# Possible first time landlord, costs?



## mmurph85 (3 Feb 2019)

I have a house in Dublin that is currently sitting empty. I do not live or work in Ireland. I'm thinking of either selling or renting it. Can someone look over these figures and see if I'm correct or missing something? I really don't want the headache of being a landlord but the extra income could really be used.

Rental Income: *€22,200.00*

Expenses: 
Insurance €1,000.00
Light/Heating €2,000.00
RTB Reg €90.00
Property Management €2,220.00
Repairs €1,500.00
Total: €6,810.00
Total taxable: *€15,390.00*

Tax @ 20% €3,078.00
PRSI @ 5% €769.50
USC @ 0.5% €76.95
Total Tax: €3,924.45
Net Income: *€11,465.55*
PRT €400.00
Accountant €750.00
Total: €1,150.00
Total Net Income: *€10,315.55*


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## RedOnion (3 Feb 2019)

mmurph85 said:


> Light/Heating €2,000.00


Why would you pay this for a rental property?



mmurph85 said:


> Accountant €750.00


Tax deductible.

What's the value of the house?
Is there any mortgage outstanding?

Have you allowed for letting agent fees in rental figure?


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## Feemar5 (3 Feb 2019)

You can also claim capital outlay at 12.5% over 8 years.   This is money you spend on fitting out the house and purchase of white goods.     If you are not  living in Ireland you would be classed as a Non Resident Landlord and the tenants are supposed to deduct 20% from the rent and pay it to revenue.  I think you could also appoint a collection agent and he would do the same.     If you are not resident in Ireland I don't think you have to pay the PRSI.


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## robert 200 (3 Feb 2019)

The tenant will be paying the lighting and heating bill. You should get building insurance for about €500.


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## Zenith63 (3 Feb 2019)

No mortgage on the property?

Any idea what it is worth so you can calculate the yield and compare to paying off other loans or potentially investing the money in the stock market and getting headache free returns there?


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## Daddy Ireland (3 Feb 2019)

The stock market getting headache free returns.   I'll say no more.


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## mmurph85 (3 Feb 2019)

Thanks for the info. There is no mortgage and value of the house would be around €300k. Looking at similar properties they are getting between €1700-€1900 rent a month. I am lucky that currently I don't have any outstanding loans and a very small amount of debt.


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## noproblem (3 Feb 2019)

Personally i'd sell it. In my humble opinion people having a one off property to rent are going to find it difficult to make anything out of it and be trouble free, never mind the fact that you're not even in the country. You'll be using an agency to find a client, manage it and deal with what crops up along the way,. Be prepared for some late night phone calls, unless you get lucky. Then there's the money end of it, along with bills and rules and regs you'll have to abide by. Not everyone will agree but believe me, collect your €300,000.00, these are quare times.


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## Zenith63 (4 Feb 2019)

mmurph85 said:


> Thanks for the info. There is no mortgage and value of the house would be around €300k. Looking at similar properties they are getting between €1700-€1900 rent a month. I am lucky that currently I don't have any outstanding loans and a very small amount of debt.



So your return from renting (before tax) is around 5%. A few years ago you could rely on seeing a decent chunk of capital appreciation on top of that, but depending on your view of the Irish property market and the location of the property, I wouldn’t be banking on it now.

5% is quite achievable by investing that money in funds (like Vanguard’s) or ETFs, assuming you are happy to buy and forget, not stress over the ups and downs. Maybe look into doing so via your pension as there could be healthy tax breaks for doing so depending on where you live.

Personally I would sell it.


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## NoRegretsCoyote (4 Feb 2019)

If 


Zenith63 said:


> So your return from *renting (before tax) is around 5%*. A few years ago you could rely on seeing a decent chunk of capital appreciation on top of that, but depending on your view of the Irish property market and the location of the property, I wouldn’t be banking on it now.



The tax treatment of non-resident landlords is pretty generous though. It's unlikely that the OP would get the same tax treatment if it was invested in an ETF.

Long run, most people I know get tired of being a one-property landlord, especially in a property they don't wish to return to. There are much less stressful ways of investing, even if the return is good.


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## AlbacoreA (4 Feb 2019)

You problem isn't return its risk. If you get a bad tenant and they don't pay rent and do 10k damage to the house. There very little you can do. Is the return worth that risk.


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## robert 200 (4 Feb 2019)

Get a really good agent that has been recommended and that wont happen


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## noproblem (4 Feb 2019)

robert 200 said:


> Get a really good agent that has been recommended and that wont happen



Want to bet?


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## robert 200 (4 Feb 2019)

Well then it wasnt a good recommendation !!!


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## mmurph85 (4 Feb 2019)

Zenith63 said:


> So your return from renting (before tax) is around 5%. A few years ago you could rely on seeing a decent chunk of capital appreciation on top of that, but depending on your view of the Irish property market and the location of the property, I wouldn’t be banking on it now.
> 
> 5% is quite achievable by investing that money in funds (like Vanguard’s) or ETFs, assuming you are happy to buy and forget, not stress over the ups and downs. Maybe look into doing so via your pension as there could be healthy tax breaks for doing so depending on where you live.
> 
> Personally I would sell it.


I feel this property has appreciated to the max and the only way for it to go is downward so around about now is to me the best point to sell if I'm going to do it. The idea of having a semi passive income coming in is very appealing, especially when the cost of living where I am is substantially lower than Dublin.

With these funds I assume you're talking about locking the money up for a long time? E.g 10/20 years? Right now I'm pretty risk averse.


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## Risk Reversal (16 Apr 2019)

Hi, first time poster and have a question that is related to this thread.

What would be reasonable and is the market average with regard to % of rent paid to a letting agent to manage a property in terms of initial placement of tenant and on going management?

Would both of these be deductible for tax or just the monthly management fee?


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## galway_blow_in (16 Apr 2019)

Risk Reversal said:


> Hi, first time poster and have a question that is related to this thread.
> 
> What would be reasonable and is the market average with regard to % of rent paid to a letting agent to manage a property in terms of initial placement of tenant and on going management?
> 
> Would both of these be deductible for tax or just the monthly management fee?



It's either a month's rent or 10%, they probably won't charge a fee for finding the tenant if they are managing going forward ?

Yes I'm pretty sure those expenses are tax deductible


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## Palerider (16 Apr 2019)

Irish property investment is not for me and won't be until the tax burden is lessened, Govt needs to appreciate the risk investors take in order to offer accommodation to its citizens.

Reward is inadequate.

Bad tenants are there more than ever, they know the system is weighted towards them, in my view you rent at your peril, protect yourself as much as possible if you are certain this is for you, it just might work but if it doesn't work you will get a roasting.


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## plant43 (17 Apr 2019)

Risk Reversal said:


> Hi, first time poster and have a question that is related to this thread.
> 
> What would be reasonable and is the market average with regard to % of rent paid to a letting agent to manage a property in terms of initial placement of tenant and on going management?
> 
> Would both of these be deductible for tax or just the monthly management fee?



I got a few quotes a couple of years ago and most of them were 4% for rent collection and 4% for management fee (so about 1 mont rent).


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## Folsom (17 Apr 2019)

noproblem said:


> Be prepared for some late night phone calls



Why would s/he need to be prepared for late night phone calls?


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## Risk Reversal (17 Apr 2019)

Thanks,

Have been quoted initial fee of 6% + VAT of the total annual rent for placement of tenant and 8% + VAT monthly for management of the letting. This works out at just over two months rent for the year, which I think is very expensive.

Given the shortage of available properties in the Dublin commuter area, is the initial fee high for what is a template rental agreement and vetting of tenants?

Have first time landlords decided to manage themselves or are the costs worth it for a letting agent?


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## Leo (17 Apr 2019)

Risk Reversal said:


> Have first time landlords decided to manage themselves or are the costs worth it for a letting agent?



How many quotes did you get?


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## Bronte (17 Apr 2019)

Risk Reversal said:


> Have first time landlords decided to manage themselves or are the costs worth it for a letting agent?



I use family and pay them 10%.  Be VERY careful which agent you hire.  But if I were in Ireland there is no way I'd pay anyone to do the job.


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## Bronte (17 Apr 2019)

mmurph85 said:


> I
> Rental Income: *€22,200.00*
> 
> Expenses:
> ...



22200- 5560 costs - taxes 4141 = 12499.

Put 300K into a bank and you won't even get 1% which would be 3K, less DIRT.

Hard to see a return on 300K without risk that would give you 12K directly.


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## Risk Reversal (17 Apr 2019)

Got two quotes at similar levels. I can accept the monthly management costs. However, the initial placement of nearly 7.5% of the total annual rent given the level of demand in the market for nothing more than a simple vetting process is hard to come to terms with.


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## elcato (17 Apr 2019)

Bronte said:


> Hard to see a return on 300K without risk that would give you 12K directly.


Just to point out here, if the landlord is a PAYE worker on the higher rate of tax, the return would be about 7.5k. Add a month or two vacant and a few mishaps with wear and tear and you would be considerably closer to the 1.5k in the bank.


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## elcato (17 Apr 2019)

Risk Reversal said:


> However, the initial placement of nearly 7.5% of the total annual rent given the level of demand in the market for nothing more than a simple vetting process is hard to come to terms with.


Is this per annum ? I used an agent who charged me but if they stayed put they didn't get anything after a year. Mind you I think it was nearer 5%.


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## Risk Reversal (17 Apr 2019)

First year only. I would imagine it's on a per tenant basis, so should the lease terminate after a year the same would apply again


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## Risk Reversal (17 Apr 2019)

Folsom said:


> Why would s/he need to be prepared for late night phone calls?



I agree Folsom, an agent would operate normal office hours and wouldn't be answering late night phone calls either


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## deeobrien (18 Apr 2019)

In the Let & Management quotes I've got the let fee is only charged if they are not managing the property.  So for example it was 7% + VAT of the term of the lease for letting only.  Letting and management is 8.5% + VAT of monthly rental. It wasn't a case of them charging the 7% + the 8.5%.


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