Update on my Investment Strategy plans as a 26Y/O

[cee_the_atheist]

Hi All

So i last posted 6 months ago about my investment strategy and alot has changed in that time

Id like to check back in again to see your honest opinion if you believe this is a sound plan for the long term

Abit of context is key to start i suppose Background :

26 Y/O Salary 60k plus bonus 15-20 k annually- Pharma Sales role

Also have rent a room scheme maxed at 14k a year

Pension contribution maxed 15% Davy Select Employer 8 % ( i have a review on my salary next month and will try ask my employer to match my pension contribution of 15% instead of a pay rise)

( I also add all my bonus in my pension as employer contributions and take my 1k tax free voucher each year so i dont really touch any of my bonus as it goes into an accumulating vangaurd fund in davy select

I Bought 3 bed house last year in a busy town 215k with a 180 k 15 year mortgage and currently renting out 2 rooms tax free and its paying most of my mortgage ( essentially living free atm ) . Because i took out a short term i my mortgage is 1300 but getting 96 % payed from rent a room scheme

This essentially allows me to save 2-2.5 k of my monthly net salary ( Total 3100 euro ) and my tenants paying my mortgage ( Not for everyone i know but im young so it suits me )



FAST FORWARD !10 MONTHS LATER I BOUGHT A SECOND HOME

My Plan:

So my major update is iv just bought a second property 5 minutes from my first property to which ill move into as i look to renovate cosmetic stuff nothing structurally needs done . Its a 3 bed 80sqm council house built in the 1960s so its bullet proof and the house is in a mature road inthe centre of a town in the south east . I bought it for a 175k and its abit of a bargain and the survey came back squeaky clean and will have keys in Janaury . I plan to rent with multiple occupancy all 3 rooms and also rent a room to a ukrananian to avail of the 800 euro tax free ARP scheme

I have alot of cash 90k aitting ona. 4% interest account in trade republic and lightyear as i knew i woudl be purchasing the house so i put 75 k down on the house leave a 100k mortgage with BOI @ 4.75 % to which i will look ot pay down as fast as i can

I have estimated that i will receive around 2 k tax free a month and could bump that to 2.8 k if i rent my other room in my other house to another Ukrainian but ill see how im going so i estimate i will receive if i max the multiple occupancy and rent each room leaving a bedroom to myself around 3.4 k paying tax just on 700

Both mortages at 2k will leave my a 1.5k profit each month

So my next step is i now own 2 houses and ill have 10 k in deposit remaining once i sign the contracts in the coming weeks and hand over the 75k plus solicitors fees stamp duty etc . Previously had 90k

SO basically my next steps is to pay down the BOI 100k mortgage at 4.7 % as fast as possible as its a high loan and i guaranteed rate of return and i expect this will take me 3 maybe 4 years

MY QUESTION TO YOU ALL

SO currently as a roundup

I have

40 k pension Davy

2 Properties with circa 400k with mortgages of 270 k with tax free rental income of ARP 1600 plus rent a room 1150

10 k in cash with trade republic

What do you suggest i do next ? I know ill have alot of comments saying im mad becomng a landlord but the way i see it is a way of growing an asset with instant easy cashflow if you live in a desired area ?

 

[kevdog1232]

@cee_the_atheist I'll assume you value the same goals as I do, and if I were in your shoes right now heres what I'm thinking.

Youre highly leveraged right now, do your best to pay down your debt until at least your primary residence is paid off.

Then with that done, take your investment income split it into thirds between AVC on your pension (which hopefully maxes you out), and a diversified portfolio of ETFs and paying down your second mortgage. With the ETFs you want to put the same amount in every month for 10+ years.

That way then you'll have a very long term (pension), medium term (ETFs) and short term (properties) source of wealth generation.

Also be aware that interest rates are expected to drop next year, if we drop at the same rate as the Americans they're expecting a 0.75% drop over the course of 2024, if you've set things up correctly you could remortgage your second property at a lower rate.

Also, I'm just a guy on the Internet, this is just my guidance, all of the responsibility is in your hands.

 

[cee_the_atheist]

@kevdog1232 Yes this was my plan to pay off that 4.5% BOI mortgage in 2-3 years

I fixed for 5 years . TBH i should have fixed for 2 or 3 years but they had already issued the loan offer and it took ages as i wasnt bothered going back to change the term but i doubt the penalty will be too hefty and ill overpay it by 10% straight away which is free with BOI

But yes plan is to pay down the larger intrest debt over the coming year or two while adding value to the new house

I previously invested in the VWCE in degiro but took it all out before i bought the second house as ill probably start doing that again once the BOI mortgage is paid off

 

[martyw]

@kevdog1232 I’d agree except for the ETFs, is there any actual benefit with the killed compounded interest every 8 years and high tax? Would it not be smarter to have a diverse portfolio of blue chip stocks and ones like BRKB which operate like an ETF?

 

[asurfpro]

@cee_the_atheist I might be misunderstanding but this reads like you're expecting/calculating tax-free, rent a room income from both houses, which isn't possible

 

[cee_the_atheist]

@asurfpro No I’ll be getting it from one of the houses I’ll be living in
Then I can claim ARP for the two house which is 800 each
So around 3k for the two

 

[asurfpro]

@cee_the_atheist Got you

 

[vulcanlogician]

@cee_the_atheist The ARP is some serious tax free cash...

 

[cee_the_atheist]

@vulcanlogician Ah it’s mental
It’s the best scheme iv ever seen
I just rent a single room in both houses and then once the 2 doubles left over which I can get around 600 each

 

[blesshakinah]

@cee_the_atheist Phenomenal story, well done so far. Interested to hear about your evaluation process when buying the older (second) house, definitely sounds like a bargain. Wouldn’t know much myself about checking out a property. Do you know builders/tradesmen that check out houses for you or is there a more formal way of doing it? Would love to hear your thoughts, congrats again on the success so far.

 

[cee_the_atheist]

@blesshakinah I know the area as I’d lived near there for a year in the first house and the house were all council built in the 60s so basically there rock solid so put a bid on the property
It’s dated inside so I knew it would not go over asking price
I got a surveyor then to check it out straight away and basically gave recommendations on how to update BER and bits and pieces but said it was a great buy
Like it’s a 3 bed 2 bathroom house in a town for 175k

 

[blesshakinah]

@cee_the_atheist Sounds like a great buy, thanks for sharing those comments

 

[dewayneb]

@cee_the_atheist This is the wae to FIRE in Ireland and you can achieve it on a very reasonable salary of 75-80k. Anyone with college education is CS or biotech anything like that can make that after a few years or less of hard work and playing the game.

 

[cee_the_atheist]

@dewayneb Ye plan is to acquire 3-4 properties and then start to pay them all off

Should have a great cashflow then to retire off 3 or 4 rental properties

May not even need the pension in the end

 

[kathrynjones]

@cee_the_atheist So Ukraine's only need apply?

 

[cee_the_atheist]

@kathrynjones Well actually i volunteer for an organisation and provide my two single rooms

 

[liilas]

@cee_the_atheist This is seriously impressive op. I’m planning on doing the same but I’m only at the beginning deciding what first house to buy

 

[cee_the_atheist]

@liilas Thanks feel free to message if you need a hand

 

[earnest1018]

@cee_the_atheist What about revenue... I mean it's 50 percent tax on all rent in the first house ....I assume since you moved out??

 

[cee_the_atheist]

@earnest1018 So ill have 800 tax free on the ARP scheme and the rest of the rooms will be taxed on the first house but then ill avail of the rent a room on the house i just bought plus ARP