Good Buy Or Not

[bricksguy]

Looked at a commercial building with retail ground floor and two one bed apt overhead, costing €700k whole building let to one person at €35k per year in 2003 on a 4yr 9mth lease. Limerick city , what additional factors would bank require before lending, forgot stamp duty which is on top of the price

 

[DrMoriarty]

Location?

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[ClubMan]

Isn't €35K rent on a premises costing €700K a gross yield of about 6% before tax and other expenses are factored in? Isn't this the sort of basis on which such an investment should be assessed? And maybe potential capital appreciation?

 

[DrMoriarty]

And maybe potential capital appreciation?

That's why I asked about location. Rents — residential and commercial — have "softened" dramatically in Limerick in recent years, from what I hear/see around the city. Apartments in particular. Certain areas could reasonably be expected to yield good capital appreciation, others far less so...

 

[ClubMan]

Sorry - I was responding to the original query and not second guessing your post above!

 

[DrMoriarty]

No prob — and you were right to crunch the numbers like that, anyway.

My point was that current/past performance is no guarantee of future rental yields — depending. Property values in some parts of Limerick are rising very nicely (even faster than Dublin!), but stagnating elsewhere. And rental values are doing far less well, simply because of over-supply.