Buying 1 bedroom aparment for letting purposes- Ballymun or Tallaght Square?

John1648

Dear Board.ie contributors, here comes a kind request to you to critique such an investment idea:

I am a cash buyer, looking at buying a first one of two/three properties in Dublin for letting purposes. I am looking at the lower end of the budget properties, which seem to me to produce a better yield.

The calculation is like this: 1200-1300 EUR monthly rent, purchase price - 150 000 EUR.

I am currently looking at 3 apartments in Ballymun (Linnbhla, and Shangan Hall) and Tallaght (Square area, 3 mins from LUAS), 1-bedroom, 40 - 50 sq.m., in pretty good shape, furnished.

Would such rents be realistic, for these apartments? Would it be easy to find tenants in the current market?

Would it too be risky, in the sense that these apartments risk to sit empty in the event of a recession?

Many thanks!

riclad

Theres a shortage of rental units, its easy to find tenants .
do the figures add up ,
borrow 150k,
pay interest, Any income over 35 k income you pay 40 per cent tax,plus prsi,plus usc universal social charge

https://www.onlinemortgageadvisor.co.uk/mortgage-repayments/repayments-on-a-100000-mortgage/#100000-buy-to-let-mortgages
And thats assuming interest rates stay the same as they are now .
in 5 or 7 years time interest rates might go up.
plus the irish economy will be effected by brexit in 6 months approx ,even in a recession people still need to live somewhere,
Theres dcu university college ,less than a mile from ballymun,
students need to rent somewhere nearby .
You need to work out potential profits vs expenses before buying any property .
i lived in ballymun,
if 2 apartments the same price .,i,d buy the one in tallaght beside the luas.

Gumbo

Ballymun is good for DCU, Beaumont hospital etc
Tallaght is good for transport with the Luas.

If either is simply an investment then do the numbers on returns. I feel tallaght might be the better purchase with regards to return on investment.

And I say that a stern Northsider who lives in D11.

John1648

Thank you for the views, much appreciated!

Just to mention that I am a cash buyer, not requiring a mortgage, so am not affected by the interest aspects. Plus, I currently reside abroad (moved after the 2009 recession), so the withholding income tax is only 20%, and no PRSI tax either.

My math would look like this, on the Irish rental income:

1300 EUR monthy rent = 15 600 EUR yearly
Minus allowable expenses= 1000 management fee; 1250 EUR the letting agency fees, insurance 250
Minus local tax 250

Net yearly income= 12, 850. This means no USC (as income lower than 13 000), and no PRSI tax. Gross tax = 2570. Minus tax credit of 1650= 920 EUR income tax.

Net yearly income= 11 930 EUR. Which gives a net yield of 8%.

So the only question is Tallaght Square or Ballymun?

John1648

P.s

Just to mention that I am a cash buyer, not requiring a mortgage, so am not affected by the interest aspects. Plus, I currently reside abroad (moved after the 2009 recession), so the withholding income tax is only 20%, and no PRSI tax either.

My math would look like this, on the Irish rental income:

1300 EUR monthy rent = 15 600 EUR yearly
Minus allowable expenses= 1000 management fee; 1250 EUR the letting agency fees, insurance 250
Minus local tax 250

Net yearly income= 12, 850. This means no USC (as income lower than 13 000), and no PRSI tax. Gross tax = 2570. Minus tax credit of 1650= 920 EUR income tax.

Net yearly income= 11 930 EUR. Which gives a net yield of 8%.

So the only question is Tallaght Square or Ballymun?

Irishphotodesk

John1648 wrote: »

Thank you for the views, much appreciated!

Just to mention that I am a cash buyer, not requiring a mortgage, so am not affected by the interest aspects. Plus, I currently reside abroad (moved after the 2009 recession), so the withholding income tax is only 20%, and no PRSI tax either.

My math would look like this, on the Irish rental income:

1300 EUR monthy rent = 15 600 EUR yearly
Minus allowable expenses= 1000 management fee; 1250 EUR the letting agency fees, insurance 250
Minus local tax 250

Net yearly income= 12, 850. This means no USC (as income lower than 13 000), and no PRSI tax. Gross tax = 2570. Minus tax credit of 1650= 920 EUR income tax.

Net yearly income= 11 930 EUR. Which gives a net yield of 8%.

So the only question is Tallaght Square or Ballymun?

Your numbers seem a bit off.... Management fees could be higher, insurance could be higher, you haven't included fixtures or repairs contingency.

You may not have 100% occupancy, your USC calculations seem to ignore any other income, are you a non resident ?

John1648

Thank you! The figure on management fees is based on a concrete apartment I have in mind.

Yes, I am a non-resident.

CIARAN_BOYLE

Tallaght Square is central tallaght right next to the hospital and shopping centre and luas. Even in a recession those properties will be in demand.

Management fees seem low. Consider whether adequate provision is being made for sinking fund or if a massive levy will be needed in the future.

Peatys

That add went up today and it has 1700 views. Don't expect to get it for 150k

John1648

CIARAN_BOYLE wrote: »

Tallaght Square is central tallaght right next to the hospital and shopping centre and luas. Even in a recession those properties will be in demand.

Management fees seem low. Consider whether adequate provision is being made for sinking fund or if a massive levy will be needed in the future.

Thank you! The figure on management fees is based on a concrete apartment I have in mind.

John1648

Peatys wrote: »

That add went up today and it has 1700 views. Don't expect to get it for 150k

Ok, noted. I have 3 options I am looking at. Market is a bit on the buyers side these weeks. Bidding wars are over, that is what I have seen...

John1648

From Santry to Whitehall there are plans for 1000’s of apartments to be built, some underway, some at planning stage. The market may get saturated but Santry better address than Ballymun for renting if market does flood.

A friend showed me a link (think it was Social Democrats) highlighting all apartments in planning on going in area, it was pretty grim.

Could the rents go down in Ballymun?

Xterminator

Ballymun isn’t good for DCU, Beaumont hospital etc

Im sorry but i have to question your logic here.

Ballymun is 2-4 bus stops from DCU and has 3 buses on that route with good frequency, & within walking distance for able bodied person! how is that not good for DCU?

As for beaumont hospital it has a direct bus route to beaumont - with 20 minute frequency - although the route is congested at busy times.

If you mean Ballymun has a reputation, then that is correct - it does. but geographically it is better situation than tallaght for access to city center, with bus lanes and frequent service. anecdotally in the current market OP would have no problem find tenants in d9. Demand outstips availability of rental properties.

If op ever decided on short term letting in the future, it would be far better situated to attract travellers from abroad too. 15 minute from airport and 20 mins from city centre.

John1648

Xterminator wrote: »

Im sorry but i have to question your logic here.

Ballymun is 2-4 bus stops from DCU and has 3 buses on that route with good frequency, & within walking distance for able bodied person! how is that not good for DCU?

As for beaumont hospital it has a direct bus route to beaumont - with 20 minute frequency - although the route is congested at busy times.

If you mean Ballymun has a reputation, then that is correct - it does. but geographically it is better situation than tallaght for access to city center, with bus lanes and frequent service. anecdotally in the current market OP would have no problem find tenants in d9. Demand outstips availability of rental properties.

If op ever decided on short term letting in the future, it would be far better situated to attract travellers from abroad too. 15 minute from airport and 20 mins from city centre.

Very useful, thank you!

I am inclined to long term rental, through a letting agency, and just forget about it. Given that I mostly reside abroad, that would be a better option for me. Even if less profitable.

So far Tallaght LUAS area wins, over Ballymun...

John1648

John1648 wrote: »

Very useful, thank you!

I am inclined to long term rental, through a letting agency, and just forget about it. Given that I mostly reside abroad, that would be a better option for me. Even if less profitable.

So far Tallaght LUAS area wins, over Ballymun...

P.s. LUAS connects with centre pretty well, each 5 - 7 mins, and in 35 mins you are next to the Spire.

The apt is 3 mins walk to LUAS.

CIARAN_BOYLE

John1648 wrote: »

Thank you! The figure on management fees is based on a concrete apartment I have in mind.

Yes.

I know. Tha6s why I asked you to check if the management fees are properly cov and ring the sinking fund.

Basically management fees are supposed to create a surplus which will be used as a sinking fund to replace long term assets (lifts gates etc). If the management fees are low I worry about whether they are saving for the long term stuff.

A day may come when a lift breaks and theres no sinking fund and every owner has to pay a levy.

John1648

Irishphotodesk wrote: »

Your numbers seem a bit off.... Management fees could be higher, insurance could be higher, you haven't included fixtures or repairs contingency.

You may not have 100% occupancy, your USC calculations seem to ignore any other income, are you a non resident ?

P.s. The apartments are well furnished, in good shape, requiring little to no investment in fixtures.

Gumbo

Xterminator wrote: »

Im sorry but i have to question your logic here.

Ballymun is 2-4 bus stops from DCU and has 3 buses on that route with good frequency, & within walking distance for able bodied person! how is that not good for DCU?

As for beaumont hospital it has a direct bus route to beaumont - with 20 minute frequency - although the route is congested at busy times.

If you mean Ballymun has a reputation, then that is correct - it does. but geographically it is better situation than tallaght for access to city center, with bus lanes and frequent service. anecdotally in the current market OP would have no problem find tenants in d9. Demand outstips availability of rental properties.

If op ever decided on short term letting in the future, it would be far better situated to attract travellers from abroad too. 15 minute from airport and 20 mins from city centre.

It should state is good.
I was on my phone and didn't cop the autocorrect.
Also apparent is the lucas typo instead of Luas.

JustMe,K

Tallaght has 2 luas stops on the doorstep, the IT for student tenants, the hospital for medical tenants, access to St James's hospital (via the Luas) for more medical tenants, and also relatively easy access to the new childrens hospital for more medical tenants. As well as the hotel near Aldi reopening.

Just like any other development though, as has been said above about management fees, I would be doing my homework on that.

listermint

JustMe,K wrote: »

Tallaght has 2 luas stops on the doorstep, the IT for student tenants, the hospital for medical tenants, access to St James's hospital (via the Luas) for more medical tenants, and also relatively easy access to the new childrens hospital for more medical tenants. As well as the hotel near Aldi reopening.

Just like any other development though, as has been said above about management fees, I would be doing my homework on that.

Erm. You forgot tallaght has a hospital... ........

JustMe,K

listermint wrote: »

Erm. You forgot tallaght has a hospital... ........

No, I didnt?

Gumbo

JustMe,K wrote: »

Tallaght has 2 luas stops on the doorstep, the IT for student tenants, the hospital for medical tenants, access to St James's hospital (via the Luas) for more medical tenants, and also relatively easy access to the new childrens hospital for more medical tenants. As well as the hotel near Aldi reopening.

Just like any other development though, as has been said above about management fees, I would be doing my homework on that.

listermint wrote: »

Erm. You forgot tallaght has a hospital... ........

Ehh…… :pac:

listermint

JustMe,K wrote: »

No, I didnt?

My bad. Just saw James hospital highlighted.

Apologies

JustMe,K

listermint wrote: »

My bad. Just saw James hospital highlighted.

Apologies

:D

Its still early

John1648

JustMe,K wrote: »

Tallaght has 2 luas stops on the doorstep, the IT for student tenants, the hospital for medical tenants, access to St James's hospital (via the Luas) for more medical tenants, and also relatively easy access to the new childrens hospital for more medical tenants. As well as the hotel near Aldi reopening.

Just like any other development though, as has been said above about management fees, I would be doing my homework on that.

Well noted, very useful!

Yes, will keep a close eye on the aspects related to management fees.

John1648

CIARAN_BOYLE wrote: »

Yes.

I know. Tha6s why I asked you to check if the management fees are properly cov and ring the sinking fund.

Basically management fees are supposed to create a surplus which will be used as a sinking fund to replace long term assets (lifts gates etc). If the management fees are low I worry about whether they are saving for the long term stuff.

A day may come when a lift breaks and theres no sinking fund and every owner has to pay a levy.

Noted. The fees are not too low, pretty typical. Plus the lift is very new, it was changed recently, top of the line, like for a hotel.

Ush1

John1648 wrote: »

P.s. LUAS connects with centre pretty well, each 5 - 7 mins, and in 35 mins you are next to the Spire.

The apt is 3 mins walk to LUAS.

It's longer than 35 mins. Closer to 50 I would say.

John1648

Ush1 wrote: »

It's longer than 35 mins. Closer to 50 I would say.

Depends on the time of the day, agree. In my last week experience, the more typical was 40 mins. 35 over week-end.

But pretty confortable ride, direct line, being first stop you get seats etc...

John1648

P.s. friends tell me to wait 6 to 9 months, and the same could be purchased for 135, due to Brexit effects, instilling of recession, and the possible horrible news of EU adopting the single corporate tax code, which would drive away many multinationals from IE. If this last thing happens, it would be very bad news, possibly determining me to give up any idea of buying a place in Ireland ...

John1648

P.s. friends tell me to wait 6 to 9 months, and the same could be purchased for 135, due to Brexit effects, instilling of recession, and the possible horrible news of EU adopting the single corporate tax code, which would drive away many multinationals from IE. If this last thing happens, it would be very bad news, possibly determining me to give up any idea of buying a place in Ireland ...

Graham

Mod Note

John1648 please don't make the same post in multiple threads. It may be construed as spamming.

As you already have exactly the same thread running in the Investments & Market forum I'm going to close this one.

Best of luck wherever you decide to invest.

Gumbo

John1648 wrote: »

Noted. The fees are not too low, pretty typical. Plus the lift is very new, it was changed recently, top of the line, like for a hotel.

Typical Management Fees for blocks with lifts are around 2000e per year.