Buying property as investment?

CiniO

I'm Polish national who's been living in Ireland for the last 7 year with my wife, and had our kid born here over 5 years ago. We've never planned to stay here so long (we only though about few years) but somehow we are still here
We've been renting property for last 7 years, and it actually looks it was best what we could do in those times, as if we bought one in 2007 or 2008, we'd be down on cash a lot, comparing to what we spent on rent in all those years. (we live in area where property prices are quite high, but rent is quite low)

Anyway - now we thought about buying a property for investment purposes, but we don't really know much about Irish property market.
We only want to spend about 50k, and I've seen there is good few properties for around that price in the country. Mostly apartments or semi detached or terraced houses though, and obviously not in any bigger cities.
My thinking is that we would be able to rent out this property, and in few years its value would rise, as at the moment you can buy properties for lower value than cost of building one, which situation is not sustainable in longer time me thinks

I can generally work out if cost of property is attractive for the area, and how much rent is reasonable to ask in that area, but what I don't know is other costs. I know for apartments there is maintenance costs which are to be paid for maintenance company. But who does choose this maintenance company? What if apartment complex is not rightly managed - can maintenance company be changed? What is the average cost of this maintenance fee and what does it cover? And what in case of apartment complex where some of the apartments are vacant and possibly owned by bank? Who pays for their maintenance?

Is there a maintenance fee on any of the semi detached houses or terrace houses?

Would "first time buyer" mortgage be available to us, considering we don't own any property in Ireland, but we are not intending to live in property we buy?

If property is advertised for say 50k, what kind of extra costs we need to consider and how much would they be (lawyer fees, stamp duty, etc)?

Does it make sense to look for apartments, or is it better to put more money and buy a house?

Any information appreciated.

ted1

From my experience with polish friends is that they get a better ROI ( return on investment ) from buying in Poland.

Stamp duty is 1,soliciter is about 1500. Surveyor is 150. You are taxed on income but can write it off with deprecation and cap ex etc

ABajaninCork

Don't forget to factor in the cost of furnishing the property. Renting unfurnished doesn't seem to be popular here.

Are you intending to manage the property yourself, or will you need to pay an agent? Generally, there's no management or maintenance fees on houses unless it's on an estate. For example, I live on a small estate. The properties are freehold, but the resident's association here do employ someone to cut the grass on the green, and the inhabitants are asked to make a contribution to the costs. Although we pay it o.b.o the landlord, contributions are voluntary.

You won't get a FTB (First Time Buyer) mortgage as you're not intending to make it your primary residence. You'll need a BTL (buy to let) mortgage, which might be harder to find.

fash

CiniO wrote: »

My thinking is that we would be able to rent out this property, and in few years its value would rise, as at the moment you can buy properties for lower value than cost of building one, which situation is not sustainable in longer time me thinks

it is very important you properly understand this issue. Long term property cannot cost less than the cost to build- however that presumes that there is need to build new property there- I.e. that the area is growing and not being depopulated faster than it is growing. If there is a lot of emigration- there will be even more houses freed up into the future. Certain rural areas of Ireland in particular face this future. So avoid those places.

CiniO wrote: »

But who does choose this maintenance company?

All of the owners have 1 vote each per apartment- which can be a problem if there is a block owned by a bad person.

CiniO wrote: »

What if apartment complex is not rightly managed - can maintenance company be changed?

yes- but see caveat over.

CiniO wrote: »

What is the average cost of this maintenance fee and what does it cover?

varies- €900-€2000. Bins, maintenance, sinking fund, insurance, lift. Lighting of common areas.

CiniO wrote: »

And what in case of apartment complex where some of the apartments are vacant and possibly owned by bank? Who pays for their maintenance?

the bank should- I believe?

CiniO wrote: »

Is there a maintenance fee on any of the semi detached houses or terrace houses?

Rarely- sometimes they have are a private development- like a block of apartments.

CiniO wrote: »

If property is advertised for say 50k, what kind of extra costs we need to consider and how much would they be (lawyer fees, stamp duty, etc)?

€3k should cover it.

CiniO wrote: »

Does it make sense to look for apartments, or is it better to put more money and buy a house?.

That depends - work out the yield on both and factor in the additional management cost.

murphaph

Be very careful where you buy. As mentioned above, many of the properties built over the last 15 years were simply mistakes that will not be needed in our lifetimes. They are in areas facing depopulation. I'm sure Poland has similar areas where you can buy "cheap" property but you won't find anyone to rent it from you. Such areas certainly exist here in Germany.

If there are no potential tenants then even a free property is actually a liability (maintenance, property tax etc.) so make sure it's in an area with rental demand and some sort of economic future. You probably won't find any 50k houses in such areas to be honest.

Cuddlesworth

If you can't take a hit of 10-20k over a year, then walk away.

josealdo

Cuddlesworth wrote: »

If you can't take a hit of 10-20k over a year, then walk away.

does any body know about renting to the concil and they put in soneone on wekfare . i was offered a flat recenty for 50k with a person in it . the concil were offering 400 a month for the next four years .

Cuddlesworth

figs666 wrote: »

does any body know about renting to the concil and they put in soneone on wekfare . i was offered a flat recenty for 50k with a person in it . the concil were offering 400 a month for the next four years .

You don't have a choice on who gets put in but you are liable for their actions via the PRTB.

The RAS scheme has in the past included tenants known by the council to cause damage to council housing.

You are responsible for any repairs to the property, including damage by the council tenants.

The minimum period is 5 years, implying the council and tenant in this case are already there for a year.

You will always get under the market rent.

I'm not sure why anybody would ever go for it.

CiniO

ted1 wrote: »

From my experience with polish friends is that they get a better ROI ( return on investment ) from buying in Poland.

Possibly, but we have good few properties in Poland now, and want to diversify a bit (not have everything on one market as it's bit risky).
Also I don't really see any reasons for property prices in Poland to raise in nearest future, while in Ireland there is at least a change of this happening.

Stamp duty is 1,soliciter is about 1500. Surveyor is 150. You are taxed on income but can write it off with deprecation and cap ex etc

You mean income from rent?
How does that work if we moved out of Ireland. Then income from rent, would be way below our tax credits if we had no other income in Ireland... (so we wouldn't pay any tax) Is that right?

CiniO

ABajaninCork wrote: »

Don't forget to factor in the cost of furnishing the property. Renting unfurnished doesn't seem to be popular here.

I though many properties for sale come furnished, don't they?

Are you intending to manage the property yourself, or will you need to pay an agent?

Until I live in Ireland I can manage it myself. If I move abroad (which might happen) then I'll need to pay an agent. What kind of cost could that be?

Generally, there's no management or maintenance fees on houses unless it's on an estate. For example, I live on a small estate. The properties are freehold, but the resident's association here do employ someone to cut the grass on the green, and the inhabitants are asked to make a contribution to the costs. Although we pay it o.b.o the landlord, contributions are voluntary.

I can't imagine it (cutting the grass) would be any high cost overall?

You won't get a FTB (First Time Buyer) mortgage as you're not intending to make it your primary residence.

Is this a condition of FTB? How do they verify it? Or maybe there are some rules, that I need to live in property for some period after obtaining this FTB mortgage?

You'll need a BTL (buy to let) mortgage, which might be harder to find.

It all depends on circumstances and price of property. If I try really hard, I might need no mortgage at all, or just get a mortgage for only some percentage of property value.

CiniO

fash wrote: »

it is very important you properly understand this issue. Long term property cannot cost less than the cost to build- however that presumes that there is need to build new property there- I.e. that the area is growing and not being depopulated faster than it is growing. If there is a lot of emigration- there will be even more houses freed up into the future. Certain rural areas of Ireland in particular face this future. So avoid those places.

Valid point here. I'll consider it.

All of the owners have 1 vote each per apartment- which can be a problem if there is a block owned by a bad person.

In that case, majority decides, so one person can't really achieve anything. Am I right?

varies- €900-€2000. Bins, maintenance, sinking fund, insurance, lift. Lighting of common areas.

Seems expensive to me. Is this a norm or are there any maintenance prices around?

That depends - work out the yield on both and factor in the additional management cost.

So appartements are cheaper in general than houses, but this is mostly because of those management fees?

CiniO

murphaph wrote: »

Be very careful where you buy. As mentioned above, many of the properties built over the last 15 years were simply mistakes that will not be needed in our lifetimes. They are in areas facing depopulation. I'm sure Poland has similar areas where you can buy "cheap" property but you won't find anyone to rent it from you. Such areas certainly exist here in Germany.

To be honest, I don't think such areas exist in Poland. Obviously properties are cheaper in bigger cities then small towns or villages, but I don't think there are any areas suffering from depopulation. There is still shortage of houses and appartments there in Poland in nearly all areas.

If there are no potential tenants then even a free property is actually a liability (maintenance, property tax etc.) so make sure it's in an area with rental demand and some sort of economic future. You probably won't find any 50k houses in such areas to be honest.

Well, by looking at daft.ie I can actually see plenty on 50k or below in areas that are not exactly hopeless, and have some demand from tenants.

CiniO

Cuddlesworth wrote: »

If you can't take a hit of 10-20k over a year, then walk away.

Why would I need to take a hit of 20k a year?
Example?

ABajaninCork

CiniO wrote: »

I though many properties for sale come furnished, don't they?

No - they don't. If you want the furniture, you can negotiate separately with the vendor.

CiniO wrote: »

Until I live in Ireland I can manage it myself. If I move abroad (which might happen) then I'll need to pay an agent. What kind of cost could that be?

Depends on what the management company (if solvent) want to charge.

CiniO wrote: »

I can't imagine it (cutting the grass) would be any high cost overall?

We pay E40 every six months. I have no idea what others might charge...

CiniO wrote: »

Is this a condition of FTB? How do they verify it? Or maybe there are some rules, that I need to live in property for some period after obtaining this FTB mortgage?

There probably are. Check with the mortgage provider.

CiniO wrote: »

It all depends on circumstances and price of property. If I try really hard, I might need no mortgage at all, or just get a mortgage for only some percentage of property value.

Cuddlesworth

CiniO wrote: »

Why would I need to take a hit of 20k a year?
Example?

6+ months of rent lost. Damage to property possibly including complete house refit, new kitchen, bathroom, furniture, white goods, flooring and walls. No debt recovery possible in most cases.

Attempts to bypass this by illegal eviction lead to lost rent and 10k+ in damages awarded via PRTB plus whatever they did to your house.

I have worked in property maintenance and still know a large number of people who do. It happens across all possible tenants types. There is always a risk of this happening. If I invested in property, I couldn't afford the hit.

czipownik

Re-cooking the thread after some time break, some inputs from another Polish settler...

I've been living and working in Ireland since late 2001, got married to a Polish lady here in 2008, became dad in mid 2014. Renting all the time since the arrival: gradually from room shares, through house shares, apartment rentals, all the way to present countryside bungalow rental these days. About to slowly move again as the landlord is putting up the house for sale.

While being tenant in Ireland, we bought two bed apartment in highly sought by tenants suburb of Poznan City. We financed 50/50 cash/mortgage, generally success, tenants occupancy rate at least 90% since we bought the place in early 2008, securing our savings from upcoming Irish financial market collapse. Bank deposits guarantee was brought in here only some time later.

I am currently evaluating moderate mortgage scenario here in Ireland. The problem is I live in Limerick and this means potential risk of getting nasty neighbours from the council run Limerick Regeneration programme.

My evaluation goes around max 100k priced property, most likely apartment. I experienced some job turbulences during recession with two short on the dole breaks of just 2 and 4 months respectivelly. Presently with stable job in the ICT sector but in case sh#t happens, Limerick is still very poor in terms of better paying jobs.

Could someone from Mid-West write some reflections on my thoughts and ideas? Is apartment purchase a no-no in Limerick?

NIMAN

I wouldn't bother if I was the OP.

you'll not get much of a place for 50k. Plus as someone who was once a reluctant landlord, I wouldn't go back to it.

Having said that, it is for some people.