Looking to invest in Dublin, need some help from locals :)

Oren Plen

Hi there,

I am not Irish, but I've been interested in recent months in buying a property somewhere that could give me a good potential for price increase in the upcoming years.

When I examine different European markets, Dublin seem promising: Prices still haven't reached their 2008 peak, but are definitely rising, it is a very developed and modern city, which attracts many large businesses due to its tax policy, and everyone speaks english which is great (for me at least). 

In addition, current rental yields are very high compared to most of Europe and the rental demand, for properties in central locations in Dublin, seems quite high and I do not expect it to change dramatically, considering all the academic and business activity in the city.

My general plan is to buy a 1BR in a central place in Dublin (that would guarantee very high rental demand), with a budget of up to 200K Euros. Since I'm usually very cautious with these things I'd be happy to get your opinion on these issues, which still trouble me:

1. Would you aggree with my analysis of the potential for price growth in the Dublin?

2. Is this budget enough to buy a reasonable 1BR property that would allow me to achieve my goals? If not, what would be a suitable budget? 

3. My plan is to rent the property to students/young professionals. Are 1BR appartments attractive among this crowd? Do 1BR apps haev strong demand (when I search MyHome it seems they are)? will they aggree to live in a 30-40m^2 1BR apt? or do they invariably live with flat mates in 3-4 BR appartments, which will leave me without potential tenants?

4. I did some research and it seems that Dublin 7, and Dublin 2, are the most suitable in terms of high demand, decent areas and relatively lower prices. Am I correct?

5. How Should I approach finding a property? I do'nt live in Ireland, nor do I plan to visit it in the near future. 
Thus, I was thinking of finding a reputable estate agent that will find a decent property for me, as well as a management company. Obviously this will reduce returns, but they will probably still be much higher than I can get in my country. Of course I will do the maximum due dilligence, but naturally this can only be done up to a certain limit. How would you suggest finding a fair estate agent? 

6. Once I am offered a prporety, I plan to post it here to get the opinion of the "educated crowd" and see if I'm not being ripped off. I was also thinking of paying an appraiser/home inspector to test the house before I buy it to make sure it is indeed in the condition the realtor says it is. Does this make sense? is it possible? do you see any problem with this strategy? Would you do anything else?

7. What is the net rental return you estimate I can get from such a property? (After reducing vacancy periods, repairs, taxes, property management fees etc.).

8. How much is the typical fee for property management?

** If this is of some importance, I have european citizenship (Romanian passport) **

Thank you!!

whomitconcerns

erm...with that many questions....don't buy in ireland. have you been to Dublin before? Vorbesti engleză fluent?

2Mad2BeMad

I've a shed out me back, you can have it for 200k, rent it for 1500 quid a month.
Make your money back in no time

uck51js9zml2yt

2Mad2BeMad wrote: »

I've a shed out me back, you can have it for 200k, rent it for 1500 quid a month.
Make your money back in no time

200k won't buy him a shed!

alwald

Give me that 200K and I will buy a 1 bed no bother, PM for more info !

Oren Plen

whomitconcerns wrote: »

erm...with that many questions....don't buy in ireland. have you been to Dublin before? Vorbesti engleză fluent?

Da, Vorbesc excelent în engleză.
I would have asked the same questions, no matter where. I aggree buying at home is the best option. However, with current yields being close to zero, I think we need to take more risk.
Yeah, I've been to Ireland last month. Amazing place. Visited Dublin, which convinced me even further of how great a place this is for investing.

whomitconcerns

ok..so agents work very different in Ireland than in Romania, you pay them as the owner, then tenants dont pay agency fees to rent a place. You will need an agent if you are owning but not living there. Also the tenants have to deduct 20% from the rent to cover potential tax liabilities for a non resident landlord.

After that....€200k wont get you much and certainly not city centre, a one bed will be a pita to rent out unless big, tenants rights in Ireland are VERY strong.

If you insist on going forward utilise AirBnb or something similar with an agency to manage it for you. Youll thank me in the long run Forget about getting tenants. Good luck!

ted1

You need to look at the tax you’ll pay and also the costs associated with trying to evict a tenant who doesn’t pay. We have very strict eviction laws.
It’s much safer to invest in commercial property

LionelNashe

For 200k, there are two apartments listed on www.daft.ie listed in Dublin 2, and one of them is clearly in Dublin 1, so I'd say Dublin 2 is out of the question on that budget.

Dublin 1 is *just about* possible, and Dublin 7, parts of which are very central, but I wouldn't trust any predictions about capital gain.

Samuel T. Cogley

You'll get something in the rougher parts of D7/D8. They're not terrible areas just a bit lively. You'll also probably get something in D1 but that could be in a bad spot.

I put a thread up here about a UK 'documentary' series called Bad Tenants, Rogue Landlords. Watch an episode or two on YouTube and double the amount of time it takes to get stuff done. Are you able to support that sort of downtime?

Property management is approx. 10% of rent.

Ireland has no way of properly vetting tenants so pick an established EA (Estate Agent) and hope for the best.

the_syco

Oren Plen wrote: »

In addition, current rental yields are very high compared to most of Europe and the rental demand

What is the percentage or the rent do most of Europe tax?

Oren Plen wrote: »

2. Is this budget enough to buy a reasonable 1BR property that would allow me to achieve my goals? If not, what would be a suitable budget?

Have a separate budget for furnishing the house? Typically, houses are rented furnished in Ireland.

Oren Plen wrote: »

3. My plan is to rent the property to students/young professionals. Are 1BR appartments attractive among this crowd?

1BR will be for young professionals. Students won't be able to afford a 1BR apartment, unless there's actually several people living there.

Wesser

There is no agent in Ireland to help you buy a house. Agents act for the vendor only .
I think it's very unlikely that you find anything for 200k in Dublin.

Samuel T. Cogley

Wesser wrote: »

There is no agent in Ireland to help you buy a house. Agents act for the vendor only .
I think it's very unlikely that you find anything for 200k in Dublin.

Plenty of 1BR apartments in D8 for under 200K many making significant returns through Airbnb.

the_syco

Samuel T. Cogley wrote: »

Plenty of 1BR apartments in D8 for under 200K many making significant returns through Airbnb.

AirBnB would probably be the best idea for investment. Something like this house may suit the OP, but 30k more looks better, and has more room. Would perhaps avoid buying an apartment with a view to do AirBnB's, if management companies are going against them.

_brendand_

Wesser wrote: »

There is no agent in Ireland to help you buy a house. Agents act for the vendor only .
I think it's very unlikely that you find anything for 200k in Dublin.

Not true - http://<SNIP>/

CalRobert

You're asking for a lot of research for free. Why should we provide it?

Oren Plen

CalRobert wrote: »

You're asking for a lot of research for free. Why should we provide it?

Karma.

GingerLily

Oren Plen wrote: »

CalRobert wrote: »

You're asking for a lot of research for free. Why should we provide it?

Karma.

Taking affordable homes away from people living in Dublin - I'm more worried about homes for people here - not Karma

_brendand_

GingerLily wrote: »

Taking affordable homes away from people living in Dublin - I'm more worried about homes for people here - not Karma

To be quite frank, the only people doing a disservice to the people of Dublin here are those folks suggesting he AirBnB the property instead of renting it out.

beauf

This is what investors mean by "professional" landlords.

Samuel T. Cogley

_brendand_ wrote: »

To be quite frank, the only people doing a disservice to the people of Dublin here are those folks suggesting he AirBnB the property instead of renting it out.

There is a massive lack of hotel rooms which is damaging tourism and business generally; hence why Airbnb is so lucrative. The money lost to the economy is actual money lost where in, at least some cases, permanent residents have other options such as sharing, staying at home or commuting.

Furthermore if the government don't want properties let out through Airbnb they need to stop screwing private landlords.

Samuel T. Cogley

GingerLily wrote: »

Taking affordable homes away from people living in Dublin - I'm more worried about homes for people here - not Karma

How many people are buying 1BR properties to live in long term? I doubt it's very many. These units are almost exclusively for renters and without Landlords there's no where to rent.

Sleeper12

Oren Plen wrote:

In addition, current rental yields are very high compared to most of Europe and the rental demand, for properties in central locations in Dublin, seems quite high and I do not expect it to change dramatically, considering all the academic and business activity in the city.

Rents are at their highest level ever. Don't rely on them staying this high. Rents could drop by a third or more within 5 years as the shortage of homes tapers off.

I'm not saying don't buy. Just pointing out that rent this high isn't the norm

beauf

Samuel T. Cogley wrote: »

There is a massive lack of hotel rooms which is damaging tourism and business generally; hence why Airbnb is so lucrative. The money lost to the economy is actual money lost where in, at least some cases, permanent residents have other options such as sharing, staying at home or commuting.

Furthermore if the government don't want properties let out through Airbnb they need to stop screwing private landlords.

Hotel industry went through the same boom bust boom everything else did.

https://www.independent.ie/business/irish/zombie-hotels-arise-in-ireland-as-recession-empties-rooms-26676456.html
http://www.thejournal.ie/hotel-profits-ireland-2266734-Aug2015/
http://www.dublineconomy.ie/2018/02/01/dublin-hotel/

Kinda need to over supply otherwise the bust will repeat.

GingerLily

Samuel T. Cogley wrote: »

GingerLily wrote: »

Taking affordable homes away from people living in Dublin - I'm more worried about homes for people here - not Karma

How many people are buying 1BR properties to live in long term? I doubt it's very many. These units are almost exclusively for renters and without Landlords there's no where to rent.

My friend has recently.

I'm not going to bother persuading someone not to invest. I do think it's obvious though that Dublin doesn't need small time long distances landlords investing in property here.

Samuel T. Cogley

GingerLily wrote: »

My friend has recently.

I'm not going to bother persuading someone not to invest. I do think it's obvious though that Dublin doesn't need small time long distances landlords investing in property here.

OP is likely to be a more effective LL based in Romania than someone based in Cavan. Probably more likely to pay tax too!

Also glad to hear 1 beds are starting to sell to owner occupiers, there's hope for me shifting mine yet! :pac:

You've missed the boat to a huge degree IMO.

dar100

Nice little earner on this

http://www.daft.ie/dublin/houses-for-sale/north-circular-road/emmet-street-north-circular-road-dublin-1727011/

Samuel T. Cogley

https://www.daft.ie/dublin/apartments-for-sale/dublin-8/apartment-at-no-6-ushers-quay-dublin-8-dublin-8-dublin-1737924/

Probably about the best value you'll get on a 1BR CC apartment.

Oren Plen

Thanks, looks great, seems that with a bit of patience/luck it's possible to find such a property.
Do you have any buyer's agent you can recommend as trustworthy to help me find such a property? (hope it's OK to ask here, I also wrote you a PM).

Oren Plen

Augeo wrote: »

You've missed the boat to a huge degree IMO.

Why? 
Judging by the yields, Dublin's financial status, the low supply of new houses, current prices compared to previous peak levels and the short time that has passed since the trough, if I had to bet, there is still much room for price increase. I know it's just a bet but so is leaving money in the bank

Samuel T. Cogley

Oren Plen wrote: »

Why? 
Judging by the yields, Dublin's financial status, the low supply of new houses, current prices compared to previous peak levels and the short time that has passed since the trough, if I had to bet, there is still much room for price increase. I know it's just a bet but so is leaving money in the bank

Due to ICB controls property prices are beginning to top out. Will people get desperate and start thinking 1BR apartments are better than nothing? Maybe, but I don't see huge returns on a 1BR apartment. The last peak was fuelled by a ridiculous lending regime, thankfully we haven't got that madness going on this time.

The regulatory regime in Ireland is also stacked against Landlords, which is why I was suggesting to you that Airbnb might be a better bet than traditional letting. That may very well get closed off sooner rather than later.

Rents are currently mental. I would plan for a 50% reduction on current levels.

dar100

https://touch.daft.ie/dublin/houses-for-sale/dublin-1/7-william-place-upper-dublin-1-dublin-1732300

Lots of scope on this for yields; granted not a hugely great area. However 3 story house 3-4 bedrooms to rent individually or possible to restructure the house into a couple of 1 beds apartments Thoughts?

Oren Plen

Thanks, got it about the regulatory changes and why you suggested airbnb.

Why do you think the rents will decrease? You live there so you probably know more than I do, but three really Sseems like to be a shortage of supply, in the capital of the state, which is also a very popular city in general. Especially when it comes to city centre where the demand is very high I guess.
I pay a similar rent for my 1BR appartment. People say prices are mental for years now, but when no new (or not enough) flats are built, there's no reason things will change.

I guess this time might be different, but it seems there really is a shortage of new flats, and people tend to forget quickly, that's how price cycles behave from my experience. In my country the same is happening (even worse). People find alternative to the low interest mortgages (which are still historically low I assume), for instance borrowing money from their parents, chasing the dream for a flat of their own.

But all of this is just trying to tell the future. Nobody really know I guess, but like I said, it's a game of alternatives. The stock market is expensive, bonds are expensive, everything is expensive...

runawaybishop

Oren Plen wrote: »

Why? 
Judging by the yields, Dublin's financial status, the low supply of new houses, current prices compared to previous peak levels and the short time that has passed since the trough, if I had to bet, there is still much room for price increase. I know it's just a bet but so is leaving money in the bank

Rants in Dublin are capped at a 4% increase a year for tenants. You should look at Airbnb for renting it out

Oren Plen

Oren Plen wrote: »

Why? 
Judging by the yields, Dublin's financial status, the low supply of new houses, current prices compared to previous peak levels and the short time that has passed since the trough, if I had to bet, there is still much room for price increase. I know it's just a bet but so is leaving money in the bank

Well in the last 3 years there's been approx 30%price growth..... so if investing purely for appreciation and n the purchase price it's obvious why I reckon he's missed the boat to a large degree.

No doubt there's room for further appreciation but not so much.

There's for sale signs all over the place.... yet nowhere near enough supply....when loads of folk are looking to buy it's generally not a great time to invest for investment sake.


In lazy terms.... basic economics

200k is a scant enough budget too. Like, buy a 1 bed for that.... who expects 1 beds to appreciate significantly from there?

Oren Plen

Hi guys.
Been offered flats in the following areas, which to me seem OK, just wanted to make sure with locals that they are decent:
[font=arial, sans-serif]Christchurch/Inchicore/[/font][font=arial, sans-serif]Kilmainham.
[/font]
Thanks.

Samuel T. Cogley

Inchicore and Kilmainham and in fact most of Dublin 8 have some good areas, some not so good areas, and some areas you wouldn't stick your worst enemy.

Oren Plen

Got it thanks.
I'm currently trying to figure out whether I want my buyer's agent to be responsible for the management of the property (the advantage being that he might have a stronger interest to find a decent property that will result in less of a headache for him plus I guess property managers are better at estimating potential rents). OR: seperate people for the buyer's agent and for the management company, the advantage being that the buyer's agent will not be eager to close a deal, which might not be so good for me, so he can start collecting his fee.

BTW, is there any legal definition/obligation upon the buyer's agent not be in any contact with the buyer (in contrast to the estate agent)?

The_Conductor

Oren Plen wrote: »

Hi guys.
Been offered flats in the following areas, which to me seem OK, just wanted to make sure with locals that they are decent:
[font=arial, sans-serif]Christchurch/Inchicore/[/font][font=arial, sans-serif]Kilmainham.
[/font]
Thanks.

There are some incredibly dodgy areas in the 3 general areas you've outlined- I'm really sorry- but while you might get a 1 or a 2 bed for your budget there- its not something that most people would recommend............. Of all the areas- Christchurch is the most central of the three- and also possibly the dodgiest.........

The_Conductor

Oren Plen wrote: »

Got it thanks.
I'm currently trying to figure out whether I want my buyer's agent to be responsible for the management of the property (the advantage being that he might have a stronger interest to find a decent property that will result in less of a headache for him plus I guess property managers are better at estimating potential rents). OR: seperate people for the buyer's agent and for the management company, the advantage being that the buyer's agent will not be eager to close a deal, which might not be so good for me, so he can start collecting his fee.

BTW, is there any legal definition/obligation upon the buyer's agent not be in any contact with the buyer (in contrast to the estate agent)?

Hi Oren- you have to have an Irish agent- if your not resident in Ireland.
If you're using an Irish agent to manage a property- typically they take a straight cut of between 10 and 20% of the rent to find the tenant and manage the tenancy. They deal with all issues that arise- taking the costs out of your share of the rent (including Management Charges, Local Property Tax etc etc). Typically- a 1-2 bed could have management charges of anywhere from 1,000 to 2,000 per annum in Dublin (it depends on whether there is security, lifts grounds maintenance etc etc).

The tenant is obliged to deduct 20% of the rent at source as tax- and to forward it to the Revenue Commissioners in Ireland (the Irish tax collection service). They will send you a 'reconcilliation statement' at the end of the year- and if you wish you can do a formal tax return and may claim back any excess tax paid.

Rents in Dublin are controlled- they cannot increase by more than 4% per annum- and are already at an all-time high. Government policy is to assist tenants at any cost- and even if a tenant decides to stop paying their rent- it can take you 2+ years to get vacant possession of your property.

Properties are let furnished in Ireland- you are expected to furnish and maintain it to a reasonable standard.

If a tenant decides they can't pay the rent- but they qualify for HAP or other government rent payment programmes- you are obliged to accept HAP (which will necessitate you procuring and forwarding a C2 tax clearance certificate to the Local Authority- and there are a whole different set of rules associated with letting a property to a HAP tenant.

Price appreciation- isn't going to be anything to write home about- much of Dublin has already stagnated- other areas in Ireland are still increasing- however, Central Bank rules- are that people can only borrow 3.5 times their gross income to purchase a property- so we're already at the top of people's borrowing capacity- which is the brake on price increases- it doesn't matter that supply is an issue- people can't borrow any more money- so price increases have tappered off...........

Honestly- if you bought 2-3 years ago- you'd be in a good position- and I'd be suggesting you sell right now- it would be remiss of me to suggest that buying property in Dublin is a good idea given the tenancy rights in Ireland, the fact that prices in Dublin have stagnated- and the fact that supply side issues are loosening............. Buy if you want to- but its not the no-brainer situation that you seem to imagine it to be.

Oren Plen

Hi the conductor, thank you so much for the great analysis.

I would like to address the different points you raised:
1. Rent control- seems fine for me, at current yields it is perfectly fine by me. getting 7-9% gross yield is really not that bad. If this remains - then great. If it increases- even better. If it decreases- then the property is worth more, unless rents have dropped which would seem unreasonable with such high demand.

2. Difficulty of evicting a tenant. Yeah that's an issue, probably the main problem in my plan. I might consider AirBnB. Plus need to do due dilligence on potential tenants.
BTW, if I buy a 2BR flat and rent each room to a different person, do the same rules still qualify? because I am not letting the entire flat, but rather "subletting" rooms.

3. Price appreciation - to start off I think most of what we say is just a guess, and our crystal balls are similarly clouded. BUT, I disagree with some of your statements. First, looking at the daft.ie price report of q12018- prices in city centre dublin have increased by 3.1 during the last 3 months, and 15.3% year on year, which gives us 12-15% increase per year. That's really not stagnation.
As for trying to figure out what might block prices from increasing, experience has taught me that this is very difficult to predict and that while "this time might be different", predictions are difficult. Where I come from prices have risen way way way beyond the point anyone imagined, despite endless steps by the government to stop them. People move in with their parents at their 40s to save money, they lend money from other sources other than banks, they take money from their parents, etc. 
In addition, 1-2 BR appartments are the cheapest types of property so I think they still have where to go, especially when the yields are so incredibly high and that there is still a significant way to go until the previous peak has been reached. Again, this/that time might be/have been different, but if I had to guess, there will be a new peak that will be higher than the previous one. Property prices cycle, and we are only 4-5 years after the trough.

I have really researched several markets and Dublin is one of the best. 
BTW did you happen to read the analysis by PwC- Dublin is ranked 7th among the best cities for real estate investment in 2018. This is NOT why I chose it, but at least someone aggrees with me

I wonder what is your opinion on 1BR compared to 2BR flats. Are the latter easier to let? I fear that 1BR will not have enough demand, since students might not be able to afford them. Does this make sense?

Thank you again.

M.Cribben

The_Conductor wrote: »

Price appreciation- isn't going to be anything to write home about- much of Dublin has already stagnated- other areas in Ireland are still increasing- however, Central Bank rules- are that people can only borrow 3.5 times their gross income to purchase a property- so we're already at the top of people's borrowing capacity- which is the brake on price increases- it doesn't matter that supply is an issue- people can't borrow any more money- so price increases have tappered off...........

Do you have any source for this?
All the latest statistics and reports are showing the opposite. March 2017 - March 2018 saw 12.7% national rise and 12.1% Dublin rise. Link below. Stagnating would suggest close to 0%, not double digit % rises.



https://www.irishtimes.com/business/economy/residential-property-prices-rise-by-12-7-in-year-to-march-1.3489020