# Investment Property - Limerick



## Peadar (25 May 2005)

Hello,

I just wonder if anyone might have an opinon on this. Looking at a house in a housing estate in Limerick city (Garryowen), know the area pretty well. It would have been built in the 1950's, and prices are relatively low. The house we are looking at is €100k and we'd be looking to put down a €10k deposit. Rental demand is strong in the area especially from single mothers, so we'd be looking at taking in someone on rent allowance, generally landlords charge a bit more for this, so the average rent allowance rent would be €650 to €750 per month.

The yield on this property would be over 7% and we'd be in this for the long term, not speculating on short term rises.

With all the speculation on property prices, do you think it's a bad time to invest in any property in Ireland?

Any opinons on whether this would be a good investment from the figures provided.

Thanks
Peadar


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## DonKing (25 May 2005)

Hi Peadar,

That return looks very good.  I don't believe you could get a better return in Ireland at the moment

I'm doing something similiar in Dublin and it's working out very well with my tenant. In Dublin you can buy a house for say 230k to 250k and get rent for €950 to €1100 by using health board tenants.

Are you sure you can get that type of return for a 100k house? Are you sure that the house is in a reasonable area that a single mother will be able to live in ok? (I'm thinking of these feuding families you here so much of in the media.).

I presume you've kept your eye on what the local estate agents are leasing out properties for in the area?


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## zardebt (25 May 2005)

Hi Peadar,

Location Location Location .... never heard the phrase ?

-Ok - the thing about renting is that maybe it is a good idea to have a property that appeals to the wider market not just single mothers .....

- the prices are relatively low 100k ya I say that is low and did you ever wonder why..

- to get a better stats on limerick see the link  (see the report !)

and don't just take my word for it that the rental market in limerick is saturated

Not trying to put you off just trying to help!! 

Zar-debt.


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## Peadar (26 May 2005)

Zardebt,

All advice appreciated, good or bad. Your right in the sense that their would not be much of a market in the area without people on rent allowance, single mothers or otherwise, that is one of the major risks. I would probably have to drop the rent to about €400-450 if I was looking to accept other tenants. I will also have to look at the fact the gov. might clamp down on a lot of these "single mothers" , many of whom will live with their boyfriends, or that the whole rent allowance thing will be reduced.
The main advantage as I see it is that you could pay twice that much for a house in Raheen and Castletroy and only get the same amount of rent.

Donking,
It is not in any of the feuding areas, I know the area very well and know a lot of people in the area, it would be locals themselves I would be looking to rent to. The area would be classed as working class alright, but it's an older estate with many of the grown up kids now looking to come back to it. Average property prices in the area would be in the region of €120k-135k. I am viewing the house soon and I expect that their will be work required to it.

The area that's it in has a limited demand (locals looking to return) and I don't expect much capital appreciation, I'm in it for the long haul. I'll have a better idea when I view the property and maybe put out an advertisement for tenants.

Thanks for all replies.
Peadar


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## eamonn66 (26 May 2005)

i think it sounds like a good deal, provided that you can let it. you are well under the SD barrier so you could easily get out if it didnt work out and would probably not lose very much.


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## decembersal (26 May 2005)

Hi Peadar,

As a native of Limerick and given your interest in investment property, would it be better to renovate and subsequently rent an oldish house near the Treaty Stone or just sell it off?

December


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## Peadar (26 May 2005)

Hi December,

It depends on what you are looking for. If you are looking to make a quick profit, then selling it off would be good, presuming you have all your costings right and know that the market is there for the house. Renovating houses is notorious for running well over budget so you'll have to check out the costs first, my situation is that I am looking for a long term investment that will repay in 15 - 20 years time so I would be looking to rent it out, I know that beside the treaty stone there is an apartment block just being built so that might increase your competition in the rental market also there is a lot of student accomadation being built up by LIT so that would take your student market out of the equation as well.

On your location, I know the area and there is two questions that pop up, if you are on the main road near the treaty stone you are not too bad, however there is in my opinon a few rough estates there which might make it tough to rent or sell on and if the house is in one of these estates I think you'll find it hard to make a profit on a renovation project unless the figures are very good ie your getting the house way below market value and you can renovate it relatively cheaply.

If you are a local and well known in the area and you know there is a market there you can rent to people you know  and avoid a lot of the trouble, but me being from the other part of town would be very nervous of getting involved in the area.

Peadar


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## zardebt (26 May 2005)

Peader,

There is another saying that goes the higher the risk the higher the gains ...

However

1. When a market starts to saturate location is a big factor....!!!
2. You paid 110k for a rental property now alot of investors paid a 110k for a house in raheen 2 or 3 years ago .....
3. Have a look around the area is there a lot of for sale signs - if so why ?
4. If there good assess to public transport good commuting roads shops schools gyms ...both castletroy and raheen have theses.
5. Some area tend to have a poor resale value - this may well be the case in your area.
6. Also be sure that what you are doing is the most tax efficient option .....

Hope this helps ,

Zardebt


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## Peadar (26 May 2005)

Zardebt,

More good and relevant points raised, thank you. I must admit I'm only just after looking at that daft report now, didn't realise they covered limerick as well, and the drop in rent in limerick looks scary alright.

1. When you talk about saturation your talking about rental market saturation,  I couldn't imagine anyone from outside the area moving into the area it would be a local looking to return, which reduces my market I know, but at the moment that's my target.

2. Nothing I can do about that
3. There is a lot of For Sale signs up alright, I think it is because people want to cash in on the boom and get value for their houses which would have been worth very little 7-8 years ago, another area I should examine more closely
4. Area is actually very central, 10 minutes walk to limerick city centre, 5 minutes walk to local primary school, 5 minutes walk to Dublin road and bus link and 2 minutes walk from shop, chipper and pub.
5. Yes I can't see the area going through the roof in the next 5 years, but again my main concern is the rental demand and will that be sustained over the long term. The saturation of properties for rent and the fall of rents in limerick shown in the daft report would be my main concerns.
6. Yes I should get good advice on that.

Thanks again.

Peadar


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## decembersal (26 May 2005)

Peader, did you think of buying a rental property in Kilkee, Spannish Point or Lahinch?


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## Peadar (26 May 2005)

*Killkee, Lahinch , Spanish Point*

No December, I don't know enough about the areas, can't comment definitively whether they are good or bad. However from gossip and word of mouth I have heard that they are  expensive and the yield isn't great, but maybe you should do a bit of your own research and see what regular holiday goers and buyers in that area think. 

Also I'd say they are a bit out of my price range. There is a good reason why I am looking at the lower end of the market 

Peadar


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## RainyDay (26 May 2005)

Peadar said:
			
		

> I will also have to look at the fact the gov. might clamp down on a lot of these "single mothers" , many of whom will live with their boyfriends,


Do I understand this right? Are you saying that success of your investment is largely dependant on ongoing social welfare fraud by your tenants?


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## Peadar (26 May 2005)

No you misunderstand, 

The fact is at the moment in this area there is a lot of single mothers who under current legislation are entitled to rent allowance. The issue I was weighing up was whether this current goverment support would last indefinitely and also the fact that a lot of these women claim to be single mothers but move their boyfriends in with them, which means if department of social welfare moves in they won't be able to afford the rent.

This practise is widespread around the working class areas of limerick(can't comment about anywhere about else), my belief is that Dept of Social Welfare will soon be clamping down on this behaviour, which I don't condone, however I must admit I don't have the moral backbone to report people I know who are acting this way.

The success of my investment is not dependant on social welfare fraud, but rather finding out if there is a market there of people who want to move back to the area, who through rent allowance will be able to pay me a decent rent which will make my investment worthwile.


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## RainyDay (26 May 2005)

It does appear to me that the success of your investment is largely dependant on SW fraud. You state that "also the fact that a lot of these women claim to be single mothers but move their boyfriends in with them, which means if department of social welfare moves in they won't be able to afford the rent". If the boyfriend moves in, then (as you clearly understand given your concerns about SW 'moving in') the tenant is carrying out SW fraud. 

And it appears that you are planning an investment which is going to be largely dependant on ongoing SW fraud for its success?


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## ClubMan (26 May 2005)

Seems to me that sufficient information has been posted about the area/property in question for the relevant authorities to investigate further should they read this thread or get tipped off by somebody else who does and they decide that it's worth their while to do so.


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## Peadar (27 May 2005)

Thanks for all opinons offered, I will be viewing the property next week, so imagine I will be able to make an informed judgement then.

I don't see how I am engaging in social welfare fraud. The ideal situation for me is someone on rent allowance who is legally entitled to get it, then I have no worries about the dept. of social welfare moving in. 

Thanks 
Peadar


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## Vanilla (27 May 2005)

From reading Peadars previous posts I did not get the impression he was condoning or relying on social welfare fraud to make his investment. From my reading, he was simply thinking of purchasing an investment property in an area where his rental market would consist of tenants in receipt of rental allowance from the department. He happened to comment on the belief that some single mothers may be defrauding the dept by lying about their circumstances and wondered if this would decrease the amount of people in receipt of this allowance- thus there would be fewer legitimate would be renters. I didnt see any thing in his posts to suggest that he was hoping such a defrauder would rent from him! I imagine his speculation relates to whether such a clampdown will affect what had previously been a strong market. As far as I can see he is entitled to and should bear this in mind when deciding on whether to make the investment.

Wrote the above before reading your last post Peadar, in which you proved me totally wrong!


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## Peadar (27 May 2005)

Sorry Vanilla


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## zardebt (27 May 2005)

Peadar just want to wish you luck ,,,, there are a lot of links on AAM about investing in property

http://www.askaboutmoney.com/showthread.php?t=5996
http://www.askaboutmoney.com/guide/ch14.htm


also this link may be of use to you :

[broken link removed]

and I suppose the best advice is to be informed as much as possible..

- You know a large number of landlords seems to have NRA on their requirements for letting ....(I wonder why ?)
its different to see someone with an open mind to this....

Zar-debt


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## Peadar (27 May 2005)

Thanks Zardebt, your advice was appreciated and is being acted on.

Just a quick question, what does NRA mean?

Non Rental Appreciation??


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## zardebt (27 May 2005)

Peadar said:
			
		

> Thanks Zardebt, your advice was appreciated and is being acted on.
> 
> Just a quick question, what does NRA mean?
> 
> Non Rental Appreciation??



Sorry Peadar,

It means No Rent Allowence ..........or Rent Allowance Not Accepted.....

look at the daft.ie and see the amount of landlaord who don't
accept rent allowance .....

it must be distressing for someone who depends on the allowance!

Zar-debt


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## RainyDay (28 May 2005)

This is a long-term investment. You seem to be thinking about one tenant. You need to think about tenants for the next 10 years. You need to think about how long the property is going to be vacant for between tenants. You need to consider the impact of tax on your investment.



			
				Peadar said:
			
		

> I don't see how I am engaging in social welfare fraud.


No-one suggested that you were 'engaging' in SW fraud. I did suggest that you were considering an investment whose success seems to be largely dependant on ongoing SW fraud by your tenants.



			
				Peadar said:
			
		

> The ideal situation for me is someone on rent allowance who is legally entitled to get it, then I have no worries about the dept. of social welfare moving in. However, being honest, if the property isn't renting I wouldn't exclude single mothers who move their boyfriend in as well.


Charming - so you're prepared to facilitate SW fraud by your tenant in order to make your investment work. This is the unattractive under-belly of 'rip-off Ireland' where property investors (amongst others) are prepared to rip-off compliant taxpayers. I'm not clear if you have any legal liability in this scenario, but you certainly carry ethical responsibility for this fraud.


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## zardebt (28 May 2005)

you know Peadar is also providing a services that other landlords are not prepared to do so !!!!!! why do we always see the negative side of things  :-(


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## RainyDay (28 May 2005)

zardebt said:
			
		

> you know Peadar is also providing a services that other landlords are not prepared to do so !!!!!! why do we always see the negative side of things  :-(



Drug-dealers provide a service that pharmacists are not prepared to provide - Should we look positively on those too? [I'm not equating Peader with drug-dealing - I'm explaining a point of principle]


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## Peadar (28 May 2005)

Rainyday, 

I think in fairness to Zardebt he was referring to landlords who were prepared to rent to Rent Allowance recipients rather than people prepared to rent to social welfare frauds. 

You are right to in your other point about facilitating fraud, ethically and morally I am really obliged not to accept tenants who I know are frauds whatever about the law.  I will be looking for tenants who are fully social welfare compliant. The real test for me will be 6 months into the investment if I have no tenants and someone applies for the house who is a social welfare fraud.

Just as a matter of interest, would you be able to report someone you knew who was engaged in this type of fraud? I know that I wouldn't have the courage, and I know people engaged in it.

Thanks for your points, I must admit you have twigged at my conscience.

Peadar


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## RainyDay (28 May 2005)

Hi Peader

It's not just a matter of conscience - it's also a matter of cold, practical investment policy. Do you really want to get into a long term investment which may well be dependant to some extend on SW fraud for its success. What if the extreme-right PD's hold the balance of power and Ms Harney resurrects her [broken link removed]. What if there is a crank like me living opposite you who is only too happy to report you?


			
				Peadar said:
			
		

> Just as a matter of interest, would you be able to report someone you knew who was engaged in this type of fraud? I know that I wouldn't have the courage, and I know people engaged in it.


While I haven't been in that actual circumstance, I'd hope that if it ever happens to me, I will be prepared to report such activity. Would you report a drunk driver? or a politician taking back-handers?


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## DonKing (31 May 2005)

Peadar,

I really can't see how anybody could consider how you as a landlord could be facilitating fraud. You would have a rental agreement with the tenant. How she or indeed he is assisted with the rent and what conditions are attached to the assistance shouldn't be a concern for you and really it is not any of your business. 

I've a great tenant on rent assistance who looks after my property very well and only contacts me when absolutely necessary. I couldn't care less who she may or may not have staying with her from time to time.

I think when it comes to the government cracking down on fraud there are many other bigger fish to fry. How many cash orientated business fully declare all their income? Very few I'd say, if any.

I certainly hope when or if the Government ever gets around to cracking down on these cash business's that they go after the accountants and financial advisors who facilitating this fraud.

Taxi drivers earning 60k plus and only paying in the order of hundreds in tax is not uncommon. I don't have the figures for other cash business's but it's probably much the same. 

Oh and while I'm on facilitating fraud, what was the Sunday's Business Post series of articles detailing the checks that revenue carry out on various cash business's all about? I'd say every shop keeper, publican, GP etc couldn't wait to get hold of a copy.


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## Peadar (20 Dec 2005)

Hi, 

Just an update on my progress. Bought run down property in ex-council estate in limerick, put €20,000 into with the intention of actually selling it on, but we put a trial ad in the local paper and there was such a response we decided to let it out. We got 25 enquiries within 24 hours.

The property was in a very bad state when we bought, apart from a small extension onto the kitchen the owner had not revovated  the house which was built in the 1950's, so we had to put a lot of work in. 

We are letting to a single mother with 2 kids who seems like a nice person, so hopefully she'll look after the property and maintain it.

Purchase Price: €100,000
Upgrade         :€20,000

Total Cost      :€120,000

Rental Income €700 per month


Thanks for all advice on the topic, really helped me out in the initial stages

Peadar


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## Enda Storey (23 Mar 2006)

If you're still out there Peader, how are things working out ?  

I am in a similar position ( just completed a refurb in a city centre location) and am considering taking in an RA tenant as well. I have nothing against RA in principle but "NRA" seems to be so widespread as to be accepted norm.

Rgs

Enda Storey


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## thewatcher (23 Mar 2006)

Enda Storey said:
			
		

> If you're still out there Peader, how are things working out ?
> 
> I am in a similar position ( just completed a refurb in a city centre location) and am considering taking in an RA tenant as well. I have nothing against RA in principle but "NRA" seems to be so widespread as to be accepted norm.
> 
> ...


 
The house beside me was rented out to Social Welfare tenants for a while,the "boyfriend" crashed into their front wall,they did a runner with 3 months worth of cheques,took every piece of furniture and left about 20 bags of rubbish in the house.
Oh how i laughed when the landlord told me,serves him right for moving a pack of scumbags into our estate.
Not everyone is bad of course,just make sure you check them out.


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## Enda Storey (26 Mar 2006)

Scary stuff. I guess it could happen with any tenant, have to be absolutely sure of the bona fides beforehand.


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## Peadar (28 Mar 2006)

Hi Enda,

It's going well so far, the girl we have in there is lovely, she's from the area and her mother lives up the road from her so it suits her fine. Small few teething problems that every tenacy has, especially with a recently renovated house, leaking pipe, drainage etc. but overall going well.

They were very impressed with the house, new floors, windows, furniture etc. and she seems to be a good tenant.

In general there is a lot of single mothers out there and Rent Allowance tenants, we were prepared to wait a long time if we had to in order to get the right one. If you get a messy tenant they could break your heart. We did plenty of research and checked our tenant before we let her in. Local knowledge would help in that regard as well.

Peadar


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## Enda Storey (29 Mar 2006)

Good man Peadar.

I was also flooded with requests and will sift carefully through them but won't reject RA out of hand.

Rgs

Enda


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## Nollaig (3 Apr 2006)

Peadar said:
			
		

> Hello,
> 
> I just wonder if anyone might have an opinon on this. Looking at a house in a housing estate in Limerick city (Garryowen), know the area pretty well. It would have been built in the 1950's, and prices are relatively low. The house we are looking at is €100k and we'd be looking to put down a €10k deposit. Rental demand is strong in the area especially from single mothers, so we'd be looking at taking in someone on rent allowance, generally landlords charge a bit more for this, so the average rent allowance rent would be €650 to €750 per month.
> 
> ...


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## Nollaig (3 Apr 2006)

Peader,
          I did something similar about three years ago. You would not believe what damage a single mother with one child(allegedly)could do. I threw out the contents,redecorated and sold. You might be better looking at Brierfield in Castletroy.


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## Peadar (3 Apr 2006)

Too late Nollaig, if you read the rest of the thread I've already bought the house and I am currently renting it out to a single mother on Rent Allowance. She has been well vetted and I believe she wil be a good tenant, but as you know there will always be risks.

I wouldn't buy in Briarfield or any part of Castletroy with the amount of student accomodation being built up there. I've heard landlords are struggling with vacancies at the moment, as there is an oversupply in the rental market.

Peadar


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