Is now a good time to buy? Confused FTB

Hi all,

First up, my stats - FTB, age 31, will be buying solo.

I’ve always put buying in the back of my mind as was never sure if I wanted to settle in Ireland forever. I still don’t know for sure!

However, a couple of years ago I started working remotely full time, and want to start taking advantage of it and start spending a few months a year in Berlin, Budapest, or wherever, while still spending enough time here to keep my Irish tax residency. I’m hoping to spend at least some of the year away every year for the next 5 or so years.

The plan is to buy somewhere in Dublin, use it as a base when I’m here, and rent/Airbnb it when I’m not. I’m a huge commitment phobe so the idea of a mortgage is a bit daunting, but I’m getting antsy because I am not getting any younger and the longer I leave it, the shorter my mortgage will be, and the higher the repayments. It doesn’t help that prices keep going up and up. In an ideal world, I’d like to wait til there’s another crash and buy then, but wouldn’t we all? There’s every chance that I could travel everywhere and at the end of the day, decide to settle here. I don’t want to be in a situation where I wake up one morning at 40, still renting, prices even higher than now, and I can only spread the payments over a 25 year mortgage, because I wouldn’t bite the bullet at 31.

I will have a circa 30k deposit saved up by Christmas and am thinking of applying for a mortgage in January or February.

I want the property to hopefully be a 2 bed somewhere near town. Given I work from home, in theory I could buy anywhere in the country, but I don’t want to be isolated in the middle of nowhere - my friends, family and social life are in Dublin.

My question is - is it normal to be nervous and not know if you want to live in Ireland forever when you buy? I know that the idea of a “starter home” was huge in the boom, and it’s considered better for a few reasons to buy the house you see as your “forever home” but I’m just not there yet. Am I being insane to be considering buying now? I can hopefully always sell it, but I’m sure many people in the Boom said that, and are now trapped in Leitrim or Cavan in negative equity with no options. I want to learn from other people’s lessons.

I’m not sure this is practical, particularly the “rent it” part. You can’t just turf out tenants every time you come home, and you can’t rent-a-room if it’s not your main residence (or at least you can, but it’s much less tax efficient). So that just leaves Airbnb. Who is going to run it for you?

Given the supply constraints, 2 beds near the city centre are in high demand and likely to go for more than you every thought. Id steer clear. the renting short term might be ok but management fees etc would be steep. You clearly would need a management company to deal with any issues. Also where would you put your stuff every time you leave?
It doesn’t sound practical. Id keep saving and have a think again in a few months time

I was thinking of doing short-term lets if I take in tenants (say 3-6 months). With Airbnb, there are 3rd party companies who can do all the logistics for you - setting up your ad, greeting the person and letting them in, etc, though obviously it comes at a price.

Yeah, the management companies obviously come at a price. I wouldn’t want to be making any profit out of the rent for now, just breaking even (which is all I could probably hope for after tax/management fees and the rest). My stuff would go in my parents house, or storage if there’s a surplus (more money!).

I’ve noticed yeah that 2 beds in good locations seem to sell very quickly (I’ve seen some on Daft that seem to be sold within a month!)
If I could get a decent 1 bed apartment in the city centre I’d probably be happy enough with that for a few years at least, I am single and children would not be on the horizon even if I wasn’t. At least a 1 bed in the city centre might be easy enough to rent out, but they need a higher deposit. I’ve also heard they can be hard to sell on.
I’d prefer an apartment for many reasons, but the fact I’d have to follow the rules of a management company, and pay them for the pleasure, puts me off. That, and so many apartments are just poorly constructed boxes.

Mortgages up to the age of 70 are normal now I think.

Ah ok, I thought the cutoff was 65 because the online mortgage calculator on AIB only gives me up to 34 years.

I see that so I could be wrong. Permanent TSB and my local mortgage broker said 70.

I bought last year and the mortgage term was only allowed till 65. Think some banks might allow longer but not all.

I’d go for it if.i was you. Its a Base to come back to, rent a room out then if you want to stay away longer you can rent it all out. The only reason I wouldn’t would be if you can see it limiting your choices. Would you be less likely to buy a ‘dream’ house if u buy this place?
More likely to be tied, stay in a job you hate. Would u hate to rent the place out.
None of these apply to you so cant see a reason not to if u can afford it.

I was out of house and home for 3 months following a chimney fire > battle with the insurance company. I needed short term accommodation and, not knowing that the battle would take as long as it did, I was renting for shortish periods at a time - 2 to 3 weeks.

What I learned was:

  • short term letting is centred in Dublin city centre / Ballsbridge
  • it’s week at a time stuff, not night by night
  • the clients are often business people coming in for a brief project or the like and their companies can afford to pay the rates.
  • the rates are approx. 3 times the weekly rate of a normal 1 year fixed rental contract
  • there wasn’t exactly a flood of options at any point in that 3 months.

I can’t imagine the agent fees are going to put a terminal dent in that as a line of income when you’re out of town. You’d avoid the potential trouble of Airbnb damage/hassle. The short term letters more likely to be professionals at work / someone on holidays

No one knows which way the market is going but waiting on a crash strikes me as the wishful-est of thinking. If property stagnates you’re no worse off (and you might generate some income from short terms letting). If it rises, you hedged against it.

You’re 31 but sure as dammit you will wake up at 40 and perspectives could very well have changed by then re: wife and kids. Getting going on setting yourself up financially now avoids facing into a long/late mortgage eating into your life at a time when you’re kids are starting to become very expensive.

And as bigbooks says: it’s great to have your own gaf. There’s an intangible disquiet going on in the back of a renters head: security of tenure, being able to do what you want with the place, money down the drain. Once it’s your house, a certain peace descends. You wouldn’t miss it if you didn’t have it (i.e. never bought), but it’s worth having.

You ask if it’s normal to be nervous. Yes it is. When I bought my first house in my early 30s as a single person and commitmentphobe I was terrified - it was only the thought of moving home when my cushy rental finished that pushed me to do it. And I was spending 60% of my salary on a mortgage so it had a severe impact on my lifestyle. It worked out ok in the end and I wouldn’t have the great house I have now if I hadn’t bitten the bullet then.

My advice: do not spent 60% of your salary on a mortgage.

Are you Irish? Why would you want to keep your tax residency? The financial advantage would be greater to relocate to a lower country or region, Malta/Dubai etc. and operate from Ireland for the maximum period permitted. This depends where you earn your income from and what you earn etc.

It’s certainly worth investigating.

You could put yourself in a tax efficient position wher eyou are far better off after 5 years.

Depending on earnings, even a German tax residency could be better than an Irish one.

Yeah I’m Irish, I’ve looked into it already a bit. As regards Dubai, I would never move to the Middle East, particularly as a female. I know there’s lots of Irish girls over there having a great time, but it’s not for me.
Malta looks good for short-term, and I love Berlin so definitely want to go there.
I think German tax is actually slightly higher than here when you work it out, but the cost of living is a bit less. Budapest has the 15% Hungarian income tax rate but they pile on lots of social security taxes as well. Needless to say, speaking to a tax advisor is on the to-do list!

Tax advisor would likely be worth an hours discussion if you were well prepared beforehand.

If it was me, I would have a Holding Company in Malta and residence there. You need to spend less than 183 days of the year in Ireland which sounds like your plan.

Some further nuances but better to have a tax advisor explain. All perfectly legal.

Germany may work out better than here when on higher income. The tax code is very complex though, so can be hard to self-navigate, moreso as a foreigner.

Ixus’ advice, and your own summation, on the ball: get a tax adviser.

On that theme, does anyone have tax adviser they’d recommend?

German taxes are substantially higher on those earning €40k or less whereas high earners in Germany (IIRC those earning €200k+ ) pay a good bit less than their Irish cousins.

As a wise man once said, it’s never the wrong time to do the right thing

What percentage of the population in either Germany or Ireland are earning >200k? I’d assume it’d be fractions of a percent.

Let me put it another way tax rates are lower in Germany for those earning more than €45k.