# How to buy an investment property 101!



## yourname (2 Jul 2014)

I am considering buying a house /apartment in Dublin with the aim of renting it out.

I am a complete novice when it comes to anything like this and have read the sticky on this forum (can't link).

I have a couple of questions.

If I am going to view a property in Dublin - 

1) What should I have on a check list for visiting?

- Should I have an architect? 
- How can I insure that everything regarding the apartment ownership is legit and that I am not getting landed with a complicated situation.
- How can I find out if there any outstanding payments, or repairs to be conducted by the management company (of an apartment block in this case) that might be so substantial that that is the reason they are selling?

Basically, I am asking is there any pitfalls to the process other than reaching an agreement on the house?


2) How does the house buying process work? 

I view,
I like and buy,  
I pay.

I assume I sign deeds or there is a deeds signing process with the estate agent/solicitor? Do I need my own solicitor? 

Now that the house is in my name, what all do I have to do?

Sorry for all the newbie questions.


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## 110quests (2 Jul 2014)

Hi, 1. As it's for renting choose your location carefully ie.  one where you will be assured of constant tenancy. 

2. Do your maths on it to ensure rental income is adequate to cover mortgage, expenses etc.

3. Go look at more than one apartment ! And go onto websites to look at prices and rents.

4. When you find one that seems to tick the boxes, you are ready to bid. I suggest having a friend at this point to discuss various points.

5. In the meantime search for a solicitor and a surveyor. Once you are seriously interested and ready to make an offer you may find the process speeding along or the opposite . This depends on many variants from the number of other bids to the position of the seller.

6.You need a solicitor. They will tell you all the procedures when money is due to be paid, will request the deeds, correspond with the sellers solicitors, do searches to establish free title and discover the status of the Management company.

7. In some apartment blocks there are problems with Mgmt companies, due to unpaid fees etc so it is vital to discover its position.

8. When you have made your final bid ......after much cat and mouse game......and are ready to pay your booking deposit, you need the surveyor to check the apartment structurally.

9. All being well you are ready to proceed with much paper signing etc but your solicitor will time all this.

10. Of course ahead of all this you have your loan lined up and ready to go. There is a serious amount of paperwork in the application for loan so be ready with that.

11. Assuming all goes as above, you will be handed your keys !

12 You will need to register with the PRTB, line up a tenant as soon as possible as your first repayment of loan will fall due first month after loan drawn down.

13. You may need to furnish or repaint the apartment, replace floor coverings, carry out minor repairs etc so be prepared ! Good Luck

I may have omitted several points which I am sure others will supply.


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## huskerdu (2 Jul 2014)

14 , Inform yourself about the taxing of rental income.


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## Eithneangela (2 Jul 2014)

15. Make provision for repairs and maintenance
16. Decide whether to let furnished/unfurnished
17. If furnished, then you're responsible for breakdown in same (ie springs break on couch, mattress, curtains 'tear', 
18. Even if unfurnished, you're responsible for fittings which include stuff like fridge, washing machine, showers, dishwasher etc. and for maintaining/replacing same when they do not work
19. You need to insure property as an investment property which carries a premium
20. LPT


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## 44brendan (3 Jul 2014)

> Would I be correct in saying that for a property to give out a profitable yield it would be best if there was no mortgage attached


Not necessarily. Yield would be after mortgage interest but not capital payments. However, given that cheap mortgages are a thing of the past the cost of capital is now a considerable factor in making an investment.


> I have often wondered what happened to all the buy to lets that were purchased during the crazy bom years with interest only mortgages with nothing in place for paying off the underlying capiital.


Fair point. Most of these were on low tracker interest rates and as such the net income is/was more than suficient to pay the interest. As you say many/most of them are in negative equity and while the market is recovering it is unlikely that it will recover sufficiently to clear the associated mortgages completely from sale of the property at loan maturity date. Given that these are long term investments the chickens will not come home to roost for a number of years! The Banks can do nothing provide that interest is covered in the interim!


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## Knuttell (5 Jul 2014)

Three words followed correctly will at least set you off on the right foot,research research research.

You are off to a good start,when you are looking at properties/apts do checks on the current property management agents.

What is their reputation like...Google them.

What is the sinking fund like?Quite important that there is a healthy SF less so on new developments as they take time to build up.

What are the annual fees?Why are they so high?Development has lifts?

In newer developments,the snags were not ever completed out,dragged out over the years and large sums of money are now needed to fix these snags.

Has the developer been NAMAED?

Google the particular complex you have in mind,nothing worse than tenants leaving one after the other either due to social problems or paper thin partition walls,tenants tend to post these experiences on fora.

Is there a higher % of owner occupiers (good sign)

How quickly will this rent and for how much..place a dummy ad,see what the response is like (let the phone ring out and return the call,unfair to put callers to expense)

Yield is your friend if you aren't getting a good return its simply not worth your time.

Do your sums,right down to the pound shilling and pence,factor in voids and every possible drain/cost on your finances.

Look at how future budgetary measures will impact your business,will tax relief on interest be cut further?

Will the property tax be hiked?


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## milic (9 Jul 2014)

I am considering buying an apartment in a complex with 35 apartments which is about 10 years old. How much should be in sinking fund here to be considered healthy.


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## facetious (11 Jul 2014)

I note that the OP seems to be only concerned about purchasing the property and possible tax implications.

Renting is a business and as a landlord you should know all the laws relating to renting, not only taxes but the renting laws.

Many people think that renting is a simple business; the property gets let to tenants and money (the rent) appears in the landlord's bank account on a regular basis.

Life and renting is often not quite so simple. Not understanding the renting laws could cost the landlord a substantial amount of money in fines and damages to be paid to the tenant - the highest that I know of, in a PRTB Tribunal decision was 17,000 euros. Though, I do recall newspaper articles, either last year or the year before, when there was an award of either 20k or 30k paid to third parties by a landlord for not evicting anti-social tenants.

Complete knowledge of the various acts relating to tenancy laws, housing standards etc. is a must.

Knowledge of the vetting process of tenants can go a long way to ensuring good tenants.

If you decide to employ an agent to look after your property and tenants you will need a good agent. These seem to be far and few between. There seem to be too many agents who do not know the laws. Their fees seem to be between 10% and 15% of the annual rental value - commonly one month's rent. However, you may find that they may also charge extras for call outs etc.

And the law is sometimes very difficult to understand. I have seen where even a solicitor issued a Notice of Termination which was invalid.

I would suggest that you read some of the PRTB adjudications which are available on the PRTB website.

Make no mistake, the renting business is not as simple nor profitable as many people think.


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## valparaiso (17 Jul 2014)

*Rentals*

21. Are you landlord material? No, seriously do you have the financial capacity to replace a radiator leaking water or replace a boiler when it breaks down? Are you the type who'll manage to keep your cool on new year's eve when the tenants call you about frozen pipes? Can you resist constant requests for a furniture upgrade? or new flooring? 

Letting property is not for the faint-hearted . 

It's not profitable either. you pay 50+% tax on your "income". 

You'd be better off living in the place and renting out a room for which you can earn €10,000 tax free for some reason.


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