To put house on the market in Feb or not

[liteweight]

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 looking

Whathome, whathome...........why weren't you born rich instead of beautiful???

 

[liteweight]

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.

Just to re-iterate, it was the above post to which I was replying...Not talking about current value of house, just how rental yields are calculated! The money ain't yours until it's in your pocket!!

 

[whathome]

if you wished to sell THEN you use the current market value of the property

OK liteweight - from what you say here it looks like you're getting it.

What is the title of this thread?
Using the title of this thread as a subtle guide, how do we calculate yield?

Here's the sesame street approach to keep it simple.

- If you're thinking of buying a property, use the purchase price to calculate gross yield.

- If you're thinking about selling a property, use the current valuation to calculate gross yield.

 

[liteweight]

OK liteweight - from what you say here it looks like you're getting it.

What is the title of this thread?
Using the title of this thread as a subtle guide, how do we calculate yield?

Here's the sesame street approach to keep it simple.

- If you're thinking of buying a property, use the purchase price to calculate gross yield.

- If you're thinking about selling a property, use the current valuation to calculate gross yield.

There's no need to be patronising. I'm fully aware of the title of the thread but the comment was made that rental yield was good by some and atrocious by others. It warranted clarification IMO. Why don't you give us the Sesame Street version of how Elainem will cope with inflation, capital gains and the other things I mention. You're the one with the simplistic view...sell and stick it in a bank account

 

[darag]

Yield is calculated on the original cost of the property. It is done this way in order to calculate rental returns for tax purposes.

With all due respect, liteweight, you are just plain wrong on this one. Tax law has nothing to do with yield at all - revenue have absolutely no interest in the "yield" and their documents and guides doesn't mention the term at all with respect to property investment. All they care about (for income tax purposes) is the income and allowable expenses. They simply don't give a damn about present (or past for that matter) valuations. CGT is a different matter but even then, "yield" is simply not used by revenue at all.

In purely financial terms you are confusing something that perhaps would be called "nominal rate of return" with yield. The latter is always calculated on the basis of current valuations. This is the case with bonds, shares (which pay dividends), commercial property and every other type of investment.

 

[whathome]

Why don't you give us the Sesame Street version of how Elainem will cope with inflation, capital gains and the other things I mention. You're the one with the simplistic view...sell and stick it in a bank account

The OP didn't ask how to cope with inflation and capital gains.

I didn't suggest selling and sticking it in a bank account. I pointed out that even a bank account would provide better returns, improving with interest rates rising.

 

[room305]

Just to re-iterate, it was the above post to which I was replying...Not talking about current value of house, just how rental yields are calculated! The money ain't yours until it's in your pocket!!

I really do think you have this wrong liteweight. Rental yield is always based on the market value of the house. Otherwise it would be a nonsense figure. How can two similar houses, worth the same amount and with the same rental income have a different yield dependent on the purchase price?

When calculating yield it does not matter if the invested capital is leverage or not. Otherwise by your calculations I could lodge €1k of my own capital in Rabobank and borrow an additional €9k and lodge that in my account and calculate the yield as being a healthy 36.5% instead of an actual 3.65%.

 

[bacchus]

Why don't you give us the Sesame Street version of how Elainem will cope with inflation, capital gains and the other things I mention.

I have no worries that Elainem will cope very very well with inflation. Did you read the start of the thread (see extract below)

I have a period property in D4, with no mortgage, earning E2,300 a month in rent, but needing about E50,000 in repairs - The house was valued at E1.8m a few months ago

You're the one with the simplistic view...sell and stick it in a bank account

Again liteweight like in some other threads (do not ask me to point then out this time!), you are getting personal in your defense because you know that some of your statements are wrong and misleading.
Far simpler sometimes to accept that mistakes can be made..

 

[liteweight]

With all due respect, liteweight, you are just plain wrong on this one. Tax law has nothing to do with yield at all - revenue have absolutely no interest in the "yield" and their documents and guides doesn't mention the term at all with respect to property investment. All they care about (for income tax purposes) is the income and allowable expenses. They simply don't give a damn about present (or past for that matter) valuations. CGT is a different matter but even then, "yield" is simply not used by revenue at all.

In purely financial terms you are confusing something that perhaps would be called "nominal rate of return" with yield. The latter is always calculated on the basis of current valuations. This is the case with bonds, shares (which pay dividends), commercial property and every other type of investment.

Are we talking at cross purposes here? The gross yield translates to rental income IMO.

I realise the Revenue don't give a damn about yield. It's the rental income they are interested in, and the sale price with regard to capital gains. Perhaps I should not have said for 'tax purposes' as I just confused the issue.

 

[liteweight]

[qupte=bacchus]Again liteweight like in some other threads (do not ask me to point then out this time!), you are getting personal in your defense because you know that some of your statements are wrong and misleading.
Far simpler sometimes to accept that mistakes can be made.. [/quote]

I wouldn't dream of getting personal with Whathome.... Mrs. WH would probably kill me. Unfortunately I replied using the 'quick reply' which doesn't have smileys. Please don't turn a debate into an argument.

I don't believe I get personal in my defence......unless you considered that to be the case when I asked if you'd been on the wine?? That too was a , which I thought was made very clear at the time. With such an accusation I think I'm entitled to ask you which threads.

I'm sure Whathome won't be crying into his cornflakes tomorrow over anything I might say to him but if I was offensive I apologise.........


No I don't until he apologises for being patronising.....

 

[whathome]

No I don't until he apologises for being patronising.....

What does patronising mean?
All is forgiven - now we have explained what gross yield is, lets allow some other posters give their opinion on the OP's question

 

[liteweight]

What does patronising mean?
All is forgiven - now we have explained what gross yield is, lets allow some other posters give their opinion on the OP's question

"A patronage system has different characteristics depending on the area in which it is practiced. Generally it can be described as a system where someone in a powerful position (the Patron) offers handouts in return for support."

So where's my bribe?


"The terms patron or patroness may also be used to refer to a patron saint."

 

[elainem]

Thaks everyone for your replies - it's been a very entertaining discussion so far! Some of the stuff on yields went a little over my head - as in how it relates to the original cost of the property - though I know in terms of actual current value of the property, the yield is abysmal. I inherited the property in 2001. The value then was £500000 punts. The house is not set out in flats, it is rented as a family home. However, rental income is my main source of income at the moment. I also have another property rented for E1,400 per month. I was thinking of selling this property as the maintenance costs are large - repainting a period house is expensive, after every tenancy. Generally, the house is in excellent order. The only problem is the kitchen area where there is damp. I was going to attend to this before I went to sell it. I also want to sell it as I feel I will never live there again. It would be a great place to live if my children were going to college. However, they are currently only two and four. The house fronts very busy main road from Upper Leeson St. to town - so it is not a suitable place to bring up young children. Capital gains does concern me, especially that the next government might increase it. Thanks again for all the replies.

 

[delboy159]

I know this seems like a simple response - but we live in a democracy. There is either going to be 1 of 3 possible governments in 8/10 months time

- FF & PD, FF & some ind, FG & Labour (possible the greens)

You can be aggresive and ask the above parties what is their policy on CGT. Be it by contacting a TD in the area or the party head office.

Based on that info and who might get in you can make a more informed decision on the CGT issue, rather than second guessing!

Anyway - when canvasers come around in Spring looking for your vote - you can grill them then aswell - it's really fun to ask them something, they are generally shocked and ill informed!

 

[room305]

It seems to me that you could increase your quality of life by selling the house and lodging the money in the bank. The monthly interest would amount to well over €5k a month compared to the circa €2k you are earning now.

The only question then is, will capital appreciation over the coming years be sufficient to make up the opportunity cost of €3k a month?

It's possible but it's a gamble. My choice would be too sell and look at investment options for your €1.8M.

 

[liteweight]

I would agree with room 305. It's difficult when faced with a potential 250k capital gain tax bill but you'd have this anyway no matter when you sell. I'd get valuations first to see whether EA feel it necessary to get the work done in kitchen. Because of it's location you might get builders interested in it and they don't care what state it's in. It is on a very busy road but which road isn't nowadays. You never see kids playing outside anymore, at least not on the scale they used to.

An EA told me to go for either option e.g. fix it up to perfection for the brigade who just want to move their furniture in, or leave it for those who can't quite afford to go much over AMV, so that they can fix it up themselves.

Capital appreciation is anyone's guess at the moment, just like other investments houses can go down as well as up.....just hasn't been the case in Ireland to date. I' d go for quality of life. A period house will always need some sort of repair. Even a simple paint job can cost a fortune.