Buy in a falling market

Hi all,

I'm looking at the following deal at the moment. (I'm based in Ireland, so this is based in Euro pricing.)

3 bed house. Asking price 100K. A previous sale has fallen thru at 90K. Total purchasing costs approx 2K. The previous tenant has a 'disagreement' with the landlord, so there is some fix-up work to be done by the current owner. I would also do a minor re-decoration and estimate on this work would be 3K.

Another similar property on the same street is asking 129K, although it has some better features. Once the property is presentable, I feel is should fetch 100 – 110K.

Rent is 150pw. The only other annual cost is 300 for insurance. There are no rates or council fees.

If I can get the property for say 86 or 87K the numbers look good. Rates here in Ireland are 5% Int. only. Also, if I buy for cash and then re-mortgage, I reckon I can effectively hold the property, make a cash gain and use none of my own money.

However, this property is not in a good part of town. Quite the opposite in fact. Also, tenanting would be tougher than normal as it is not the most desireable area. The house however would be offered below what the rest of the market is asking for 3-beds.

Also, prices in the irish market are falling and are predicted to fall further. This part of Ireland has not seen the type of increases the rest of the Ireland has seen. This area has not risen in the last 4-5 yrs, even though the rest of the market has surged ahead. However, you will not find a 3-bed at this price anywhere else in the area.

Do the positives outweigh the negatives on this one ? All feedback appreciated.

rgds,

aidan