# Clondalkin investment



## lopin10 (5 Nov 2006)

I have an option to buy 2 bed, 2 bath, 6 months old, fully furnished apt in Clondalkin for €285k. I checked the rental to see if i could get €1200 per month got lots of calls. Is this a good buy


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## dancarter (6 Nov 2006)

aint too many 5% yields around now
all boils down to whether you can afford it or not!!
seems ok on basis of yield


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## MandaC (6 Nov 2006)

Depends on where it is in Clondalkin as to whether you would get if any capital appreciation.  There are too many cheap apartment complexes in Clondalkin and the majority of them are rented out to EHB tenants.   There is one particular scheme which is now only about 4 years old, but looks 40.

I believe the rental market is good in Clondalkin(I was recently thinking of renting my house in Lucan and was told the same thing) and I would think you would quite easily get €1200 per month.


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## DonKing (7 Nov 2006)

Yes you will get that rent as the good aul health board and council are propping up the rental market housing single mothers.(and the boyfriends on the QT)


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## SherryTrifle (7 Nov 2006)

dancarter said:


> aint too many 5% yields around now
> all boils down to whether you can afford it or not!!
> seems ok on basis of yield


5%??? Thats gross and doesnt include stamp duty, maintenance, insurance, the cost of letting agents or cost of your own time. More like 3% net or less. With prices actually falling in many parts of Dublin why would you buy a depreciating asset yielding less than 3% net?? 3% is less than the interest rate on the borrowings. What if theres an oversupply of aprtments in Clondalkin in years to come?? Risky investment in current market.


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## lopin10 (8 Nov 2006)

hi sherrytrifle.
in any investment property thats a risk you take. have you any better investment idea? Maybe Bulgaria,Turkey ect.


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## elcato (8 Nov 2006)

A loan of say 285k on interest only will be €950 a month on repayment so your gain would be something in the line of €250 less management, maintainance, out of tenants fees which would easily gobble up the rest. If the asset doesn't drop in value and actually gains then you're in pocket (this may or may not be the case but the longer the term probably the better). Can you afford to take a short term hit if you dont have tenants and the property drops in value ? Its anyone's guess but past experience has shown that property would rise over a long term but certainly as a short term investment it looks risky (please dont blame me if property prices go thru the roof in that area in the next few years). If you were to take the interest and principle approach your monthly repayments would be €1,727. Just showing you the numbers as oppose to saying whether you should or shouldn't buy. As stated you will also be liable for stamp duty and tax on any gain in any year. See Karls mortgage calc to crunch numbers here and for interest only see here


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## DonKing (8 Nov 2006)

You shouldn't under estimate how much maintenance costs can run to. There is a reasonable chance that your tenant/s will trash the place requiring you to refit/clean/paint the property property. If you are a good DIY'er and willing to give up your time then it could be manageable, but if you are relying on others to do it, it can be very expensive.


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## makindye (8 Nov 2006)

lopin10 said:


> I have an option to buy 2 bed, 2 bath, 6 months old, fully furnished apt in Clondalkin for €285k. I checked the rental to see if i could get €1200 per month got lots of calls. Is this a good buy


 
If you dont mind a very low yeild (3% or less in real terms) and already have a balanced portifilio in cash / stocks / gold and are prepared for say a 40% drop in property values I would say go for it. Otherwise put you money in the bank.


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## lopin10 (9 Nov 2006)

Property was purchased 30K UNDER MARKET VALUE. Rent 1200pm, on interest only after all charges €4,500 profit pa. if the property increases 33% (5.5%pa) over 5 years captail growth is €93,000. On original investment of 85k leaving out profit from rent its almost 110% return on investment.the return from at 3% bank would be 15k from 85k investment a 18% return.


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## whizzbang (9 Nov 2006)

lopin10 said:


> Property was purchased 30K UNDER MARKET VALUE. Rent 1200pm, on interest only after all charges €4,500 profit pa. if the property increases 33% (5.5%pa) over 5 years captail growth is €93,000. On original investment of 85k leaving out profit from rent its almost 110% return on investment.the return from at 3% bank would be 15k from 85k investment a 18% return.



Under market value or new market value? I wouldn't guage prices 6 months ago as "Market value". Also why did this person sell to you for 30k under? Indication of property prices in the area, leaving the country on super short notice or just giving away money for free?


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## MandaC (9 Nov 2006)

I would be interested to know where the complex is.  There is a serious over supply in some complexes and they are taking a bit of a hit (to put it mildly)


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## lopin10 (9 Nov 2006)

25+ calls to my rental add, over supply?


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## CCOVICH (9 Nov 2006)

lopin10 said:


> 25+ calls to my rental add, over supply?


 
And how many tenants have you actually got from those calls?  Calls don't always turn into tenants etc.

If you're so sure it's a good idea why do you need affirmation?


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## whathome (9 Nov 2006)

lopin10 said:


> Property was purchased 30K UNDER MARKET VALUE. Rent 1200pm, on interest only after all charges €4,500 profit pa. if the property increases 33% (5.5%pa) over 5 years captail growth is €93,000. On original investment of 85k leaving out profit from rent its almost 110% return on investment.the return from at 3% bank would be 15k from 85k investment a 18% return.


 
When thinking about the investment, have you considered the fact that prices may fall as well as rise? On the flipside of your highly optimistic calculation above, if the property value decreases by 33% over 5 years, you will experience a loss of €94,050, putting you firmly in negative equity. 

You say "property was purchased" - are you looking for confirmation on something you have already done?


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## elcato (9 Nov 2006)

> Property was purchased 30K UNDER MARKET VALUE. Rent 1200pm, on interest only after all charges €4,500 profit pa.


From your original post it looked like you were thinking of buying but now you look as if you bought ? Your interest only payment is dependant solely on how much you actually borrowed so its still not clear where your figures come from.


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## MandaC (9 Nov 2006)

There are way too many (cheap)apartments in Clondalkin. My comments in respect of this refer to the resale value as opposed to the rental.  I would think there is a good rental potential at present, but would personally feel that it may be difficult to offload when selling, depending on where it is, proximity to the village, etc.  

Why would someone consider selling a property for €30K under the market value?  It might be more like the market value has dropped by €30K   That would not surprise me one bit, knowing some of the apartment complexes.  Which complex are you thinking of buying and perhaps we might be better able to comment on the location.


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## Luternau (9 Nov 2006)

I would not be buying investment property at the moment. No one sells at a lower price than they would otherwise get from someone else. Whether you got a discount of 30% on the market value, the market value of your investment is what someone else is willing to pay for it. In your case, you have set the market value by purchasing at 30% less than previous value. 

I am presuming that you have added in the stamp duty of 14,250 and legal fees into your outlay in your first year. Until the market rises by 14250 for your property you are effectively in negative equity because of the very high entry fees into property investment. This up front costs and income tax on the rental profit, also need to be taken into account when calculating the ROI. These upfront costs are not allowable as expenses either as they are pre let costs. 85k in the bank would be way ahead on a standing start with spec-uvesting in property.


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## lopin10 (9 Nov 2006)

If i took any notice of the advice given over the past few days I would be living in a caravan.


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## whathome (9 Nov 2006)

lopin10 said:


> If i took any notice of the advice given over the past few days I would be living in a caravan.


Rather than asking others for advice and rubbishing it when they have taken the time to reply, why didn't you sit down and have a good chat with yourself instead? At least that way you would receive the answers that you want to hear (hopefully!).

Enjoy life of the road


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## DonKing (9 Nov 2006)

whathome said:


> Rather than asking others for advice and rubbishing it when they have taken the time to reply, why didn't you sit down and have a good chat with yourself instead? At least that way you would receive the answers that you want to hear (hopefully!).
> 
> Enjoy life of the road



Nice one!


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## makindye (9 Nov 2006)

lopin10 said:


> Property was purchased 30K UNDER MARKET VALUE. Rent 1200pm, on interest only after all charges €4,500 profit pa. if the property increases 33% (5.5%pa) over 5 years captail growth is €93,000. On original investment of 85k leaving out profit from rent its almost 110% return on investment.the return from at 3% bank would be 15k from 85k investment a 18% return.


 
You would be wise to ignore your 30K under market value gain- this only means something if you sell that property for 30K more.  "If property increases 33% over next 5 years" - this is highly unlikely seeing as we already have highest proprerty prices on planet (for no good reason) and prices are currently dropping - interest rates are rising and supply is rising.  You calculate your "profit" based on costs of aprox 1000 euro for the year (according to your numbers). You say that you have taken all charges into consideration.  Do they include a margin for increased interest rates - repairs - depreciation - voids - management charges etc I doubt it! Bank your cash befor your cash banks you.


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## makindye (9 Nov 2006)

lopin10 said:


> Property was purchased 30K UNDER MARKET VALUE. Rent 1200pm, on interest only after all charges €4,500 profit pa. if the property increases 33% (5.5%pa) over 5 years captail growth is €93,000. On original investment of 85k leaving out profit from rent its almost 110% return on investment.the return from at 3% bank would be 15k from 85k investment a 18% return.


 
You would be wise to ignore your 30K under market value gain- this only means something if you sell that property for 30K more.  "If property increases 33% over next 5 years" - this is highly unlikely seeing as we already have highest proprerty prices on planet (for no good reason) and prices are currently dropping - interest rates are rising and supply is rising.  You calculate your "profit" based on costs of aprox 1000 euro for the year (according to your numbers). You say that you have taken all charges into consideration.  Do they include a margin for increased interest rates - repairs - depreciation - voids - management charges etc I doubt it! Bank your cash befor your cash banks you.


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## Panzraam (10 Nov 2006)

Did somebody mention a property price fall? A bit risky I would have thought?

[broken link removed]


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## lopin10 (10 Nov 2006)

You dont look at propery on a 1 year basis,thats stupit,I want to hear from people like myself who have 10 or more investments properties, who can afford to wait for prices to increase, Maybe next year they will not increase but on a 5 year basis property will always go up. Lets compare the irish market to the UK maket over the past 30 years.
UK HOUSE PRICES  1st QRT 1983 TO 3rd QRT  2006


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## bearishbull (10 Nov 2006)

lopin10 said:


> You dont look at propery on a 1 year basis,thats stupit,I want to hear from people like myself who have 10 or more investments properties, who can afford to wait for prices to increase, Maybe next year they will not increase but on a 5 year basis property will always go up. Lets compare the irish market to the UK maket over the past 30 years.
> *UK** HOUSE PRICES 1st QRT 1983 TO 3rd QRT 2006*
> 
> 
> ...


Is it really necessary to post all those lines of figures?? 
As for property always rising over 5 years, tell that to those in japan and hong kong and dont confuse the nominal returns with real returns. Property IMO will be no higher in nominal terms in ten years and especially in areas like clondalkin when theres massive supply of apartments being build all over dublin every year.


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## MandaC (10 Nov 2006)

Still havent said which complex it is in? Any reason for that?

Bearing in mind that Clondalkin now stretches from Monastery Road (almost up as far as M50 roundabout) down as far as Rowlagh Village and there are numerous new apartments all along the way, it is difficult to comment whether €285 is actually good value for the location.


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## CCOVICH (10 Nov 2006)

lopin10 said:


> If i took any notice of the advice given over the past few days I would be living in a caravan.


 

Fine.  This thread has run it's course.  Best of luck with your investment.


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