Am I mad to consider becoming a landlord?

hairyslug

I've just finished buying our family home. I hated every minute of it.

In the next while, I will have a lump sum, enough to buy an apartment in Dublin, rent in the area is around €1,200 a month.

Along with having a full-time job, how much extra hassle is it, does it just come down to the types of tenants you get.

Parchment

I think there are a number of factors involved but the type of tenants is a central one. Others that i can see are : the condition of the apartment, anti-social behaviour from other tenants affecting your tenants, maintaining the apartment/replacing anything that brakes.

We have rented our place for six years and have a great relationship with our landlord. He is a gentleman and is very good to us but we are also excellent tenants - rent paid on time each month, place kept spotless, inform him of any problems right away, never had any complaints against us from other tenants.

I would suggest you be very selective about your tenants. Would you live close to the rental property? I think it would be even more of a headache if you lived far away from it.

MarkAnthony

It can vary from a few minutes a month to an all consuming obsession involving thousands in court costs, massive amounts of stress and potentially costs against you if you fail to use the right sort of envelope. Unless you have a hankering to become a Landlord for whatever reason it's a very ill advised decision to enter into without speaking to an accountant and financial advisor. There maybe better investments out there.

In regard to where we are in the market at the moment. Apartments have reentered bubble territory for a myriad of factors, they won't lose 50% but could lose as much as 10-20% in the short term conceivably. Rents are at or very near to an all time high. They will probably go a bit higher but they could lose as much as 50% as they never corrected from the boom properly. I think it's a very poor time to be looking at property as an investment personally but pay a few quid as a consultancy fee to a successful LL and see what he or she thinks.

castle2012

hairyslug wrote: »

I've just finished buying our family home. I hated every minute of it.

In the next while, I will have a lump sum, enough to buy an apartment in Dublin, rent in the area is around €1,200 a month.

Along with having a full-time job, how much extra hassle is it, does it just come down to the types of tenants you get.

Couple of things , have a pool of money available at all times to access in case teanant ant breaks something , 1200 per month ? After your taxs every month your look at around 550 -580 per month, That's not taking in your mortgage repayments, property tax , insurance, Prtb registration and accountant fees , yes your insurance and accountant fees can be offset against your tax bill but they can't be claimed till the new tax year , personally I got out of it last year as I felt like I was just working for the government collecting tax and little reward for me .

Choc Chip

Becoming a residential property landlord can be a horribly inefficient way of investing from a tax perspective (Revenue can dissallow lots of your expenses for tax purposes). Purely my personal opinion, but you could look into something like EIIS if you're not fussed about tying up your money for a few years and have income taxed at the marginal rate, or maybe REITs if you've your heart set on property?

4ensic15

Apartments generally aren't as good an investment as houses. Apartment blocks age and management fees go up. Over time housing estates mature. Some apartments build 40 years ago initially cost a lot more than nearby houses to buy. . Now the situation is reversed. The nearby houses cost more to buy than the apartments. In letting property, capital gain is the most important element of the return on the investment.

handlemaster

OP. .. How much hassle all depends on the tenant. Prepare for the worst

Jen44

dont do it!! its a constant worry even though we have good a good tenant. plus there is a tax return to contend with every year! not worth the hassle! I am a reluctant land lord and would not have done it had i a choice!

Jen44

Jen44 wrote: »

dont do it!! its a constant worry even though we have good a good tenant. plus there is a tax return to contend with every year! not worth the hassle! I am a reluctant land lord and would not have done it had i a choice!

That's an important consideration though, some people would like the whole idea of being a LL and running a side business of renting out a house or two. Its something that very much appeals to me if I was in a position to get involved in that game in the future.

beauf

hairyslug wrote: »

...Along with having a full-time job, how much extra hassle is it, does it just come down to the types of tenants you get.

From my limited experience.

All about the tenants. Which is a lottery. You've also no protection against big losses. So it can't be done on a shoestring. You can't be relying on the income and have to have a reserve fund of 10k ish for emergencies. If you can do that, then its do-able.

But there not a lot of money in it for the amount of capital involved for one or two properties. I think if you have a a number of properties perhaps 4+ then its less of a struggle. Assuming you're not borrowing a load to do it.

beauf

Steven Spoiled Slothfulness wrote: »

That's an important consideration though, some people would like the whole idea of being a LL and running a side business of renting out a house or two. Its something that very much appeals to me if I was in a position to get involved in that game in the future.

Also have to consider what happens if you get a bad tenant who doesn't pay rent for a year and destroys the inside of the house. If you can treat it as a business and not take that personally.

mickoneill31

Steven Spoiled Slothfulness wrote: »

That's an important consideration though, some people would like the whole idea of being a LL and running a side business of renting out a house or two. Its something that very much appeals to me if I was in a position to get involved in that game in the future.

Have you done the sums though? I was in a position a couple of years ago where I could have been a landlord. I put all of the expenses / income into a spreadsheet and did some best case and worst case scenarios. At that time, best case (long term tenancy, 100% occupancy, standard maintenance) was I'd be making about €4000 a year and worst case was obviously negative numbers. The risk / reward wasn't worth it for me.
I'd say the reward has increased with the rent increases and lack of supply now but the costs of entry have also gone up.

MarkAnthony

On bad tenants and reserves - excellent point.

You can carry losses forward against tax so it's not a disaster if you get a bad tenant, pretty stressful though.

@Nox, perfectly reasonable reason to do it IMO my concerns are there are far too many people who see it as a get rich (slow) scheme.

beauf

beauf wrote: »

Also have to consider what happens if you get a bad tenant who doesn't pay rent for a year and destroys the inside of the house. If you can treat it as a business and not take that personally.

There are ways to mitigate these risks such as renting rooms seperately, regular inspections etc.

mickoneill31 wrote: »

Have you done the sums though? .

Haven't done sums as its not something I will be doing immediately but its certainly a much better return than a savings account and I'd prefer it to shares etc. I'm currently looking at buying my first apartment/house to live in but it will only be a place I will live a few a shortish time and when I'm moving I will be strongly considering renting it rather than selling it.

Fiona

I was an accidental landlord and it was a pain.

I had great social welfare tenants and never had to worry about them but I had to put nearly €200 extra per month of my own money to the mortgage / mgt fees and / mortgage protection cover.

Then every year I was paying approx. €1,500 for my tax returns and accountant, I was on a tracker mortgage so had very low interest to write off against my tax bill.

I couldn't wait to move back into the apt I thought I couldn't afford to live in!!!!

newacc2015

Choc Chip wrote: »

Becoming a residential property landlord can be a horribly inefficient way of investing from a tax perspective (Revenue can dissallow lots of your expenses for tax purposes). Purely my personal opinion, but you could look into something like EIIS if you're not fussed about tying up your money for a few years and have income taxed at the marginal rate, or maybe REITs if you've your heart set on property?

I second the EIIS scheme for a decent return. Irish REITs are pretty horrific. The only people making money from them are the employees of them and the management of the buildings ie the management company of one REIT made more profit in a year, than the REIT did. American REIT's have a some what rational price, but Irish REIT's are overvalued IMO

2rkehij30qtza5

hairyslug wrote: »

I've just finished buying our family home. I hated every minute of it.

In the next while, I will have a lump sum, enough to buy an apartment in Dublin, rent in the area is around €1,200 a month.

Along with having a full-time job, how much extra hassle is it, does it just come down to the types of tenants you get.

It's serious hassle. It's stressful, you'll lose sleep over it, it's a major pain in the a$$. Invest elsewhere unless you don't get stressed out..ever..