Sunday Trib. - 16.12 - invest in prop. in 2008 or not ?

Hurrah, Liz O’Kane calls the bottom of the market - time to pile back in ! … E=Property

I’m off the get a mortgage this woman knows what she’s talking about!

prices up up and away!

Are we going to make any effort to contact some of the featured experts on the ‘VIs: what they said/when they said it’ thread and ask them about their comments? Or is it too early yet?

The old hard soft landing :slight_smile:

wonderful Irony from Eddie Trump Hobbs

Liz has had this little beauty for sale for quite a while now. No price drops though. … earchlist=

wow! fancy that! :unamused:

:laughing: :laughing: :laughing: :laughing: :laughing: :laughing:

Nice one Jake.

What a sleeze. People who have the ability to get published should have to declare their interests.

7375 Euros per month over 35 years. If I had that kind of money I wouldn’t be buying a three bedroomed house in Rathmines.

I might buy this though … l=overseas
See how silly you look Liz? :unamused:

I’m doing a quick calculation here, but the negative return I’m getting seem to be too high to be believable. Can anyone see what the hell I’m doing wrong?

Assume a property was bought for EUR 750,000 and sold one year later at EUR 675,000. In addition, the investor paid transactions costs (stamp duty/legal fees and so on) of EUR 50,000 - so total purchase price was EUR 800,000

For simplicity assume interest rates were a constant 5% payable in arrears, and that an investor could have achieved leverage of 92%, the loss assuming the property was not rented out, is

Initial capital EUR 64,000 (92% leverage)
Loan EUR 736,000
Sale proceeds EUR 675,000
Capital loss (EUR 125,000)
Interest cost (EUR 36,800)
Net loss (EUR 161,800) that is 36.8K+125K

Return on cap -252% that is -161.8/64K

If you use leverage in your investments your potential profit and losses are magnified. Just ask CFD investors. It will be no different for property.

taking away transaction costs the person in your example is 50 times leveraged (736k borrowed for 750k asset). about as highly leveraged as the most toxic financial asset/hedge fund.

not happy with that level of leverage, our genius bankers were giving 100% loans with the approval of the central bank- infinite leverage folks.



+FTB status

anyone got any blonde jokes ? :confused:

I’d guess that the 92% loan shouldn’t be 92% of total purchase cost, just of the asset itself - 750K. So you’d actually need to pony up an additional 50K - which would bring the rate of return back a bit.

ireland is different: the main mistake in your equation is right at the beginning.

its the bit where you try look at it from an ‘investment’ angle.