Considering buying and renting out

Drakares

Hello folks,

have been lurking a while - here is my story.

I have a bit of spare cash at the moment and am considering buying an apartment in Ireland to rent out. I currently live in Germany and have no plans to move back to Ireland. House prices where I am at the moment are 3-5 times more expensive than where I'm looking to buy in Ireland.

I have the following questions:

- When looking for a tenant, is it legal to ask for a copy of your work contract to prove that it's permanent + the last 3 bank statements? (perhaps you may find this strange or normal, I don't know but this is standard practice in Germany)
- Income tax on the rent from your tenant: Is it just better to hire an accountant to take care of this? How much do accountants charge in Ireland for such a thing nowadays?
- What else should I be aware/careful of? Can you provide me with some advice?

Thanks!

Finbarr Murphy

I would check out your tax situation first. One of the main reasons that landlords are leaving the sector over here is that they may have to pay tax even when making a loss. The gov't could easily make the sector more attractive by providing 100% mortgage interest relief but then they would lose a massive inflow of cash.

Rulmeq

If you're going to be living abroad, you really should use an agent (They will take the first months rent on each renewal), if you don't your tenants will be obliged to retain 20% of their rent, and pay it directly to revenue.

jester77

I would just buy in Germany. You can get a 20+ year fixed mortgage for around 2%, plus you can get the first 100k for around 1%. And if you have a decent deposit you can negotiate an even better deal. Houses might be more expensive here but the quality is far superior and the market is far stabler.

4ensic15

Drakares wrote: »

Hello folks,

have been lurking a while - here is my story.

I have a bit of spare cash at the moment and am considering buying an apartment in Ireland to rent out. I currently live in Germany and have no plans to move back to Ireland. House prices where I am at the moment are 3-5 times more expensive than where I'm looking to buy in Ireland.

I have the following questions:

- When looking for a tenant, is it legal to ask for a copy of your work contract to prove that it's permanent + the last 3 bank statements? (perhaps you may find this strange or normal, I don't know but this is standard practice in Germany)
- Income tax on the rent from your tenant: Is it just better to hire an accountant to take care of this? How much do accountants charge in Ireland for such a thing nowadays?
- What else should I be aware/careful of? Can you provide me with some advice?

Thanks!

There are a lot of bad agents in Ireland. Repair obligations are onerous. A lanldlord who gets caught up in the RTB will have a nightmare. Some apartment blocks are not well run and have high service charges.

Drakares

jester77 wrote: »

I would just buy in Germany. You can get a 20+ year fixed mortgage for around 2%, plus you can get the first 100k for around 1%. And if you have a decent deposit you can negotiate an even better deal. Houses might be more expensive here but the quality is far superior and the market is far stabler.

Unfortunately it is just too expensive for me here. Where I live a 120 sqm+ Grundstück is around 500k+ not including renovations. Even with the nice interest rates here, I think property is too expensive.

Rulmeq wrote: »

If you're going to be living abroad, you really should use an agent (They will take the first months rent on each renewal), if you don't your tenants will be obliged to retain 20% of their rent, and pay it directly to revenue.

I was thinking I could get my sister to take care of it (she lives in the area)
Would an agency also take care of my taxes/water charges etc inclusive of my payment to them or do I need an accountant separately?

4ensic15 wrote: »

There are a lot of bad agents in Ireland. Repair obligations are onerous. A lanldlord who gets caught up in the RTB will have a nightmare. Some apartment blocks are not well run and have high service charges.

I have also heard this, would definitely be looking for some advice on which agency to use if I went with an agency.

Askthe EA

4ensic15 wrote: »

There are a lot of bad agents in Ireland. Repair obligations are onerous. A lanldlord who gets caught up in the RTB will have a nightmare. Some apartment blocks are not well run and have high service charges.

There are a lot of good agents too. Do some research because it is VERY difficult to manage your property from abroad unless you know your tenants. A management agency will generally be very careful with the tenants they choose as THEY will be dealing with them not you. They will also take care of any maintenance issues. What can you do with a burst pipe at 2am? Prices vary from agency to agency but youre looking at about 6 -8% per month management fees. Most charge first months rent as a finders fee for the tenants.

Definitely employ a tax consultant. Some agencies will charge you an admin fee for withholding the 20% tax and paying it over to revenue.

Other costs to be aware of is the RTB registration €90 which must be carried out for every NEW tenancy or if a tenancy has been in place for 4 years.

The biggest bit of advice I'd give is, unless you really want to be a landlord, don't be. Its a minefield with current legislation. Tenants have the vast portion of legal protection, there is very little protection for a LL imho and the timescales involved in legally dealing with problem tenancies is simply ludicrous.

On the plus side, you could buy a property as part of a self administered pension fund. These are extremely tax efficient. Might be worth looking into???

jester77

Drakares wrote: »

Unfortunately it is just too expensive for me here. Where I live a 120 sqm+ Grundstück is around 500k+ not including renovations. Even with the nice interest rates here, I think property is too expensive.

You would be surprised, I would still have a broker look into for you. It doesn't cost anything. Prices are the same here in Hamburg, at least 500k+ for 120 sqm, but if you can keep the mortgage under 400k you will be paying much less than what the place would cost to rent today.

Drakares

jester77 wrote: »

You would be surprised, I would still have a broker look into for you. It doesn't cost anything. Prices are the same here in Hamburg, at least 500k+ for 120 sqm, but if you can keep the mortgage under 400k you will be paying much less than what the place would cost to rent today.

Yes but I would be paying it for 40 years. Thanks for the advice but I won't be buying in Germany any time soon.

Freddiestar

Drakares wrote: »

Hello folks,

have been lurking a while - here is my story.

I have a bit of spare cash at the moment and am considering buying an apartment in Ireland to rent out. I currently live in Germany and have no plans to move back to Ireland. House prices where I am at the moment are 3-5 times more expensive than where I'm looking to buy in Ireland.

I have the following questions:

- When looking for a tenant, is it legal to ask for a copy of your work contract to prove that it's permanent + the last 3 bank statements? (perhaps you may find this strange or normal, I don't know but this is standard practice in Germany)
- Income tax on the rent from your tenant: Is it just better to hire an accountant to take care of this? How much do accountants charge in Ireland for such a thing nowadays?
- What else should I be aware/careful of? Can you provide me with some advice?

Thanks!

Another option is handing it over to the council for social tenants. They look after all repairs and guarantee all year round rent even if empty. They become the landlord for minimum 10 years, you charge 80% going rental rates.

Drakares

Freddiestar wrote: »

Another option is handing it over to the council for social tenants. They look after all repairs and guarantee all year round rent even if empty. They become the landlord for minimum 10 years, you charge 80% going rental rates.

This sounds really attractive. Could you provide a link? I can only find news articles and stuff re rent allowance.

Edit: Seems only to be available in Dublin. Can anyone confirm?

Mrs OBumble

OP, go and see an financial adviser. If you have some space cash, then are lots of lower risk ways to invest it.

The only exception I could see to this is if you were buying a property in Ireland which you eventually intend to live in. That's a situation in which buying property may make sense.

Freddiestar

Drakares wrote: »

This sounds really attractive. Could you provide a link? I can only find news articles and stuff re rent allowance.

Edit: Seems only to be available in Dublin. Can anyone confirm?

http://www.housing.ie/leasing

newacc2015

Freddiestar wrote: »

Another option is handing it over to the council for social tenants. They look after all repairs and guarantee all year round rent even if empty. They become the landlord for minimum 10 years, you charge 80% going rental rates.

It sounds great until you actual call the council and you discover they have pulled the rental rate out of no where. DCC have been advertising heavily to get LLs to take up this offer and they have had barely any interest. I have seen houses on daft for €1200 a month. DCC will try to tell you the market rate for that area is about €800-850 and after their 20% haircut you get €640 a month. No one is taking up their offer, as it isnt attractive. Unless you are buying seriously ****ty properties in the worst parts of Finglas or Ballyfermot. If you buy in Dublin, you should have to worry about a season or empty periods.

OP look for a student apartment complex. They will pretty much guarantee 100% occupancy. They are completely managed by an office on site, so you dont have to worry about dealing with tenants etc. You will get a cheque every 3 months. If I was buying anything as a hands off LL, that is what I would buy. Now is the time to buy as the section has run out on them and a lot of LLs are selling up

http://www.myhome.ie/residential/brochure/apt-4-block-a-shanowen-hall-shanowen-road-santry-dublin-9/3611861

hollytrees

I wouldn't advise anyone to buy to rent. I have a property that I can't wait to get rid of. Nothing but bills and tenants seem to have more right to the place than I have.