Cost of being a first time landlord

If for example, you bought a property for 250K.
Had mortgage repayments of 1200euro per month.
What additional charges would you face as a landlord if you were renting gout the property for 1500 per month.

liam bourke said:

If for example, you bought a property for 250K.
Had mortgage repayments of 1200euro per month.
What additional charges would you face as a landlord if you were renting gout the property for 1500 per month.

Click to expand...

Of the top of my head.

1. Property Tax
2. Landlords Insurance
3. Management Fees (If Apartment)
4. Furnishing (Beds, Couch, table and chairs etc)
5. Letting Fees
6. Property Management (if you don't want to deal with tenant directly)
7. RTB Registration
8. Tax on Income net of Mortgage interest and other allowable expenses

The costs above can all vary, but I imagine based on the numbers you quoted this property would be cashflow negative on a monthly basis.

liam bourke said:

If for example, you bought a property for 250K.
Had mortgage repayments of 1200euro per month.
What additional charges would you face as a landlord if you were renting gout the property for 1500 per month.

Click to expand...

1. A management agency will charge about 10% or thereabouts. Alternatively, you can do the admin yourself. If so, you'll need to advertise the property, vet tenants, draft a lease agreement and comply with RTB rent review rules, etc. Not rocket science, and not terribly expensive either, but some people just don't like doing that sort of thing themselves.

2. You'll need to pay LPT. About 250 pa.

3. Management Company charges for an apartment or some townhouses. About 1500pa for an apartment.

4. Insurance. You can get landlords specific insurance policy to cover buildings, public liability (very important!) and your contents. About €120pa for an apartment.

5. You'll probably have life assurance on the mortgaged amount. About 200pa.

6. RTB registration fees. €90 once off per tenancy, renewable after 6 years.

7. Repairs. You can DIY or outsource. I'd allow about €500 pa but it's a piece of string really.

8. You'll need to do a tax return. Again, it's either DIY or hire an accountant. If you're not DIY, it's about €250pa.

9. Furnishings and contents. Depends on what you've bought. €5000 will probably do it. You can claim it as a capital allowance over 8 years.

10. Redecorating between tenancies. Variable. Don't forget the cost of rent foregone during voids. Not really applicable.in today's market but historically was significant.

All the above except LPT is allowable against income tax. You'll also pay 4% PRSI and 8% USC on your nett rental income. Then there's CGT if you sell it at a profit. The government will make more money than you will, but pick the right property and it can still be a very worthwhile long-term investment.

There may be additional items you'll need to add to the house/apartment - Fire Blanket/Microwave/Drier not sure where the list is.

Just to add - a management agency is probably not ideal. They don't really care too much about the tenants they choose. One way or another, you need to meet and interview each potential tenant. The more work you put into choosing a candidate, then with a bit of luck you will have less hassle, longer tenancies, shorter voids, less damage etc.
I think the insurance will be part of your annual management charge, if say it's in a department development.
Get one or two handymen/women who you can call to fix items when necessary. After any length of tenancy repaint most if not all of the property. It helps when you try to re-let. For an apartment always paint it white as it looks clean and it looks larger than say with other colours.
Good leather couches are much better than cheap material ones. They last longer and don't stain etc. Don't buy cheap furniture etc as you will end up replacing it more often. I have really good leather couches for over 15 years that are in great condition. For many potential tenants a leather couch is one of a handful of much have items.
Finally don't buy the cheapest beds going. Again they won't be respected and will need to be replaced more often.
Good luck with it.

Brian C said:

Just to add - a management agency is probably not ideal. They don't really care too much about the tenants they choose. One way or another, you need to meet and interview each potential tenant. The more work you put into choosing a candidate, then with a bit of luck you will have less hassle, longer tenancies, shorter voids, less damage etc.
I think the insurance will be part of your annual management charge, if say it's in a department development.
Get one or two handymen/women who you can call to fix items when necessary. After any length of tenancy repaint most if not all of the property. It helps when you try to re-let. For an apartment always paint it white as it looks clean and it looks larger than say with other colours.
Good leather couches are much better than cheap material ones. They last longer and don't stain etc. Don't buy cheap furniture etc as you will end up replacing it more often. I have really good leather couches for over 15 years that are in great condition. For many potential tenants a leather couch is one of a handful of much have items.
Finally don't buy the cheapest beds going. Again they won't be respected and will need to be replaced more often.
Good luck with it.

Click to expand...

It depends on the management agency you use. The one I use is very particular. They do a much better job of vetting the tenants than I ever could.

if you are a PAYE worker on the higher rate of tax,and you getting roughly 1200 per month rent...50 percent is what you will be taxed?is that right?

You pay tax on the net rental profits, not on the gross rent.

liam bourke said:

if you are a PAYE worker on the higher rate of tax,and you getting roughly 1200 per month rent...50 percent is what you will be taxed?is that right?

Click to expand...

You'll have costs somewhere between €3,500 and €5,000 a year. That's around €300-€400 a month. That's deducted from your rent. Then you deduct whatever proportion of your mortgage repayment is interest, say €400 of the €1200.
So €350 (mid point) + €400 = €750. You'll pay income tax, USC and PRSI on €1500 less €750 = €750. If you are on the higher marginal rate you'll pay a little over half of €750 or around €375.

You'll probably be cashflow negative; it ain't gonna wash it's face, but you'll be acquiring an asset. The important thing is to remember that it's not your tenant's fault it's cashflow negative so don't be as ass and do your job properly.