So you've built up a nice little nest egg over the years and despite all the hype about hi-tech stocks, you'd like to invest it in something a little more solid - like old-fashioned bricks and mortar. But what are the financial issues that have to be taken into consideration? As always, much depends on the circumstances of what you're investing in and where it is. The average small investor has a number of choices which include buying a second property at home, going to Britain in search of a residential or commercial investment, or heading even further afield to places such as Spain or Florida to combine the investment with a holiday home.

Lenders say that more and more people are plumping for one of the second two options as the Bacon report, introduced in 1998, has taken much of the steam out of the once-buoyant home market for residential investors. EBS Building Society, for instance, says it has seen a 30 per cent reduction in the numbers investing in property such as city centre apartments over the last two years. The Bacon measures made it far less tax efficient to invest in property while many people are reluctant to buy into a market which may be nearing its peak.

Brian Healy, divisional manager of property finance with EBS, cautions that investors need to stand back from any deal and carefully weigh it up. "We estimate that the after-tax yield on such investment (residential) is just two to three per cent, assuming you buy for cash. If you borrow up to 90 per cent of the mortgage, the yield may be negative," he says.

However, for those with cash to buy, the yield on such property is still ahead of the paltry sums available on deposit given the current strength of rental income. Mortgages are usually easy to organise, although they may involve a small premium over home loan rates.

The difficulties associated with investing in residential property have not resulted in a mass move into commercial property. Sources estimate that a small commercial deal in Dublin would cost at least £300,000 to £500,000 - more than most small investors can afford - and supply at that level is limited. As a result, a lot of investors are looking overseas, both to Britain, where the market is picking up, and more exotic locations.

For those buying in Britain, arranging finance is not difficult. Irish lenders, such as Bank of Ireland and First Active, have British lending arms to which they will refer you.

First Active says its British operation is prepared to loan up to 80 per cent of the value of the property being acquired. It also expects applicants to have sufficient income to meet their existing liabilities while seeking rental cover of 130 per cent of the interest charged.

But investors should bear in mind that British interest rates are quite a bit higher than those in the Republic, with the key official UK rate at 6.0 per cent compared with 3.25 per cent in the euro zone.

First Active says that it usually charges the cost of funds on the money market, currently around 6.25 per cent, plus 1.5 per cent, for commercial mortgages, meaning would-be investors face a rate of around 7.75 per cent.

The current weakness of the pound against sterling should also be factored in by those buying in Britain. Investors keen to pick up a pad in Spain, or some other far-flung sunny location, need to consider carefully where to take out the mortgage. If they borrow at home, they will not be able to use the property as security as Irish institutions are not in a position to repossess it in the event of a default on the loan. Borrowing abroad also has the advantage of allowing them to use rental income to meet the mortgage without involving any currency risk.

Estate agents warn would-be buyers to make very sure of the financial parameters they are using to underpin their investment. If you are banking on renting out the property for eight months a year to cover your costs, make sure it is a realistic proposition.