zander1983
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- Jan 24, 2021
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Im looking to get into Real Estate investment but am living in country with what appears to be unfavourable conditions. So I'm looking for advice on whether Real Estate is a good idea in my circumstances to increase wealth, and if so, what strategy should I employ. I'll outline my details: Im a software engineer. I earn €95,000 per year working at a startup where I am a shareholder. I have my own consultancy company and I pay myself €60,000 per year. This is to reduce income tax, which is high here in Ireland, eg on a salary of €100,000, you would pay about €40,000 per year in income tax. Im putting some of what's left in the company into a Software as a Service product Im building with the help of some developers in India. I have personal savings of €160,000k (I inherited just under half of that). I dont own a home - I rent in a city, paying €1,100 per month for a room in a 2 bed apartment. Im looking to start buying properties but Im unsure of the best strategy. In my city, the average house price is €500,000. In the country as a whole, its about €300,000. Mortgage repayment rates are the highest in Europe and start at 2.25%. Banks will only lend if you have a minimum of 30% of the price of the house. I could just about afford a house of €500,000, but repayments would be €2,000 per month - and this could go to €3,000 as interest rates are going to rise. We also have Capital Gains Tax here - 33% of any gain in the sale of a house must be paid in tax. If I buy, I dont need to live there, I have a girlfriend and will live with her soon. Another important point is that in my city, rents are really high. Average per month for a 2 bed is €1800.
So given the situation where I live is less favourable to flipping properties than the US, is this even a viable strategy for increasing wealth? And if it was, whats the best strategy? Buy one for €500,000 and live there, or try to buy 2 cheaper 1-bedroom apartments and rent them out? Mortgage repayments on a 1 bedroom would be approximately €1k, and rent for a one bed averages at €1500 (but this is taxable income), so Im leaning towards this option. But the gap between mortgage repayments and rent is also wider. I dont know if this is the correct strategy or not - my (traditional) finance advisor would say this is a terrible move - since the price per square foot is higher for smaller places.
Would love thoughts from people here. Thanks.
So given the situation where I live is less favourable to flipping properties than the US, is this even a viable strategy for increasing wealth? And if it was, whats the best strategy? Buy one for €500,000 and live there, or try to buy 2 cheaper 1-bedroom apartments and rent them out? Mortgage repayments on a 1 bedroom would be approximately €1k, and rent for a one bed averages at €1500 (but this is taxable income), so Im leaning towards this option. But the gap between mortgage repayments and rent is also wider. I dont know if this is the correct strategy or not - my (traditional) finance advisor would say this is a terrible move - since the price per square foot is higher for smaller places.
Would love thoughts from people here. Thanks.
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