best interest rate for property portfolio

M

markowitzman

Registered User
Messages
936
Have 8 rental properties and debt of circa 1.2million.
Am being messed around by bank that hold the whole loan book on these.
My solicitor tells me I can get considerably lower rates for mortgages.
With this level of debt (circa50%ltv) what rate could I get?
Should I consolidate all properties into one mortgage?
As I purchased each property I was on bank standard variable rate (now changed to tracker).
Now that I have a few want better rate and bank dragging their feet.
Would I be in a better negotiating position with other institutions if I consolidated?
Any one in a similar position and what rate reduction of the published rates did you get?
Thanks.
 
With this size of property portfolio and mortgages outstanding you should really be getting independent, professional advice from a tax advisor and/or accountant and not just a solicitor or a message board in my opinion.
 
Eddie Hobbs? He said on the "last word" he charges €200 per hour, though I'm not sure if that included VAT. Maybe he can do a cash deal with you.
 
Marko,

No I haven't used Eddie and I'm not sure if he would necessarily have the skills/experience that you require.

I think the problem in Ireland is that most small Tax advisors/consultants tend to make their crust by selling products rather than charging a fee. This is just my opinion, perhaps somebody more in the know can pass comment.

I did have a discussion with Sonia McEntee from Ernst & Young at a property exhibition last year and she confirmed that E&Y were availible to provide tax advice on a consulatncy basis. She didn't indicate to me that there was any sort of client minimum wealth level. I didn't discuss fees with her at the time.

Take a look at the Ernst & Young website and see what you think.
[broken link removed]

If I was you I'd also contact Sonia and see what services they can provide. I would imagine a reputable firm like E & Y would be able to give you good impartial advice.

If you find any additional info, it would be useful if you report back as I'd be interested to know myself


Sonia's contact details are [email protected]
 
DonKing,

Thanks for the Ernst & Young tip - one of their "What's topical" articles answered a question I've been trying to investigate for quite a while now.
 
I think the problem in Ireland is that most small Tax advisors/consultants tend to make their crust by selling products rather than charging a fee. This is just my opinion, perhaps somebody more in the know can pass comment.
As a small tax advisor / consultant, I find this a completely reckless comment. Any tax advisors who engage in this behaviour, would obviously have a conflict of interest, and the advice given therefore is not independent. I know of no tax consultant who operates on this basis. Are you sure you are not mixing this with financial advisors selling pensions, life assurance etc, and who profers tax advice on an ad-hoc basis. Financial Advisors are in the main unqualified to provide this advice.

If I was you I'd also contact Sonia and see what services they can provide. I would imagine a reputable firm like E & Y would be able to give you good impartial advice.

In relation to E&Y, I am sure that they can provide you with an excellent service, but be prepared to pay for this. On average, tax partners in Big 4 practice charge their time at between e400 to e500 per hour. This charge decreases by rank, but even at junior level expect to pay e125 per hour.

can anyone recommend one (tax advisor)?.........Will they bat on my behalf with the bank directly?

From reading your situation, my own professional opinion (unsolicited) is that you are looking to try and consolidate your loan book, contact all the main financial institutions, and see what will they provide, if you get a good offer, then re-approach your present provider and see will they match it. If so, great but you will probably have to consolidate your loan book either way. It's not unusual for you bank to be stonewalling on this issue, as they don't want to reduce their interest income and fees, and only if you have an alternative would they be prepared to move from this position.

There is a lot of admin involved in rolling up 8 mortgages into one, (question, do you have seperate life assurance, house insurance on each property?). This needs to borne in mind ie how hands-on would be prepared in relation to organising this. The administration work (or lack of) will ultimately be borne out in the fee.

I could outline in more detail, what I think would be involved, but this is really more accounting advice rather than specialised tax advice. If you'd like to contact me, please pm me. If not, I would suggest contacting the either the ICAI or ACCA in Ireland, together with possibly the Insitute of Taxation in Sandymount, and ask them to provide a listing of approved practices / sole practicioners in your area. I would think that any small / medium sized practice should be able to meet your requirements.
 
JohnGonne,

I think you're over reacting somewhat to think that "my opinion" is a reckless comment. I did in fairness (sort of) indicate that I wasn't necessarily an expert in the area.

Anyway the problem as I see it, is that it's hard to get a personnel recommendation for good reliable tax consultants. I really don't think going to a list of approved tax consultants and picking one with a pin is a great option.

Perhaps you could advise the forum of the typical rates you would expect to pay for services from sole practioners? Would you post your fee on the forum? Would you be able to recommend a tax advisor other than yourself?

With respect to using one of the "big 4" tax consultants. I think a fee of €125 per hour for even a junior would be acceptable to me. It wouldn't matter if the person you are dealing with is junior or a partner once you got all advice in writing. These big firms would have internal procedures to ensure that the most appropriate advice would be given. A junior tax consultant would also have the resouces of the firm available to him to help to put together the best solution for his client.

Marko has properties worth €2.4 million and a debt of €1.2 million. I would say a few 1 hour meetings and perhaps 2 hours to prepare a proposal/report should be sufficient to at least ensure that Marko is going in the right direction and perhaps refer him to certain people in the different financial institutions who could arrange preferential interest rates.

How long would this take 5/6 hours? €600/€700? If you can be assured that you are getting correct independant advice and you have assets of €2.4 million, then I would say this kind of fee is peanuts.
 
DonKing said:
With respect to using one of the "big 4" tax consultants. I think a fee of €125 per hour for even a junior would be acceptable to me. It wouldn't matter if the person you are dealing with is junior or a partner once you got all advice in writing. These big firms would have internal procedures to ensure that the most appropriate advice would be given. A junior tax consultant would also have the resouces of the firm available to him to help to put together the best solution for his client.
Click to expand...

Thats not necessarily how it works, the juniors are probably more involved in the preparation of computations and the other donkey work than in planning/advice, for which you are more likely to be dealing with managers or maybe in some cases partners. You would more likely be charged a mixture of rates for the work done by various staff at different levels.
 
Thank you for all the advice. A few questions:
1. My portfolio is small for the big 4 firms. As a minnow will I be more likely to be seen by a junior in the company for advice?
2. Will they push for me to do the annual business accounts with them?
3. Preliminary investigations with institutions have yielded a prospective variable rate of 3%. Will I get much better if one of the big 4 bat for me?
4. JohnGonne yes separate life assurance,property ins etc etc on each. What are likely professional cost of doing a consolidation?
5. Re consolidation if I was to sell a property or two in the future would this create a legal problem as mortgage was secured on them all?
6. Does consolidation make it any easier or more desirable to put the properties into a corporate strtucture or not. Would it be advisable to look at corporate structure?

Thanks in advance. I realise some of these questions will not be answered definitively inthis thread but by raising them I hope to stimulate further discussion.
 
dam099 said:
Thats not necessarily how it works, the juniors are probably more involved in the preparation of computations and the other donkey work than in planning/advice, for which you are more likely to be dealing with managers or maybe in some cases partners. You would more likely be charged a mixture of rates for the work done by various staff at different levels.
Click to expand...
Are they likely to give a breakdown of the total bill in terms of apportionment between work done by managers and juniors or just present the bottom line figure?
 
ClubMan said:
Are they likely to give a breakdown of the total bill in terms of apportionment between work done by managers and juniors or just present the bottom line figure?
Click to expand...

In general I would say they would give a bottom line figure on the bill. You could ask at quote stage who is likely to be doing the work and their rates. On request they might give a break out of the bill (and maybe charge you 1/4 of an hour for time spent on the breakout ;) )
 
Your own solicitor I can assure you is being hounded every day by local bank/building society managers looking for business. I know because I was one of the hounders, now retired. Why not ask him for a referral? If not send me a private email and I can put you in touch with two people who will talk to you and advise you if you like. Are you based in Dublin?
 
Markowitzman

A few responses to your questions

Don King, thanks for the clarification.

1. My portfolio is small for the big 4 firms. As a minnow will I be more likely to be seen by a junior in the company for advice?

- Not at all. No practice would allow a junior to engage solely with a client without manager / partner supervision. It is the partner is ultimately the designate face for the firm.

When you request advice, you usually will be asked to sign a letter of engagement, or letter of authorisation. You will meet with partner & his designate manger, who will manage your requirements. The donkey work will be performed by senior, who will delegate admin tasks to a junior. Manager reviews and corrects, if necessary, and then reviews with partner, who signs off on behalf of the practice. You will have a final closing meeting with partner / manager / senior to discuss the opnion.

That's the way it works. From looking at your requirements, I would estimate that you could be quoted between e4k-e5k plus VAT. This might be mitigated if you use their internal financial services, but then how independent is the advice?

2. Will they push for me to do the annual business accounts with them?

- Probably

3. Preliminary investigations with institutions have yielded a prospective variable rate of 3%. Will I get much better if one of the big 4 bat for me?

- I would think not. No institution will lend at less than 75 points margin over ECB (currently 2%), and bearing in mind that you may want to buy / sell future properties, location of properties (i.e how will they react in a downturn), I don't think you would do much better than that

4. JohnGonne yes separate life assurance,property ins etc etc on each. What are likely professional cost of doing a consolidation?

I honestly don't know - I'm not a financial advisor re life assurance, property ins. My only suggestion would be that you look at all aspects of your property portfolio including related expenditure, and see if you can get additional discounts by placing all your business with one provider.

For life cover, look at the type of cover that you have (level term, reducing term) and shop around for the best rates

5. Re consolidation if I was to sell a property or two in the future would this create a legal problem as mortgage was secured on them all?

In managing a portfolio, you should always define an entry and exit strategy ie why are getting into property, and how are you going to get out / it at all?.

To be honest, you would have to talk to your prospective provider on this question. I honestly would not be sure - perhaps the mortage deed would have to be updated to reflect the reduced property portfolio. However the bank may decide to have first call on all proceeds of sale, or not - I don't know

6. Does consolidation make it any easier or more desirable to put the properties into a corporate strtucture or not. Would it be advisable to look at corporate structure?

Again, this depends on what your entry / exit strategy is. Many people have gone into property because of the capital appreciation, without thinking how they are going to get out. I can see at the first sign of a downturn a glut of second hand property coming onto the marketplace.

Are you long or short on property. Do you intend to use your portfolio to finance children's education, lifestyle expenditure etc (short), or do you intend to use this for pension / inheritance (long). Would you plan to sell the portfolio as one block investment in the future. Property investment is a business - from extensive reading of this bulletin board, a lot of people have not clicked with that as yet.

My rule of thumb (and I stress rule of thumb) would be - if you are short, keep the property in your own name - do not put into a corporate structure. If you are long, then a corporate structure becomes a much more viable proposition
 
sorry for delay........after much negotiating best I could get was 3% tracker interest only. No consolidation but they are assuring me of same deal for future property .
 
You must log in or register to reply here.
Back
Top