Renting a property - business

Chrisdotdot

I'd like to buy an apt in Dublin City Center and rent it. My questions are:
- do you know any good independent blogs about properties & prices in Dublin? I don't know that market very well yet
- do you know any good agencies that could rent a house for me? Maybe some agencies that can even buy it for me?
- do you know any especially good or especially bad regions in Dublin I should consider?
- I work full time as software developer with salary > 41k. As I understand tax is 41% + 7% USC, is it correct?
- any good hints here? I don't own any property so far, I'm not Irish but Irish resident. I think I'm considered as first time buyer, any advantages because of that?

I would really love to speak with some people doing the same business.
Cheers

Chrisdotdot

Nobody? Really? Guys, don't tell me you don't buy properties for rent.

kkelliher

Chrisdotdot wrote: »

I'd like to buy an apt in Dublin City Center and rent it. My questions are:
- do you know any good independent blogs about properties & prices in Dublin? I don't know that market very well yet
- do you know any good agencies that could rent a house for me? Maybe some agencies that can even buy it for me?
- do you know any especially good or especially bad regions in Dublin I should consider?
- I work full time as software developer with salary > 41k. As I understand tax is 41% + 7% USC, is it correct?
- any good hints here? I don't own any property so far, I'm not Irish but Irish resident. I think I'm considered as first time buyer, any advantages because of that?

I would really love to speak with some people doing the same business.
Cheers

If you have to ask all of the above i would guess you have not had an answer from anyone as you clearly dont understand what you are getting into and you have clearly learnt little out of the celtic tiger downturn

Chrisdotdot

Are you talking about bubble in 2007? Right now it's gone and obviously there is good opportunity to get into the market AFTER the bubble. I'm investing money in different markets/different countries.

ted1

Chrisdotdot wrote: »

Are you talking about bubble in 2007? Right now it's gone and obviously there is good opportunity to get into the market AFTER the bubble. I'm investing money in different markets/different countries.

A bubble in 2007? Try 2000-2008
Are you aware of your tax implications on rental properties, PRTB charge etc?

A 1 bed in swords offers good yields. But to be honest being a landlord is a pain in the arse.

kkelliher

Chrisdotdot wrote: »

Are you talking about bubble in 2007? Right now it's gone and obviously there is good opportunity to get into the market AFTER the bubble. I'm investing money in different markets/different countries.

Its gone? I think thats called newspaper economics as in certain areas it is and others it is not. Like any industry you need to know your market and your business as you clearly need to do your own research to understand both as it is certainly not as simple to make a profit as you appear to suggest

Chrisdotdot

I'm aware of taxes. Didn't calculate it yet very precise (for that I need exact figures from apt owner how much he wants for the property + I need to know how much exactly I can earn on it). But it looks like I should be able to get around 8% easily. On top of that I can see that banks are scared to give out loans, people are scared of buying which is great position for buyers and for price negotiations.
The whole point of buying a house is so called 'passive income'. That's why being a landlord means - hiring people to deal with house/tenants. I don't have to spend any minute after I buy and hire someone to look after.

I don't read newspapers, I don't watch TV. It's all bull****. I asked in my first post about independent blogs. I talk to people, I read forums, I send emails. In my opinion right now there is growth potential in property market because (Dublin area, considering 5+ years):
- very good demography
- immigration
- big demand on the rental market
- very limited supply and lack of new houses in city center (I consider Dublin 2)
- bad moods of investors and owned house buyers
It was always easy to do good deals during crisis. But that's just my opinion. I'd love to read some good blogs about it or talk to investors. I'm perfectly happy to deal with all paper-work. If I can buy a property with good cashflow factor (e.g. giving 8%) then I'm not really scared of:
- increasing property tax
- increasing interests rates
- increasing costs of living
At the end of the day tenant will pay for it - not me. Demography is huge thing. It's like titanic. You cannot really change it, it needs years and years. To be honest I don't really care about possible loss of value of apt. I'm not going to sell it, but rent it. End after all it's very likely that long-term (10/20/30 years) properties in city center will grow up.

Saying "it's gone" I meant "properties bubble popped, we are somewhere on the bottom". Sorry for bad mental shortcut.

And to be honest - more paperwork, more taxes and more difficulties government/banks create the better it is for investors because there will be less buyers, more sellers = price goes down. As long as investor can find investment giving >5% it's a good one.

the_syco

Chrisdotdot wrote: »

I'd like to buy an apt in Dublin City Center and rent it.

Be prepared to never get your money back.

Chrisdotdot wrote: »

do you know any good independent blogs about properties & prices in Dublin? I don't know that market very well yet

I don't, no.

Chrisdotdot wrote: »

do you know any good agencies that could rent a house for me? Maybe some agencies that can even buy it for me?

There are plenty who'll rent it for you. The agency that will buy it for you will in fact be the one selling it to you, at a higher price.

Chrisdotdot wrote: »

do you know any especially good or especially bad regions in Dublin I should consider?

The bad regions are dotted all around Dublin. You'll need to a lot of threads to ensure you're not sold a great looking expensive house in an area only the local scum will live in.

Chrisdotdot wrote: »

I work full time as software developer with salary > 41k. As I understand tax is 41% + 7% USC, is it correct?

Have you gotten a job here yet?

Chrisdotdot wrote: »

any good hints here? I don't own any property so far, I'm not Irish but Irish resident. I think I'm considered as first time buyer, any advantages because of that?

Some, but I don't think they are the same if you intend to "buy to let".

Chrisdotdot wrote: »

I would really love to speak with some people doing the same business.

A lot are no longer in the business. There are also new taxes for people that rent out houses.

Chrisdotdot wrote: »

Are you talking about bubble in 2007? Right now it's gone and obviously there is good opportunity to get into the market AFTER the bubble. I'm investing money in different markets/different countries.

HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA.

No seriously; the bubble happened, and we're still in the crash period. The rent in some places have gone slightly up, but in the places that it hasn't gone up, the prices will still go down.

ted1 wrote: »

But to be honest being a landlord is a pain in the arse.

Agreed; even if you let it out through an agent, be prepared to sort a lot of the crap out yourself.

the_syco

Chrisdotdot wrote: »

At the end of the day tenant will pay for it - not me.

Well, maybe. As the recent price taxes to the landlords have shown, not always.

Chrisdotdot

Tax is calculated on profit, not on income = means no income, no tax. Plus there are many things that I can substract from profit (is there any special word for it?), like furnishing/painting/periods with no tenants/etc. It means I start with e.g. EUR400 income =~ EUR200 profit. When really bad things happen - fees and taxes up I might go down to EUR250 income =~ EUR100 profit. Still I'm earning, still good business. I like your negative attitude . It encourages me even more to do that. If everybody said "that's best ever business, go and do it" I would be worried. No risk no gain. I'm really missing good properties blogs. Maybe I should create one, would anybody read?
I'm interested in real data like:
- number of mortgage loans over years: 2000 - now
- average LTV over years: 2000 - now
- unemployment rate (in my case in Dublin City center)
- new investments rate
- number of new investments started by developers over years
- population pyramid
- scale of immigration
That gives real market picture and possible future trends. Obviously such a valuable data is not to be found in newspapers, it's hard work and digging different sources.

You are telling me that being landlord in Ireland sucks. Are you landlords or know any friends landlords? What kind of problems are you talking about? I believe it's just about choosing right person to look after apt and setting up proper contract! At the end of the day landlord + agent are being fed off the same source, so they have common interest.

ted1

I'm a landlord, letting agencies are generally crap and look after their interest.
Tenants have all the rights, if they stop paying you have little come back and its expensive and timely to evict.

I rent to social welfare tenants because I bought in areas where locals can't and the cheque is guaranteed and I don't fear the tenant losing their job and leaving me hanging.

41k isn't a great income and as an investment you'll need a minimum of 20% deposit. Then your at the mercy if interest rates.

You need to pay for repairs, upkeep, empty periods, tenant not paying etc.

Unless your going into it full time with multiple units, accountant, etc it really isn't worth your while.

Chrisdotdot

"letting agencies are generally crap and look after their interest" why wouldn't you negotiate different contract to make 'their' interest your common interest? I don't believe there is no such agent earning let's say 10% of the rent and taking care properly about property. I don't know what you are paying for your agents, but all agreements like 'landlord pays xyz EUR for finding a tenant' are crap. I would start with setting up a contract where agent receives monthly payment as percentage of rent and then it's his interest to have that source of money up and running.

My income is exactly 45k + 10k bonuses. It's enough for mortgage - even too much. I want approx EUR 150k for small 1bed apt in Dublin 2. I'm going to "buy for me", live there 1 day and then start renting. Thanks to that I can have 10% cash + 90% from bank. Maybe even 8/92. After that I let bank know that I changed my mind - they will slightly adjust interests rate, but LTV stays, so no more cash from me. Using mortgage as a leverage in such scenario gives better return of investment and leaves more cash in my wallet for next deals. I read as well about some tax relief for non-Irish, will take deeper look.

Good agent will take care immediately if someone stops paying and visit, talk, throw out. I don't know renting/letting law in here yet though.

Are you landlord because you wanted, or you were just given (or inherited) property from someone?

I don't really believe in empty periods in Dublin 2 . One problem less.

doolox

Tax is calculated on what the govt DECIDE. They only allow 75% of the interest paid on your mortgage and do not allow for negative equity and depressed rents or void periods.

There is an awful lot of stuff you have to do to keep tenants in place which are not fully allowed for. For example furniture and fittings are allowed over eight yrs on your account, but try getting ANYTHING to last eight years.......govt do not want to know.

Result is that you have to have money to put in to subsidise lower than adequate rents and are not allowed to offset losses incurred from operating rental property at a loss on other earnings.

People buying now with cash, so as to avoid high interest rates being charged on buy to let ( high risk = high rates ) may be able to make a profit but people who bought at the height of the boom are having to pay money into the set-up in order to offset low rents being paid which do not meet high mortgage payments.

kkelliher

Chrisdotdot wrote: »

"letting agencies are generally crap and look after their interest" why wouldn't you negotiate different contract to make 'their' interest your common interest? I don't believe there is no such agent earning let's say 10% of the rent and taking care properly about property. I don't know what you are paying for your agents, but all agreements like 'landlord pays xyz EUR for finding a tenant' are crap. I would start with setting up a contract where agent receives monthly payment as percentage of rent and then it's his interest to have that source of money up and running.

My income is exactly 45k + 10k bonuses. It's enough for mortgage - even too much. I want approx EUR 150k for small 1bed apt in Dublin 2. I'm going to "buy for me", live there 1 day and then start renting. Thanks to that I can have 10% cash + 90% from bank. Maybe even 8/92. After that I let bank know that I changed my mind - they will slightly adjust interests rate, but LTV stays, so no more cash from me. Using mortgage as a leverage in such scenario gives better return of investment and leaves more cash in my wallet for next deals. I read as well about some tax relief for non-Irish, will take deeper look.

Good agent will take care immediately if someone stops paying and visit, talk, throw out. I don't know renting/letting law in here yet though.

Are you landlord because you wanted, or you were just given (or inherited) property from someone?

I don't really believe in empty periods in Dublin 2 . One problem less.

Empty periods are guaranteed and you really appear to have no idea about the dublin rental market.....

ted1

So you are going to pay rent someplace,
Then pay a mortgage for a place you don't live in, then pay tax and other charges on your income from the rental.

Deffo a loss maker.
If you rent is 10k a year, 2k could go to Management fee, 1k to estate agents. That leaves you with 7k. Take away property tax, PRTB, life assurance etc, your down to 6k. Then tax that you left with 4.8 k.

Mortgage on 150 is about 750 , which is 9000 a year leaving you with a loss of 4200.

A one unit landlord has no real power to negotiate with a estate agent.

Chrisdotdot

Well obviously I'm not going to enter losing business. I did a spreadsheet with all knowledge I have, take a look:
https://docs.google.com/spreadsheet/ccc?key=0Ako2azpDjFRKdDhESF94LTc1bTZFQk1BZEJER2lyOEE&usp=sharing

I skipped estate agend for now - so I would take care about property myself. Assumption is pretty difficult to meat anyway: EUR 150k property price and EUR 1.4k monthly rent.
Could you please point me if there are any significant faults in spreadsheet? Like I forgot some tax/fee or maybe some values are incorrect? Most of the values I estimated using google. I need to gather more data to make that spreadsheet more real. Especially rent prices vs property prices.

Of course there are many places in spreadsheet to tweak whole investment. For example APR. 5.8 APR is for buy to let (it becomes about 5.7 average after 75% tax relief on interest is substracted). If I said I'm first time buyer (which actually I'm) and extended Term to 35 years, then APR becomes 4.6 = around 4.5 after tax relief. Then skip PRTB & BER & NPPR & Income tax & PRSI & USC .

Any clever thoughts in general?

WorkingLady

Rental income will also be subject to prsi at 4% from 1st jan 2014 so you will be paying 52% of any profits earned to revenue.

ted1

Your 1,400 a month is way off

The_Conductor

1,400 for a 1 bed? Highly optimistic.
300 for Furnishings, repairs, repairs, renovations per annum? I really don't think this is realistic.
You have no budget for furnishing the property at the outset- as in, none at all?
I don't believe BOI will give you a 90% mortgage to fund this- even owner occupiers will have severe issues getting a 90% mortgage on an apartment- this is across the board. Any potential mortgages will go to the credit panel- they are *not* decided at branch level.

I genuinely think you are looking at the rosiest possible scenarios- a constant 11 month occupancy, no trouble with tenants, as good as no wear and tear or upkeep etc etc etc

I'm sorry- it really just doesn't add up- in 100% ideal circumstances- maybe- but 1400 for a 1 bed and no budget for high end furniture, fixtures and fittings?

In addition- the bank will look at all of your outgoings- including a cost associated with your own accommodation. How are you going to factor this into your Net income if you're only on 41k (the rental income for the unit doesn't count- by your own admission you've sold this to the bank as an owner occupied premises).

To be honest- while you've done some preliminary research, its scant at best, looking at wholly unreasonable and unrealistic scenarios, has absolutely no contingencies built in- and is based on a totally unreasonable/unrealistic rental income expectation.

Go ahead by all means- but don't say you haven't been warned.

kkelliher

Chrisdotdot wrote: »

Well obviously I'm not going to enter losing business. I did a spreadsheet with all knowledge I have, take a look:
https://docs.google.com/spreadsheet/ccc?key=0Ako2azpDjFRKdDhESF94LTc1bTZFQk1BZEJER2lyOEE&usp=sharing

I skipped estate agend for now - so I would take care about property myself. Assumption is pretty difficult to meat anyway: EUR 150k property price and EUR 1.4k monthly rent.
Could you please point me if there are any significant faults in spreadsheet? Like I forgot some tax/fee or maybe some values are incorrect? Most of the values I estimated using google. I need to gather more data to make that spreadsheet more real. Especially rent prices vs property prices.

Of course there are many places in spreadsheet to tweak whole investment. For example APR. 5.8 APR is for buy to let (it becomes about 5.7 average after 75% tax relief on interest is substracted). If I said I'm first time buyer (which actually I'm) and extended Term to 35 years, then APR becomes 4.6 = around 4.5 after tax relief. Then skip PRTB & BER & NPPR & Income tax & PRSI & USC .

Any clever thoughts in general?

1400 per month for one bed? Dreamland

no furnishing budget at all, pots pans knives forks etc etc

no estate agent / rental fees which generally add to a months rental (incl.advertising)

prtb is 90 for every tenancy

insurance is actually high if apartment as you only need contents cover

Annual boiler and general maintenance will be at least 300

wear and tear? Replacement boiler, carpets, kitchen, beds, etc etc no allowance

ber cert required for letting

tv licence if you provide a tv

fobs for electric gates for tenants

keys and lock replacements

Smoke alarm, extinguisher, blanket replacements

Bank charges

Glenbhoy

I think OP knows a little more than he's letting on about this subject, whether he's serious or not is another matter.

That aside, it's highly unlikely that a bank will give a mortgage of 90% for a one bedroom apartment.

AIB for example specify that

"A Mortgage Co-ordinator who will guide you through the mortgage process - Up to 92% loan to value finance available
- Max 85% for Mortgages over EUR400,000
- Max of 75% for one bedroom apartments"

vandriver

There is only one apt in D2 for 150k or less

Fol20

kkelliher wrote: »

1400 per month for one bed? Dreamland

no furnishing budget at all, pots pans knives forks etc etc

no estate agent / rental fees which generally add to a months rental (incl.advertising)

prtb is 90 for every tenancy

insurance is actually high if apartment as you only need contents cover

Annual boiler and general maintenance will be at least 300

wear and tear? Replacement boiler, carpets, kitchen, beds, etc etc no allowance

ber cert required for letting

tv licence if you provide a tv

fobs for electric gates for tenants

keys and lock replacements

Smoke alarm, extinguisher, blanket replacements

Bank charges

You dont need to pay for a tv license if you provide a tv. It is still up to the tenant to pay for that.

Fol20

You can take out NPPR out of your calculations as that is no longer needed in 2014. Getting a BER will cost you more than 25. Id say closer to 100-200e. Whatever house you do buy should legally have one before you buy anyway.

When buying a house as well i would add in an extra 600 for land registry fees(dont know the exact name for it)

djimi

Have you actually seen any examples of €150k apartments in D2 that will rent for €1400 a month? Because looking at your spreadsheet, if you adjust the buying price up or the rental price down (either of which is quite likely) then your profit becomes a loss very quickly.

eclectichoney

Rental estimate is way off. Sure, some one beds could possibly rent for 1400 a month (Donnybrook, high spec finish etc), but these are not the kind of properties you pick up for 150k.

Take a look at this in Temple Bar: 1k per month
http://www.daft.ie/searchrental.daft?id=1408293
This is more the level you should be estimating imo.

kkelliher

Fol20 wrote: »

You dont need to pay for a tv license if you provide a tv. It is still up to the tenant to pay for that.

Not if you provide the tv

ted1

kkelliher wrote: »

Not if you provide the tv

Its up to the residents not the landlord

djimi

kkelliher wrote: »

Not if you provide the tv

License is the responsibility of the occupier; doesnt matter who owns the TV.

Jesus Wept

I know the op wants to run this at a profit, but just to play devils advocate (and learn something), say it makes a loss, 50e per month, or 100e per month.
He is still having the asset paid for over the term? (obviously the value of said asset can rise or fall).

Qualifies as profit?

vandriver

OPs figures are wrong anyway,as he has deducted the cost of the mortgage from the rent to arrive at a profit.

edanto

Chrisdotdot, as vandriver says, you've made a lazy and fatal mistake in your 'profit' calculations.

Rental income is taxed, not rental 'profit'. There are deductibles (I think you are allowed take off 75% of the INTEREST portion of the mortgage, management fee, repairs off the total rental income to produce the final 'taxable rental income').... but all of that information about tax on rental income is easily available, and you'd be well advised to research it properly and recalculate the tax that would be due.

I think that your estimates of 1.4k monthly rent for a 1 bed in D2 is far too much - look at the PRTB reports which shows the average in that area (they show actual prices instead of asking).

Your maintenance/repair costs are too low, based on the upkeep that my landlord had to do on our city centre apartment. I lived there for about 5 years, and in that time, they spent about €3,500 (carpet changed to laminate floors, completely painted, freezer/washing machine were replaced, curtains and couches).

All that being said - you might still have an investment opportunity, but your numbers need a lot of work and you need to park your assumptions.

Chrisdotdot

Guys, thanks a lot for all your input. It's really valuable for me. I will make my numbers more realistic after few calls to estate agents and some fake offers on daft to get some real knowledge about demand and prices.
I will definitely upgrade the spreadsheet with:
- increased maintenance price/furnishing/renovations
- possible other once-off expenses (land and mortgage register entry, estate agent margin etc.)
- removed NPPR as someone suggested it's no longer valid (replaced by LPT?)
- 75% tax relief, not sure about how it works; strange thing here is that BOI online mortgage calculator shows different figures than my spreadsheet; it means they are taking into account some other numbers - I thought it might be that 75% tax relief was taken into account there; APR 5.7 in my spreadsheet gives more/less same monthly payment as APR 5.8 on BOI calculator... I will make sure about that bit
- the business here is only about positive cashflow; I invest in different markets and even if after my safe calculations it happens that cashflow drops to negative then I would do my best to repay mortgage as much as needed to bring cashflow to positive level. That would obviously dramatically decrease ROI from ~5% to e.g. 0.5%, but that's all about investing - taking risk, isn't it? Worst case I would sell and take a loss. I cannot let myself paying bad investment every month. I don't care what happens to property price in future - just cashflow. If the price goes up then I would sell it, if it doesn't then I keep cashflow. This kind of investment in Dublin City Center would rather be stable and safe.

The big picture right now is more less I need to look for something that meets:
property price = 100x monthly rent
If 1-bed apt in Dublin 2 doesn't meet that then maybe something else? I'm limited with my creditworthiness to EUR 200k. Obviously I cannot buy anything meeting 100x criteria on market price, so it breaks down to how difficult it is to find motivated seller that would agree to let's say market-25% price.

If you have any ideas about some clever tax tricks or property investment tricks then let me know. I know some people buy properties in very bad condition and then fix it or increase numbers of bedrooms, etc. I'm determined to invest in property as I don't have any yet. The question is whether I do that in Dublin/other part of Ireland/other country. I'm monitoring few property markets right now.

The_Conductor

You're not going to persuade any seller in the Dublin city area to accept a discount of 25% on asking price. The way the market is at the moment- a premium of 25% isn't unheard of- thats the state of play in the Dublin market (which I have to emphasize is completely decoupled from the rest of the country).

100 Times monthly rent max price?

Start looking outside of Dublin- because this is wholly unachievable- its so far out there- its not going to happen.

markpb

Our Year wrote: »

I know the op wants to run this at a profit, but just to play devils advocate (and learn something), say it makes a loss, 50e per month, or 100e per month. He is still having the asset paid for over the term? (obviously the value of said asset can rise or fall). Qualifies as profit?

He could make a loss but still have to pay quite a bit of tax. Add in the additional workload, it would hardly be worth it.

Chrisdotdot wrote: »

- 75% tax relief, not sure about how it works; strange thing here is that BOI online mortgage calculator shows different figures than my spreadsheet; it means they are taking into account some other numbers - I thought it might be that 75% tax relief was taken into account there; APR 5.7 in my spreadsheet gives more/less same monthly payment as APR 5.8 on BOI calculator... I will make sure about that bit

You're mixing up TRS (which only applies to mortgages on your home) with interest deduction on your tax bill (which only applies to rental properties). Since you're presumably applying for a PPR mortgage with BoI, their website is quoting the monthly repayment net of TRS. This doesn't apply to you.

djimi

Chrisdotdot wrote: »

The big picture right now is more less I need to look for something that meets:
property price = 100x monthly rent
If 1-bed apt in Dublin 2 doesn't meet that then maybe something else? I'm limited with my creditworthiness to EUR 200k. Obviously I cannot buy anything meeting 100x criteria on market price, so it breaks down to how difficult it is to find motivated seller that would agree to let's say market-25% price.

Again have you actually found any properties that meet this criteria?

You might be able to find some properties in places like Leitrim that you can buy for €35000 and rent for €350 a month, but these are very poor rental markets and the chances are you could be faced with larger than normal vacant periods.

In a healthier rental market its not likely that you are going to buy a rental property for 100x the monthly rent. I wouldnt say it would be even remotely close to that.

Chrisdotdot

Hi there.
I had a look at some places. It looks pretty difficult to meet the criteria and succeed in that business with my assumptions. However I found out recently rent-a-room scheme. There are apts to be found outside Dublin to buy for EUR100k with the potential to rent a room for EUR430/month. I could buy one like that, live there myself and rent a room. Then EUR430/month covers my mortgage (which is lowest APR as first time buyer), I don't have to do PRTB and I don't pay income tax on that (since <EUR10k is not taxable). How does that sound? As a first time buyer I have to live there only for 5 years - after that I can just sell apt. More less it gives me free apt to live.
Am I missing something? Because that looks quite cool.
Cheers

markpb

Its a fine plan as long as you accept that you're mixing business with pleasure. You have to share your home with someone, get along reasonably well with them, fix all the little things quickly that you'd otherwise let lie, accept that they'll come in late or leave early, might not tidy up after themselves, etc. There's nothing wrong with it, just don't think of it as get rich quick scheme.

Edit: forgot to mention that now you're deciding where to live based on how to make money. Will you be happy living there, can you get to work easily?

The_Conductor

How reasonable is it to expect 430 a month for the rent-a-room scheme, outside of the Dublin area? I don't know where you're talking about- but it seems a good deal optimistic- if 2 bed apartments are 100k- there obviously isn't massive demand in the area.

Also- the 10k a year- is all receipts from your rent-a-room housemate. Aka- its his or her share of all the bills etc- these are not in addition to the 430 a month. Once you go a penny over the 10k- for whatever reason- the whole lot is taxable- not just that portion in excess of the 10k.

Further- there are costs of ownership- wholly aside from the mortgage, that you, as owner, will be expected to meet (such as property tax, management charges (seeing as its an apartment), insurance (you'll need an enhanced policy as the property is not solely owner-occupied) etc etc etc)

Your idea sounds wonderful- but you really need to drill down into the nitty gritty and see whether it adds up, or not. You seem to be taking an unduly rosy look at things here.........

odds_on

Chrisdotdot wrote: »

Well obviously I'm not going to enter losing business. I did a spreadsheet with all knowledge I have, take a look:
https://docs.google.com/spreadsheet/ccc?key=0Ako2azpDjFRKdDhESF94LTc1bTZFQk1BZEJER2lyOEE&usp=sharing

I skipped estate agend for now - so I would take care about property myself.

Any clever thoughts in general?

Jumped into this thread having read as far as post #16 and have missed the later replies.

I notice that you have missed out Landlord's insurance.

As you will be in the renting business, you will be assumed to have a thorough knowledge of all the law pertaining to renting. Any slip-up could cost you thousands in damages awarded to your tenants.

For some reason, people seem to think that the renting business is a simple job. You advertize your prooperty, you get the tenant in place, sit back and bingo, in a years time you have a profit and income.

Just like any business there will be problems, often unforeseen in the renting business which will dig deep into your profits.

Have you read the Residential Tenancies Act 2004 and the Housing Standards for Private rented Accommodation 2008 (as amended 2009) which governs much of the renting business.

Do you know how to deal with anti.-social tenants?
Do you know the difference between the different types of leases - periodic, Fixed term and Part 4? And the implications of each type.
What will you do if a tenant over-holds and is not paying rent? It will probably take months to resolve (if you are exceptionally lucky as the PRTB are extremely slow and rarely is a claim resolved in less than 4 months.
What will you do if a tenant fails to pay the rent?
You do know that once a tenant has been in a property for 6 months he then has the right to stay for a total of 4 years without signing any new lease.

You will find that a tenant's idea (and the PRTB's) of "normal wear and tear" is completely different to an ordinary house owners. You may well expect to have to do some redecorating between each tenancy - nearly on a yearly basis.

As regards your spreadsheet, IMHO, you need to do a proper Anticipated Profit and Loss Account with cumulative totals on a monthly basis. And allow more than 800 p.a. for your furnishing, repairs and renovations (including PRTB and BER).

marathonic

You would think that Irish property investing would be a sure fire way to make money given the recent drops in house prices. This is not the case. It's not in Dublin, nor is it in other counties.

I think some more realistic figures can be seen in my working below. Some might even consider these optimistic.

They show that it's possible for an investment to 'just about' hold it's own on an interest only mortgage. Of course, it'd be impossible to obtain such a mortgage so you'd need to subsidise the investment with your own income.

My figures are also based on the fact that you cannot offset your entire mortgage payment against rental income for tax purposes and you can't even offset the entire interest portion - only 75% of it.

The basic outcome of my investigation in Dublin, and other counties, is that investing now only makes sense if you want to take a punt on rising prices.

If you want to be a professional landlord, you'd need to wait until the rent rises, or property falls, to a level where the profits cover the capital repayment portion of the mortgage. That way, the investment looks after itself and you can move onto the next.

If you need to subsidise each property you buy using your own income, you'll soon find yourself in a position where you have no income left.

https://drive.google.com/file/d/0B29azmuweF9_dExoVE1iUTJZQ3c/edit?usp=sharing