Worth the investment?

The address:1 Gilsfort Court, Cappagh Road, Galway.

The agent:Keane Mahony Smith.

The property:two-bed apartment for €305,000.

The landscape:just off the Cappagh Road, near Rusheen Bay and Barna Woods on the west side of Galway city.

The features:this end apartment, which is 79sq m (850sq ft), has its own entrance to a hallway and storage area.

It has a large livingroom/kitchenette with an open fireplace. There are two double bedrooms, an en suite and a bathroom. There is a storage shed to the rear and designated car-parking at the front. The managed development has 11 units in total.

How much for an investor to buy?An investor could borrow up to 90 per cent of the price on a variable tracker mortgage of 4.6 per cent (4.7 per cent APR), which is a loan of €274,500. Over a term of 25 years, the repayments would be €1,541 a month. On an interest-only loan, the monthly repayments would be €1,052.

How much for a residential buyer?A first-time buyer purchasing the apartment for themselves can get up to 100 per cent finance, which would work out as €1,564 a month at a rate of 4.6 per cent over 30 years (before mortgage interest relief). A second-time buyer can borrow up to 92 per cent or €280,600. Over 30 years, this would cost €1,438 a month. A single applicant would need to earn over €60,000 to qualify for this loan.

Potential:this apartment would secure a rent of around €800-€850 a month.

Verdict:an investor would need very strong capital appreciation on this property to compensate for a possible €200 monthly shortfall on an interest-only loan and a stamp duty cost of €15,250.

Calculations by Ferguson & Associates