Buy to Let questions

Isityourself

Hi all,

I am currently thinking about buying a house in the Drumcondra area with the intention of letting it out. I have a nice lump saved up but i dont really want to tie it all down in the property so im considering getting about 90%ish (depending on final price) of the value of the prop in a mortage.

Now im totally new to all this but ive been doing a bit of research regarding tax...ptrb registration etc. Doing the math in simpleish terms im thinking, well if the proprerty is paying for itself, ie covering the mortgage im winning....right????

I have also accounted for some of the cash for upgrades/maintainence.

Just wondering if anyone has any thoughts on these investments these days...good/bad idea or other wise!! All appreciated!!

Thanks!

Isityourself

I do work in the public sector so i would have a pretty secure job but its not the getting of the mortgage that im asking about!! Its everything else!!

gordongekko

Don't forget income tax on your rental income

tommylimerick

I doubt you will get mortgage if you volunteer all the information
I think though your idea is pretty good if you can make 6 % return
you might have to put in most of your own savings
do you have mortgage approval
I tried getting a 20 % mortgage on a investment property 2 year ago
the bank said it was a investment loan and they are rebalancing their books
was for a commercial building

euroboom13

if you are planning on getting into the rental market now,with a morgage,even if you get approved ,you would be wise to try and have a surplus of rent after morgage payments to cover any interest hikes which seem likely.

Hidden cost.

prtb,(ending shortly)
Rent is taxed as income before morgage payments ,
property tax,
water rates,
Maintance,
capitol gains may apply on sale depending on when you buy,
Vacancy,
insurance,
etc.


HASSLE(that is completely your responsibility)

evicting bad tenants,
interviewing and selecting tenants,
Chasing late rent,
organising maintance,
Repairing after filthy tenants,
on call 24/7 to answer tenants,
worry!


If you dont fund it through debt and can find good tenants everytime,then it may work out well in the long run,but definitely not a hassle free return or sure income generator.

Min 10% yield(tax will eat 3%,overheads2%.....debt 5%at least)

I manage property and would hate to be dependant on rent to cover debt,too unreliable.

(Leaving money in the bank pays better short term but capitol appreciation in property can be hugh,over a long period.)

Isityourself

Eurobloom thats a great list youve made out there, appreciate it. Ive considered all mentioned there apart from capital gains tax and also i wasnt aware that the ptrb is ending soon....what is in line to replace it??

joeguevara

@ eurobloom: Will water charges not be for the tenant to be paying - similar to gas and electricity?

joeguevara

Isityourself wrote: »

Eurobloom thats a great list youve made out there, appreciate it. Ive considered all mentioned there apart from capital gains tax and also i wasnt aware that the ptrb is ending soon....what is in line to replace it??

Is it not the NPPR that is ending and being replaced by the Property tax for everyone. I don't thing PRTB is ending. Maybe wrong!

Fitz123

Just looking at OP, is it even possible to get a 90% loan on a buy to let ? Would have thought most banks would extend a lot lower % than that.

As alluded to above, when doing your figures on repayments etc, stress test yourself for an increase in rates in the future, even if rents don't move accordingly (unless you are taking a fixed rate mortgage of course.) Assume over a 12 month period, you may have periods of unoccupancy, as well as unforeseen repairs.

Over the last number of years tax policy has been tough on landlords, i.e. only a 75% deduction for interest paid etc. Who knows what the future holds in that regard. One benefit out there at the moment, if I recall there is a CGT exemption for properties bought in 2013, that are held for a 7 year or greater period.


I've no experience in property myself, but there is a lot to be aware of prior to becoming a landlord.

RaggyDays

Be a realist with the rents, a simple rule of thumb is to have a look a what is being looked for in the area and discount that amount by at least 50%.
For example if the local estate agents are quoting 750 per calendar month in the area then do your sums based on 50% of this ie 375 per calendar month