Dh & I are discussing buying another property at the moment and we have a list of pros and cons but swing between thinking it's a great idea to we'd be mad to buy it.
It's an older property which is within budget and would need about 20K of work done to it to have it rentable. The issue is we'd have to use the majority of the savings we have for third level for the children to fund it (along with a manageable mortgage) The return is pretty guaranteed but as we all know the property market in Ireland can be unreliable.
We have a small mortgage on our home and we have an investment property that is almost paid for. We have a very comfortable lifestyle but know the purse strings would have to be tightened if we do buy.
I'm interested to know would others risk their savings for children's education? While we wouldn't be scraping to get by we'd have less disposable income but it could be worth it in the long run. We have 5 years before third level comes into the equation.
What would you do? Obviously we're not going to base our decision on what the Hey Mammies would do but I'm interested to get different perspectives.
Invest or not?
Re: Invest or not?
As you already have an investment property, I don’t think I would invest further in property. I would worry about exposure to the property market and would prefer to diversify my investments. That said, I have no knowledge of this area and nothing to invest! I’m probably just a risk averse person!
Re: Invest or not?
I wouldn’t. Residential rental property can be a hassle. Unless you’ll be achieving a very high rent, you won’t have much left over after you pay tax on rental income, mortgage, insurance, property tax, house, maintenance, etc.
It would be too much of a risk for me, using your savings ear-marked for college costs that will start in five years time.
It would be too much of a risk for me, using your savings ear-marked for college costs that will start in five years time.
Re: Invest or not?
Given you already have two properties I would (like a previous poster said) be more inclined to diversify. You've a lot of eggs in one basket if things go belly up. I would not be at all comfortable buying now when the market is nuts (and it is truly nuts, worse than it was at its pre-crash peak); and add to that I generally have very little faith in the accuracy of "it'll just take 20k" estimates.
On top of that I would not play with my children's college fund. 5 years is not very long if the market crashes.
On top of that I would not play with my children's college fund. 5 years is not very long if the market crashes.
Re: Invest or not?
I'd agree with all the above unless you sold the investment property that is almost paid for and use the proceeds from that to buy the other investment property if you think it has longer term investment potential.RDR wrote:Given you already have two properties I would (like a previous poster said) be more inclined to diversify. You've a lot of eggs in one basket if things go belly up. I would not be at all comfortable buying now when the market is nuts (and it is truly nuts, worse than it was at its pre-crash peak); and add to that I generally have very little faith in the accuracy of "it'll just take 20k" estimates.
On top of that I would not play with my children's college fund. 5 years is not very long if the market crashes.
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janeymac
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Re: Invest or not?
Given you have a very comfortable lifestyle, an investment property almost paid off and just a small mortgage on your home, I'd question your motivation in risking savings you have earmarked for college starting in 5 years.
I think I wouldn't risk it but we're all different and some people are much less risk averse if the potential financial pay off is tempting enough.
I think I wouldn't risk it but we're all different and some people are much less risk averse if the potential financial pay off is tempting enough.
Re: Invest or not?
Location location location - the 3 reasons to buy a property. What is your return on the investment? Are you planning on using the rental property as retirement income? Will the purchase impact on holidays with your kids which is time you can never buy back as they will fly the nest. remember there is a boom again in prices - what if interest rates increase and brexit effects.
I'm not too concerned about college fees as kids can work to assist in the bills for entertainment and we plan on them living at home. But then we have school fees that exceed the college fee.
Totally depends on your circumstances. What age are you to retirement - are you buying something that is going to cost
- lack of money by tightening the purse strings
- lack of holidays and experiences with your kids
- hassle of renting and tenants
- tax - income balance not favouring landlords
- a future inheritance bill for your kids?
Kids education fund may be balanced with rental income as the property gets on its feet - its a calculation only you can do but is laced with risk.
I'm not too concerned about college fees as kids can work to assist in the bills for entertainment and we plan on them living at home. But then we have school fees that exceed the college fee.
Totally depends on your circumstances. What age are you to retirement - are you buying something that is going to cost
- lack of money by tightening the purse strings
- lack of holidays and experiences with your kids
- hassle of renting and tenants
- tax - income balance not favouring landlords
- a future inheritance bill for your kids?
Kids education fund may be balanced with rental income as the property gets on its feet - its a calculation only you can do but is laced with risk.
Re: Invest or not?
Thank you for all the replies, your views are all in line with what we've been saying ourselves on our cons list.
I should clarify that we are not in Dublin so the cost of the property is very low in comparison to Dublin prices. DH is also in the business so the 20K estimate is pretty accurate. Our other property has paid for itself with very little outlay over the years apart from the usual painting and furniture.
On the pros side it has good rental potential as it's within a village area and in a good tourist destination. It is also somewhere DH & I could see ourselves downsizing and retiring to.
However I'm loathe to touch the savings for education. My parents drilled it into me to start saving when my eldest was born, we were fairly comfortably off but they say it was tough with all of us in third level and no grants to help. Apart from one option ours will need to live away from home for third level.
The holidays with the children is something that we've also discussed, we'd still have holidays but maybe not to the same degree.
I think we've pretty much argued the same points over and over and have decided to leave it but we do wonder if we will regret our decision.
I should clarify that we are not in Dublin so the cost of the property is very low in comparison to Dublin prices. DH is also in the business so the 20K estimate is pretty accurate. Our other property has paid for itself with very little outlay over the years apart from the usual painting and furniture.
On the pros side it has good rental potential as it's within a village area and in a good tourist destination. It is also somewhere DH & I could see ourselves downsizing and retiring to.
However I'm loathe to touch the savings for education. My parents drilled it into me to start saving when my eldest was born, we were fairly comfortably off but they say it was tough with all of us in third level and no grants to help. Apart from one option ours will need to live away from home for third level.
The holidays with the children is something that we've also discussed, we'd still have holidays but maybe not to the same degree.
I think we've pretty much argued the same points over and over and have decided to leave it but we do wonder if we will regret our decision.
Re: Invest or not?
Investing a college fund in property imo is a bad move, you may need fast access to cash, and that cannot happen when it's tied to that property.
boards.ie have a very good accommodation and property section where you can get good opinions and experiences.
boards.ie have a very good accommodation and property section where you can get good opinions and experiences.
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DazedandConfused
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Re: Invest or not?
Why would your purse strings need to be tightened if you bought it? Would the rental income not cover the mortgage and more?
Re: Invest or not?
I wouldn't but I'm extremely conservative when it comes to money and risk. There'd be too many unknowns for me.
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DazedandConfused
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Re: Invest or not?
I know that but if rent wasn't covering tax, mortgage and all other expenses I wouldn't dream of buying it.Angel wrote:You have to pay tax on rental income. They don’t take the mortgage into account.
Re: Invest or not?
DazedandConfused wrote:I know that but if rent wasn't covering tax, mortgage and all other expenses I wouldn't dream of buying it.Angel wrote:You have to pay tax on rental income. They don’t take the mortgage into account.
Sorry I wasn’t sure because some people think you can write the whole mortgage amount off the rent
Re: Invest or not?
This.April wrote:I wouldn’t. Residential rental property can be a hassle. Unless you’ll be achieving a very high rent, you won’t have much left over after you pay tax on rental income, mortgage, insurance, property tax, house, maintenance, etc.
It would be too much of a risk for me, using your savings ear-marked for college costs that will start in five years time.