The more I saved the more I wanted to use this money to buy a house or apartment. The main reason behind this was that I saw the money I was spending on rent as a waste. I saw that rent and said: "well if I could just be spending that money to pay a mortgage then at least I would be paying myself and not somebody else". I was in a solid job that I enjoyed and I expected to stay there for at least 10 years. This meant that I didn't expect to have to move area anytime soon, so buying a property wasn't going to limit me. I also felt that even if I did have to move then I could rent the room I was staying in in my property to cover some or all of the rental costs in another property. Without realizing it, the decision I was making was that I wanted to increase my net worth.
I spent the next few years saving and was getting close to the amount I felt I needed to start looking a properties when I got a bit lucky. The landlord in the apartment I had been living in rang me to tell me that he was getting the apartment valued with a view to selling. I told him that I had been saving and asked him to let me know what he was looking for once he had gotten it valued. After a few weeks he rang to let me know. The price was a bit higher than I had hoped but I asked him to give me a week to look at finances and see what I could do.
I spent the next week looking around at mortgage providers. I spent hours calculating the mortgage amount I could get, the repayments, the fees involved for solicitors, my ability to repay and my ability to get that dreaded deposit together. After all my calculations I decided I was in a position where I could make an offer at least if I was approved for the mortgage. I made the application and was approved in principle.
I knew that the landlord was very unlikely to accept my first offer so I made an offer below what I was capable of affording. As expected, the landlord rejected this and I asked for a bit more time to redo my calculations and see what I could do. I didn't need this but it was a negotiating tactic to make the landlord feel like I was being stretched. I knew that he wanted to sell and that he would prefer to sell to me as it would mean he wouldn't have to pay auctioneers fees and it would be a far quicker sale. After a few days I called again to increase my offer, though not all the way to my maximum, and the landlord asked for a bit more time to consider it. When they called the next day they told me that we were close and that if I could increase my offer a slight bit more then we could make a deal. I made an increased offer there and then and said that was my absolute maximum and that if that wasn't acceptable then I would have to stop there. Luckily they accepted!
At that point I had a mortgage in principle and an offer accepted. The first main task was to complete the mortgage process. This included submitting bank statements, completing application forms, choosing a mortgage option and getting an independent evaluation on the property. It took about a week after submitting all the paperwork but I was granted the formal approval. During this week I had contacted a number of solicitors to get quotes. In the end I chose a solicitor who wasn't the cheapest, but was also close to where I worked and easy for me to get to during my lunch breaks. This made things easy for completing and submitting paperwork as I could actually pop in to the office. The process of drawing up contracts and completing registration took about 3 months. During this time I had to pay the deposit which was 10% of the property value. I paid this to my solicitor and they looked after it from there. My solicitor was probably overly picky but I was happier with this than if they weren't careful enough. This was too important to rush and get wrong. Too be honest it also gave me a few extra months to save because I was really pushing myself to the limit to complete the deal. As this was an apartment in an apartment complex, I also had to review the management company finances and make sure I was happy that the apartment complex was being run well. Eventually I signed the contracts, the solicitor took care of all mortgage draw down and transfer and after all of this was completed and I was given the keys to my new apartment.
One of the best things about the deal for me was that I had lived in the apartment for 3 years before this. I was familiar with it and happy that I knew how things ran and that nothing was being covered up. It made me much more comfortable with the investment. The other great thing was that the apartment had rooms I could rent out! After getting the keys I was able to rent 2 rooms. Because I am a live in landlord I can make up to €14,000 per year tax free from rental income. In my case this means that the income I get from rent covers my mortgage payments.
I created a separate current account for the apartment income and expenses. This allows me to keep track of the costs and income much better. I also still pay "rent" myself each month. I deposit the same rent I used to pay from my personal current account to the apartment current account because even though the rental income covers the mortgage, I need to pay for management fees and maintenance costs. I also want to build up a safety fund for the apartment, just like I have for my personal account, so that I can deal with any emergency expenses. Once I have this safety fund in place I will be able to use this extra money to invest in other areas.
That is how I have put my foot on the property ladder. I was lucky that the apartment I was living in was being put up for sale but even if it hadn't, within 6 months I would have purchased another similar property anyway. I am now 6 months into being a property owner and landlord and so far its going great! I have rental income covering my mortgage, my own rent covering expenses and building up a safety fund and I am also able to keep saving at the same rate that I was before I purchased the apartment. Admittedly I have used a small amount of these savings to redecorate the apartment and I will continue to do this for a few more months.
Thanks for reading and keep an eye out for more updates!
