Rent is money down the drain. Take a Risk.

Looking at all these posts, I get a feeling that a lot of the contributers are very smug about the fact that people out there are losing money. I also get a feeling that most of the contributers rented through the ‘boom’ and are still renting - that’s a hell of a lot of money down the drain. I bought one of these apartments as a long term investment and so far it’s been great - rent covers the mortgage, the complex is superbly kept and is improving by the day. As for those who mentioned ‘industrial estate’, ‘motorway’, ‘sans knackers’ etc. - have a look around any evening of the week at those who frequent the shops and restaurants - not quite knackers in my humble opinion. Some people obviously bought property with money they didn’t have and now need to get out - at least they took a chance. No need to knock them while they’re down. Remember, even if rents go down, you’re still putting money in someone else’s pocket.

At this point I feel I should reiterate:

Rent is dead money (as implied above).
Mortgage interest is also dead money.

lets be clear goodlivin if you paid 500 K for the cubes then over 30 years you will pay approx. 580 K on interest only
(not principle)

if i buy this flat at 200K and pay over 20 years I’ll pay 144 K in interest

there are 10 flats up for rent in the cubes right now - yes it’s a great building and they are small two beds and there seems to be a ventilation issue

prices in ireland since 2000 were driven by:

  1. interest rate drops
  2. convergence of irish interest rates to german ones
  3. expansion of credit available both in LTV and Income multiples
  4. pre and post accession immigration
  5. tax incentives to building industry
  6. poorly regulated planning

items 1-4 are now reversed (NOT STOPPED reversed) and the market has a structural oversupply - the market clearing price equilibrium will be at 200 or less - but the good news is that assuming the building is sound, the cubes will likely always sell. There will be large ammounts of apartments and houses built in ireland which will not be sold even if they are given away

so as was pointed out the cubes are a good example of how to find a market clearing price in this example

my advice to you would be to sell at 300 K now - speak to the bank and see if you can get away with another payment of 50K on top of that (assuming you paid 500K) - or wait until the irish banks are bought at a fraction of loan value and do the same. peace

I’ve just split this from the original topic on a properties price dropping as it can apply to the property market in general. Also moving it to the Irish Property Bubble & Current Market Sentiment - Part III Unity forum.

What a daft debate. Prices are falling. Rent is falling. Debate over.

Just to clarify goodlivin, is the rent covering the mortgage or is it covering the interest on the mortgage for the next year or two?

Does it?

There are 16 2 bed currently for rent
Source

The average rent is just less than €1,500 per month. Even using a 30 year mortgage that would only cover a mortgage of around €270,000.

And interest paid to a bank is just as dead as rent.

That’s simply not true.
Loads of property owners on the pin, see the introductions thread.

thepropertypin.com/viewtopic … &start=150

Good for you.

My rent cost for one year is €6000. Your apartment is probably decreasing in value by more than that every month. See here. But hey no problem it’s a long term investment.

Some additional information abut your apartment would be interesting.
How much rent are you getting?
How much did the apartment cost?
Is your mortgage IO?

You have made an assertion without any facts to back it up?

This might be of some use

Irish Buy to Let calculator

mycash.ie/news/?page_id=51

More calculators

mycash.ie/news/?page_id=44

Agreed, there appears to be a great deal of sour grapes stuff in hear, gloating over difficulties that ordinary people find themselves in, and talking everyone’s hard work and honest actions down the drain. It’s as if a lot of people want us to go back to the bad old days.

It is one of the regrettable qualities of the Irish psyche to run sucess down, and enjoy the failures and bad luck of others. Keep digging and we’ll be back in the 60’s … is that what you all want ?

More assertions, cite an exmple of this glee that you talk about. I am sure that you will have no trouble in finding a few specific examples but it does not mean that the general tone of the forum is like that. I happen to think that the moderators and posters in general on this forum go to great lengths to ensure that the forum does not degenerate into finger pointing, gloating, sneering or whatever other way you want to describe it.

I also find it unbelieveable that people pop up on the site every so often and their first post is to make an attack on other posters without ever realising the irony of their actions.

The shit has hit the fan in Ireland, now we just have to deal with it.

This forum has been on the go since the summer of 2006.

You claim is unsubstantiated and seems to take no account of the hundreds of hours ( eh years…. At this stage) efforts posters have spent enriching this forum for others to digest and benefit from.

While we understand many people may be under serious pressure at this juncture as the economy falters we would kindly ask posters not to simply ride in a pull the classic straw man and attack the messenger. It’s a fatal mistake that open critical analysis backed up with links and reports offered freely are cast as begrudgery.

Many raise the point of bias and that may be so but I would claim posters are in fact merely a reflection of the current reality and if that’s changes they will also.

Its very easy for your post to be classified as trolling.

I suggest you start here

thepropertypin.com/viewtopic … 64&start=0

mambo wrote:

No. If that was the case, no one would get a mortage and it would not be a multi-trillion dollar business. Everyone woudl simply rent.

At least with a mortgage you get a house at the end of it. If nothing else, something to leave to the kids. Renting you get the same roof over your head, but nothing else to your name.

Hmmm, what about a scenario where you save/invest the difference between renting and buying. After 20/30 years you either have a big wad of cash or a nice portfolio of equities.

An example, my rent is €500 per month. If I was to buy it might cost me three times this per month, so €1,500. If I save the €1000 per month, at the end of 20 years I have €240,000 without taking into account any interest or equity growth.

I would hardly consider this nothing to my name. Ah, the buying fallacy runs and runs.

You are assuming people are rational beings…

You don’t get a house at the end of it from mortgage interest, not if it’s an investment property. You get a house at the end of it from mortgage principal. If the rent on an investment property is only covering the interest portion of the mortgage, you’re getting neither shelter nor equity from it.

If the (net) rent is covering some or all of the principal payment, then that’s another story. But the assertion is that mortgage interest is dead money.

It’s even deader than rent if you don’t live in the house because at least rent buys shelter.

Whizzbang wrote:

You assume they are not…

fable wrote:

So, what are you saying? You want a 300,000+ loan given to you with no interest to be paid on it? I think you have to change religion and bank with a muslim bank for that my friend, or take a How Finance Works 101 course to understand how the Western banking system works.

i have worked out that the recent price drops on the house i rent have effectively wiped out almost a decade of rent alone. if that sounds gleeful, well then i have no business telling anyone that they are about to get ripped off and it would be proper and polite to instead to pat them on the back and say “well done, aren’t you lucky you caught the falling knife before everyone else”.
fools and their money etc…