Hi! everyone, I have a peirod property in D4, with no mortgage, earning E2,300 a month in rent, but needing about E50,000 in repairs - damp etc. I had intended to ask the tenants to leave and place in on the market in February, but the market seems to have gone belly up so quickly. Now I don't know whether to leave the tenants there - lease runs out in June - and sell next September. I am also worried about capital gains (won't be quite such a large sum now with fall in house prices), and believe that there is a likelihood that the next government will increase same. I don't want to keep the property as it is a period listed building which I find is just a hassle in terms of repairs, and a general money pit. The house was valued at E1.8 a few months ago - though I don't think I'll get near that now!! Any advice appreciated.
a house with that kind of rental yield is very good by today's standard.
I would be inclined to sell sooner rather than later.
whathome said:There have been price drops in D4. Some high profile failures at auction are now selling by private treaty. 7 Shrewsbury Park was withdrawn in May with an AMV of 3.5M and quoted 3.9M in private treaty after the auction. It has now been reduced to 3.45M.
There are quite a few other examples.
whathome said:With interest rates rising, the housing market might weaken further but deposit accounts would pay higher interest.
. IMO Q3/Q4 next year could be more difficult as SSIA spend dissapears and according to Davys/ goodbodys / lots of economists the irish economy will start to slow.
Note say sold for 1.8m net ( lets remain optimistic) .
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Probably not many ppl hanging on for their SSIA's so they can buy a 1.8m home.
Note say sold for 1.8m net ( lets remain optimistic) .
Probably not many ppl hanging on for their SSIA's so they can buy a 1.8m home.
Rent of €2,300 pm on a valuation of €1.8M produces a gross yield of 1.53%. As fatmanknows pointed out, this is a terrible return. I don't know how anyone could say that yield is "very good", it's atrocious.
Yield is calculated on the original cost of the property, not on its current value.
Now I don't know whether to leave the tenants there - lease runs out in June
You always get this wrong liteweight. Yield is calculated on current value, otherwise there's no way to compare return with alternative investments. If for example the OP had inherited the property, what would the yield be then?
When making a sell/buy decision on an asset, current valuation should always be used.
I beg to differ. You are mistaken. Yield is calculated on the original cost of the property. It is done this way in order to calculate rental returns for tax purposes.
I beg to differ. You are mistaken. Yield is calculated on the original cost of the property. It is done this way in order to calculate rental returns for tax purposes.
In other threads, I have stated that there is value in comparing what the property is worth 'today' in order to decide whether your money would be better invested elsewhere. When it comes to calculating yields on rental property however, this does not stand up. You cannot calculate a 'yield' on money you do not have and might not get....you can only do it on what you spent.
Whether you inherit a property or not is a moot point. If the tax man looks at your accounts, let's take Elainem as an example:- at 1.8m cost of property and a rental income of 2,300 pm she has very little tax liability. If she inherited it then all 2,300 is liable for tax as she has little or no expenses.
With all due respect you are trying to compare two totally different things and calling them both 'yield'.
I know you have argued this case before and you were wrong then too!!
If, however, you want to ascertain what your profit might gain elsewhere then by all means 'guestimate' what you will be worth.
It might feel that way to you because everyone is pointing out that you are wrong but we're different people. I'm far better lookingBacchus are you Whathome in disguise??
Gross yield has absolutely nothing to do with tax.
You're confusing gross yield with the ability of a landlord to offset interest expenditure against rental income. They're not related.
whathome said:If I bought the house in D4 in 1980 for €80,000, it would currently yield 34% according to your calculations. So I compare your "yield" that to a deposit account returning 3.5% and I decide not to sell. Bad move, using your method I've based today's decision on calculations using figures from 26 years ago.
whathome said:Calculating it correctly, the actual gross yield is based on current valuation - €1,800,000 which returns 1.53%. When making a decision to sell an asset, in order to compare returns - current valuations should always be used.
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