# Investing in Dublin 1 ?



## elk123 (23 Jul 2004)

Think of purchasing a 1bed apartment located just 5mins from O'Connell st as an investmentl, but unsure of the current rental market situation in D1.

I have done the figures and a rental of circa 900pm would easily pay the mortgage, plus the actual apartment itself is a really decent size of 585sq ft for city centre location.

Anyone knows the current rental situation in the city centre i.e is their an oversupply or are good quality apts always rented out easily ?
Wondering if any landlords out their have good/bad experiences recently with getting tennants ?

TIA
elk


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## househunter1 (23 Jul 2004)

Is there a parking space included?


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## elk123 (23 Jul 2004)

Parking is 15k extra which I probably wouldn't opt for, as I don't think its really a deciding factor for tennants looking to rent in the city centre.
Would I be right in thinking that.. ?


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## oilean (23 Jul 2004)

Any city center apartment unless in bad condition will rent itself

Trt an ad on www.daft.ie and see what reposnse you get
It costs nothing

From experience, you will probably have to take it off after the first day


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## elk123 (23 Jul 2004)

Thats encouraging to hear. Just thought I read somewhere about an oversupply of rental accomadation.. must be in suburbia land ;-)


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## delaneyd159 (23 Jul 2004)

There are two schools of thought on the over supply theory.

1.  If you try to get 1,000 p.m. for a 1 bed then you will feel that there is an over supply as it will be hard to rent.

2. If you try to rent it at 850 - 900 you will have a good level of interest and believe that there is still a high demand out there.

There are still a lot of dives out there and a lot of people looking for somewhere nice to rent.  If you pitch a fair (bit still profitable) rent you will get people.

I helped a friend get a place in D8 (a 2 bed apartment - no parking).  A man met us and asked if we wanted to see the apartment - assuming he was the guy my friend had arranged to meet we looked at it, but he said he wanted 1,200 - we walked away.  

On our way out of the apartment block we bumped into a second man who asked if we had rang him to see the apartment!  He showed us a 2 bed a floor above the one we had just looked at - except is cost 1,000!  We went for it!

The second guy said it was common knowledge in the block that the first guy was trying to "steal" tenants - he'd been trying to flog the 2 bed for weeks at 1,200 - but no one was taking it.  Whereas the 1,000 one was only on the market for a day.

It just shows - if you pitch the price right, you'll rent your place! Also, watch out for chancers, there all over the place...


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## elk123 (23 Jul 2004)

The apt is new, so with a half decent fit-out it should rent easily enough.
Seems to be better yields on 1bed apt and also more demand.

elk


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## N0elC (26 Jul 2004)

€15k for a parking spot in D1 ?

Sounds like a bargain to me. It'll also make it a whole easier to resell, and rent. Personally, I'd go for it.


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## elk123 (26 Jul 2004)

Compared to Smithfield & IFSC I agree 15k is cheap for parking space!
As its an investment property which I hope to rent out, the whole cost rises with parking;

15k + purchase price of 235k + stamp duty/legal fees = >260k!

Just not sure if its necessary.. is parking really a deciding factor for tennants looking for a place in the city centre ?


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## househunter1 (27 Jul 2004)

Think of (research) who you'll likely be renting to, will they have a car?


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## biggerry (27 Jul 2004)

I agree wtih Noelc.  I bought a 2 bed apt in D1 about 6 years ago.  At the time, a parking spot cost an extra £10K but I didn't go for it.  By not having parking it reduced my potential tenants.


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## EstorilB (27 Jul 2004)

Hi Elk,

Just wondering - are you going interest only on the mortgage?

EB


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## elk123 (27 Jul 2004)

Probably go for the std variable mortgage as first few years is just interest anyway, don't really start eating into the principal sum until year 3 or 4!

If I do opt for interest only, I understand rent recievable minus mortgage re-payment is taxed at the full 42% ?


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## EstorilB (27 Jul 2004)

Elk,

I think you must be putting down a fairly hefty deposit to easily cover your mortgage payments , with a 20% deposit I can't see how you can generate any cash flow on the property , especially taking void periods and other expenses into account.

I'm curious to know your motives for purchasing, are you trying to build a portfolio or make a short term killing?

Your tax calculation is correct but based on the above I'm not sure you'll have to worry about paying too much tax on it for the first few years at least.

EB


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## Guest (27 Jul 2004)

> Your tax calculation is correct but based on the above

Is that necessarily true? Is rental income (less allowable expenses) always taxed at 42% or could it be 20% if under the relevant standard rate cut off point?


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## elk123 (27 Jul 2004)

Hi EB,

I have the cash for a 5 - 10% deposit, hope to secure a mortgage against me existing property for 220k to finance the purchase.

My main motive is primarily putting some cash in my bank account to good use.
Can't see a better investment to put 15 - 20k into at the moment so going to go with property!
I reckon I will see steady growth over the medium term of  
5 - 7yrs in this purchase, as the property itself is new and ideally located in the city centre.

Also, rent of 900pm should cover the calculated repayments over 35yr mortgage.

elk


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## EstorilB (27 Jul 2004)

> Is rental income (less allowable expenses) always taxed at 42% or could it be 20% if under the relevant standard rate cut off point



You are correct - I was assuming (naughty me) that elk paid at 42% - I doubt there are many property investors paying tax at 20%.

EB


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## EstorilB (27 Jul 2004)

Elk,

I'm not sure I agree with your outlook for the next few years.  I'm going to see where things stand after a couple of interest rate rises before dipping my toes back into property investment.

That said best of luck with the purchase, I hope it works out for you.

EB


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## Guest (27 Jul 2004)

> You are correct - I was assuming (naughty me) that elk paid at 42% - I doubt there are many property investors paying tax at 20%.

I wasn't simply being pedantic. I would have thought that some investors with a single property and no other income might well be in the standard rate bracket. Anyway, my main point was that what looks like a no brainer when it comes to tax in this context may not be so straightforward which is why property investors should generally seek independent, professional advice on the relevant accountancy and tax matters involved.


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## elk123 (27 Jul 2004)

Hi EB,

Their is no denying that interest rates can only go one way.. but each increase shouldn't be more than 0.25 or 0.5% upward movement!

As the German economy is still in 'dire straits', I can't see large interest rate increases over the next few years.
Of course I might be completely wrong, but watching the news the other night where workers unions in Germany have agreed to roll back to a 40hr working week paints a grim picture of the Germany economy.

However, if I was buying in the IFSC area or Smithfield at the moment then of course I would have secon thoughts as prices for the new developments their are already top end, and a tiny increase in interest rates could push an investor over the brink!

elk


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## N0elC (28 Jul 2004)

> ...as prices for the new developments their are already top end...



Why do you say that ? People have been predicting that the sky will fall in on house prices for the past ten years. If it makes sense on the economics of the rental stream, then any temporary price fluctuation should be academic.

What part of D1 are you looking at, btw ?


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## elk123 (28 Jul 2004)

Its a small development of just off Parnell St... that whole area itself isn't very inspiring mind you, but the apartments themselves are of a pretty high standard!

According to Dublin City Council this area and north O'Connell st is due for upgrading over the next few years.
At the moment, its the surrounding area thats putting me off buying, but I suppose this goes with the terriority when buying in town!

elk


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