100k looking for rental property

musgravedk

Hi all
currently looking for investment property maybe one bed or 2 bed apartment would be looking to rent it out. so was wondering what would be peoples advice on best locations to start looking , this will be long term investment so not really looking for short term gain but solid rental potential any help /advice would be greatly appreciated

meglome

This is not the question you asked but none the less. There is a huge oversupply of properties and people are leaving the country in large numbers. Says to me that it's a terrible time to buy an investment property, especially since prices are still falling.

musgravedk

Thanks meglome, i appreciate the feed back

Smcgie

meglome wrote: »

This is not the question you asked but none the less. There is a huge oversupply of properties and people are leaving the country in large numbers. Says to me that it's a terrible time to buy an investment property, especially since prices are still falling.

Yeah sure hold on until they reach 500k then buy one.

OP its an excellent time to buy an investment property. As the famous warren buffet said the key to investment success is "be greedy when others are fearful and fearful when others are greedy"

musgravedk

Thanks smcgie just thinking it mite be slightly safer to have it in bricks and mortar sooner then in a bank especially as i dont really believe the goverment has the cash to back up there bank guarantee on deposits

meglome

Smcgie wrote: »

Yeah sure hold on until they reach 500k then buy one.

OP its an excellent time to buy an investment property. As the famous warren buffet said the key to investment success is "be greedy when others are fearful and fearful when others are greedy"

Well it's not my money. But with less people to rent a property and prices falling plus showing no signs of stopping it would seem a foolish move.

musgravedk wrote: »

Thanks smcgie just thinking it mite be slightly safer to have it in bricks and mortar sooner then in a bank especially as i dont really believe the goverment has the cash to back up there bank guarantee on deposits

Contrary to our previous belief in this country property prices can fall and are falling. If you're worried put the money into a foreign bank that isn't in trouble.

Treehouse72

Your first hurdle is to beat what you can get in a deposit account. Here's a good list:

http://www.askaboutmoney.com/showthread.php?t=101813

The state savings bonds, which are not subject to DIRT, but which ties up your money for 5 years have an equivalent AER of 4.21% (that's the rate you'd need to get pre-DIRT elsewhere in other words). 3.5% (minus DIRT) is standard and a decent ballpark to base your calcs on.

Honestly, I think a 5% gross yield is the absolute minimum you need on a property to beat this (or to guarantee breakeven). But you must also factor in:

> DIRT may go up in the budget
> Property and water taxes may also be introduced
> You have income tax payments to make on rental profit
> You will have CGT to pay if you sell the property at a profit
> Rent supplement might be reduced in the budget, thus depressing rents.
> Property prices are not at the bottom and will fall more, meaning you need to factor depreciation into your calculations.

It should also be said that you won't find many properties in Dublin for €100,000. Maybe you can outside Dublin but getting rent of €450 pm for that property - which you need for your 5% yield - might be tough with the budget upcoming and rent supplements falling.

musgravedk

Thanks Treehouse72 some useful advice there thanks for the detailed reply

D3PO

Treehouse72 wrote: »

Your first hurdle is to beat what you can get in a deposit account. Here's a good list:

http://www.askaboutmoney.com/showthread.php?t=101813

The state savings bonds, which are not subject to DIRT, but which ties up your money for 5 years have an equivalent AER of 4.21% (that's the rate you'd need to get pre-DIRT elsewhere in other words). 3.5% (minus DIRT) is standard and a decent ballpark to base your calcs on.

Honestly, I think a 5% gross yield is the absolute minimum you need on a property to beat this (or to guarantee breakeven). But you must also factor in:

> DIRT may go up in the budget
> Property and water taxes may also be introduced
> You have income tax payments to make on rental profit
> You will have CGT to pay if you sell the property at a profit
> Rent supplement might be reduced in the budget, thus depressing rents.
> Property prices are not at the bottom and will fall more, meaning you need to factor depreciation into your calculations.

It should also be said that you won't find many properties in Dublin for €100,000. Maybe you can outside Dublin but getting rent of €450 pm for that property - which you need for your 5% yield - might be tough with the budget upcoming and rent supplements falling.

bang on post except 1 thing Id say you want a min yield of 7%

quozl

musgravedk wrote: »

Thanks smcgie just thinking it mite be slightly safer to have it in bricks and mortar sooner then in a bank especially as i dont really believe the goverment has the cash to back up there bank guarantee on deposits

If that is your concern then why not put your money into a foreign bank that you have researched, and that is covered by a national deposit guarantee that you trust more than the Irish one. There is free movement of capital inside the EU.

If I was worried about losing my savings, I would not be putting them into irish property frankly. I do agree with you about the governments ability to stand over the guarantee of course.

Treehouse72

D3PO wrote: »

bang on post except 1 thing Id say you want a min yield of 7%

I agree with you to be honest, but a lot of people think that 7% is way too optimistic to expect in a low IR environment. Which is a fair point given we've probably got years and years of low IR's ahead. Maybe something (globalisation? the dotcom bubble? whatever) has caused a change in the neutral IR from, say, a long term 5% to a now 4%. It's possible I suppose. So I tend to prefer the 5% figure so as to be more neutral and since, at the moment, it is a reasonable break-even amount versus a deposit account (erm, as long as you completely ignore capital depreciation that is!).

A 5% yield on a €100,000 property is getting €416pm rent v. 3.5% on deposit (€3,500 - €900 DIRT = €2,600/12 €216pm. The €200pm difference to pay your costs of ownership, allow for voids and whatnot seems tight, but probably breakeven. That's IF things hold exactly as they are now.

If IR's rise it doesn't look so good, as the deposit interest goes up and the value of the property will decline. Alternatively, DIRT might go up while property prices go back up and IR's hold, in which case the picture gets better for the buyer and worse for the money on deposit.

The most likely scenario I think in the next 5 years is: DIRT up, IR's stable, property prices down, rents down modestly. In which case, 5% is not a great deal, because the asset depreciation will probably outweigh the DIRT increase, and meanwhile rents are stable at very best and IR's only have one way to go. Not great at all.

(My maths suck, so I hope those numbers are correct).

BostonB

Unless of course you struggle to rent a 100k property, have problem tenants or lots of repair costs.

Basically its a gamble. I have a feeling its going to get worse before it gets better. In which case not being tied to a property might give you some advantages. You might get a 150k property for 100k in 12 months time, or sooner. be a long time making 50k back on 500pm rent.

tevion

http://www.myhome.ie/residential/brochure/30-russell-view-russell-square-fortunestown-dublin-24/286145

Theres a house for less than 100K and theres another in the same estate for the same price.
Wouldnt be a great area, but I'd imagine ya'd get minimum 600 euro per month easy enough, which wouldnt be too bad of an investment possibly, if a 5% gross yield is the target.
The advantage is the fact that its not an appartment, so there wouldnt be the management fee.

Mr. Loverman

Smcgie wrote: »

OP its an excellent time to buy an investment property.

What the hell?

Please tell me you are taking the piss, my brain refuses to accept someone could be that clueless.

Smcgie

Mr. Loverman wrote: »

What the hell?

Please tell me you are taking the piss, my brain refuses to accept someone could be that clueless.

So when should he have bought back 2 years ago?? Buy em cheap sell em high!
Finch american rating agency have an 'outperform' rating on irish property saying that house stock are massively undervalued due to oversupply. You my friend are a typical sheep and that's why you refuse to get your head around it.

I'm on bb but I will get the finch report linked later.

BostonB

Wait another 2yrs and you'll buy them cheaper again.

Smcgie

BostonB wrote: »

Wait another 2yrs and you'll buy them cheaper again.

Source?

BostonB

Common sense.

Smcgie

BostonB wrote: »

Common sense.

Fair enough

BostonB

Theres oversupply and peoples ability to rent/buy will continue to decrease for the foreseeable future. At some point that will change. But its not anytime soon.