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.