Not worth the hassle?

Wheres Me Jumper?

Just spotted this article today.
Wondering if other LLs feel the same way, or were they just unlucky or perhaps a tad naive?


https://www.independent.ie/irish-news/its-not-worth-the-hassle-woman-on-nightmare-experience-of-being-a-dublin-landlord-37435400.html

handlemaster

I have had that experience of a very bad tenant. Place cost around 7/8k to repair . Also gave full deposit back as violence and intimation was involved. I didnt persue or entertain taking a case even if I won no chance of getting the money owned.

RayCun

Wheres Me Jumper? wrote: »

Just spotted this article today.
Wondering if other LLs feel the same way, or were they just unlucky or perhaps a tad naive?


https://www.independent.ie/irish-news/its-not-worth-the-hassle-woman-on-nightmare-experience-of-being-a-dublin-landlord-37435400.html

Three properties in negative equity?

Wheres Me Jumper?

RayCun wrote: »

Three properties in negative equity?

i saw that and thought wtf are they doing?

looks like they may have entered the market at the worst possible time, and borrowed heavily.

Wheres Me Jumper?

handlemaster wrote: »

I have had that experience of a very bad tenant. Place cost around 7/8k to repair . Also gave full deposit back as violence and intimation was involved. I didnt persue or entertain taking a case even if I won no chance of getting the money owned.

crikey sorry to hear that.
just wondering at what stage did the LL/tenant relationship break down.
were they lousy tenants from day 1, or did issues emerge later on?
and did you interview them yourself before you took them in?

Samuel T. Cogley

Feel exactly the same way and have had excellent tenants. The wife won't budge on selling and crystalising the loss but I've had it, too much risk for the reward. There needs to be a massive overhaul of the eviction process for the market to stop losing LL's.

The Student

Samuel T. Cogley wrote: »

Feel exactly the same way and have had excellent tenants. The wife won't budge on selling and crystalising the loss but I've had it, too much risk for the reward. There needs to be a massive overhaul of the eviction process for the market to stop losing LL's.

Thinking the same myself.

DubCount

"Its not worth the hastle" is something that I reckon pretty much every landlord has thought in the last couple of years. Returns are not exceptional (especially for properties that are mortgaged), and risks are high. There is a constant stream of new regulations, rules and legislation. The public perception is that all landlords are greedy rich fat cats that are abusing ordinary decent citizens so they can upgrade their BMW - and this perception is backed up by 99% of media coverage and the soap box provided to "homeless" charities.

Frankly, there are easier ways to turn a coin. You can pump loads of money into a private pension scheme and you wont find angry mobs calling for your head - the government will even give you tax relief to help you make more money.

Between RTB, RPZ and HAP discrimination so far and lots more to come, "its not worth the hastle" is spot on the money in my view.

I know some people don't think there should be a private rented sector at all. People should be either buying property for themselves or in government provided direct social housing. Be careful what you wish for - you may just get it.

handlemaster

Wheres Me Jumper? wrote: »

crikey sorry to hear that.
just wondering at what stage did the LL/tenant relationship break down.
were they lousy tenants from day 1, or did issues emerge later on?
and did you interview them yourself before you took them in?

8

agent found the tenant. I senced somthing off from the start but just kept giving the benefit of the doubt. This was to bit me every month for two years. the stress was always there

Wheres Me Jumper?

handlemaster wrote: »

8

agent found the tenant. I senced somthing off from the start but just kept giving the benefit of the doubt. This was to bit me every month for two years. the stress was always there

did the agency provide references? did you see them?

where were they when things went south?

did they offer you any type of compensation?

Baby01032012

As above, check the references the agent got. I did and found they were made up. I’m suing the letting agent at the moment for loosing a years income because they never checked the references.

Wheres Me Jumper?

Baby01032012 wrote: »

As above, check the references the agent got. I did and found they were made up. I’m suing the letting agent at the moment for loosing a years income because they never checked the references.

that's appalling, but sadly i am not at all surprised. i NEVER use agents as i think they are about as much use an ashtray on a motorbike.
besides there is nothing like meeting a prospective tenant face to face and getting to see the cut of their jib as it were.
on the one occasion, i ever used them i recall returning to my property to be horrified that he had forgot to lock the front door! not even an apology. dreadful stuff.

i hope you are successful in your action. do keep us posted.

jimmycrackcorm

Baby01032012 wrote:

As above, check the references the agent got. I did and found they were made up. I’m suing the letting agent at the moment for loosing a years income because they never checked the references.

What's the point in employing an agent when they can't get the basics right?

handlemaster

Wheres Me Jumper? wrote: »

did the agency provide references? did you see them?

where were they when things went south?

did they offer you any type of compensation?

ex landlords provide the best references. i just used them to find a *good* tenant.

Wheres Me Jumper?

handlemaster wrote: »

ex landlords provide the best references. i just used them to find a *good* tenant.

that depends.
i know some LLs who will give a bad tenant a good reference, just to be rid of them.

i would get references from LL, employer, Garda (if in doubt).
if the tenant objects or shows any reluctance, then it's NEXT!

my sympathies goes to the above LLs who have been stung. i must have been very lucky, as i've never had any serious problems with tenants.

Baby01032012

Baby01032012 wrote: »

As above, check the references the agent got. I did and found they were made up. I’m suing the letting agent at the moment for loosing a years income because they never checked the references.

Happened to me too - mentally unstable tenant... I was abroad, but issues from day 2.

After various dramas unfolded I insisted on following up the references personally - and one out of the three was legit - in that referee existed, said she was sorry for my troubles, had no idea her name and number had been given out and would never have vouched for the tenant. Letting agent had checked nothing.
I considered suing - but due to a stroke of luck the tenant and crazy friends left (I think local residents "encouraged" their early departure before I was back in the country). I was down just 2 months rent, and a deep clean (no major damage) - and felt like I got off lightly.

Legalities and stress just not worth it. Sold the place soon after, weight off my shoulders.

the_syco

Wheres Me Jumper? wrote: »

that depends.
i know some LLs who will give a bad tenant a good reference, just to be rid of them.

I think he means that "ex landlords" won't have a reason to lie, unlike the current landlord, who may.

Wheres Me Jumper?

the_syco wrote: »

I think he means that "ex landlords" won't have a reason to lie, unlike the current landlord, who may.

point taken.

cruizer101

RayCun wrote: »

Three properties in negative equity?

Yeah that ridiculous to still have 3 properties in negative equity.

House prices are up to 80% of their peak values, considering they were bought as rental properties they I doubt they had 100% mortgage so over the past 10 years they have paid barely anything of the mortgages.
They must have been going interest only on the rental properties for a good few years.

I have some sympathy for having bad tenants and the losses from that but there were some very bad decisions made by landlords

Wheres Me Jumper?

cruizer101 wrote: »

Yeah that ridiculous to still have 3 properties in negative equity.

House prices are up to 80% of their peak values, considering they were bought as rental properties they I doubt they had 100% mortgage so over the past 10 years they have paid barely anything of the mortgages.
They must have been going interest only on the rental properties for a good few years.

I have some sympathy for having bad tenants and the losses from that but there were some very bad decisions made by landlords

to be fair i think they had a bit of bad luck as well what with ill health and all, but certainly, they seem to have been very poorly advised

Wildly Boaring

Bit much to be going to a national newspaper with

"Woe is me, I have 4 houses and need to sell one"

Surely even if all 4 were in negative equity they weren't all bought with 100% mortgages.

Even if they were surely the current rents are more than paying any mortgage


Edit 5 they currently have 5 houses, 3 in negative equity. Which means 2 that aren't!!

RayCun

They must have bought three houses, at the peak of the market, on interest only mortgages.

They're gamblers who lost.

Ray Palmer

Wildly Boaring wrote: »

Bit much to be going to a national newspaper with

"Woe is me, I have 4 houses and need to sell one"

Surely even if all 4 were in negative equity they weren't all bought with 100% mortgages.

Even if they were surely the current rents are more than paying any mortgage


Edit 5 they currently have 5 houses, 3 in negative equity. Which means 2 that aren't!!

Why do you think rent would more than pay the mortgage? They have said 3 are in negative equity. That would mean the mortgage is higher than the value of the property. If you bought a house tomorrow and rented it out the rent wouldn't pay the mortgage. If the bought in 2008 current rents wouldn't pay off a much larger mortgage than if bought now.

They are making a loss and took a huge financial hit while renting that would put them at least a decade behind when they would have planned to be paid off. The have gone to papers to highlight they have lost money in an effort for public understanding. Unfortunately you and others still don't see it. They have lost money and are losing money while people think landlords are making a fortune.

Even if they sell up all their property they have still lost money but because they own property people don't care.

Wheres Me Jumper?

Ray Palmer wrote: »

Why do you think rent would more than pay the mortgage? They have said 3 are in negative equity. That would mean the mortgage is higher than the value of the property. If you bought a house tomorrow and rented it out the rent wouldn't pay the mortgage. If the bought in 2008 current rents wouldn't pay off a much larger mortgage than if bought now.

They are making a loss and took a huge financial hit while renting that would put them at least a decade behind when they would have planned to be paid off. The have gone to papers to highlight they have lost money in an effort for public understanding. Unfortunately you and others still don't see it. They have lost money and are losing money while people think landlords are making a fortune.

Even if they sell up all their property they have still lost money but because they own property people don't care.

did you not know it is a sin for irish people to own rental property in ireland, unless you are a foreigner that is. in which case our Govt. will thank you by way of very generous tax breaks.
:eek:

cruizer101

Ray Palmer wrote: »

If you bought a house tomorrow and rented it out the rent wouldn't pay the mortgage.

It should easily cover the mortgage, there are two bed apartment in balbriggan you can buy for 180ish and rent for 1300 - 1400, mortgage repayment on 160k is 675@3% and 763@4%.
So rent is about double what mortgage repayment is.
Taking tax off you still covering the payments and that ignores interest relief.

So If you bought a house tomorrow and rented it out and the rent wouldn't pay the mortgage. you made a bad decision.

Ray Palmer wrote: »

because they own property people don't care

I think it is more that people don't care as much because this was an investment they lost money on, the same as many other investments,
it wasn't an accidental landlord with one property. The have 4 rented properties which they took large mortgages on, that was a bad decision and they are paying the price. No one forced them to borrow to invest.
This isn't their home we are talking about, it was an investment made on borrowed money in other words a gamble that didn't pay off.

Browney7

Ray Palmer wrote: »

Why do you think rent would more than pay the mortgage? They have said 3 are in negative equity. That would mean the mortgage is higher than the value of the property. If you bought a house tomorrow and rented it out the rent wouldn't pay the mortgage. If the bought in 2008 current rents wouldn't pay off a much larger mortgage than if bought now.

They are making a loss and took a huge financial hit while renting that would put them at least a decade behind when they would have planned to be paid off. The have gone to papers to highlight they have lost money in an effort for public understanding. Unfortunately you and others still don't see it. They have lost money and are losing money while people think landlords are making a fortune.

Even if they sell up all their property they have still lost money but because they own property people don't care.

Because they bought several property at the top of the market with borrowed money and probably on interest only - if it was a capital repayment mortgage mortgage they would surely have a chunk of the capital paid off and with the strong asset price recovery be in positive equity (albeit the property being worth less than the mad money they paid for it). They made a terrible and substantial investment which is regrettable for them and no doubt they would go back in time if they could.

Hundreds of thousands of people lost a pile of money in the crash from all manner of investments including property, equity funds and my personal favourite of "diversified portfolios of bank shares". Let's not kid ourselves, they didn't buy three leveraged properties out of some moral or idealistic notion to provide housing. They purchased 3 properties to ride the property speculation train to make money but got their timing disastrously wrong.

Tenants wrecking the place on them is reprehensible and punishments should be more severe for delinquent tenants. They'd still be severely in the hole if they had model tenants.

Ray Palmer

cruizer101 wrote: »

It should easily cover the mortgage, there are two bed apartment in balbriggan you can buy for 180ish and rent for 1300 - 1400, mortgage repayment on 160k is 675@3% and 763@4%.
So rent is about double what mortgage repayment is.
Taking tax off you still covering the payments and that ignores interest relief.

So If you bought a house tomorrow and rented it out and the rent wouldn't pay the mortgage. you made a bad decision.



I think it is more that people don't care as much because this was an investment they lost money on, the same as many other investments,
it wasn't an accidental landlord with one property. The have 4 rented properties which they took large mortgages on, that was a bad decision and they are paying the price. No one forced them to borrow to invest.
This isn't their home we are talking about, it was an investment made on borrowed money in other words a gamble that didn't pay off.

You are ignoring tax of 52% so rent 1400 after tax it is 672. That is why you can't make money on a property.

No matter what they lost money in a market where people claim that landlords are rolling in money

cruizer101

Ray Palmer wrote: »

You are ignoring tax of 52% so rent 1400 after tax it is 672. That is why you can't make money on a property.

cruizer101 wrote: »

It should easily cover the mortgage, there are two bed apartment in balbriggan you can buy for 180ish and rent for 1300 - 1400, mortgage repayment on 160k is 675@3% and 763@4%.
So rent is about double what mortgage repayment is.
Taking tax off you still covering the payments and that ignores interest relief.

I didn't ignore it, I just didn't go into all the details, I said about half the rent the rent will still cover mortgage.

So say 1,400, mortgage payment is 763@4% (there are better rates but lets go with this)
Mortgage interest portion of repayment starts at 533 and is 415 after 10 years, lets take an average on that of 474.
75% of mortgage interest is 355 (I think the rate of mortgage interest relief went up in last budget)
1400-355 = 1045 @ 52% is 543 tax paid leaving 856 profit.

That is enough to cover the mortgage, even accounting for some expenditure. And remember paying off the mortgage is still profit even if you are left with nothing after it, at the end of the mortgage you own a large asset.

I'm not trying to say there is huge money to be made being a landlord, I accept the margins are tight and a bad tenant can ruin your investment.
But that is the risk you take when you make an investment, no different to shares dropping or companies going bust.
They took loans to make that investment and if they didn't educate themselves on the risks of doing that before taking loans of what likely amounted to over €1,000,000 then I'm sorry but they have no-one to blame but themselves.

Fol20

Great video of rent control

https://www.youtube.com/watch?v=snTgTQndvi0

Ray Palmer

cruizer101 wrote: »

I didn't ignore it, I just didn't go into all the details, I said about half the rent the rent will still cover mortgage.

So say 1,400, mortgage payment is 763@4% (there are better rates but lets go with this)
Mortgage interest portion of repayment starts at 533 and is 415 after 10 years, lets take an average on that of 474.
75% of mortgage interest is 355 (I think the rate of mortgage interest relief went up in last budget)
1400-355 = 1045 @ 52% is 543 tax paid leaving 856 profit.

That is enough to cover the mortgage, even accounting for some expenditure. And remember paying off the mortgage is still profit even if you are left with nothing after it, at the end of the mortgage you own a large asset.

I'm not trying to say there is huge money to be made being a landlord, I accept the margins are tight and a bad tenant can ruin your investment.
But that is the risk you take when you make an investment, no different to shares dropping or companies going bust.
They took loans to make that investment and if they didn't educate themselves on the risks of doing that before taking loans of what likely amounted to over €1,000,000 then I'm sorry but they have no-one to blame but themselves.

Notice profit now includes ignoring paying the mortgage off. Paying off the mortgage is not and never will be profit. Building equity in the house is not profit. Yes you can make money but no accountant ever worked it out as you suggest.

One vacant month and you make a loss in a year. You certainly are ignoring expenses like insurance, maintenance, lot etc..

Work out all the figure properly and it is a loss. Ignored lawyer fees, decoration, furniture and appliances.

Buy a house and rent it out now you will lose money buy it at 2008 prices you certainly will be making a loss. Hugely different from investing in shares as the government increased taxes while rent dropped and you can lose 2 years of income and incur extra costs. No financial advisor could tell people the government will just add extra tax and charges then cap your rent. That added risk to property investment is now there increasing risk.

circular flexing

I have good tenants who pay the rent on time and look after the house but even I think it's too much hassle. The rent is well below what I could be getting (partially my fault, but also partially the RPZ regulation coming in) and the constant stream of regulations can be hard to keep up with. Also my biggest worry is getting the house back if I ever need it. In today's market, I wouldn't blame a tenant for overholding but I think there needs to be more landlord support in that respect.

RayCun

Building equity in a property is profit. Of course it is. You pay for 10% of a house and 20 years later you have 100% of a house. That's profit.

cruizer101

Ray Palmer wrote: »

Paying off the mortgage is not and never will be profit. Building equity in the house is not profit.

I don't understand this, you own something that you previously didn't, I don't see how that can be thought of as anything other than profit.
Profit tied up in a non-liquid yes but profit non the less.

I agree with your earlier point They have lost money and are losing money while people think landlords are making a fortune.


Landlords aren't making a fortune, in many cases the margins are very tight and they are potentially making a loss.

But my point is more that I don't have a huge amount of sympathy for this couple a it wasn't a case of them being a young couple who bought an apartment in the boom to get on the property ladder, they ended up moving because of work but couldn't sell so ended up as negative equity landlords and are making a loss on the property, they have my sympathy.

This couple borrowed massive amounts of money to invest/gamble on the property market, no one forced them to do this, it was their own bad decision that they made. It was people like this drove the property bubble.

It is crap that they now have an overholding tenant and I do think there should be more done to legislate for that situation. But my sympathy for their losses is limited as it was their decision to invest as they did.

Ray Palmer

cruizer101 wrote: »

I don't understand this, you own something that you previously didn't, I don't see how that can be thought of as anything other than profit.
Profit tied up in a non-liquid yes but profit non the less.

I agree with your earlier point They have lost money and are losing money while people think landlords are making a fortune.


Landlords aren't making a fortune, in many cases the margins are very tight and they are potentially making a loss.

But my point is more that I don't have a huge amount of sympathy for this couple a it wasn't a case of them being a young couple who bought an apartment in the boom to get on the property ladder, they ended up moving because of work but couldn't sell so ended up as negative equity landlords and are making a loss on the property, they have my sympathy.

This couple borrowed massive amounts of money to invest/gamble on the property market, no one forced them to do this, it was their own bad decision that they made. It was people like this drove the property bubble.

It is crap that they now have an overholding tenant and I do think there should be more done to legislate for that situation. But my sympathy for their losses is limited as it was their decision to invest as they did.

No you don't understand it so why are you making a claim it is profit because you won't find any accountancy theory that agrees with that. Go try and you will see nobody considers it profit. How you think profit is based on capital gains is just plain absurd. How you think a business would calculate themselves as being in profit because the are closer to buying their premises while in negative cash flow is what you are saying. Imagine working a 40 hour week and getting no money but having to put money it to the business according to you that is profit. You aren't thinking it out.

These people could have done all there sums and looked for a modest 4% rent yield. The rents dropped the government added USC, PRSI, reduced tax relief on interest, LPT and PRTB charges. That was done to this couple who by all means weren't being greedy or reckless it was the government that were. It sounds like they sold up property they already had and refinanced the situation that should have provided a service to tenants and given them a good retirement. But along with the punishment for daring to provide rental property they were shafted by the government and not given any protection from tenants

handlemaster

RayCun wrote: »

Building equity in a property is profit. Of course it is. You pay for 10% of a house and 20 years later you have 100% of a house. That's profit.

Perhaps once all is paid off it may be worth more than the investor has paid for it. But this is capital appreciation not profit.

RayCun

handlemaster wrote: »

Perhaps once all is paid off it may be worth more than the investor has paid for it. But this is capital appreciation not profit.

No, if you buy a house for 100k, and ten years later it is worth 150k, that is capital appreciation.

If you put up 10% of the cost of a house and 20 years later own the house outright, that is profit.

RayCun

"How you think a business would calculate themselves as being in profit because the are closer to buying their premises "

Business year one :
Assets 100k building
Liabilities 100k mortgage
Income 500/month

Business year twenty:
Assets 100k building
Liabilities 0
Income 500/month

circular flexing

RayCun wrote: »

"How you think a business would calculate themselves as being in profit because the are closer to buying their premises "

Business year one :
Assets 100k building
Liabilities 100k mortgage
Income 500/month

Business year twenty:
Assets 100k building
Liabilities 0
Income 500/month

Assets are not profit. To say as such breaks fundamental accounting rules as any junior cert business studies student could tell you.

RayCun

circular flexing wrote: »

Assets are not profit. To say as such breaks fundamental accounting rules as any junior cert business studies student could tell you.

Yes, I know the principles of double entry accounting.
But colloquially, when you have some money and then you have more, 'profit' will do as a description.

circular flexing

RayCun wrote: »

Yes, I know the principles of double entry accounting.
But colloquially, when you have some money and then you have more, 'profit' will do as a description.

But you don't have more money.

RayCun

circular flexing wrote: »

But you don't have more money.

You buy a property for 10k cash and 90k mortgage.
Twenty years later you have paid off the mortgage with rental income. You sell the property for 100k.
You have 90k more money.
Call it what you like.

Browney7

circular flexing wrote: »

Assets are not profit. To say as such breaks fundamental accounting rules as any junior cert business studies student could tell you.

You must have missed the part on repayment of debt principal not being included in "profit" too??

circular flexing

RayCun wrote: »

You buy a property for 10k cash and 90k mortgage.
Twenty years later you have paid off the mortgage with rental income. You sell the property for 100k.
You have 90k more money.
Call it what you like.

I can't call it what I like, I will call it what it should be: an asset that has increased in value (which doesn't automatically mean more money, the asset still has to be converted to cash).


Also your simple calculation ignores any costs in holding onto the asset and any costs that need to be paid on disposal.

Franz Von Peppercorn

It’s been disasterous year after disasterous year for landlords ever since rents skyrocketed.

RayCun

"should have provided a service to tenants and given them a good retirement. But along with the punishment for daring to provide rental property"

Oh this is just so much bollocks.

I don't think landlords are devils incarnate, my parents were landlords for a while. But these people, and most landlords, are in it to make money. They could be very nice people, good landlords, not taking the piss with rents, not holding back deposits, etc etc etc but they are not doing it because they want to provide a service, or want to increase the supply of rental property.

They are in it to make money. It's an alternative to putting money in the bank, or a pension fund, or a hedge fund. It has good points and bad points as an investment. And that's what it is.

And like most investments you have the potential to lose money, particularly if you over extend as this couple did.

QuintusFabius

I just don't believe it ...

A landlord has spoken out about the challenges of renting saying it has mentally, physically and financially destroyed her.

She owns 4 properties in Dublin but is broke ?
nah ....

RayCun

circular flexing wrote: »

Also your simple calculation ignores any costs in holding onto the asset and any costs that need to be paid on disposal.

I also ignored any capital appreciation, and any possibility that the rent will exceed the mortgage.
We could quibble about exact figures, but the point remains that at the end of the mortgage term the landlord has an asset they didn't have at the start.

DubCount

RayCun wrote: »

We could quibble about exact figures, but the point remains that at the end of the mortgage term the landlord has an asset they didn't have at the start.

The point remains that the mortgage does not disappear by magic. It has to be paid off with real cash. Like any other business, a landlord hopes to make a profit and on that profit he/she will pay tax. The profit after tax adds some cash to the landlords pocket. If the landlord had an interest only loan, that's where things would end and he/she could spend/invest the extra cash.

However with a capital repayment mortgage, the landlord has to pay out cash to capital repayments. Its like an enforced saving scheme. Regardless of what profit/loss after tax a landlord makes, they have to put cash into their enforced savings scheme and make capital repayments on the mortgage. After 10/20/30 years, the mortgage is repaid, but most of the cash to repay the loan have come from sources other than rental profits after tax.

beauf

QuintusFabius wrote: »

I just don't believe it ...



She owns 4 properties in Dublin but is broke ?
nah ....

There are mortgages on them all.

Which means they don't own any of them.

beauf

cruizer101 wrote: »

....This couple borrowed massive amounts of money to invest/gamble on the property market, no one forced them to do this, it was their own bad decision that they made. It was people like this drove the property bubble. ....

The banks were allowed to borrow like this, and give credit/loans to people like this with no regulation. So did the Banks not drive it? If they had stuck to rules people like this wouldn't have been able to borrow to buy. Then there was no regulation and the Govt ignored all the warnings.

So while people have to take responsibility for their own actions. You can't just ignore all the external influences that facilitated this.

Wanderer78

beauf wrote:

The banks were allowed to borrow like this, and give credit/loans to people like this with no regulation. So did the Banks not drive it? If they had stuck to rules people like this wouldn't have been able to borrow to buy. Then there was no regulation and the Govt ignored all the warnings.

The fact that banks have been allowed to effectively print their own money in the form of loans via deregulation, which disturbingly hasn't changed at all, is a bit of a concern to say the least.