Buying a house and renting it??

Repli

cormie wrote:

This is actually possible.

Well, the casinos obviously know this which is how they counter it. They have limits on the tables so you have to actually win before you reach the limit. This is on roulette anyway.

It's called the martingale system, heard people have lost quite a lot of money using it because theoretically it can only work 100% of the time if you have infinite money.

lomb

The Corinthian wrote:

At this stage you appear to be responding with increasingly unlikely logic in a bid to avoid admitting that you’re just plain wrong.

not at all. property values have always been linked to inflation via labour values etcand being a finite resource then desirable property will rise at the rate of inflation perpetually whatever that rate of inflation is. of course there are blips 5 or 10 year blips but as a general rule u can take it as a fact. that is why a 5 million euro house in ballsbridge today changed hands for under 1000 punts back about 115 years ago.

seamus

Best bet is to try get your hands on a property that

a) You (probably) will never have trouble renting out
b) You (probably) will never have trouble selling on
c) You don't intend to keep, or that you'd happy to hold onto for 5 or 6 years, then sell it on
d) You would live in yourself if you had to
e) You could afford the repayments on if/when you were short a renter.

1-bed apartments in a city are the safest bet on these grounds. They're quite cheap*, and foreign students or foreign workers in particular are usually quite keen on renting single apartments in the city centre.

Getting into the property market is tough, and getting into the investment property market from a blank canvas is even tougher. All property investments are a risk. I say "safest bet" above, but you still have to be willing to accept that if you find yourself with some unforseen massive losses (car exploded? Only got Third-party insurance?) or losing your job, or taking a pay cut, or any other of a multitude of things, could result in the loss of your house, and a screwing up of your credit rating.

My own advice, and what I plan to do is - Buy something that *you* can afford to live in, *now*. Then work out a way to rent it out.

All this said, an acquaintance of mine is quite confident that he's in the closing stages of getting a €500,000 mortgage based on the €2,000 rent he'll be taking in each month by renting out 5 rooms. He has no other properties, and works a contract-based career.

*When I say "quite cheap", I mean affordable if you're earning at least €25,000 a year. You could get a 1-bed in the South City with a €200,000 mortgage. A €200,000 mortgage would cost you €838 (based on this ) per month, which should be affordable on that salary, assumin you're a young man with very little debt or outgoings. You'd also want to be quite confident that your salary will continue to rise over the next few years.

The Corinthian

lomb wrote:

not at all. property values have always been linked to inflation via labour values etcand being a finite resource then desirable property will rise at the rate of inflation perpetually whatever that rate of inflation is. of course there are blips 5 or 10 year blips but as a general rule u can take it as a fact. that is why a 5 million euro house in ballsbridge today changed hands for under 1000 punts back about 115 years ago.

That’s actually not true. To begin with you can get high inflation in recessionary times too, it’s called stagflation. In that scenario demand for goods and services, including property, does not match inflation - indeed, it drops.

As for your Ballsbridge example, other than the fact that punts didn’t exist 115 years ago, you just pulled those figures out of thin air. Property in Ballsbridge may (this is I repeat only speculation) well have appreciated in real terms over the last century or two, but property in other areas may well have not. For example prior to the Duke of Leinster’s move to beautify the area south of the Liffey, the area around Mountjoy would have been the most exclusive residential area of Dublin. While still highly expensive, in real terms the value has most likely dropped, overshadowed by the rise of what is now known as Dublin 2.

Of course, you may still ultimately turn a profit in a one or two hundred years time as you suggested but this is not assured and, as has already been pointed out, you’ll be dead.

So it’s actually repeatedly been demonstrated that you’ll not always make money on property, at this stage. Why do you persist to argue otherwise?

lomb

The Corinthian wrote:

. Why do you persist to argue otherwise?

because i know i am right. that is why. desirable property is finite. it will always track inflation over a period of time. on the otehr hand shares in companys are over a period of time infinite. names change, goodwill becomes worthless. for example even a patented drug runs out of patent after 20 years. there are constant competitive pressures as is the way in business. that is the nature of the beast. but property remains finate as a resource. young couples buying in dublin and many provincial towns even are finding this to their cost.

what consitutes desirable may change of course. also what constitutes inflation may also change. and 1000 punts was the value roughly in punt equiv. which i read in a newspaper that may or may not be right but i would say it wouldnt be far off.
u stick with ur arguments and il stick with mine

The Corinthian

lomb wrote:

because i know i am right. that is why.

Sure you are... :rolleyes:

desirable property is finite. it will always track inflation over a period of time. on the otehr hand shares in companys are over a period of time infinite. names change, goodwill becomes worthless. for example even a patented drug runs out of patent after 20 years. there are constant competitive pressures as is the way in business. that is the nature of the beast. but property remains finate as a resource. young couples buying in dublin and many provincial towns even are finding this to their cost.

Property is not finite. If it were you wouldn’t have speculators.

what consitutes desirable may change of course. also what constitutes inflation may also change. and 1000 punts was the value roughly in punt equiv. which i read in a newspaper that may or may not be right but i would say it wouldnt be far off.

And a friend of my second cousin told me in a pub that he read in a newspaper that you’re talking complete bollocks. In other words, this is all complete hearsay, based upon your conviction of being right, rather than any grasp of reality.

u stick with ur arguments and il stick with mine

You don’t actually have arguments though. You have conviction of your own righteousness propped up by a number of assertions that you are repeating even though they’ve been disproved. Seriously, you’ve put forward your point of view, which numerous people have demonstrated is seriously factually incorrect and yet you’ve conveniently ignored these criticisms, merrily continuing with this mantra of ‘arguments’ of yours.

Of course you can stick to them, but it would be irresponsible to advise people using them - which is what you did here.

lomb

i amnt advising people to do anything. and DESIRABLE property is finite. end of conversation/

The Corinthian

lomb wrote:

i amnt advising people to do anything.

What would you call this post?

and DESIRABLE property is finite.

That must be the most stupid thing I’ve heard in quite a while.

The problem with that statement is that no good or service, including property, is guaranteed to remain as desirable as it always has been. That’s why we get property speculation based upon people banking that an undesirable area is going to become desirable in a few years time. And the reverse is true also.

end of conversation/

Because you say so?

RainyDay

lomb wrote:

because i know i am right. that is why. desirable property is finite. it will always track inflation over a period of time. on the otehr hand shares in companys are over a period of time infinite. names change, goodwill becomes worthless. for example even a patented drug runs out of patent after 20 years. there are constant competitive pressures as is the way in business. that is the nature of the beast. but property remains finate as a resource. young couples buying in dublin and many provincial towns even are finding this to their cost.

Would you care to provide any independent data to support your 'property beats equities' arguement?

7mountpleasant

If you have that money to hand take it and throw it into a syndicated property portfolio. Gets you far more leverage the risk adjusted return is miles and miles better than a simple residential buy to let (3% yields versus on average 6% yield after management fees on your average syndicated portfolio). As well as that you can also take advantage of investing in countries with far higher capital appreciation potential. And as an added brucie bonus as the rent these properties is used by the fund to pay down borrowings you payoff is taxed at CGT (20%).

7mountpleasant

lomb wrote:

because i know i am right. that is why. desirable property is finite. it will always track inflation over a period of time. on the otehr hand shares in companys are over a period of time infinite. names change, goodwill becomes worthless. for example even a patented drug runs out of patent after 20 years. there are constant competitive pressures as is the way in business. that is the nature of the beast. but property remains finate as a resource. young couples buying in dublin and many provincial towns even are finding this to their cost.

Many examples of Property prices falling or stagnating exist. Look at the very recent expierience of the netherlands, South East Asia, Britan (house price falls 8 out of the last 12 months) etc. . Speculative bubbles will always exist and contrary to 'the gospel according to the man inside the pub' as property is a tradeable asset is also susceptible to such a bubble.

vector

lomb wrote:

the rent wont cover the mortgage. it may cover the interest but it wont cover the principal. anyway u will have to pay tax on the rent minus the interst/maintainece so rent-interest-tax-insurance-upkeep-vacant periods means u will need a source of income to pay whats left for the principle.

the principal isnt tax deductable

Sure why don't the banks just get into the business of property speculation and close their branches, oh wait...

knightsbridge

I own some property and here's the model that has worked.

1. Single family homes go up the most in value, but the rent never covers the mortgage until you've had them awhile.

2. Crappy slummy flats are very cash flow positive, but don't appreciate nearly as much as houses.

I combine the two. I buy one house and one crappy flat around the same time, and I find that the together net out to be cash flow neutral. Thus, I get the nice appreciation on the house but am never out of pocket month to month.