Real Estate Investing in Ireland

rmorrissey63

Hey everyone,

My name is Rob and I've been looking to find a local forum for landlords and other property investors for a while and I believe I finally stumbled upon one. I'm 18 and looking to get into R.E investing and wondered if any of you have any advice for doing so within Ireland?

I've been watching many videos on R.E and gathered as much information as possible from forums like BiggerPockets but a lot of these gurus are based in the States and I'm wondering would basic strategys like "house hacking" and "BRRRR" work here in Ireland almost as well?

Thanks,
Rob.

DubCount

Firstly, well done at thinking about investments at 18 - I wish I had that attitude at that age !!
The Irish market is different in 2 major respects in my view - banking arrangements and tenancy rights.  These make the kind of strategies you see in other markets difficult to replicate here.
Irish banks insist on high LTV ratios for non-buy to own mortgages.  They also charge high interest rates.  Finally, most of them don't really do interest only mortgages, and insist on capital repayments.  Take BRRRR (Buy, renovate, rent, re-finance, repeat - I hope I got that right).  When you need 40% deposit plus cost of acquisition, and you have to make capital repayments on a mortgage with rates over 5%, its hard to make that strategy work, as you wont be able to extract enough equity from your first property to refinance and repeat - especially when you are making capital repayments on a mortgage.
Even if you get past the finance issues, the regulatory environment makes becoming a landlord very risky.  If you end up with a rogue tenant, the potential costs are massive.  There's lots of horror stories on that side in other posts on this forum.
Overall, Ireland is not an attractive location for a budding RE investor.

handlemaster

rmorrissey63 wrote: »

Hey everyone,

My name is Rob and I've been looking to find a local forum for landlords and other property investors for a while and I believe I finally stumbled upon one. I'm 18 and looking to get into R.E investing and wondered if any of you have any advice for doing so within Ireland?

I've been watching many videos on R.E and gathered as much information as possible from forums like BiggerPockets but a lot of these gurus are based in the States and I'm wondering would basic strategys like "house hacking" and "BRRRR" work here in Ireland almost as well?

Thanks,
Rob.

Do you have cash to buy without mortgage ? For BTL you are looking at 20% deposit plus all the extras

rmorrissey63

First time buyer so yea I have enough money for the 10% down payment and yeah I've taken into account closing costs, renovation costs and other things like that.

rmorrissey63

Thanks for the reply, I'll be taking that into account.

And do you have an income that would make you a candidate for the 90% mortgage?

handlemaster

rmorrissey63 wrote: »

First time buyer so yea I have enough money for the 10% down payment and yeah I've taken into account closing costs, renovation costs and other things like that.

So your not investing your buying PPR thats differnet. Looks like your all set.

Fol20

If your just starting out, I would recommend looking at house hacking. It’s better and more financial efficient if you get yourself your own place first and let out some of the rooms in it. At least that way you don’t pay rent, your receiving tax free rent and your paying down equity in your first home.More importantly, you also avoid the mess of the tenancy regulation and have much more control. After you get your own ppr down to a reasonable level then you can start saving for the next one. The first 1 or 2 are always the longest,most time consuming and slowest to get off your feet but once you get going, it’s basically rinse and repeat. There will be bumps along the way and it’s a long game mentality so don’t expect to get rich in the next 20years from it. You will probably be in your 50’s before you really reap the rewards for it but then you should have a nice cushion while others will still be doing their day job with no side hustle.

rmorrissey63

Fol20 wrote: »

If your just starting out, I would recommend looking at house hacking. It’s better and more financial efficient if you get yourself your own place first and let out some of the rooms in it. At least that way you don’t pay rent, your receiving tax free rent and your paying down equity in your first home.More importantly, you also avoid the mess of the tenancy regulation and have much more control. After you get your own ppr down to a reasonable level then you can start saving for the next one. The first 1 or 2 are always the longest,most time consuming and slowest to get off your feet but once you get going, it’s basically rinse and repeat. There will be bumps along the way and it’s a long game mentality so don’t expect to get rich in the next 20years from it. You will probably be in your 50’s before you really reap the rewards for it but then you should have a nice cushion while others will still be doing their day job with no side hustle.

Exactly man. On top of increasing the equity by having my tenants pay down my mortgage, I'm also going to renovate it and generate more 'sweat equity' while generating cash flow and yeah my plan is to rinse and repeat and slowly work my way up to apartment complexes. Also just out of curiosity, are you an experienced investor yourself and if so, how long have you been investing for? @Fol20

rmorrissey63

handlemaster wrote: »

So your not investing your buying PPR thats differnet. Looks like your all set.

By PPR I'm assuming you mean Principle Place of Residence? And yea, the idea of "house hacking" pretty much means I buy a multi-family property (in this case a duplex) I then rent out 1 unit of the duplex and have the other unit to myself while my tenant pays down my mortgage and other side expenses while I essentially live for free while also generating cash flow.

rmorrissey63

^

Graham

Mod Note

Similar threads merged.

Baby01032012

rmorrissey63 wrote: »

By PPR I'm assuming you mean Principle Place of Residence? And yea, the idea of "house hacking" pretty much means I buy a multi-family property (in this case a duplex) I then rent out 1 unit of the duplex and have the other unit to myself while my tenant pays down my mortgage and other side expenses while I essentially live for free while also generating cash flow.

PPR is principle private residence. PPRs are exempt from CGT. A duplex is one unit otherwise it won’t qualify for rent a room relief and will be subject to CGT on the portion not your PPR. As a 19 yr won’t having a family in your own home not kill the vibe..imaging bringing a girl home to your pad only to meet “your family” that’s not your family. And will a family want to live with a 19 yr old. And what happpends when the tenant ( by the way if you qualify for rent a room relief they are not your tenant) stops paying rent and refuses to leave, wrecks your gone and takes two years through rtb and courts with solicitor and barrister costs to get out.

C3PO

I would seriously suggest that you get employment in the field for a few years to learn the way the market operates before considering investing!

Fol20

rmorrissey63 wrote: »

Exactly man. On top of increasing the equity by having my tenants pay down my mortgage, I'm also going to renovate it and generate more 'sweat equity' while generating cash flow and yeah my plan is to rinse and repeat and slowly work my way up to apartment complexes. Also just out of curiosity, are you an experienced investor yourself and if so, how long have you been investing for? @Fol20

Careful with renovations. They may help for the type of clientele you appeal to but in terms of equity increase. It may not add that much. Maybe if you spend 10k on it it might add max of 5k. Yes I am an experienced invester

Fol20

rmorrissey63 wrote: »

By PPR I'm assuming you mean Principle Place of Residence? And yea, the idea of "house hacking" pretty much means I buy a multi-family property (in this case a duplex) I then rent out 1 unit of the duplex and have the other unit to myself while my tenant pays down my mortgage and other side expenses while I essentially live for free while also generating cash flow.

In terms of Ireland I meant house hacking by buying your first house you actually live in and let rooms in it as others have pointed out so you can get up to 14k tax free and also be free of capital gains. To put it into perspective. To earn 14k tax free from standard rentals, you would need to have a profit of about 28k

Fol20

Baby01032012 wrote: »

PPR is principle private residence. PPRs are exempt from CGT. A duplex is one unit otherwise it won’t qualify for rent a room relief and will be subject to CGT on the portion not your PPR. As a 19 yr won’t having a family in your own home not kill the vibe..imaging bringing a girl home to your pad only to meet “your family” that’s not your family. And will a family want to live with a 19 yr old. And what happpends when the tenant ( by the way if you qualify for rent a room relief they are not your tenant) stops paying rent and refuses to leave, wrecks your gone and takes two years through rtb and courts with solicitor and barrister costs to get out.

If it’s rent a room, they have no rights and you can get rid of them in days. If they refuse to leave, call the gardai for thresspassing. If it’s standard letting it’s a different story and personally you would be a bit young for managing stuff as some people might take advantage of your age. It might be better if you shadow someone to see how they operate

Graham

rmorrissey63 wrote: »

By PPR I'm assuming you mean Principle Place of Residence? And yea, the idea of "house hacking" pretty much means I buy a multi-family property (in this case a duplex) I then rent out 1 unit of the duplex and have the other unit to myself while my tenant pays down my mortgage and other side expenses while I essentially live for free while also generating cash flow.

As much as I admire the enthusiasm, I think you need a bit of a reality check.

You won't get a 'multi-family' property for 10% down. At your age you will be doing incredible well to get any kind of mortgage.

You will need somewhere in the region of a six figure deposit or 30%+.

There's a good chance the bank will wan't evidence that you can manage the mortgage repayments when the property is not generating an income (i.e. you will need a job sufficient to cover the mortgage payments).

You will almost certainly not be generating positive cashflow in the early years.

Stop reading the American books on 'real estate', they bare little to no resemblance to the Irish property market.

That's not meant to be deliberately harsh but I do think the American books have given you a false expectation that you're going to find impossible to meet.

scheister

fair play thinking about it from a young age. items like property and pension people forget till they are further down the line.

I would agree with others look to work in the field first and serve an apprenticeship before looking at using your capital first.

Fol20

Graham wrote: »

As much as I admire the enthusiasm, I think you need a bit of a reality check.

You won't get a 'multi-family' property for 10% down. At your age you will be doing incredible well to get any kind of mortgage.

You will need somewhere in the region of a six figure deposit.

There's a good chance the bank will wan't evidence that you can manage the mortgage repayments when the property is not generating an income (i.e. you will need a job sufficient to cover the mortgage payments).

You will almost certainly not be generating positive cashflow in the early years.

Stop reading the American books on 'real estate', they bare little to no resemblance to the Irish property market.

Your right about a lot of aspects however it’s good to see someone his age thinking of his future to see how he can invest instead of “what are the lads doing on the weekend”

I assume that he has a decent paying job and he has the deposit.

markjbloggs

Is there a definitive report analysing the Irish property market? For example, what is the average / best yield obtainable?

Fol20

Fol20 wrote: »

.............

I assume that he has a decent paying job and he has the deposit.

Not many 18 year olds have decent paying jobs and deposits..........

Caranica

rmorrissey63 wrote: »

By PPR I'm assuming you mean Principle Place of Residence? And yea, the idea of "house hacking" pretty much means I buy a multi-family property (in this case a duplex) I then rent out 1 unit of the duplex and have the other unit to myself while my tenant pays down my mortgage and other side expenses while I essentially live for free while also generating cash flow.

If you mean duplex in terms of apartments here you'll find that dividing it into multiple letting units is against the terms of the contract you sign.

couples getting married and buying a house in their early twenties was the norm when I was young. They were not looking at it as an investment though.

Samuel T. Cogley

markjbloggs wrote: »

Is there a definitive report analysing the Irish property market? For example, what is the average / best yield obtainable?

DAFT rental/sales reports will give you headline figures.

Fol20

Augeo wrote: »

Not many 18 year olds have decent paying jobs and deposits..........

Most don’t but I saw a thread recently where someone was on 60k at 21 in their family business so you might be surprised

rmorrissey63

Graham wrote: »

As much as I admire the enthusiasm, I think you need a bit of a reality check.

You won't get a 'multi-family' property for 10% down. At your age you will be doing incredible well to get any kind of mortgage.

You will need somewhere in the region of a six figure deposit or 30%+.

There's a good chance the bank will wan't evidence that you can manage the mortgage repayments when the property is not generating an income (i.e. you will need a job sufficient to cover the mortgage payments).

You will almost certainly not be generating positive cashflow in the early years.

Stop reading the American books on 'real estate', they bare little to no resemblance to the Irish property market.

That's not meant to be deliberately harsh but I do think the American books have given you a false expectation that you're going to find impossible to meet.

Yea, I've taken that into consideration and I know the checks that go on behind getting a mortgage and in regards to my age preventing me from taking out a mortgage, my friend who is 25 in November recently went to a mortgage broker and took out a 200k+ for the next 30 years.

rmorrissey63

Fol20 wrote: »

Most don’t but I saw a thread recently where someone was on 60k at 21 in their family business so you might be surprised

Yea, sharing a room with a family is the last thing I'd do.

Fol20

rmorrissey63 wrote: »

Yea, sharing a room with a family is the last thing I'd do.

Normally you would just house share with people in early to late 20's

rmorrissey63

Fol20 wrote: »

Normally you would just house share with people in early to late 20's

I wouldn't mind house sharing with someone I know but not a family that I don't know.

joxer1988

Fol20 wrote: »

Careful with renovations. They may help for the type of clientele you appeal to but in terms of equity increase. It may not add that much. Maybe if you spend 10k on it it might add max of 5k. Yes I am an experienced invester

So in this sense, you think it's better value to purchase a renovated house than an old house and do the work yourself?

Cheers!

rmorrissey63

joxer1988 wrote: »

So in this sense, you think it's better value to purchase a renovated house than an old house and do the work yourself?

Cheers!

He's not, it's just telling you to make sure you don't go overboard on renovations because they may not add a whole lot of equity.

Gumbo

rmorrissey63 wrote: »

He's not, it's just telling you to make sure you don't go overboard on renovations because they may not add a whole lot of equity.

If your buying and renovating to sell for profit, then you have to renovate with your head and nor your heart.

Fol20

joxer1988 wrote: »

So in this sense, you think it's better value to purchase a renovated house than an old house and do the work yourself?

Cheers!

As pointed out already it can add value but it may not be the equivalent of what you paid. If it’s your first rodeo buying a house that needs a lot of work may not be the best move in the world. Some houses can be money pits especially if they are very old and your jaw might drop once you open the house up and see problems such as subsidence, full rewire of houses, plumbing costs, insulation, windows etc. all I am saying is do your research first, have your eyes wide open before committing. If your doing a fixer upper especially if your new to the game I would add a 10-20pc contingency to cover yourself.

joxer1988

Fol20 wrote: »

As pointed out already it can add value but it may not be the equivalent of what you paid. If it’s your first rodeo buying a house that needs a lot of work may not be the best move in the world. Some houses can be money pits especially if they are very old and your jaw might drop once you open the house up and see problems such as subsidence, full rewire of houses, plumbing costs, insulation, windows etc. all I am saying is do your research first, have your eyes wide open before committing. If your doing a fixer upper especially if your new to the game I would add a 10-20pc contingency to cover yourself.

Cheers for the advice!

Graham

Fol20 wrote: »

Most don’t but I saw a thread recently where someone was on 60k at 21 in their family business so you might be surprised

There's been a few popping up alright but you're right, I would.

pnecilcaser

Can you expand on this a bit more please? Employment in what roles exactly and do you have any advice on how to go about that? I think its a good idea generally

FernandoTorres

Is there any particular reason that you're purely focusing on property? At your age and the fact that you have some savings it could be a great time to start regular investments in the stock market. A lot less hassle, fewer barriers to entry and over the long term you should be able to beat residential property returns.

rmorrissey63

FernandoTorres wrote: »

Is there any particular reason that you're purely focusing on property? At your age and the fact that you have some savings it could be a great time to start regular investments in the stock market. A lot less hassle, fewer barriers to entry and over the long term you should be able to beat residential property returns.

Thanks for the recommendation. I've been meaning to look into it and how it works for a period of time but have just gotten sidetracked and how does it compare to real estate, is it more profitable generally?

Peregrinus

rmorrissey63 wrote: »

Thanks for the recommendation. I've been meaning to look into it and how it works for a period of time but have just gotten sidetracked and how does it compare to real estate, is it more profitable generally?

Property and stocks and shares are both real assets whose value, ultimately, depends on the performance of the national economy. The price of houses depends on what people are willilng to pay to rent or buy them, which in turn depends on employment rates, wage levels and so on, and so on the general health of the economy. The value of shares depends on company earnings which, again, depends on the health of the economy.

So, in the long run, taking the rough with the smooth, etc, etc, you expect both to have similar returns in the same economy.

But that can conceal an awful lot of rough and smooth. Over decades, you expect returns on investing in houses to be similar to returns on investing in companies, but that doesn't mean that the return on this house will bear any relationship to the return on this share over any particular period of time.

From the point of view of the private investor, the main difference between them is that it's relatively easy to leverage your investment in the property market with borrowing, but not at all easy to do the same with shares.

Suppose I have 100k to invest. I put it into a portfolion of shares over X number of years. Over that time the cumulatve return is, say, 50%. I sell out for 150k. I have 50k profit.

Now suppose, instead of buying the shares, I use the 100k, plus a 400k mortgage, to purchase a house for 500k. After X years, at a 50% return, the house is now worth 750k. I sell. I pay off the loan, 400k, plus let's say I have also payed 100k in interest over the years. Take away the 100k I originally invested, and my net profit is 150k - three times more than if I invested in shares.

On the other hand, if returns had been low over the period of X years, I'd be crucified. Suppose instead of a 50% return real assets earned only a 10% return. Investing in shares would mean that after X years I would have 110k. But investing in the house, on the same figures, after X years I'd have lost the whole of my 100k, and would owe a further 50k to the bank.

So, leveraging maximises returns, but also maximises losses.

While you can faff around with the fact that shares pay dividends while property pays rent, and the slightly different tax treatment of each, etc, etc., for the private investor the fact that property investment can be and generally is highly leverages, while share investment generally is not, swmaps all other differences.

Momento Mori

Peregrinus wrote: »

Property and stocks and shares are both real assets whose value, ultimately, depends on the performance of the national economy.

While that may be true for property, it's a common misconception that the stock market is related to the national economy.

OP, well done for having an interest in investing at such a young age. You have a great opportunity to accumulate wealth over time. I have listened to a few of Bigger Pockets' podcasts in the past and, while it may work in America, I can assure you that it's not so easy in Ireland, despite some tax benefits that are in place for Irish property investors. As others have stated, unless you are sitting on a lot of cash or have a high paying job, there is 0% chance of a bank giving you a mortgage at age 18.

Now, some things to consider. Historically speaking, stocks have been the best performing asset class, yielding an average annual return of close to 10%. (Read up on how compound interest works). The benefits are that you can start investing with any amount, at any age. No need for 10% deposits, no hassle with banks, tenants, maintaining and managing a property. You can even invest in the property market through the stock market if you wish (look at Real Estate Investment Trust). A disadvantage could be the emotional rollercoaster of seeing prices rise and fall, although if you are prepared this shouldn't be an issue as time in the market beats timing the market.

Peregrinus

Momento Mori wrote: »

While that may be true for property, it's a common misconception that the stock market is related to the national economy.

On reflection, yes, you're quite right. A great many of the shares that are readily available to Irish investors are exposed to international rather than local markets.
This tells you little, though, about which asset class will outperform the other.

FernandoTorres

Peregrinus wrote: »

On reflection, yes, you're quite right. A great many of the shares that are readily available to Irish investors are exposed to international rather than local markets.
This tells you little, though, about which asset class will outperform the other.

You could argue that if the OP is an Irish resident and will be working here then investing in Irish property is doubling down on the performance of the Irish economy. If the economy took a serious downturn he could lose his job as well as take a large hit on the property portfolio. I think it's important to diversify in terms of asset classes as well as geographically. There's no real right or wrong answer but OP seeing as you've already done the research on property I'd recommend reading at least a couple of beginner investment books so you have the full picture before making any decisions.

markjbloggs

Samuel T. Cogley wrote: »

DAFT rental/sales reports will give you headline figures.

Is there any report / analysis that goes into more depth than the headline numbers? Taxes, service fees, maintenance costs etc should all be part of any worthwhile study to compare real estate with other investment vehicles.

Below is an example of what I am looking for - it is from a NY times article comparing the benefits / drawbacks of buying vs renting. It discusses many of the metrics that should be part of a detailed analysis of property investment.

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

Again, I know this article does compare property vs other investments, but it does have the level of detail that would help answer the question - how does investing in property compare to the alternatives?

Fol20

rmorrissey63 wrote: »

Thanks for the recommendation. I've been meaning to look into it and how it works for a period of time but have just gotten sidetracked and how does it compare to real estate, is it more profitable generally?

It’s all about timing. I personally only have stocks and shares directly through my pension however for example if you had invested in the s&p500 at rock bottom a few years ago vs investing in property a few years ago. Shares tripled while houses doubled. It’s all on swings and roundabouts so it’s very hard to predict. With shares, it’s much more liquid and less work intensive also. The one thing about houses though is that it gives you the ability to rent out cash(mortgage) to invest which shares would not give you

murphaph

FernandoTorres wrote: »

You could argue that if the OP is an Irish resident and will be working here then investing in Irish property is doubling down on the performance of the Irish economy. If the economy took a serious downturn he could lose his job as well as take a large hit on the property portfolio. I think it's important to diversify in terms of asset classes as well as geographically. There's no real right or wrong answer but OP seeing as you've already done the research on property I'd recommend reading at least a couple of beginner investment books so you have the full picture before making any decisions.

Agree.
I have rental properties in Ireland and Germany, my own house in Germany and my shares are deliberately weighted away from these 2 countries.

I have no real clue about which company is the next big thing, so I invest passively in a MSCI ACWI ETF, a bundle of shares in app 2,400 companies spread across 23 industrialised nations and 23 emerging markets but 90% weighted towards the industrialised countries, which in turn are mostly weighted towards companies based in the United States but most/all large US companies derive profits globally so you are not overly exposed to the US economy itself.

It works for me like this as World ETFs barely factor the Irish economy in at all and even Germany is only 3% or something like that.

pnecilcaser

I wonder have you considered teaming up with any friends or family to buy property? I am testing the water with my immediate family and one or two of my friends. I currently have a house which I am "house hacking" (I don't really like that term, rent-a-room scheme is more accurate). I want to invest in another property and I am currently saving and exploring options.

I looked into releasing equity from my current house but AIB said NOPE. (They would do it for refurbishing the current house but not for investing in a new property). Someone on here very recently suggested I look at Pepper Finance so I will be exploring that option very soon. In the mean time I will be saving for a 20% deposit and finding ways to increase my income.

DubCount

pnecilcaser wrote: »

I wonder have you considered teaming up with any friends or family to buy property? I am testing the water with my immediate family and one or two of my friends. I currently have a house which I am "house hacking" (I don't really like that term, rent-a-room scheme is more accurate). I want to invest in another property and I am currently saving and exploring options.

I looked into releasing equity from my current house but AIB said NOPE. (They would do it for refurbishing the current house but not for investing in a new property). Someone on here very recently suggested I look at Pepper Finance so I will be exploring that option very soon. In the mean time I will be saving for a 20% deposit and finding ways to increase my income.

I would not buy property with family and friends.  Nothing tests a relationship like money.  Even if everyone is in agreement when the investment is made, circumstances change.  One party might want to sell, or be impacted by the investment in getting another mortgage, or other life events may mean not everyone is aligned.  Will excess income be distributed or used to pay down a mortgage quicker?  Who decides when to sell?  If further investment is required, what if one party cant afford the additional investment?

Lumen

Asset diversification is less important than matching assets and liabilities.

e.g. don't have income and expenses in different currencies.

Arklow10

Suggestions on ways to get involved in property, all come with their own health warnings though:

Buy an investment property with close friends/family - ensure it is set up on a legally sound basis though
Do a training course with e.g. Irish Property Owners Association or similar to get more acquainted with system and met great experienced people.
Get a job as a trainee in a Letting company or Real Estate Company
Purchase a cheap property in a large town or small city e.g. Waterford (bigger markets), do it up yourself or as much as possible over toime
Buy shares in property companies on ISEQ (great Annual Reports and see how property is managed well)
Train to become a builder/carpenter etc. and after time renovate a property

The Irish market is not as sophisticated as US or UK markets but has niches and opportunities. Many of the above comments I concur with - long game, lots of hassle.