# Investing in property again ?



## landlord (24 Jun 2013)

I am considering investing in property again..........?

My History...
I have 5 investment properties, purchased between 2002 and 2007 all in Swords, all on Danske bank interest only (for life) mortgages, tracking at 0.75% above ECB. 
Gross rents are approx 3 times the cost of each mortgage.  So even after all costs rental profits are v good.  
I live in Swords so manage them all my self. 
They are all in serious negative equity, but are long term investments so I am not particularly concerned.  


My Plan...
Considering purchasing as a cash buyer with a friend.....
( the purchasing with a friend issue has its own concerns!!)

Worked example of property I have seen .......4 bed swords 

Cost 180000
Stamp duty 1800 
solicitors fees 1000

total 180000 after i hopefully negotiate a discount in price???

So realistically 180000..... plus 6000 fixtures and fittings = 186000

Rent 1300 p/month 
15,600 p/year

Rental yield 15600/186000=8.4%

Annual costs 
Management fee 700 p/year 
Local property tax 315 p/year
Repairs and replacing fixtures and fixings 1000?
PRTB 90
Daft ad 70?
= total approx 2000 (rounded down)?

15600 rent minus 2000=13600 rental profit/year before tax
And   V. Approx 7000 after tax

Rental yield looks good, However this project is more about capital appreciation. 

Other consideration for me would be to instead invest the 186000 in a savings bank. Best rate currently is fixed 1 year Danske bank at 2.75% 
186000 x 2.75%= 5115
and after deposit interest retention tax which is 33% leaves 3427 significantly less than the approximate after tax rental profit figure (7000). 

Avoiding any speculation on house prices, does this look like a runner?
Any other pros, cons or comments appreciated.


----------



## Brendan Burgess (24 Jun 2013)

Hi landlord



> Rental yield looks good, However this project is more about capital appreciation.




It's hard to have a full discussion of these questions without speculating on house prices, but we can answer it, making assumptions e.g. 
If house prices rise...
If house prices fall...
If house prices remain the same...

As these all seem to be profitable investments, the fact that they are in negative equity is not very relevant, as long as their price recovers by the time you have to redeem the mortgage. 

However, if you have 5 investment properties and a family home, then it seems to me that you are over exposed to property. A few things can go wrong 


Interest rates may rise
Rents may fall
You may have empty periods in your houses
The tax treatement of landlords may deteriorate further
House prices may fall further and not recover by the time you have to redeem the mortgage
You can handle these risks if they come at you one at a time, but they have a habit of going in the wrong direction at the same time. 

If a few of your tenants default at the same time, you may not have the cash-flow to meet your repayments, and Danske will do their best to kick you off your trackers in exchange for a deal. Having a cash or near cash buffer available, insulates you from any of these problems. 

If house prices fall, your position will get worse if you own yet another house.
If house prices rise, you will benefit anyway from your 6 houses. 

The net interest rate you are paying is about 0.8% after tax. 

I think you would be taking less risk by investing your cash in a portfolio of shares. It is better diversification away from the one asset class of property

You can set capital gains and losses against your eventual gains and losses on your property investments
Share are very liquid - you can convert them to cash quickly if you need it.
Shares is a passive investment while owning a property is a time-consuming business
And this liquidity issue is the big issue. At some stage Danske may offer a discount to people to pay off their trackers early. If your only cash is tied up in another property, you may not be able to liquidate it fast enough. If you have shares, you can sell them and access the cash in a few days.  Given the profitability of your investments at present, Danske would have to offer a huge discount to make it worth your while. 

You may need the cash for some other reasons. For example, you may want to trade-up from your present home.  If you need to go to the bank, borrowing will be expensive. They may be reluctant to lend to you if you have big borrowings and you are in negative equity.


----------



## cremeegg (24 Jun 2013)

I would just like to pick up on a couple of points made here

Interest rates may rise. If that happens this property investment might seem an excellent idea in a few years from now. It generates €3,573 pa free cashflow, more than the alternative. This could go towards any increased interest costs in the existing properties.

Landlord is very exposed to property. Well yes he is and diversification is fine for a risk adverse passive investor. But this poster knows property and knows Swords, this is his area of expertise, better to invest in yourself than hand your money over to someone else.

Perhaps I am biased here but in invested €200k in shares in 2008 as a way to diversify out of property, and lets just say that it wasn't a pleasant experience.

With a house you can collect the rent, paint the house, and wait. Shares can become worthless as AIB shareholders know.

Landlords alternative is to put the money on deposit with Danske. I would definitely not put the money on deposit with the same bank as the borrowings. Your relationship might turn bad some time in the future.

As a matter of interest why not borrow say 70% of the purchase price, you would then retain the bulk of your cash and still have options in the future. This might also let you make the investment on your own. Many partnerships like this go bad. Not because the partner is necessarily a bad person just because their needs change in different ways.  They may need to sell to get their money out and you may not want to.

Brendan's point that the tax treatment of landlords may get worse would be a concern for me.

And I would have an additional concern, that this government is borrowing so heavily that Ireland's debt may stifle the economy for a generation.

However it does seem a strong investment case.

Good luck with what ever you decide.


----------



## Brendan Burgess (24 Jun 2013)

> Perhaps I am biased here but I invested €200k in shares in 2008 as a way to diversify out of property , and lets just say that it wasn't a pleasant experience.



Would a €200k investment in shares in 2008 not have done better than an investment in property in 2008?  

Maybe not, depending on the shares chosen and the time period selected, but most of the time shares do better than property. And the whole point about diversification is not to maximise returns, but to minimise risk.


----------



## Jim2007 (25 Jun 2013)

cremeegg said:


> Landlord is very exposed to property. Well yes he is and diversification is fine for a risk adverse passive investor.





cremeegg said:


> But this poster knows property and knows Swords, this is his area of expertise, better to invest in yourself than hand your money over to someone else.



The OP is _extremely_ over exposed to the property market and even worse he is concentrated on a couple of properties in a single location - this is most definitely not the way to manage financial risk!  The reality is that this investor has lost big time.  And right now his only hope is that the economy will turn around and the property prices will recover and it is chance rather than good financial management that will get him out of this!  If for any reason he is forced to liquidate his 'investments' he is wiped out.



cremeegg said:


> Perhaps I am biased here but in invested €200k in shares in 2008 as a way to diversify out of property, and lets just say that it wasn't a pleasant experience.



So why is seeing 50% of the value of a property being wiped out OK, while seeing the same happen to equities is not...  I might add that over the same period most broad market indexes have in fact more than recovered since 2007.  And as a general rule, equities tend to recover quicker than property.



cremeegg said:


> With a house you can collect the rent, paint the house, and wait. Shares can become worthless as AIB shareholders know.



This is just the same problem in another guis - a failure to diversify.  Dumping large amounts of money in a couple of shares in a minor European economy is no better!  A reasonably diversified portfolio would be generating dividends over the same period and would in addition have more or less fully recovered their value by now - so no negative equity.


----------



## Knuttell (25 Jun 2013)

I would be looking at paying down as much mortgage debt as I possibly could,not sure if I understand *IO* for life,is that for the term of the mortgage or your actual life?

Regarding buying with another,never in a million years would I consider this,at the very least you will have lost a friendship,these deals very rarely end amicably and disputes arise about whose responsibility it is to do even the most basic of tasks on the property leading to resentment etc.

You have enough property,the fact its all located in such a concentrated area would be a concern as previous poster have alluded to.

Should you invest in property again?My opinion would be a massive negative,there are too many known unknowns.


----------



## cremeegg (26 Jun 2013)

Jim2007 said:


> The OP is _extremely_ over exposed to the property market and even worse he is concentrated on a couple of properties in a single location - this is most definitely not the way to manage financial risk!



The purpose of investment is to maximise return, not to avoid risk.

In a perfectly efficient market it would not be possible to get above market return in the long run.

But no market is perfectly efficient, and the present Irish housing market is probably more inefficient than most.

This is because bank lending is not based on market criteria, it is restricted due to the banks own internal weaknesses.

If landlord believes he has identified a superior investment opportunity he may well be right and he should take it.


----------



## Brendan Burgess (26 Jun 2013)

Hi cremeegg



> The purpose of investment is to maximise return, not to avoid risk.



I don't think that many people would agree with you.  The first objective should be to achieve a reasonable standard of living and to avoid going bust.  The OP is at serious risk of going bust and should not take any steps which increase this risk.

Diversification could well achieve increasing his returns while reducing risk. 

Brendan


----------



## Bronte (26 Jun 2013)

Brendan Burgess said:


> It's hard to have a full discussion of these questions without speculating on house prices,
> 
> Rents may fall
> 
> ...


 
It is indeed nearly impossibly to discuss this without referring to house prices. !

The OP is very exposed to property, *they* (the experts) say the key to investment is to diversify. I'm much like you, mostly property, and currently thinking of going back in as the value where I'm looking is excellent.

There is one difference between us though, I'm repaying the mortgages, don't see why with the amount of rent you're receiving that you don't do the same?

What is your exit strategy if house prices don't recover when the mortgage term ends. At that time you will have to repay the capital amount outstanding. How do you propose to do that. 

The pluses are it's Dublin, good location in Dublin, great rents, you know how to be a landlord. At this stage you know how to manage empty periods. I don't see rents decreasing because supply is getting tight in Dublin, people cannot get mortgages and there is I'm reliable informed a mini boom in Dublin and particularly in the South (I know Swords is in the North).

Re the tax treatment, in all honesty with so many struggling landlords I cannot see any government going after this market any further. I think one in 3 buy to lets is in trouble. Can you imagine if there were even more taxes. Not going to happen. 

In relation to the property market and price falls, well Dublin is certainly a particular good market, with Galway and Cork the only real places kinda keeping steady. Cannot see those locations going any further (sorry now if I'm not allowed to say this, please delete). But I can see for example Waterford in free fall. And anything in plenty of other areas where there is no work. 

No way would I ever risk shares. The amount of people that lost everything in this is amazing, and I agree with Creemeeg on this that if shares tank you've nothing but if a property price collapses, you've still got the house 

There are two reasons not to do what you're planning, you've 5 properties already, it's enough. And most importantly never ever go into business with your soon to be enemy !

Perhaps consider putting some of your savings towards the capital amount of your mortgages. I'm actually doing this currently in relation to my PPR. I've been mulling it over for a few years now and have taken the plunge and will be signing for it today. I'm sick of getting a near zero return and watching my capital evaporate. Having calculated the better interst rate I'll get, the amount I'll save on reducing the term and the extra years of life insurance we won't have to pay for etc it makse sense.


----------



## cremeegg (26 Jun 2013)

Brendan Burgess said:


> Hi cremeegg
> 
> I don't think that many people would agree with you.  The first objective should be to achieve a reasonable standard of living and to avoid going bust.  The OP is at serious risk of going bust and should not take any steps which increase this risk.
> 
> ...



Interesting that our perspectives are so different.

I look to my income for a reasonable standard of living, I invest (very cautiously) in a pension so that this can continue after I retire. 

Then anything left over I invest with the aim of maximising my return.

If I save say €10,000 from my income over a few years, I could invest it  safely at max 3% after tax, in 20 years I would have about €18,000 (thats nominal, who knows what inflation will be).

If I borrow another €70,000 and buy an apartment, rent it out and the rent covers a 20 year repayment mortgage ( which is very realistic at the moment) I will have €80,000 in 20 years time, (again thats nominal). 

I recognise there are risks, but to be honest the uncertainties are probably more likely to work in my favour than against me. I.e. inflation would be with you in the buy an apartment scenario, and against you in the safe investment.


----------



## Brendan Burgess (26 Jun 2013)

Hi cremeegg

Your punting on property with borrowed money is risky. But you can handle the downside, so that is ok. (I assume you are mortgage free on your own home) 

The OP already has 6 properties.  He is very exposed. He will probably be ok. He will possibly do very well. But there is a small, but significant, risk that he will go bankrupt.


----------



## Mrs Vimes (26 Jun 2013)

Bronte said:


> the extra years of life insurance we won't have to pay for etc it makse sense.



The rest of your reasoning makes perfect sense Bronte, but this doesn't.

If you die before the mortgage is paid off, the life assurance will pay it for you and you still leave your cash sum as well.

If you pay the cash sum off the mortgage and cancel life assurance then your estate still received an unencumbered house but no cash sum.

Many people have life assurance even without any debts for this reason.


----------



## Jim2007 (26 Jun 2013)

cremeegg said:


> The purpose of investment is to maximise return, not to avoid risk.



Hmmm, I would suggest that objective should be to strive to achieve above average results while preserving one's capital and avoiding unnecessary financial risks.



cremeegg said:


> In a perfectly efficient market it would not be possible to get above market return in the long run.
> 
> But no market is perfectly efficient, and the present Irish housing market is probably more inefficient than most.
> 
> This is because bank lending is not based on market criteria, it is restricted due to the banks own internal weaknesses.



There is no market!  On the one side you have all this property being held back and on the other side you have buyers with out funds - any values produced by such a 'market' are meaningless because there is no way to determine if they are reasonable or not...



cremeegg said:


> If landlord believes he has identified a superior investment opportunity he may well be right and he should take it.



Well first of all the OP is so over exposed to the property market that no matter how good this investment is it will only server to increase that exposure rather than enhance the portfolio return.  Furthermore the OPs performance so far would suggest anything but expertise in this area!

By contrast, anyone who invested in say the 'FTSE/EPRA European Property Index Fund' or the 'FTSE EPRA/NAREIT US Property Yield Fund' over the same period would have seen their investment grow by between 25% and 50% depending on how they acquired their position - they are not in negative equity, like so called Irish property investors...

Heck, even an investment in an equity index such as the 'iShares MSCI World' would have easily out performed an investment in Irish property returning anything up to 50% depending on who the position was acquired.

No matter how you dress it up, any reasonably well balanced, broadly based portfolio has out performed investments in Irish property!  Enough said.


----------



## Knuttell (26 Jun 2013)

Jim2007 said:


> Furthermore the OPs performance so far would suggest anything but expertise in this area!



Bit harsh considering you know nothing about him beyond the fact he owns 5 properties on IO in Swords.


----------



## oldnick (26 Jun 2013)

I don't know about OP's expertise or not.

I do know he was clever or lucky enough to get an amazing deal from the bank - five houses on a loss-making(to the bank) tracker rate for 20/30 years- and no capital repayment.

He was given the means to earn ca. 13k rent after costs per house X 5  -75k p.a. 
OP says i  costs a third of gross rent. So that's 5k per house X 5          - 25k p.a.

That's 50.000 euros every year for ,what 20 years ? - One million pre-tax income!
(plus any interest earned on the income each year)

Unless my figures are wildly out -and of course the i rates will vary as will the rent - this is an enormous sum for either putting not a penny down or maybe a small deposit.

No way I could see any investment making so much  with so little upfront.
Well done , Landlord.

But if I were you I'd rest on my laurels.


----------



## Bronte (27 Jun 2013)

Jim2007 said:


> By contrast, anyone who invested in say the 'FTSE/EPRA European Property Index Fund' or the 'FTSE EPRA/NAREIT US Property Yield Fund' over the same period would have seen their investment grow by between 25% and 50% depending on how they acquired their position - they are not in negative equity, like so called Irish property investors...
> 
> Heck, even an investment in an equity index such as the 'iShares MSCI World' would have easily out performed an investment in Irish property returning anything up to 50% depending on who the position was acquired.
> 
> .


 
Jim I know you know your stuff in relation to these kind of investments.  But people like myself, and presumable the OP wouldn't even know where to start.  So both he and I, were we to go down that route would have nothing.  Because I'm sure we'd lose it all.  You've out of thin air, but a lot of expertise on your side, picked an extrordinarly well performing fund. If it's that easy presumable you are a multi millionaire and we are idiots.  

You're wrong about there being no market, there is a market in Dublin.  Location is everything, that's all I know.  Not much, but OP is in the right market for property in Ireland.  Only this morning on newstalk, I heard a snipet about some article in the Indo, I think, mentioning that funds/investors are coming back into Irish property and expecting 12 to 15% returns.


----------



## Bronte (27 Jun 2013)

Mrs Vimes said:


> The rest of your reasoning makes perfect sense Bronte, but this doesn't.
> 
> If you die before the mortgage is paid off, the life assurance will pay it for you and you still leave your cash sum as well.
> 
> ...


 
Just to clarify, Mr.Bronte's life insurance is around 1700 and rising, mine is 600 Euro annually. (don't ask - all insurances here are very expensive and tied to the mortgages) The new bank is allowing us to just insure me at 700 Euro for 2/3 of the remaining term. So we are reducing the term by 7 years, but it would have been 17. 17 X 1700 is about 30K, would be more as the insurance goes up. My new insurance is fixed so I know exactly how much it will cost and I don't have to to pay it for the final 1/3. Without the life insurance I'd have to pay the mortgage, if I couldn't I'd just sell the house. But we've it coverd in other ways. There were so many options on the life insurance, 25% &75% split, or 50% 50%, I've gone for 100% on me. Option to pay the whole premium on one lump sum. Very complicated. I picked the cheapest as I'm only doing it as it's a bank requirement and it reduces my mortgage rate to a miniscule amount. 

What is interesting about the OP's conondrum, from an investment point of view is that all of us on here divide basically into more or less two camps. Those that think property is great, and those that think one should diversify and that the OP is crazy. It's always the same on AAM. In all there years Knuttall and Burgess have never convinced me they are right and I've never convinced them my view is right. So I have concluded, both options are correct, for each, but only for each, and it's because they are experts at their options and I consider my choices were right for me. Hope that makes sense.  That said I'm in NE on one property, and I think the other two lost on shares.  Only when we're in the box will be really know who was right.


----------



## landlord (27 Jun 2013)

Thanks for all the responses......
I guess my main motivating driver is 
"Go with what you know"..........Property.
and
"Fear of the unknown"...........Stocks and Shares. 

I acknowledge that I am over exposed and that is a concern.

Yes interest rates WILL rise, but so MIGHT rents?
As for the possibility of empty periods, in 10 years of managing them I have seen an average of 7 days unlet between rentals and a max of 13 days. Possibly due the proximity to the airport and the very strong rental demand.
After an approx. 50% drop in house prices, I personally cant see much more of a drop. 
Brendans point about this governments future treatment of Landlords RE tax is a concern!
Comments about all my eggs being in one basket, relating to 1. property and 2. choosing just one location....Swords, can be seen as a weakness, but also as a strength.
for example 1. The strong rental demand in Swords and 2. I live in Swords and am able to manage them myself. 

I acknowledge that my investment has performed very poorly over the last 6 years in terms of capital appreciation, however I have netted a very decent income from these properties WHICH I HAVE SAVED !! enough in fact to purchase a new property. 




Knuttell said:


> I would be looking at paying down as much mortgage debt as I possibly could,not sure if I understand *IO* for life,is that for the term of the mortgage or your actual life?





Knuttell said:


> .




This point above by Knuttell definatly needs comment....
It is a fundamental point that many property investors do not understand.
If your investment mortgage is capital and interest, then year on year as you pay off the capital your interest payments reduce. Therefore the amount you can offset reduces. (Currently you can offset 75% of the mortgage interest against the tax). So while I am missing out on the opportunity to reduce the size of my mortgage, I am 1. Minimising my tax exposure and 2. Generating an additional income which I have chosen to save not squander!........
In 20 years time I am hoping that the size of the mortgages compared to the value of the houses are insignificant.
……. not sure if I have explained this point particularly well?




Jim2007 said:


> . Furthermore the OPs performance so far would suggest anything but expertise in this area!





Jim2007 said:


> .




I think this is a bit harsh......
If you are comparing my performance over the last 10 years to the performance of other property investors I think I have done fairly well. 
At worst I could have, no tenants, no income, property destruction due to poor management etc....
Instead with much hard work I have generated a very descent additional income and gained much experience managing not only the properties, but also my own tax affairs. 

I will be looking at stocks and shares.  Just because I know nothing about them, doesn't meant to say I cant start learning. I havnt ruled out future property investment either. In fact I have seen a few properties recently with rental yields over 10%.
Thanks again for all the comments......


----------



## Knuttell (27 Jun 2013)

landlord said:


> If your investment mortgage is capital and interest, then year on year as you pay off the capital your interest payments reduce. Therefore the amount you can offset reduces. (Currently you can offset 75% of the mortgage interest against the tax). So while I am missing out on the opportunity to reduce the size of my mortgage, I am 1. Minimising my tax exposure and 2. Generating an additional income which I have chosen to save not squander!........



I get that point alright I was wondering what you meant by IO for life (yours or the mortgages?)

I had property on IO which I was assured would continue till the expiration of the mortgage (20 years) ICS though,thanks to the mess we are in,changed me to cap & int payment.

They weren't looking to do me any favours but in a way they did,I no longer have to worry about inflation eating away at the mortgage size (really don't think it will tbh,Germans are death on inflation)

I now know that in X number of years 4 years before I retire all mortgage debt will be repaid on all property I own,as for the tax implication I bought a section 23 property to shelter this income.


----------



## landlord (27 Jun 2013)

Apologies I believe it is a 25 year interest only period..... After looking at the terms and conditions..... Hopefully I'll still be alive by then?

As for section 23 yes I meant to mention that in my post. You probably paid a little bit over the market value for that property when you initially bought it but a huge benefit to shelter tax on rental income. I still believe that by adopting your approach, paying capital and interest you will be eating away at your section 23 allowance more than if you were interest only.

My theory is, If I were to save all the extra cash that you are plugging into the capital of your properties I would be in a superior position in 20 or 30 years time  because of the tax advantage I mentioned earlier. So far in the last 10 years I have managed to save this additional income.


----------



## landlord (4 Oct 2017)

Update.....
Investment property bought for cash Jan 2014 (on the no CGT scheme) for 120,000, or 125,000 after costs, currently worth 230,000. Rent 1,700 p/month (HAP).  Complete fluke, but I think I timed that purchase very well in terms of the recent property boom. 
Plan to sell at the end of the 7 year period (2021) to avoid CGT. 
Brendan's concerns about governments future tax treatment of landlords proved to be relevant.....RPZ etc....
I have been using my excess rental income on the rentals to pay down my home loan which has a slightly higher tracker rate, whilst also maintaining the mortgage capital on the rentals to reduce my tax exposure. 
Due to the comments on this post I have overcome my fears and started diversifying into equities and bitcoin investments.


----------



## cremeegg (4 Oct 2017)

Thanks for the update. Well done on the successful purchase.

It was not really a fluke, you knew that the rental income justified the cost of the investment. The potential for the capital appreciation was there and the strong rent meant that you could afford to wait. Putting yourself in a position to benefit from an upturn while insulating yourself from a possible downturn, (through the strong rent) is hardly luck.

As a wise poster said.



cremeegg said:


> But this poster knows property and knows Swords, this is his area of expertise, better to invest in yourself than hand your money over to someone else.



It is interesting to note that interest rates have not gone up in the 4 years since the original thread.

Having said all that, Bitcoin ? seriously ?


----------



## landlord (4 Oct 2017)

Thanks for the words of encouragement my wise creamed egg. Yeh the rental yield was always looking strong, but as for capital appreciation that was never certain. 
As for bitcoin.....I am trying to diversify out of Fiat currencies and slowly accumulating gold, silver and bitcoin.


----------



## galway_blow_in (4 Oct 2017)

landlord said:


> Thanks for the words of encouragement my wise creamed egg. Yeh the rental yield was always looking strong, but as for capital appreciation that was never certain.
> As for bitcoin.....I am trying to diversify out of Fiat currencies and slowly accumulating gold, silver and bitcoin.



have you ever owned a BTL which was a distance away from where you live , i.e , two hours drive ?


----------



## landlord (5 Oct 2017)

No all within a 2 min drive


----------



## galway_blow_in (5 Oct 2017)

ive come across a dirt cheap terraced house in limerick , the estate agent who sold my old apartment in limerick ( sale price 165 k ) contacted me about it , they had it sale agreed  to a guy who turned out to have no money and messed them all around , 75 k for 60 sqr metre two up two down , the catch is , the area flooded in 2014 though this one escaped

tempting but its ninety minutes away ( vacant possession ) , the RAS scheme does appeal to me for these kind of houses in traditionally social housing locations , would still allow me a significant equity portfolio and no debt


----------



## Alistair (5 Oct 2017)

Hi Galway_Blow_In....

location, location, location I believe the old adage goes.  If the area close by flooded in 2014, it may be located close to O'Callaghan or Clancy Strand (north of the river) or near Lee Estate / St. Mary's park (south of the river).  There will typically be a significant price differential between these two areas despite the close geographic proximity.   I can confirm based on recent experience that there is significant demand for rentals both in and close to the city centre.

Again, based on experience, managing BTLs remotely presents all kinds of challenges.  However, the main gripe I have is should you self-manage this unit, your travel time and costs are not currently recognised as deducible expenses by revenue.  Would you consider appointing a local management agent, depending on your prospective catchment tenant.


----------



## galway_blow_in (5 Oct 2017)

Alistair said:


> Hi Galway_Blow_In....
> 
> location, location, location I believe the old adage goes.  If the area close by flooded in 2014, it may be located close to O'Callaghan Strand (north of the river) or near Lee Estate / St. Mary's park (south of the river).  There will typically be a significant price differential between these two areas despite the close geographic proximity.   I can confirm based on recent experience that there is significant demand for rentals both in and close to the city centre.
> 
> Again, based on experience, managing BTLs remotely presents all kinds of challenges.  However, the main gripe I have is should you self-manage this unit, your travel time and costs are not currently recognised as deducible expenses by revenue.  Would you consider appointing a local management agent, depending on your prospective catchment tenant.



were i to buy , i would go the RAS route and enter into a ten year lease with the local authority , at a cost of 80 k including solicitors fees and stamp duty , id settle for 600 euro per month

the property is in none of those areas you outline but not far from any of them , its not an estate but a street close to king johns castle , the property needs nothing much spent on it , no furniture in it mind you


----------



## landlord (5 Oct 2017)

I would agree with Alistair regarding the loacation.....there is a reason why it's such a bargain!!!! The locals won't go near it. I am not too familiar with the RAS scheme. Will they manage it for the 10 years? If not you have to REALLY TRUST an agent. I personally am a control freak to be honest and could never allow anyone else to manage my properties. Selecting the right tenants in the first place is even more important. What was the previous rent? Is it in a RPZ? Can you get insurance on it if it had flooding issues previously.


----------



## galway_blow_in (5 Oct 2017)

landlord said:


> I would agree with Alistair regarding the loacation.....there is a reason why it's such a bargain!!!! The locals won't go near it. I am not too familiar with the RAS scheme. Will they manage it for the 10 years? If not you have to REALLY TRUST an agent. I personally am a control freak to be honest and could never allow anyone else to manage my properties. Selecting the right tenants in the first place is even more important. What was the previous rent? Is it in a RPZ? Can you get insurance on it if it had flooding issues previously.



yes i have gotten an insurance quote 

i dont mind signing up to a lease with the local authority for a below market rate as it eliminates the hassle of managing a place ninety minutes away 

remedial work - flood prevention work has been carried out in the area , i realise there are no guarentees in this regard , the price is what it is due to the flood risk 

my attitude would be that entering into a long term lease with the local authority would be similar to owning a commercial property where the sitting tenant has a long term lease , i would have very little dealings with the house , the way the state has become so iterferring in matters housing , i really dot see that big of an issue with them being in control of a house belonging to me , its a relatively small capital spend with no borrowings 

i might not go through with it at all but i am seriously considering it


----------



## landlord (5 Oct 2017)

Sorry still unclear. Will RAS both manage and pay for all repairs for the 10 years?


----------



## galway_blow_in (5 Oct 2017)

landlord said:


> Sorry still unclear. Will RAS both manage and pay for all repairs for the 10 years?



if i were to buy it and if i were to enter into a lease agreement with the local authority , i understand  they cover maintainence for the ten year period but a contract would have to  be drawn between the council and house owner so as this is underlined in writing , not sure if the house owner must pay home insurance

can you appreciate the point of view that a location with a history ( flooding ) or reputation ( its close to problematic estates ) can present an opportunity to create better than average returns due to the low entry point ?  , you dont have to love every house you own


----------



## landlord (6 Oct 2017)

Yep with more risk certainly can provide more reward.


----------



## galway_blow_in (6 Oct 2017)

just to be clear , what im talking about is not the RAS scheme as i incorrectly stated earlier , its a relatively new scheme where the local authority lease houses from private owners over the long term ( 10 t0 20 years )  , i would still have to pay the home insurance and cover  "structural " repair however from reading further on the local government site  , like i said earlier , on a purchase price of 75 k for a 65 sqr metre house , id be content with 600 per month into my pocket if thats what it came to


----------



## cremeegg (6 Oct 2017)

Do you have a link for that scheme. Sounds interesting.


----------



## galway_blow_in (6 Oct 2017)

cremeegg said:


> Do you have a link for that scheme. Sounds interesting.



let me dig one out if i can , ive emailed them to see if structural maintainence doesnt include internal painting or replacement of furniture , its one thing having to do replace slates on the roof which wouldnt be often but replacing fridges or sofas is another 

rent is 80% of market rate but its possible the local authority gauge market rate by the cheapest in the area rather than the average , all these issues would be important when signing up to a lease


----------



## galway_blow_in (6 Oct 2017)

https://www.limerick.ie/council/ser...ate-accommodation/sell-or-lease-your-property


----------



## galway_blow_in (6 Oct 2017)

[broken link removed]

here is another similar one related to fingal in dublin


----------



## robert 200 (7 Oct 2017)

Landlords paying 73% tax are selling up ,  - homeless situation to get much worse unless major changes in the budget. Brilliant article by Robert Lawson.

Tackle the rent crisis? Stop overtaxing and over-regulating landlords

Ahead of next week’s budget Government should see private landlords as part of the housing solution, not the problem

*Robert Lawson *

Record low: currently there are only 1,062 units available to rent in Dublin city, the lowest level on record.


In recent years the topic of rents and the housing crisis has come to the fore, with many people holding strong views on the subject. The one thing that is evident is that Government policy is not working. That can be seen in the increase in Dublin rents by 22 per cent in just three years.

It is however also worth noting that compared to 10 years ago, rents are just 10 per cent higher today. While over the same period, electricity prices have increased by about 22per cent and car insurance by 61per cent.

It may seem strange to say, but fixing the rental crisis is actually rather straightforward. The level of rent, like any other commodity, is predominately determined by supply and demand.

*Private investors*

Currently there are only 1,062 units available to rent in Dublin city. This is the lowest level on record; the number of properties available to rent has fallen every year since 2009. Simultaneously, the total stock of rented properties has been falling. According to the census, the number of private rented dwellings in Dublin in 2011 was 116,935, while in 2016 it was 114,462, a decline of more than 2 per cent. This has been reflected in our figures with 32 per cent of our sales disposals of investment properties, while only 10 per cent of purchasers buying property from us are investors. Private investors are leaving the Dublin market.

In understanding the solution to the crisis, it is important to first understand that private landlords supply 69 per cent of the rental stock in the country. Given that private landlords are by far the largest supplier of rental property in the State they hold the key to solving the crisis.

Why have landlords been exiting the market in such large numbers since 2009? The answer is Government policy. In recent years the Government has introduced the following measures:

- Household charge (now called property tax)

- NPPR tax (now called property tax)

- Property tax

- Water charges (currently on hold)

- USC and PRSI on rental income

- Reduction of mortgage interest relief from 100 per cent to 80 per cent

- 4 per cent rent cap denies landlords the right to charge market rent. When rents fell by 26 per cent between the end of 2007 and 2011 no one was suggesting capping falling rents at 4 per cent annually – another example of a one-sided system

- Penal tax rates – the effective income tax rate is 73per cent

- Lack of control over your most valuable asset, such as Part 4 leases, giving the tenant the right to stay in the property for six years

- Proposals to not allow landlords to hold their own deposits

So in short, landlords are over-regulated, overtaxed with an ever-reducing level of control over their most valuable asset.

It is also worth pointing out that the Government only built 247 social housing units nationwide in 2016 and only bought 1,397 units in the same period. It appears that rather than invest in social housing, the Government’s solution is to try and take over private landlords’ property by stealth.

Landlords are now saying enough is enough; they are selling up. Remember it is the landlord’s name on the title deeds, their name on the 20-30-year mortgage; it is they that the banks will pursue should the mortgage not be paid. In short, they are taking all the risk. And if the risk versus return is not acceptable, people will invest their money elsewhere, such as in property reits.

All of the above adds up to an assault on the largest supplier of rental property in the State, the private landlord.

It would seem that the Government is reluctant to be seen to encourage landlords back into the market, rather than understanding that landlords are part of the solution, not the problem.

Next week’s budget provides the Government with an opportunity to introduce the following policies:

*Reduce the tax/income burden*

- Reintroduce 100 per cent mortgage interest relief in this budget, rather than phasing it in over the next four years (this alone will bring the effective income tax rate to just under 60 per cent).

Remove USC and PRSI on rent.

- Allow the market to find its own level. Remove the 4 per cent rent cap.

*Stop eroding landlords’ control of their properties*

- Roll back on policies and proposals that seek to prevent landlords accessing their properties.

The market reacts very quickly to new policy incentives as we saw most recently with the capital gains tax exemption introduced in December 2011. If these polices were introduced, significantly more landlords would be enticed to enter the market, supply would increase and as a result within six months we would have made significant inroads into solving the rental crisis.


----------



## landlord (7 Oct 2017)

Great article.... unfortunately a landlord could only dream of getting half of those policies put in place.


----------



## Sarenco (7 Oct 2017)

Here's a link to the full article -
https://www.irishtimes.com/life-and...axing-and-over-regulating-landlords-1.3245825


----------

