# Property Investment in Dublin



## WorkingClass (29 Mar 2012)

I'm looking into buying a property in Dublin for investment purposes and looking for some general guidance. I'll outline a few things first though which are bound to come up.

1. I view this as a long term investment (20+ year time frame)

2. I have read numerous posts on here about the hazards and hard work involved in becoming a landlord. I'm not totally naive in this respect (although I expect I have a awful lot to learn)

3. I will NOT be taking out a mortgage, so my personal financial exposure is very limited. I don't *have* to rent out the property. If it goes down in value or I never rent it out, I'm not going to be in financial difficulty. I'm basically just committing the vast majority of my savings and risking the return I could get for it in a deposit account or in the stock market.

4. My tax returns are already complex due to share dealing.

5. I'm well aware anything I buy this year may continue to fall in value. Once again, this is a long term investment so I'm willing to risk this in the hopes that 25 years from now our economy has finally recovered 

So I have a few general questions.

1. Long term rentals are well covered here and elsewhere. How are short-term rentals (like a few weeks at a time) handled from a tax and legal perspective. How are things like holiday home rentals handles where there is no contract, etc?

I may want to rent the property out for short periods of time, but still have the option of letting visiting family use it.

2. Tax - Is there value in setting up a limited liability company when purchasing? Assuming I take no money out of the "business" can I get away with paying corporate tax on any profit made? Is this kind of thing commonly done by landlords? why/why not?

I don't intend to use any of the money generated by rental income so if I could find a way to pay a lower tax rate on it and have it available for further investment, then great.


----------



## elcato (29 Mar 2012)

Without answering any of your questions I would point out that short term lets are a bit more trouble because you would be expected to supply a lot more than your average long term apartment i.e. cutlery, kettles, towels, bed linen to name a few. This brings bigger risk of loss. Also ESB and services can't be changed into different names at willy nilly so you would be taking the risk of high usage with large bills.


----------



## RIAD_BSC (29 Mar 2012)

I'm not competent to answer point 2, so I won't. But on point 1, I think you should think very carefully.

You say you are buying it as an *investment*, but then you say you might not rent it out that often. That's crazy. If, as it sounds, you are buying it purely in the hope that its capital value will rise in future, then that's not investment at all, it is *speculation*, pure and simple.

An investment is something that gives you a regular income. Speculation (which many people mistook for investment during the boom) is about rising and falling capital values. Speculation is very very high risk. Just ask the thousands of amateur buy-to-let speculators who have gotten their hands burnt in recent years buying flats for 250k that are now only worth 100k.

My advice to you would be: if you want to buy a property as an *investment*, then buy one that will be attractive to renters and *rent it out, always*. Why leave it empty when it is earning you no income?

I'd look for a good rental yield of about 7%-8%. Calculate how much the property will generate in annual rent, divide that number by 7 or 8 (or whatever yield you are seeking), and multiply it by 100. Then you know the absolute maximum you should pay for the property. Be disciplined, and don't go beyond this price.

Because you have no financing costs (a very inefficient use of capital, by the way), you could probably accept a lower yield.

Personally, I think you are mad to risk almost all your savings on a speculative punt, with no emphasis on income. If you are going to make an investment, then you might need to rethink.


----------



## WorkingClass (29 Mar 2012)

RIAD_BSC said:


> You say you are buying it as an *investment*, but then you say you might not rent it out that often. That's crazy. If, as it sounds, you are buying it purely in the hope that its capital value will rise in future, then that's not investment at all, it is *speculation*, pure and simple.



I'm saying I don't *have* to rent it out, not that I don't fully intend to rent it out in some manner and have it generate income. I'm more looking for the difference between short and long term rentals and what's involved.

I would hope that over a lengthy enough period of time that the property will appreciate in value and rental income will increase as I'm sure any property investor does. In the short term, I know both of these are probably very unlikely, over the longer term, well only time will tell.



RIAD_BSC said:


> An investment is something that gives you a regular income. Speculation (which many people mistook for investment during the boom) is about rising and falling capital values. Speculation is very very high risk. Just ask the thousands of amateur buy-to-let speculators who have gotten their hands burnt in recent years buying flats for 250k that are now only worth 100k.



No argument here that people made very bad decisions during the boom, often with borrowed money. The two key differences I see here are the fact that a) it's not a boom anymore, and property prices today are significantly lower than they were during that period (while rental income certainly does not seem to have fallen by the same percentage)  b) I'm not using borrowed money so my personal risk is lower. In a worst case scenario of me being unable to to rent the property at all, I'm not losing money every month to interest charges. 



RIAD_BSC said:


> My advice to you would be: if you want to buy a property as an *investment*, then buy one that will be attractive to renters and *rent it out, always*. Why leave it empty when it is earning you no income?



I intend to only purchase a property that I would be happy to move my family into tomorrow if I needed to. By holding the property to what I would consider my own very high standard it should also be equally attractive to renters. Location and the property itself are absolutely key. 



RIAD_BSC said:


> I'd look for a good rental yield of about 7%-8%. Calculate how much the property will generate in annual rent, divide that number by 7 or 8 (or whatever yield you are seeking), and multiply it by 100. Then you know the absolute maximum you should pay for the property. Be disciplined, and don't go beyond this price.



Good advice. Thank you. The figure I arrived at using this formula is pretty much in line with what I was planning to spend.  



RIAD_BSC said:


> Because you have no financing costs (a very inefficient use of capital, by the way), you could probably accept a lower yield.



Indeed. I have certainly considered this. I can effectively undercut the rental market in the area I choose to purchase and still turn a profit which is a nice situation to be in.


----------



## RIAD_BSC (29 Mar 2012)

Sorry if I appeared too strident. On read back, it sounded like I was lecturing you. I wasn't, just urging caution. It is good that you are thinking long term. But I see some risk here for you. This is pretty much all your savings we are talking about here. You don't want to put them at risk.

If you ignore the income element and focus too much on capital appreciation, you may be disappointed by the investment. Let's say you buy tomorrow, house prices fall a bit further, before taking one or even two decades to recover to any great degree beyond today's prices. I think that's a reasonable prediction. You have just locked away all your savings for 20 years - houses are illiquid, you can't just make a withdrawal.

If you were prepared instead to lock your savings away in cash for even 10 years, you could probably get a really excellent deposit rate of maybe 3.5%-4% that will far outstrip the average annual house price rise during that time. Plus, your savings will not have any capital risk attached, unlike owning a house.

But to calculate your real return, you also need to deduct inflation off it to calculate what extra you are really making. Rental income is actually future inflation-proofed, because rents will generally rise in line with inflation in a normal market, unlike deposit rates, which depend on lots of factors and go up and down all the time.

If I were you, I'd forget about making money off a house price rise. If it happens in 10 or 20 years time that you've made money this way, consider it a nice bonus. Focus on getting yourself a good annual return instead - that's how a professional property company would approach things. Think short-term regular returns to make money long term.

I'd buy a good house in a good area that is tailor made for renters. But that might not necessarily be where you want to live, by the way. For example, a good renter area in Dublin might be down around Grand Canal Dock area - there's thousands down there working in Google, Facebook, LinkedIn and plenty more companies due to arrive, your workers in these type of firms are often foreign and transient. A landlord's dream. But it is not an area that would be attractive to most families (perhaps like yours, or mine), because they prefer suburban locations with more space for the kids, parks etc.

Anyway, just some food for thought. Good luck with it!


----------



## WorkingClass (29 Mar 2012)

You made a number of very valid points, and continue to do so  

I tend to always focus on the worst case and I suspect this came across in my post (ie being unable to rent and property prices continuing to fall). This is the main reason why I have saved the capital required to do this instead of borrowing it a few years ago when I would have had a very healthy deposit.  I just don't like debt in general. Beyond the mortgage on my family home, I've never borrowed a penny. Given that I'll never again borrow money at the tracker rate I have, it doesn't seem to make much sense in paying down my own mortgage. 

Having no mortgage means much less risk for me. I'm very aware that I'm committing the bulk of my savings here, and exactly how long I have worked to save this capital. That said, I'm still going to keep saving at the same rate that I have done before so in time I'll replenish those savings. 

One of the plus sides of property ownership is that you potentially get to benefit from both a steady income of rent and capital appreciation (in the longer term) and as you mentioned you are somewhat immune to inflation. As you have also pointed out, many of those who have speculated on property in the last few years have been very badly burned by it. Sadly, without a crystal ball no-one really knows where exactly where the peaks and troughs in the property market are until after they have occurred. 

As for location, it's always a tricky one. There are many places in the city center that might make good investments, but I certainly would not want to live there and would never move my family there. I'm thinking along the lines of cheap apartments is slightly dodgier areas that still might produce very good rental income. I'm sure you can make great money as a slum lord, but I don't think that's for me 

Places like grand canal dock, etc are obviously good candidates because they would meet both of my requirements of being in a good location for renters and places that I would also live with my family if I needed to (obviously, I'm at the stage in my life where surburbia suits my family needs, but if I were ever needed to leave or sell my family home, it would be nice to know I had somewhere else that I could live)


----------



## queenlex (30 Mar 2012)

RIAD_BSC said:


> Sorry if I appeared too strident. On read back, it sounded like I was lecturing you. I wasn't, just urging caution. It is good that you are thinking long term. But I see some risk here for you. This is pretty much all your savings we are talking about here. You don't want to put them at risk.
> 
> If you ignore the income element and focus too much on capital appreciation, you may be disappointed by the investment. Let's say you buy tomorrow, house prices fall a bit further, before taking one or even two decades to recover to any great degree beyond today's prices. I think that's a reasonable prediction. You have just locked away all your savings for 20 years - houses are illiquid, you can't just make a withdrawal.
> 
> ...


 
Very good post re the bit I've highlighted though I'd assume you wouldnt regard Ireland (particularly Dublin as I'm more familiar with myself) at the moment as a 'normal' market.  Rents here have to drop because at the moment they're still at mad levels imo, obviously to keep up with the excessive mortgages taken out by the owners in recent years....


----------



## WorkingClass (30 Mar 2012)

queenlex said:


> Very good post re the bit I've highlighted though I'd assume you wouldnt regard Ireland (particularly Dublin as I'm more familiar with myself) at the moment as a 'normal' market.  Rents here have to drop because at the moment they're still at mad levels imo, obviously to keep up with the excessive mortgages taken out by the owners in recent years....



It's certainly not a normal market.

I'm not sure I agree that rents *have* to drop because they are too high. Rents have dropped significantly since the boom as renters realized they had a lot more room to negotiate with their landlords and most people have done so. Given the ongoing market decline rents may continue to drop. However, the flip side is that people are not buying and still need places to live so currently the rental market seems to be decent, at least for areas of Dublin where people actually want to live.

Rent is *very* much market driven. Landlords suggest a rental price for a property and if it's too high for the market then they don't get a tenant. They naturally reduce the price in order to get a tenant (as in almost all cases it's better to have some income from a property that none). I'd assume that rents adjust to market demand very, very quickly (at least within 12 months as lease agreements are renewed). 

The size of the mortgages that landlords have taken out on the property are pretty much irrelevant in this picture. Landlords of course might want to get enough rent to cover their mortgage payments, but many can't anymore and just have to accept what they can get and pay the difference themselves.

While Ireland and Dublin currently has a lot of idle property, much of that property is in places where people just don't want to live. I'm sure you can rent a new apartment in a half built development in a crappy part of the city for very cheap, but no-one wants to live there. 

The places where people actually want to live in Dublin are still in high demand because it's still where many jobs are located.


----------



## mcivor (30 Mar 2012)

Hi,

you should think very carefully before investing in rental property in Ireland. It's not an easy way to make money or even secure a regular income that some people seem to think. I'm speaking from experience. 
Some of the hazards

- household charge will transition into a property tax over next couple of years and likely to be very significant. Some estimates put this at €1000 - €1500 per annum. This is payable by landlord unlike in other countries, and is not tax deductable
- your rental income is liable for income tax, USC, and PRSI. Likley to be significant particularly if you have no mortgage and therefore won't be eligible for tax relief on interest repayments
- rents likely to reduce for a number of reasons incl large amount of NAMA stock still to be released onto market, further austerity budgets likely to reduce disposable incomes, govt continues to reduce rents it pays to landlords on behalf of SW tenants, high emigration, etc
- high apartment service charges - typically €1500 per annum
- future budgets likely to involve additional taxes on landlords as they are seen as an easy target
Apart from above, being landlord involves being on call 24*7 and you are responsible for everything from faulty appliances to blocked sinks, etc


----------



## elcato (30 Mar 2012)

> - household charge will transition into a property tax over next couple  of years and likely to be very significant. Some estimates put this at  €1000 - €1500 per annum. This is payable by landlord unlike in other  countries, and is not tax deductable
> - your rental income is liable for income tax, USC, and PRSI. Likley to  be significant particularly if you have no mortgage and therefore won't  be eligible for tax relief on interest repayments
> - rents likely to reduce for a number of reasons incl large amount of  NAMA stock still to be released onto market, further austerity budgets  likely to reduce disposable incomes, govt continues to reduce rents it  pays to landlords on behalf of SW tenants, high emigration, etc
> - high apartment service charges - typically €1500 per annum
> ...


A fair summary but points one and three are subjective. I think the OP is suggesting more a case of using the fact that the property is a place to park some savings for now which he feels might be a safer place than a bank in the long run though.


----------



## RIAD_BSC (30 Mar 2012)

queenlex said:


> Very good post re the bit I've highlighted though I'd assume you wouldnt regard Ireland (particularly Dublin as I'm more familiar with myself) at the moment as a 'normal' market. Rents here have to drop because at the moment they're still at mad levels imo, obviously to keep up with the excessive mortgages taken out by the owners in recent years....


 
Rents have dropped quite a bit from boomtime levels, although obviously not as much as house prices. So I'm not sure they're still at mad levels. But they are probably being artificially propped up, to some degree, by the hordes of people renting who would ordinarily have bought their first house by now, but can't because they can't get a mortgage. They're probably too scared to buy anyway. So if credit opens up and house prices stabilise, these people may jump from the rental market as FTBs and there might not be enough new renters to take their place. Also, as the banks get to grips with reality of unsustainable mortgages, and start repossessing from buy-to-lets, the rents offered on these properties may indeed drop a little. Ronan Lyons is really your man for a good insight on where rents will go. I won't make any prediction on house prices, as this is still banned (completely bizarrely, in my opinion) on AAM.


----------



## oldnick (30 Mar 2012)

Some thoughts..

1. If , and it is an IF, property prices increase over the next seven years you won't have to pay any CGT  if you buy now. 

2. Some people are saying that there is a rental demand because people can't buy. Once they can buy more easily then rents will drop. But surely this means that if it becomes easier to buy ( and there is a pent-up demand) then sales prices will  at least stabilise if not increase ?

3. I've got one beds, two beds, plus houses in Dublin area - centre and suburbs. By the far the biggest yield is on the smaller apts. -7-8% after all costs but before tax.
On 3 bed houses -in reasonable suburbs- the yield is only 5%. But the smaller apts have crashed more in price. Confusing ,eh?  

4. Even odder is that the yield on houses ,not apts, in somewhat poorer areas is far better than in "better" areas, within a mile of each other. B'fermot v P'ton..  Ringsend v Sandymount etc


----------



## WorkingClass (30 Mar 2012)

mcivor said:


> - your rental income is liable for income tax, USC, and PRSI. Likley to be significant particularly if you have no mortgage and therefore won't be eligible for tax relief on interest repayments



So this brings me to my original question number 2. Assuming you don't actually require the income, is there anyway to avoid paying personal income tax on it. 

In other countries I've lived in, purchased property would often be moved under a limited liability company and no longer legally held by an individual. Partially this is to avoid the risk of being sued directly (I've lived in America) but also also for tax purposes to insulate the income they generate. 

I would have assumed that most larger property owners in ireland would set up their properties in a company and therefor be able to avail or Ireland's significantly lower corporate tax rate on business, provided they were not taking money out of the company.

Based on the posts here so far, it does not seem like this is the case. I really don't know much about setting up a business in Ireland and the rules that apply. I'm just wondering a) if this is possible and b) why people don't seem to do it regularly


----------



## Brendan Burgess (30 Mar 2012)

> it does not seem like this is the case. I  really don't know much about setting up a business in Ireland and the  rules that apply. I'm just wondering a) if this is possible and b) why  people don't seem to do it regularly



Do a search for the topic on askaboutmoney

It has been explained many times why it's not a good idea to hold properties through a company. 

Brendan


----------



## oldnick (30 Mar 2012)

W-Class - Please don't take this as patronising..

If you don't find the info that Brendan is referring to -and it can be difficult for someone new to search  AAM - then you really should go to a proper tax accountant who'll explain a few basic tax facts regarding your proposal and queries.

But just to save a bit of time...
- Ireland does not have a great corporation tax rate on rental income .It's 25%.
-  If you have a company then  the company will pay it's tax and then you will pay tax again on the dividends. You'll end up paying far more than if you owned it directly. 
- You don't want to individually earn anything ? keep it all in the company ? Sorry , then you -or,rather your company - will pay an extra tax penalty.
-   Companies, like people, pay CGT. 

There are other reasons for not making a rental company, besides company returns every year, eventual liquidation costs of the company etc etc.

Buy  several million's worth of propertY and things change. But a one house company is a bad idea.
I've omitted certain things and the above is only roughly correct as there lots of ifs-and-buts.  Your tax accountant will better advise you.


----------



## rekhib (31 Mar 2012)

elcato said:


> Without answering any of your questions I would point out that short term lets are a bit more trouble because you would be expected to supply a lot more than your average long term apartment i.e. cutlery, kettles, towels, bed linen to name a few. This brings bigger risk of loss. Also ESB and services can't be changed into different names at willy nilly so you would be taking the risk of high usage with large bills.


 
While it's true that you do need to supply more items with short term lets, it's very misleading to say it's more trouble. I have properties in Dublin, France, Italy and the Caribbean, all on short-term lets. In my experience, the one thing that is common across all of those markets is that people on holiday tend to take more care of the properties than long-term rentals. 

When I rented out my apartments in Dublin long-term, whenever a tenancy ended, there was always a big clean-up, some maintenance, a vacancy period and while the cost of this was annual, if you added up all of the costs associated with the short-term lets over the same period, they in no way came close.

As oldnick said, smaller apartments will yield better in either market. Again, in my experience, the yields on short-term lets (assuming occupancy of 15-20 weeks a year) will match long-term lets and once you have your keyholder, cleaner, booking system organised, it's a breeze compared to long term lets. The only other thing worth mentioning is that you won't get over your 20 weeks if the investment apartment doesn't have some sort of holiday hook (location, view, price - preferrably all three).


----------



## WorkingClass (31 Mar 2012)

oldnick said:


> W-Class - Please don't take this as patronising..



I lived in Canada for many years where moving even a single property into a limited company was standard practice. It certainly appears that it's not financially advantageous to do it here. I've never had any reason to investigate setting up a limited liability company in Ireland so I'm the first to admit I know absolutly nothing about it.


----------



## milic (6 Apr 2012)

oldnick said:


> Some thoughts..
> 
> 1. If , and it is an IF, property prices increase over the next seven years you won't have to pay any CGT if you buy now.
> 
> ...


 
In calculating yield, is there a general rule of thumb for converting gross yield to nett yield? If I purchase a property in a good letting area in Dublin for say €150,000, and I want a nett yield of 6%, how much gross per month would I want to receive?

I know that there are a number of variables here, but I wonder is there general rule.


----------



## oldnick (6 Apr 2012)

I dont know about general rules of thumb . most general rules have gone topsy-turvey in the confusing world of property investment in the last decade.

Also- every area of Dublin ,even the centre ,is different so I'll stick to the area I know best.

One strange aspect - the "worse" the property the higher the yield.  

To be more accurate, I don't mean slums . I mean a reasonable place, somewhat old, maybe no lifts but quite O.K. for younger people, foreign nationals who won't stay too long and often prefer to save money and thus sleep four into a two-be apt rather than two persons.

If these Apts are a bit away from the central streets then that lowers the purchase price more than the rental price  e.g. The area north of Talbot St -Smithfield.  East Wall, Stoneybatter, James St
But what do we mean by "yield" -some people mean the return on the initial investment .Auctioneers do thisto make you think the yield on properties can be amazing.

Now, a "worse " two-bedroom can be got for ca. 130.000 and you could get 1.000 per month -that's a 9% return. But of course you have to furnish (sometimes you get them furnished but forget that and spend 5k on new stuff). there'll be other buying costs,advertising for tenants etc  - so, 130k could end up as 138k - meaning that it's nearer to 8 % yield. (12.000 p.a. from 138.000 total buying cost)

But to me the real yield is what i get after paying running costs  - out of 12.000 euros  you must figure 2.000 euros for insurance, fees,charges etc. I pay less than 1.000 p.a. but that's because I have a few apts in one block which saves a lot of insurance and other costs. Still have to pay NPPR etc.
So, to be on the safe side, reckon on 2k pa. costs - that leaves 10k nett rent (before tax)out of the initial investment of 138k - about 7 %

But having said all that I would now go for a modern well appointed apartment in a more central area -even though the yield would be lower. Why ?
- no repairs (hopefully!) for some years
- I believe prices are nearing bottom ,but even if they have not, I reckon a nice roomy two bedroomed apt in a reasonable central location will rise more quickly than an inferior one. (Oh dear now I'm speculatiing!)
- you can much more easily let on a short-term basis  where the real money is (but thats another story and involves much more work).

Take an example of a "nice" apt on Capel street on Daft.ie - selling for 166k today. Offer 160k. If you have to buy new stuff and with a few costs that means 167/8
The rent for those apts are around 1.100  -which means a yield of under 7%.
After various running costs etc you may end up with a net yield  (pre-tax) of " only" 5%.


My figures will be dispUted because everyone has different experiences. Also i do a lot of any work myself and save money. I dont use a rental agency for central dublin places and do the bit off painting  etc, cleaning the halls etc -but I;'m retired and it's difficult for a fulltime person to do that.

if you're a busy person go for a nice new apt.

- and please have a word with the government and ask them what the charges, fees, penalties will be in the future. That's the big worry !
-and look into a crystal ball and tell me whether rents will continue increasing ,which over the last year they slightly have been in central Dublin.

So many variables...


----------



## WorkingClass (10 Apr 2012)

Huge thanks to everyone who has posted. It's been extremely informative and has greatly changed my mindset for making a purchase. 

I've changed my focus to be almost entirely around obtaining a reliable rental yield of 7-8% which has given me a MUCH better understanding of what I should be willing to pay for a property. This has excluded a number of areas I would have initially looked at purchasing because the numbers just don't add up.

As a few people have pointed out, a "nice area" can command and extra 50% premium in terms of purchase price, whereas the retail income is at best 10-15% higher than a "not quite so nice area".  While these "nice areas" might be wonderful to live in they don't necessarily make quality investments, particularly as even medium terms capital appreciation is not likely.

I'm generally leaning towards the middle ground of places I feel are in nice areas with good amenities (shops, public transport, etc) where the rental income seems very good and the purchase price is not at a premium. I'm also leaning towards properties built in the last 10 years that are in very good shape and less likely to have day-to-day issues for tenants.

I made my first round of offers this morning (all on the low side obviously) to get a feel for what the market is really like in the areas that I'm looking. Lets see what happens.


----------



## Firefly (11 Apr 2012)

RIAD_BSC said:


> .* If, as it sounds, you are buying it purely in the hope that its capital value will rise in future, then that's not investment at all, it is speculation, pure and simple.*
> 
> An investment is something that gives you a regular income. Speculation (which many people mistook for investment during the boom) is about rising and falling capital values.


 
Hi RIAD_BSC.

I understand the points you are making and agree with your definitions. However, without the potential for capital appreciation, is purchasing investment properties a waste of time for the small-time investor/speculator? The reason I am asking is that I spoke to my father-in-law about this over the weekend. He had a number of properties that he sold circa 2004/2005 and said to me that apart from the capital appreciation he enjoyed, he was hard pushed to make any money at all from property given the work involved. Tenants leaving a house in a state, non-payment of rent, furniture being replaced etc etc. I would be interested from seasoned property inverstors such as Oldnick to reply here if they could.....if you ruled out any potential capital appreciation, all things considered, is property investment worth it for a small time investor (ie someone who still works at something else and does not benefit from economies of scale as someone owning say 50 properties)

Thanks,
Firefly.


----------



## ajapale (11 Apr 2012)

RIAD_BSC said:


> If you are buying it purely in the hope that its capital value will rise in future, then that's not *investment* at all, it is *speculation*, pure and simple.



Agreed.

Read some of the contributions at www.thepropertypin.com for some good property sceptic commentary.


----------



## oldnick (11 Apr 2012)

Firefly - I envy your dad-in-law who sold at peak prices. Actually I hate and curse him and anyone else who has done better than me in the property business-in fact ,anyone who has done better than me. I confess that by 2005 I was speculating rather than investing. Now I am concentrating purely on obtaining a renatl living and am trying to ignore the property price. 
(well, my wife tells me to ignore property prices but I can't I can't)


 RIAD's  comment about property purchasing in order to make money is speculating rather than investing is pretty accurate- _but only in  hindsight._ Until the last decade property was better or as good as any investment -shares, gold, paintings etc.  
By RIAD's definition there is no such thing as an investment - bank interest rates go up and down, govnt bonds are liable to political upheavals. 

(Incidentally - almost any investment/speculation profit is subject to CGT except property  for the next seven yrs)

But you asked about whether there is money to be made from* renting *...

Yes and No.  *YES* -if you buy an newish apt in city-centre-ish. (an even better yield if you buy a few together) .
 Getting good references or knowing the tenant helps enormously.
If your property is new there shouldn't be problems with  things falling apart and tenants complaining, so you can work full-time and you don't need a mngt company"to look after it".

*NO *- If you buy something that needs  repairs/upkeep, whether an apt or house. Even  a house in top condition usually has a garden that tenants neglect and needs a lot of painting and refurbishing periodically.(so does an apt but that's easy-peasy).
 A house rarely yields more than 5%. Don't buy a house as a rental investment  unless you have spare time and/or like DIY -or you buy several and have a couple of guys to look after them - or are an ex-builder a few of whom with money left are buying rental proeprties as an income - source-cum-job )

Rental yields are good based on the present value of property. When your dad-in-law sold at the crazy high prices of six yrs ago the yield was obviously much lower than now, so he did the right thing for two reasons - good selling prices and lousy rental yield. 

Today, Dublin apts prices are nearly 60% down but rents only 20% lower and slowly increasing. You've probably read that there's a good number of cash buyers buying properties now for their rental yield.
 Are they right? Who knows ? And I do mean who knows ?


Last note - thepropertypin.ie  posters are addicted  with the property market and I'm convinced that their morbid fascination with property price falls is combined with a desire to find a good deal.


----------



## Firefly (12 Apr 2012)

Thanks for that Oldnick. FIL did well alright....not much to do with feel for the market...was up enough as it was and was planning on retiring anyway.

A newish city centre apt is what I would be looking at alright...probably sometime next year. A concern I would have though is that a property tax plus a maintenance fee might make it difficult to sell at a profit in the future...


----------



## oldnick (12 Apr 2012)

Yes -I confess the uncertainty is a drag, though this is true nowadays of anything  -shares, gold, overseas proeprty,currency trading- the future of Europe. It is all so uncertain.

Property taxes on small properties worry me less than potential anti-landlord actions by government due to this never ending perception that landlordsd are  bad,greedy and undeserving of anything . Thus, there may be more burdens (like PRTB,NPPR, BES etc) down the line, interest relief may diminish. Those are my worries.

If you do go ahead ask yourself - could you live in the apt,.If you have kids would they be comfy there if they wanted a city-centre pad. It's like any product and sales appeal - if it appeals at first sight it really does help rental. Central, new, -no noise from road and a balcony helps.

Good luck

P.S. I do hope you understood my comments on your FIL were a self-deprecating parody of me and so many others who became ,and still are, a bit too obsessive about property.
 Oh, it's Thursday -better dash to get the I.Times today; love that property supplement)


----------



## Firefly (12 Apr 2012)

Thanks for that Oldnick. The apt would be primarliy for investment purposes. We would have romantic notions of using it ourselves in the future as the best shows/plays etc are in Dublin. If any of our kids wanted to go to 3rd level in Dublin it would fit that bill too. Primary objective though would be to provide a pension in the form of rental income but also the ability to sell should the money be required for expensive, emergency situations (God forbid).

The FIL didn't get it 100% right you'll be glad to know...held onto some sites he had....the power of the "land"


----------



## WorkingClass (12 Apr 2012)

oldnick said:


> Yes -I confess the uncertainty is a drag, though this is true nowadays of anything  -shares, gold, overseas proeprty,currency trading- the future of Europe. It is all so uncertain.


 
Very true. But almost any type of investment carries risk. It's very hard to know what will happen. Surely if things get bad enough someone will start WW3 in order to kickstart the global economy again 



oldnick said:


> Property taxes on small properties worry me less than potential anti-landlord actions by government due to this never ending perception that landlordsd are  bad,greedy and undeserving of anything.



I kind of feel the same way too. While increasing property taxes are certainly a concern I do wonder what's going to happen there in the longer term. Because the property tax applies to virtually all private property I suspect that they will simply push up the general cost of living in Ireland and rents will rise in line with the taxes over time as landlords attempt to pass on this extra tax. Obviously, market conditions will dictate how successful landlords will be at doing this but you can be damn sure everyone is going to try it.

The targeted landlord taxes are a bigger concern. Landlords probably are greedy though, lets be honest. The perception that landlords are all "rich" is probably less true. I have no doubts that many boomtime landlords these days may have collective debt that is significantly larger than the combined value of their properties.


----------



## Bronte (16 Apr 2012)

oldnick said:


> Property taxes on small properties worry me less than potential anti-landlord actions by government due to this never ending perception that landlordsd are bad,greedy and undeserving of anything . Thus, there may be more burdens (like PRTB,NPPR, BES etc) down the line, interest relief may diminish. Those are my worries.


 
That's what I worry about too.  Also agree with all your other comments if that's of help to Firefly.  In addition I too bought in 2005 but the rent is good so even though it's in negative equity (I presume) it doesn't matter.  Other half asked me the other day should we have sold, and in hindsight yes but hindsight is great and what would we do with the money?  Bank shares, gold !  My long term aim is an income when employment income has ceased.  

One thing to watch out for, I don't think Oldnick mentioned it, the newer apartments make sure you check that it was well built, I have a feeling that Priory hall is only the tip of the iceberg.  Don't be relying on old certificates, good money should be spent on the best engineer with insurance, make sure you have come back.  And check how well the management of the building is conducted.


----------



## oldnick (16 Apr 2012)

-Excellent point ,Bronte, about checking new build which I had not mentioned. I don't know what Irish TV programmes you watch in your  foreign exile,  but there was a Prime Time programme the other day which  shocked me. Maybe tens of thousands of new properties could be affected.


----------



## Bronte (16 Apr 2012)

Thanks Oldnick, very interested in that, my OH is good at getting downloads from the RTE website. 

In relation to your own experience of Dublin apartments, do you avoid those with management companies and sinking funds? I'd be interested in your experience of those. 

Referring to property supplements, I saw last weeks Independant, my goodness the prices for Allsopps but also new homes just outside Athlone and some fine properties in Dublin were surprising, very strong yields in Dublin as you mentioned, and meanwhile headline pieces with mention of property prices stablising etc. Things are very tough out there. I was down a City High street recently and it's shocking.


----------



## oldnick (16 Apr 2012)

I have a small building in city centre with four apts and a shop. Due to the fact i live in Dublin and am bored I decided that I'd do mngt and basic maintenance myself. 

It saves money but it does mean I get bothered a few times a year.("heating not working" "water pressure is v.low" ) These are small things and I pop down and attend to them or if I can't I ring my plumber or sparks friends. 

 I've good relations with tenants  -only one change of tenants  in five years - and we've reached the stage where they'll fix small things themselves now and knock it off the rent.( "shower head/microwave broken", "door jammed",  ).

I know that few people like to get so involved whetehr it's painting, cleaning the common area   - perhaps the worst thing is when sewage drains are blocked. But rather than pay dynorod several hundred euro it's satisfying to  unblock them oneself (strangley, my wife doesn't share my enthusiasm for unblocking sewers).

The point I'm making ,I suppose, is that my income is maximised by not using a mgt company who may not care too much about the costs of getting things repaired. Plus I am occupied -useful for an active older chap.  

I have a couple of houses miles away ;big mistake -low yield.  I'm hoping to sell them and get at least one more city centre apt.

So, my experience of Dublin city centre apts  is not usual -most of my friends have one,two or three apts  in large blocks with mngt companies deducting large fees. On the other hand my friends do no work and don't get involved.


----------

