which is growing, consistently breaches 2% in the Eurozone- interest rates will increase. As it stands, the asset purchase schemes are being tapered (but not finally wound down- the ECB took fright at some recent figures and put the asset purchase scheme on prolonged life support- but it will get yanked- its just a matter of when).

Inflationary pressures- have been bouncing around the place- couple of very positive months, single month in complete contrast, back to growth again, etc etc. There is not a consistent picture being displayed.

Interest rates are going up- its a matter of by how much and when.
Once it is more expensive to service debt- logic dictates that demand will be dampened- when and by how much- are the million dollar questions.

CurlyWurly_

The_Conductor wrote: »

The issue in a not insignificant number of European countries- is rock bottom (or even negative) interest rates- alongside a dearth of investment opportunities for prospective investors. German pensioners are the most vocal in this respect. For the first time ever- there are improbable number of people piling into property as an investment- where historically its not something they would ever have considered.

Sweden has taken particularly tough action to try and dampen demand- Denmark have acknowledged they have a serious problem- on a cost basis- The Netherlands and Belgium have fallen badly out of fundamentals- and then you have the erstwhile PIGS- who are climbing out of the depths of despair thanks to improbably low interest rates- however, while its helping some segments of their economies- its crucifying others.

Low interest rates- are not normal- and should not be viewed as normal.
Investors have not priced historical interest rates into their equations.
If inflation, which is growing, consistently breaches 2% in the Eurozone- interest rates will increase. As it stands, the asset purchase schemes are being tapered (but not finally wound down- the ECB took fright at some recent figures and put the asset purchase scheme on prolonged life support- but it will get yanked- its just a matter of when).

Inflationary pressures- have been bouncing around the place- couple of very positive months, single month in complete contrast, back to growth again, etc etc. There is not a consistent picture being displayed.

Interest rates are going up- its a matter of by how much and when.
Once it is more expensive to service debt- logic dictates that demand will be dampened- when and by how much- are the million dollar questions.

Thank you! You have some great knowledge

CurlyWurly_

daheff wrote: »

thats the million dollar question OP.


Really depends on the apartment. Does it have good resale potential or good rental potential?

Ideally save for at least a 2 bed (as they have much better rental/resale potential). If thats not an option look at the apartment as a long term property.

Could you live in it for a while and then rent it if you needed to? Do you want to be a landlord in a few years time if it was your only way of moving to a 'forever home'? You might need to be if you cant shift the apartment.


Also think about how much you are currently paying in rent vs what a mortgage would cost. The first few years of the mortgage payments are equivalent to renting...assuming value of property doesnt go up or down, after taxes/legal fees if you sold you'd be break even. Longer than that and you would be turning a profit.

Hi, I checked that 1 bed at the moment can be rented out for 1.3k and 2bed for 1.5k in that complex. You have to pay additional 65k for 2bed though. It's a mature development, close to the station.

Not the cheapest though. Last one bed, 8m2 less sold in Jan for 190k. I'd have to pay 30k more for bigger size and south aspect.

CurlyWurly_

JimmyMW wrote: »

Also worth bearing in mind that the €860 a month you have estimated is not including the €120k of savings you have put into the purchase.

If I put all my savings, my mortgage would be c. €500. I'm planning to put only 25% into the apartment and invest balance somewhere else.

sbsquarepants

CurlyWurly_ wrote: »

Also, would it be difficult to get a second mortgage in a few years and keep 1bed as an investment? Mortgage on it won't be huge and my salary should be going up year on year. How do banks look at that?

I've done exactly that quite recently. I was very surprised to find the existing mortgage didn't impact on the new one at all. They still gave me 3.5x salary.
I'd say negative equity would have been a big no no however.

I did need to demonstrate an ability to pay both mortgages though in the event of the apartment being empty (or occupied by squatters:D), but saving up the deposit took care of that.

The_Conductor

Something else to keep in mind- while you have a very enviable lumpsum- if you are buying an apartment with the intention of renting it out in the near future- the sanest thing to do is to have as much debt as possible associated with the property- as its your primary manner of sheltering rental income from the taxman.

Aka- we are bringing mortgage interest as an allowable cost- back up to 100%- which for the vast majority of landlords is their major cost they can offset against income before calculation of net taxable income.

Someone who doesn't have a mortgage- can in theory, end up with a combined tax rate of 54% on rental income.

wench

CurlyWurly_ wrote: »

Hi, I checked that 1 bed at the moment can be rented out for 1.3k and 2bed for 1.5k in that complex. You have to pay additional 65k for 2bed though. It's a mature development, close to the station.

Not the cheapest though. Last one bed, 8m2 less sold in Jan for 190k. I'd have to pay 30k more for bigger size and south aspect.

I wouldn't take the current record high rents as the basis of calculating if it works as a rental property for you.
If the rent drops back closer to 1,000 would it still make sense?

CurlyWurly_

sbsquarepants wrote: »

I've done exactly that quite recently. I was very surprised to find the existing mortgage didn't impact on the new one at all. They still gave me 3.5x salary.
I'd say negative equity would have been a big no no however.

I did need to demonstrate an ability to pay both mortgages though in the event of the apartment being empty (or occupied by squatters:D), but saving up the deposit took care of that.

How did you demonstrate that if I may ask? Showing you can rent it out?

CurlyWurly_

wench wrote: »

I wouldn't take the current record high rents as the basis of calculating if it works as a rental property for you.
If the rent drops back closer to 1,000 would it still make sense?

I actually think it's easier to rent out 1bed - couples, professionals. For 2bed you're usually looking at two people sharing, students etc Think it gets messy...no?

CurlyWurly_

The_Conductor wrote: »

Something else to keep in mind- while you have a very enviable lumpsum- if you are buying an apartment with the intention of renting it out in the near future- the sanest thing to do is to have as much debt as possible associated with the property- as its your primary manner of sheltering rental income from the taxman.

Aka- we are bringing mortgage interest as an allowable cost- back up to 100%- which for the vast majority of landlords is their major cost they can offset against income before calculation of net taxable income.

Someone who doesn't have a mortgage- can in theory, end up with a combined tax rate of 54% on rental income.

This is a very good point. Thanks.

I would have to switch my mortgage from residential to BTL to do it all legally though. How does that work? What if I want to airbnb it?

wench

CurlyWurly_ wrote: »

I actually think it's easier to rent out 1bed - couples, professionals. For 2bed you're usually looking at two people sharing, students etc

My point was less about 1 vs 2 bed, and more about not relying on the current high rents to make it work.

When I was renting in 2007, 1 beds in D8 went for about 1K, they fell to 750 - 800 over the next few years.
If you couldn't take that kind of fall from current rates, then you could end up with problems.

Akrasia

PhoenixParker wrote: »

http://www.daft.ie/dublin/apartments-for-sale/ashtown/40-cassian-court-south-royal-canal-park-ashtown-dublin-1468363/

Three bed, opens into internal courtyard. Good for now and very workable with young kids. On budget, on a solid bus route to the city centre. Train and (soon) Luas within 15 mins walk. All amenities close by.

This is only picked because it's an area I'm familiar with, I'm sure there are dozens more options. Basically I'm saying there's no need to be looking at 1 beds.

60m2 would feel a lot more spacious in a 1 bed apt than an 80m2 3 bed apt with 2 bathrooms.

2 decent sized bedrooms and a nice big living area and one bathroom would feel a lot bigger and you wouldn't be paying for a spare room that nobody's gonna use 350 days of the year.

CurlyWurly_

Akrasia wrote: »

60m2 would feel a lot more spacious in a 1 bed apt than an 80m2 3 bed apt with 2 bathrooms.

2 decent sized bedrooms and a nice big living area and one bathroom would feel a lot bigger and you wouldn't be paying for a spare room that nobody's gonna use 350 days of the year.

Apart from that daft apartment. I'm grateful for someone taking their time and doing a search and I do think Ashtown is nice....

I could afford 2bed somewhere else but tbh I don't want to live too far, on a huge estate with poor transport links. I think a 1bed in good location will bounce back quicker than 2bed far from everything.

I do value nice location, pleasant souroundings, not being scared coming home in the late evening.

CurlyWurly_

wench wrote: »

I wouldn't take the current record high rents as the basis of calculating if it works as a rental property for you.
If the rent drops back closer to 1,000 would it still make sense?

As long as it covers mortgage then yes. Paying towards it for a few years of it stops below, wouldn't be a drama either.

sbsquarepants

CurlyWurly_ wrote: »

How did you demonstrate that if I may ask? Showing you can rent it out?

I meant it the other way. You can't really prove you can rent it out (although at the moment, how could you possibly have a problem) but who knows what's around the corner. (House move is still 2 months away so I haven't actually rented the apartment, but anecdotally I hear dodgy tenants are a big concern) You'll need to show that you can pay both mortgages yourself should the need arise. In my case the money I was saving monthly to get the deposit together was in excess of the mortgage so they took that as proof I could pay both.

PhoenixParker

Akrasia wrote: »

60m2 would feel a lot more spacious in a 1 bed apt than an 80m2 3 bed apt with 2 bathrooms.

2 decent sized bedrooms and a nice big living area and one bathroom would feel a lot bigger and you wouldn't be paying for a spare room that nobody's gonna use 350 days of the year.

Most apartments have stud walls internally. Rearranging the internal space is trivial. On the continent its common but here for some reason it's considered unfathomable.

I can't speak for this apartment as it's really just an example of what might be more suitable to the long term needs of someone in a long term relationship who plans to have children. I can guarantee you three beds and two bathrooms will be more bearable with a one year old then a one bed.

Graham

PhoenixParker wrote: »

Most apartments have stud walls internally. Rearranging the internal space is trivial. On the continent its common but here for some reason it's considered unfathomable.

I vaguely recall something about needing permission for that type of change. To be honest I don't even remember who from, the OMC perhaps?

CurlyWurly_

CurlyWurly_ wrote: »

Hi,
I'm thinking of getting a 1 bedroom apartment (approx 60m2, quite spacious compared to some). I work in the city centre so train is ideal for me. I'm going back and forward in my head whether I should get it or not?

I owned a property before and because I purchased at the right time I was able to sell and put some money towards this apartment with a mortgage. I'm 34 this year and I would like to get back on the property ladder. Prices are going up so much every month that I feel pressurized in a way to get my own place. I'll save on rent and won't have to share with strangers.

As much as i like the apartment, I do not want it to be my 'forever home'. I've been with my boyfriend almost 2 years and one day we would like to buy a bigger place and start a family together. He's not able to get a mortgage at the moment as he has no credit history but that is something he will work on when after changing jobs.

Question is: Should I buy it now on my own and hope that one day (3-5 years) I will be able to rent it out (would like to hold on to it as an investment for as long as possible) or sell it to purchase a bigger place to have a family?

Should I keep saving and look for a 2 bedroom or house instead?

Many thanks.
CW

***Update***
Feel like I owe you an update Thanks for all your comments, it was definietelly a learning curve for me. I'm little bit nervous about the future, prices going up, shortage of supply, Brexit but decided to go for 2bed. I'll also continue saving and hopefully will find a nice home!

sharpish

Graham wrote: »

I vaguely recall something about needing permission for that type of change. To be honest I don't even remember who from, the OMC perhaps?

Fire cert required and the management company would have to OK it also.