Am I mad to buy a buy to let

adam88

Hi all.

I’m pretty clued into the do’s and don’t of being a landlord etc. a house ready to rent has come up for sale close enough to me. The house is ready to rent immediately and I’d be getting just over 11 percent return before tax on my investment.

Am I mad for even considering getting caught up in this, a part of me thinks the market is going to collapse any day now but people will always need a place to rent etc.

Any advice be greatly appreciated.

NIMAN

I wouldn't.

ShaneC93

I personally think you would be have to be completely mad to buy now even with cash.

A recession within a couple of years is as good as guaranteed at this stage and we could even be in one by mid next year with a couple of EU countries in technical recession already. Between Brexit, US shutdown and China's economy weak this could easily be as big as the last one too.

My advice is leave it a few years, if the housing market colapses in that time (bearing in-mind there has already been a massive slowdown in the past few months, way quicker than expected) then you'll stand to gain much more by buying when prices are down. In the mean-time you could just invest in a REIT to still earn from the a good ROI while the market is good while protecting yourself against the growing risk.

overkill602

High taxation, regulation, anti ll stigma, no laws to protect LLs from arrears/tenant damage, loss of ownership rights, extra admin, indefinite tenancies, tenant compo, criminal prosecution, constant media negativity, enforced social responsibility.
Nah I'd leave it

dubrov

11% is a great return in Dublin. Even if there is a bit if a downturn you'd still be doing well.

If it is in the country, I wouldn't touch it. 11% can turn into 0% very easily

Caranica

Run away as fast as you can!

3DataModem

Depends how steady the rental income in future is going to be. If you are near a hospital or college, then 11% is a great gross return, even allowing for the current massive demand and high rents, and low cost of capital.

Yes, all of the risks are there (overholding, reduced options for renting short term, etc) but if you manage them properly it could be a great investment.

q85dw7osi4lebg

Leg it

Claw Hammer

In a provincial town, the money is small and capital appreciation is small. Maintenance is often higher because of the higher square footage. I saw a 3 bed house in a country village advertised as let at €560 a month. I know people paying that for a small bedroom in Dublin. €560 is not going to go far in terms of paint, garden maintenance. renewals and repairs.

dashoonage

I wouldnt wish being a landlord on my worst enemy these days.

soirish

If the house is in good location the rental income could be solid even during crisis.

Claw Hammer

soirish wrote: »

If the house is in good location the rental income could be solid even during crisis.

Rents will go down everywhere in a crisis. The bigger they are, the harder they fall.

dubrov

Claw Hammer wrote:

Rents will go down everywhere in a crisis. The bigger they are, the harder they fall.

In general the smaller they are the harder they fall in a property crash

Claw Hammer

dubrov wrote: »

In general the smaller they are the harder they fall in a property crash

The don't have as much room to fall. In the last 10 years 3 bed apartments in the sweepstakes in Ballsbridge were let at €1500 per month. That was the market rent. That was a massive drop from previously and well below the current.

milhous

Would rent not stay fairly steady? Less people can afford mortgages, increased amount of people renting or not leaving the rental market to buy. No signs of HAPS changing or social housing being built.

Also on the outside Dublin thing, don't a lot of county Councils rent private rented accomm for up to 10years, 80% of market value iirc and hand it back in the same condition? Maybe this has changed

Claw Hammer

milhous wrote: »

Would rent not stay fairly steady? Less people can afford mortgages, increased amount of people renting or not leaving the rental market to buy. No signs of HAPS changing or social housing being built.

Also on the outside Dublin thing, don't a lot of county Councils rent private rented accomm for up to 10years, 80% of market value iirc and hand it back in the same condition? Maybe this has changed

Rents rise and fall with the market. When jobs are scarce people emigrate, don't go to college and just don't offer a higher rent to secure a place. when people realise they have a choice of properties they tend to bid down.

Das Reich

I doubt a country ranked on the first ten by HDI will have a massive emigration. I believe on the other trend that is more people coming and no building that will reduce the available properties on the market. I bought an apartment in another european years ago for 1/10 of what the same apartment would cost in Ireland, it is rented but it will not appreciate as that country have a totally different demographics trends with the population reducing. I can't see the population of Ireland reducing so it means always a demand for rent.

dubrov

Claw Hammer wrote:

The don't have as much room to fall. In the last 10 years 3 bed apartments in the sweepstakes in Ballsbridge were let at €1500 per month. That was the market rent. That was a massive drop from previously and well below the current.

Rent was about 1800 for a 3 bed in the sweepstakes in 2006 so the drop there wasn't too bad.

Think of a small village in Leitrim nowhere close to employment centres. It would have been difficult to rent at any price in 2008

the_syco

adam88 wrote: »

Am I mad for even considering getting caught up in this, a part of me thinks the market is going to collapse any day now but people will always need a place to rent etc.

It's illegal not to rent to someone on HAP, if someone pays one month, and then goes on HAP, you cannot say no. A few pf the loonie left are trying hard to make it illegal to evict people, and if someone does get in, you can only get rid of them if they don't pay rent, and when they stop paying rent, it'll take a year to get them out, all the time they may not may a cent, you won't get back rent, and you'll have to pay a sheriff to evict them, as the PTRB, who will fine you if you do anything bad, will be toothless when trying to evict someone who owes you rent.

So no, now is not a good time to rent.

If it was a good time to rent, why would the seller be trying to sell it?

adam88

ShaneC93 wrote: »

I personally think you would be have to be completely mad to buy now even with cash.

A recession within a couple of years is as good as guaranteed at this stage and we could even be in one by mid next year with a couple of EU countries in technical recession already. Between Brexit, US shutdown and China's economy weak this could easily be as big as the last one too.

My advice is leave it a few years, if the housing market colapses in that time (bearing in-mind there has already been a massive slowdown in the past few months, way quicker than expected) then you'll stand to gain much more by buying when prices are down. In the mean-time you could just invest in a REIT to still earn from the a good ROI while the market is good while protecting yourself against the growing risk.

Am I right in saying that the yearly return from say for example Hibernia reit is just over 1.5 percent??? What your hoping for with the reit is capital appreciation ??

storker

Take the same money and invest it in a property-based managed fund. Let some one else deal with the headaches.

Wheres Me Jumper?

adam88 wrote: »

Hi all.

I’m pretty clued into the do’s and don’t of being a landlord etc. a house ready to rent has come up for sale close enough to me. The house is ready to rent immediately and I’d be getting just over 11 percent return before tax on my investment.

Am I mad for even considering getting caught up in this, a part of me thinks the market is going to collapse any day now but people will always need a place to rent etc.

Any advice be greatly appreciated.

i wouldn't say you are mad, but i would urge a large dollop of caution. certainly if it were me i would wait until this whole Brexit business is over. few if any people really know how it's going to pan out, and i dont buy the Govt/EU spin anymore than i buy the UK's.

11% return on the face of it seems very good. maybe too good possibly?
as someone else said on here, if the property is in a good area of Dublin, then it could well be worth a punt. if it's in a provincial town, i would steer clear. country rents are not as predictable as city rents. tenants tend to be more troublesome also. Dublin is full of highly paid professionals desperate to get a decent place.
i've had the same Dublin tenants paying top rent for the past 15 years. on average they stay 4 to 5 years. dont believe the naysayers and begrudgers in here, that's nice handy money if you can get it.
yes there is more rules & regulations than ever before, but personally as a LL, i welcome most of them.

in any case good luck whatever you decide.

riclad

Maybe a good idea if the house is in a city,dublin, cork etc
the house will go up in value,you can sell it when you are ready to retire.
The risk is you might get a bad tenant,
you might have to go to court to evict em,
this takes months, meanwhile you get no rent at all .
if you buy a house in leitrim its much cheaper than a house in dublin,price is based on location.
even in a crisis rents in dublin will still be high ,
i presume you have cash to buy ,
There,s no point in borrowing 150k to buy a rental property.

Samuel T. Cogley

It's either completely fecking stupid or it's a calculated risk. Question is have you done your calculations? For example are there other ways you could invest money. If you're mortgaging to invest then make sure you maintain a decent contingency fund in case things go bad with the tenant.

4ensic15

storker wrote: »

Take the same money and invest it in a property-based managed fund. Let some one else deal with the headaches.

Let someone make a profit with your money and give you a pittance more like!

The_Conductor

In the current regulatory regime- and with even more onerous legislation on the horizon- it would take balls of steel to contemplate becoming a landlord in the current climate. Many of the downsides have already been discussed in this thread- I don't feel any need to rehash them- however, you *need* to properly evaluate the sector in which you are proposing to operate. It is not like operating in any other business sector- as evidenced by the creative methods the RTB have been forced to use to hide the stampede to the door. Personally- I think you'd be completely and utterly insane to consider becoming a landlord in the current regulatory regime- however, each unto themselves- you could get lucky and it may work out nicely for you- however, you shouldn't have to rely on luck in order to succeed.

adam88

Thanks for all your replies. Very useful. Okay so the property is A very large town down the south of the country. It’s 80k current offer with current rental income of 800 pm. Recently done up. Built circa 1995 ish. Appears to be in good order. Near 2 large areas of employment. Estate is ok’ish. I wouldn’t personally live there but a lot of working people seem to be residing there. Would that change what ye have suggested.

Wheres Me Jumper?

4ensic15 wrote: »

Let someone make a profit with your money and give you a pittance more like!

some people seem to think you just buy an investment, and then just sit back and watch the money roll in.
property investment, indeed any investment requires a certain amount of management. either you are prepared to do it yourself, or you will need to pay someone to do it for you.

if you do neither, don't be so surprised if/when things go pear-shaped.

liam7831

adam88 wrote:

Thanks for all your replies. Very useful. Okay so the property is A very large town down the south of the country. It’s 80k current offer with current rental income of 800 pm. Recently done up. Built circa 1995 ish. Appears to be in good order. Near 2 large areas of employment. Estate is ok’ish. I wouldn’t personally live there but a lot of working people seem to be residing there. Would that change what ye have suggested.

Sounds like a good investment,

soirish

Ask yourself if you're prepared to get 50% drop in rental income (400 euro). If the answer is yes then you can consider it.

Claw Hammer

adam88 wrote: »

Thanks for all your replies. Very useful. Okay so the property is A very large town down the south of the country. It’s 80k current offer with current rental income of 800 pm. Recently done up. Built circa 1995 ish. Appears to be in good order. Near 2 large areas of employment. Estate is ok’ish. I wouldn’t personally live there but a lot of working people seem to be residing there. Would that change what ye have suggested.

800 pm is a piddling rent, less than 10k per year. There are bedrooms in Dublin let out for more. By the sounds of this property there would seem to be little potential for capital appreciation. It is a low grade modern development. The calibre of tenant it would attract would not be high either.

joeysoap

At €80k should attract lots of local interest. Why isn’t it snapped up? If it looks too good to be true............

Claw Hammer

joeysoap wrote: »

Why isn’t it snapped up?

If everybody said that, nobody would ever buy anything.

joeysoap

Claw Hammer wrote: »

If everybody said that, nobody would ever buy anything.

I mean why isn’t it bought by a local? Is there a reason local buyers are not interested?

Claw Hammer

joeysoap wrote: »

I mean why isn’t it bought by a local? Is there a reason local buyers are not interested?

As it is currently let it is obviously a receiver sale. As such it can't be mortgaged.

The_Conductor

The OP said 'its ready to rent' not that it already has tenants (correct me if I've misunderstood).
As such- if its in a semi-reasonable estate- I'd flog it ASAP- and lock in the capital in whatsoever a manner as was safest- obviously paying off any pre-existing debt first. Life is too short for the crap landlords are supposed to accept as normal operating parameters.

4ensic15

The_Conductor wrote: »

The OP said 'its ready to rent' not that it already has tenants (correct me if I've misunderstood).

In a later post the o/p said the current rent is 800pm. There are tenants in it and it is on the market. it is fair to assume that vacant possession will not be given.

adam88

Currently rented for the last 7/8 months for 800 pcm. Tenants are out this week. (Medical family, Dr rotating)

Did a bit of researching. Local nosey neighbour decided to fill me in with loads of info. When things were bad, property was easily let for 550-600 a month. Never really any problem with tenants. House was never empty for long. Well kept by landlord.

Standard 3 bed semi in this town would be approx 165k ish, these are just about commanding 950-1000 rent .

This is a 3 bed/ one bath terraced house hence the low price but your return is way better than the above.

I feel however you’d have to be very selective with your tenants.

Claw Hammer

adam88 wrote: »

Currently rented for the last 7/8 months for 800 pcm. Tenants are out this week. (Medical family, Dr rotating)

Did a bit of researching. Local nosey neighbour decided to fill me in with loads of info. When things were bad, property was easily let for 550-600 a month. Never really any problem with tenants. House was never empty for long. Well kept by landlord.

Standard 3 bed semi in this town would be approx 165k ish, these are just about commanding 950-1000 rent .

This is a 3 bed/ one bath terraced house hence the low price but your return is way better than the above.

I feel however you’d have to be very selective with your tenants.

When you are in a downmarket location with low end accommodation the calibre of tenant interested is invariable lower. Remember that repair, maintenance costs and insurance etc are the same as the more upmarket properties so you return may not be much greater.

Claw Hammer

Claw Hammer wrote: »

When you are in a downmarket location with low end accommodation the calibre of tenant interested is invariable lower. Remember that repair, maintenance costs and insurance etc are the same as the more upmarket properties so you return may not be much greater.

If its currently rented to a Dr. it’s obviously possible to attract a good caliber of tenant.

In fact if getting renting to rotating doctors is a area that could be tapped into it would be a great way to rent it. No worries about overholding etc, no one getting the idea the it’s their house as happens when people rent the one place for two long etc.

Soundguy.

Registered User
Hello there,

I'm considering buying a house for cash in South Dublin to let, I'd be a first-time buyer, I have no experience in investing so the only option I feel that is open to me is to buy a house to secour my savings.

I'm looking on advice to buy to let, I'm concerned with finding the right tenants the management and Maintenance of a house and the taxation on a house and the insurance ect.

I'm also moving abroad so if I bought a house to let this will be my only form of income...has anybody had a similar experience or do people feel this is a bad idea to buy to let and then move abroad?

Any advice or opinions would be greatly appreciated

Thanks in advance.

Samuel T. Cogley

You're mad to do it, you'd need to be certifiable to do it remotely. The market is at it's peak especially in South Dublin in regard to property prices, now is not a great time to buy. If the figures work out with a 2 year void (no rent) and rent at half of the current market rates then I'd say go for it, otherwise I'd hold on to my money and look at a local/safer investment.

Wheres Me Jumper?

sure property is unlikely to continue increasing at recent rates, but that said property prices are NOT coming down anything soon.

the demand is too strong. and the supply is not even close to catching up.
many of those that say otherwise are most likely tenants who cannot afford to buy, and should not be considered serious investors.
rents too are very strong, and will not come down anytime soon, due to supply & demand.
again tenants dont like to hear this, but it's the truth.

as for voids do not be frightened by scare stories. i have been letting property since 1998, and the longest any of my properties has been vacant is 1 week. if you manage your tenants correctly it will not arise.

Edgware

Soundguy. wrote: »

Registered User
Hello there,

I'm considering buying a house for cash in South Dublin to let, I'd be a first-time buyer, I have no experience in investing so the only option I feel that is open to me is to buy a house to secour my savings.

I'm looking on advice to buy to let, I'm concerned with finding the right tenants the management and Maintenance of a house and the taxation on a house and the insurance ect.

I'm also moving abroad so if I bought a house to let this will be my only form of income...has anybody had a similar experience or do people feel this is a bad idea to buy to let and then move abroad?

Any advice or opinions would be greatly appreciated

Thanks in advance.

If I was doing it I would go the apartment line rather than the house. You will be in an apartment complex which, despite stories of bad management, should be managed by a reputable agent. You will have no concerns about gutters, cutting grass, payment of refuse charges etc.
If you could get a tenant in from Microsoft, Google etc you will have a well paid tenant, more than likely a continental, who have a good tradition of renting than you should be allright.

Magnatu

HAP - landlords assistance payment.

The amount of money taxpayers are giving private landlords under the scheme has soared from just €390,000 in 2014 to €276m last year.

Samuel T. Cogley

Magnatu wrote: »

HAP - landlords assistance payment.

The amount of money taxpayers are giving private landlords under the scheme has soared from just €390,000 in 2014 to €276m last year.

Oh the irony. I'd say the vast majority of LL's don't want anything to do with HAP. Furthermore I expect I'm not the only one (LL) that think's it's ridiculous that the private sector is being used to provide social housing.

4ensic15

Soundguy. wrote: »

Registered User
Hello there,

I'm considering buying a house for cash in South Dublin to let, I'd be a first-time buyer, I have no experience in investing so the only option I feel that is open to me is to buy a house to secour my savings.

I'm looking on advice to buy to let, I'm concerned with finding the right tenants the management and Maintenance of a house and the taxation on a house and the insurance ect.

I'm also moving abroad so if I bought a house to let this will be my only form of income...has anybody had a similar experience or do people feel this is a bad idea to buy to let and then move abroad?

Any advice or opinions would be greatly appreciated

Thanks in advance.

So you have managed to save the price of a house in South Dublin by putting money under the mattress?
You don't need advice, you should be giving it.

Samuel T. Cogley

Soundguy. wrote: »

Registered User
Hello there,

I'm considering buying a house for cash in South Dublin to let, I'd be a first-time buyer, I have no experience in investing so the only option I feel that is open to me is to buy a house to secour my savings.

Why not speak to an Financial Advisor or Wealth Manager?

riclad

You can claim for maintenance expenses as a tax credit ,all expenses related to repairs.
Say you buy a fridge ,for 800, you claim 100 euro per year for the next 8 years as a capital allowance.Eg you are only taxed on the profit you make
after expense,s .
You can claim for a agents fees , and accountants fees as an expense.
A agent finds a tenant , and can deal with a tenant for you .
Accounts charge 300 euro approx for doing 1 years tax return for a landlord.
Capitals allowances can be claimed as expenses ,against rental income, eg furniiture, tv,s ,fridges, cooker ,beds etc
look on www.revenue.ie , landlords tax etc

1874

storker wrote: »

Take the same money and invest it in a property-based managed fund. Let some one else deal with the headaches.

Any examples, how are these advertised? and regulated? central bank/financial regulator, ie how do you know its a legitimate organisation and whats the typical means of investment/return? is it dividends? interest? whats the benefits? over savings? and taxes (like DIRT)?

adam88 wrote: »

Am I right in saying that the yearly return from say for example Hibernia reit is just over 1.5 percent??? What your hoping for with the reit is capital appreciation ??

Any others? 1.5% sounds fairly poor, some banks are offering that on some savings accounts, like mortgage savers and term deposits.

Samuel T. Cogley wrote: »

Why not speak to an Financial Advisor or Wealth Manager?

Any recommendations? and again, who regulates these guys?
I got out of landlording and have some money after tax and CG, I thought I was going to move house, but it seems its not happening right now, a wait might be better anyway, aside from statements of being at a peak of certain prices in some areas (Im not sure Im convinced that will affect things other then possibly, limit significant increase, but I dont forsee significant drops, but who knows with Brexit). Not that significant drops in price would necessarily benefit me, as it might mean I wont get a mortgage or worse (fingers crossed).
That said, I dont like leaving my money tied up in plain savings accounts.