# Buying to let in Galway city, good idea or not?



## priscilla (30 Jul 2014)

Hi,

I have 350,000 and as it's earning very little on interest, I thought buying a house in Galway city for renting out may give me a better return for my money.
I was looking at areas near the university and hospital but was wondering would I be better  off buying a family house near Taylor's Hill or a house for lots of students or has anyone any suggestions.

Any help greatly appreciated.


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## Branz (30 Jul 2014)

Before doing this I would have a long hard look at all the student letting posts here.

Being a landlord at best is not easy,  at worst is a nightmare, and thats even before u look at students 

What the general plan for the mula? Pension? Rainy day, ? 

Locking up 350k in one go is a big decision without looking at all the life (style) plans.

If you pen a few lines about in general what you see happening in say 5 to 10 15 years then maybe you will get some ideas here.


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## priscilla (30 Jul 2014)

Thanks Ircoha for reply.

I have the money sitting in the bank for the past few years not earning much interest and the 40% DIRT is a killer anyway so thought perhaps there was a way of getting a better return.

I'm in my early fifties and own my own home outright and live on my pension. I also have a second house which is rented out troublefree for a small amount.
I have two daughters who hope to go to college in the near future and I have left about 50,000 aside to assist with their fees.

Other than that, no plans.


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## Branz (30 Jul 2014)

Thanks: some of the others are  much more _au fait_ with all sorts of investments so I will leave it to them.

Given you have 2 chunky investments already: PPR and the other house, I would  suggest some more bite sized term investments.

In passing I suspect you will be hit  with the 4% PRSI on top of the Dirt plus the USC on the non PAYE income so maybe that world cruise!!!!
Keep well


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## priscilla (30 Jul 2014)

Thanks Ircoha for your help.


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## Orga (30 Jul 2014)

Hi Priscilla. I'm not sure if your question is (a) what should I do with 350k to maximise its utility, or, (b) should I buy a family-type home near Taylor's Hill or a student-type property. My two cents on question (b) is that you buy near Taylor's Hill, solely because of its location, and because renting to a family is usually less fraught than renting to students. On question (a) I would suggest you consider speaking with a number of independent advisors as there are many contextual factors that are important in making decisions about how you invest. 

As an aside, the fact that you are providing for your daughters' college education would spur me to wonder if you have thought about whether or not you want to be in a position to also support them should they be gathering a deposit for a mortgage or perhaps planning for a wedding. Decisions you make now can potentially affect your capability in the future, just something to bear in mind. Wishing you every success in your investing!


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## priscilla (30 Jul 2014)

Thanks Orga for your reply.

I have been to financial advisors in the past and they all seem to sell various funds of one sort or another;unfortunately, I always come away from these meetings more confused than ever.
I do not have any knowledge of funds or stocks so I thought perhaps investing in property may bring in an income that I can regularly save towards my future and my childrens'.
I also thought if they really enjoyed Galway they may want to settle in Galway and they could have the house at that stage.

I've been looking at the rental market around Newcastle, Taylor's Hill, Salthill and Woodquay and the returns look fairly good. Not interested in aparments as wary of management fees.

What you think, mad or not?.


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## Bronte (31 Jul 2014)

If your kids are going to college in Galway that it's a good idea to buy there as that will save you accommodation costs. Taylor's hill is one of the most expensive places to buy. You would get a better return in the well known student area (not all of course) of Newcastle. 

I agree with you on mangement fees, but that's not the only problem with apartments. Lots of problems in some estates with management companies, people not paying up, parking issues and not enough in sinking funds.

Stay away from the student market if you want my advice. There are though many landlords good at this type of market. In Galway not only have you the Sept to May student market, but if you purchase right you could also be in the tourist market in July/August. I've done students, holiday and family rentings and now will nonly do family or steady people. 

Can you do up the figures of what price, location, and rent you think you will achive and also put up what you think are the costs. If you're going to spend a lot of money you should spend some time figuring out the costs so that you see what you are getting into. 

Most importantly, do you have what it takes to be a landlord. One other very important point, as this is an investment, right now is excellent from a CGT point of view. We cannot discuss house prices on here, but it is something you must consider.  Apart from Dublin, Cork and Galway are strong markets. But location is key.


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## valparaiso (31 Jul 2014)

Hi Priscilla,

As regards your current position and a proposed property purchase here's a very very simplisitic observation. 

€350,000  in bank - small interest earned : 40% tax on interest only.

€350,000 cash purchase property for rental: ALL INCOME TAXED AT 52%  Nett.
(your tax liability will be minimal as you won't have interest on borrowings to deduct from rental income). 

Don't forget your legal obligations:
Prtb registration
Property tax.
Compliance with Housing Standards Legislation.
Insurance.  

Aaaannnnnnnddddddddd. Capital Gains tax on sale. 

The government has tax free savings schemes - guaranteed income over a medium term. Just an option.


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## priscilla (31 Jul 2014)

Thanks Bronte and Valparaiso for your inputs; I'm going to do up all the figures and do a comparison , I'll post later with the findings.


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## cremeegg (18 Aug 2014)

priscilla said:


> I have been to financial advisors in the past and they all seem to sell various funds of one sort or another;unfortunately, I always come away from these meetings more confused than ever.



+1

As regards a rental property, in general a cheaper property and lots of hard work will make a small profit. Students in winter and tourists in summer maximises your return, don't underestimate the work and hassle involved.

However I still believe that the returns are poor. See this thread http://www.askaboutmoney.com/showthread.php?t=184415

However a good property in a good area should hold its value over the years and if you can look at the rental income as a nice bonus while you wait then I don't think that would be mad at all.


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## noproblem (18 Aug 2014)

Priscella,
you will not get anything on Taylors Hill for €350k.


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## galwegian44 (19 Aug 2014)

valparaiso said:


> Aaaannnnnnnddddddddd. Capital Gains tax on sale.



Don't forget the 7 year Capital Gains Tax Exemption wich expires on December 31, 2014. If you do decide that property is the way to go with your investment money then it would make a lot of sense to make your purchase by the end of the year.

Best of Luck.


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