Invest in Drumcondra or Inchicore

HandyManny

Have the opportunity to buy two 2-bed apts, one in inchicore at 270 nr spar and 1 at 295 in drumcondra, both 2 beds but drumcondra more like 1.5 beds. It will be a buy to let. Broker says keep away from inchicore as no capital appreciation. This is first time for this, any and all advice would be appreciated? Also any ideas about rental potential in both areas? Tks.

mikemac

What a 1.5 bed?

HandyManny

double and single

cas_k

Definately Drumcondra

1. It is the main gate way from the airport to the city centre
2. You have got 3 colleges (st Pats, mater dei & DCU) within walking distance 3. Walking distance to town & Croke Park.

Do-more

What sort of yeild are you looking at?

HandyManny

5%

HandyManny

Sorry, posted before I finished....5% drumcondra, 5.6-6% Inchicore.

Tom123

HandyManny wrote: »

Sorry, posted before I finished....5% drumcondra, 5.6-6% Inchicore.

I don't think I would buy either.
A 5.5% gross yield isn't nearly enough to cover the risks out there at the moment and the chance of any positive capital appreciation over the next 5 years is very low.

The_Conductor

Tom123 wrote:

I don't think I would buy either.
A 5.5% gross yield isn't nearly enough to cover the risks out there at the moment and the chance of any positive capital appreciation over the next 5 years is very low.

I'd have to agree with Tom123 on this one.
I would also suggest that you would have major issues when you went to try to resell either in the future- a house, even a small one, would be a far better proposition. If you do decide to go ahead- personally I'd go for the Drumcondra one- even if it has a lower rental yield, it would be a safer bet in my eyes.

Colonel Sanders

anyone thinking of buying at the moment would want to have rocks in their head. Even the latest dose of VI spin from EBS saying people would be better off buying than renting assumes that prices will drop another 10% this year. As someone else pointed out 5% is a low yield for what has to be classified as a risky investment at the moment. Add in expenses, risk of voids etc and you're probably not doing much better (if at all) than putting your cash on deposit. Northern Rock pays 5% gross, 4% net on lump sums up to €3m and their deposits are guaranteed by the UK government

Glenbhoy

Agree with the guys, apartments are going to be extremely hard to shift down the line - didn't the IAVI say there were 40,000 unsold apartments in Dublin a few weeks ago (before quickly retracting it and saying it was a mistake - I'd say somebody got into trouble for that).

I was just looking at the Irish Times piece on 'Worth the investment' there, it was evaluating a 2 bed apartment in The Old Distillery Building in D7, it quotes price at 380K, interest only repayments of 1422pm and full capital repayments of 1997pm on 340K borrowing (90%) over 25 yrs at 4.99% (good rate). However they then state rent as being 1600 -1700 according to the selling agent, a quick search on daft shows rent for similar apartments of 1350pm and 1400pm, thus the calculated yield of 4.8 - 5.0% is utterly wrong - moral of the story, treat all information emanating from selling agents with extreme caution.

gamer

i,d say very unlikely to get a capital appreciation in inchicore,and you cant make a profit buying a house say 350k, say you get 1200 rent ,that wont cover the mortgage plus tax,insurance ,maintenance, misc expenses,you should assume 1month in 12 void,eg no tenant ,no rental income, if you open long term account tsb ,you can get 5per cent interest each year.drumcondra may be a good investment long term, re capital appreciation,look at daft.ie ,similar propertys in the area, what rent are they getting,agents tend to exaggerate returns,to sell anything they have on their books.
I heard certain parts of inchicore are rough.

Glenbhoy

gamer wrote: »

i,d say very unlikely to get a capital appreciation in inchicore,and you cant make a profit buying a house say 350k, say you get 1200 rent ,that wont cover the mortgage plus tax,insurance ,maintenance, misc expenses,you should assume 1month in 12 void,eg no tenant ,no rental income, if you open long term account tsb ,you can get 5per cent interest each year.drumcondra may be a good investment long term, re capital appreciation,look at daft.ie ,similar propertys in the area, what rent are they getting,agents tend to exaggerate returns,to sell anything they have on their books.
I heard certain parts of inchicore are rough.

remember too that buying an apament means at least one month's rent will go to the management company, and usually 1.5 months.

earlyevening

I'm with Colonel Sanders. Northern Rock give about 5% gross with no risk and its guaranteed by the British Government. Property prices are falling. Only a fool would invest.

arctictree

Why would anyone invest in property at the moment? Property prices are due to drop this year. There is a debate about the percentage drop but nearly everyone is agreed that they will drop.

Property IS a long term investment but it is critical that you enter at the right time and 2008 in my opinion is not the right time.

You should put your money in savings for next couple of years and then think about jumping in. As has been said, lots of good savings products are available at the moment.

seahorse

cas_k wrote: »

Definately Drumcondra

1. It is the main gate way from the airport to the city centre
2. You have got 3 colleges (st Pats, mater dei & DCU) within walking distance 3. Walking distance to town & Croke Park.

I would also be very cautious about investing in property at the moment OP, but if you are determined to choose between these two properties I would definitely agree with the above as it is all true. Also Drumcondra is a traditional rental area; there are a lot of flats and apartments there for rent and a lot of tenants will look to Drumcondra before they'd ever think of looking to Inchicore. Good luck with it whatever you decide.

Pa ElGrande

Consider this, under normal conditions (no property bubble) property is considered a long term investment, so I figure anyone investing today will have a long term investment horizon since there is no possibility of any capital appreciation over the next 5 years and income from rentals is likely to stagnate.

Now consider in the context of the current property market crash, that property will typically loose on average 30% of its value over peak (2006) within five years....that means that a new BTL investor can enter the market in 2011 and pick up the same apartment for less than you paid for it, they can then undercut you.

In the context of the ongoing Irish property crash this scenario is being played out now, the investors who bought off plans at peak in 2006 and those that bought in 2007 are now taking delivery of their BTL flats and trying to rent them out to pay the mortgage, but there are very few takers at the prices they need, so they have to drop the rents and subsidise their tenants, this is a mugs game.

If you are determined to get into property investment speak to existing landlords in the prospective areas first to get an idea of the issues you will face. Who knows some of them may be selling for a better price! Are you going to manage the tenants and property directly or through an agent? because you are going to have to work out the costs in terms of maintenance and time. Management fees tend to rise over time and wear and tear means the expense of having to replace carpets, paint walls, etc. (can be written off against tax)

I do not mean that you can't invest in property in the current market, but in the current environment you can loose money, unless you do your homework.

For renters here like myself, it is probable that rents will fall in the short term given the excess supply on the market, however this effect is likely to be short lived (maybe 18 months) depending on the location.

The rental market such as it exists in remote areas of the country is likely to collapse because the main driver of employment, construction will effectively cease in those areas and rising fuel prices will mean people will calculate, that it's cheaper to live nearer work which is more likely to be available in urban areas, this combined with the governments rental allowance scheme will likely put a floor on the rental market in larger urban areas.

We are then going to see a situation were very few people want to buy, since they've seen their friends/relatives get burned financially, when this happens rents will start rising and landlords anxious to restore yields will push up the prices, there will also be fewer landlords since the under capitalised flippers and specuvestors will have been forced out of the market, this will be the time to buy.

HandyManny

Hi there, to all who took the time to reply to my inchicore/drumcondra query, thank you very much. Rgds.