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!

Darc19

Tallaght (square) is far more developed and plenty of work locally esp in the hospital.

Ballymun however has the airport, so plenty of demand in both areas.

I think Tallaght slightly shades it as there's plenty of stuff on the doorstep.

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?

Millionaire only not

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?

Only question is the headache, go invest ur money somewhere else and have a life!
Why would u draw that grieve on urself for ?

Del2005

Was either property rented before and what was the rent?

HcksawJimDuggan

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?

Two points to note on your tax calculation:
- LPT is not allowed as a tax deductible expense
- Non residents receive nil tax credits

John1648

Millionaire only not wrote: »

Only question is the headache, go invest ur money somewhere else and have a life!
Why would u draw that grieve on urself for ?

I get the point about the headache...

Alas, I need to work on the basis of options at hand. 8% yield, only achievable in Dublin...

In a Paris suburb where I live now, I would get approx. 3 % - and do you know the French tax and bureaucratic system, as well as the crazy tenants protection laws?


If I knew a place better that Dublin, I would choose to buy there...

Sitting on 150 k EUR and doing nothing with it at all, also calls for some thinking on options...

John1648

Del2005 wrote: »

Was either property rented before and what was the rent?

Yes, they were rented. One for 1200, the others for 1085 and 1100. All are now up to a 4% increase

John1648

HcksawJimDuggan wrote: »

Two points to note on your tax calculation:
- LPT is not allowed as a tax deductible expense
- Non residents receive nil tax credits

Yes, agree on LPT, did not deduct it.

4 different tax advisers confirmed to me that Irish and other EU nationals are entitled to tax credit on their Irish sourced income. Pro rata of course to their non-Irish income, but this is fine, it is taken into account.

Plus revenue.ie says the same on tax credit for non residents, on their website and in their Guide 45.01.01.

I had doubts on this, but all say the same - tax credit is available.

pc7

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.

John1648

pc7 wrote: »

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.

Ok, thank you!

Are these 1000 / thousands built for renting out, buy-to-let, or just normal sales? I mean, they will not necessarily impact the rental market towards decreasing the prices.

pc7

John1648 wrote: »

Ok, thank you!

Are these 1000 / thousands built for renting out, buy-to-let, or just normal sales? I mean, they will not necessarily impact the rental market towards decreasing the prices.

Well that's for you to do your homework, a friend showed me a link (think it was Social Democrats) highlighting all apartments in planning on going in area, it was pretty grim.

pc7

They sent this on, this is the current in progress/planning for apartments in the area.

John1648

pc7 wrote: »

Well that's for you to do your homework, a friend showed me a link (think it was Social Democrats) highlighting all apartments in planning on going in area, it was pretty grim.

Thank you!

This would speak then against Ballymun ...

hognef

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?

I'm not familiar with the tax laws in your current country (France?), but do you know for sure there's no tax implications there?

John1648

hognef wrote: »

I'm not familiar with the tax laws in your current country (France?), but do you know for sure there's no tax implications there?

I checked that too. There is a bilateral tax agreement between the two countries. The Irish income is taxed in Ireland, and is largely exempt. I will not pay double tax on it, in France

Can you buy an apartment in tallaght 3 minutes to the square for 150k?

listermint

[Deleted User] wrote: »

Can you buy an apartment in tallaght 3 minutes to the square for 150k?

Probably not in reality.

John1648

[Deleted User] wrote: »

Can you buy an apartment in tallaght 3 minutes to the square for 150k?

Overall, for a couple of months now, this is a buyer's market. There are even lower prices, I have seen. Brexit uncertainty rightly so is having an impact on prices, and speed of selling. 2018 is over ...

John1648

listermint wrote: »

Probably not in reality.

That would imply that was a scam add. I have in fact visited the place, personally... nobody else showed up for the public viewing...

As I said, the market is changing. Boris is having an impact ...

listermint

John1648 wrote: »

Overall, for a couple of months now, this is a buyer's market. There are even lower prices, I have seen. Brexit uncertainty rightly so is having an impact on prices, and speed of selling. 2018 is over ...

I'd put money down you won't get an apartment for 150k. Put money.

180 k bottom perhaps.

listermint

John1648 wrote: »

That would imply that was a scam add. I have in fact visited the place, personally... nobody else showed up for the public viewing...

As I said, the market is changing. Boris is having an impact ...

I know what the market is like and Boris has nothing to do with it.

The central bank rules are doing their work


And there are plenty of investors who don't visit the places. You won't pay 150 so don't base your figures off that. Be prepped for more and don't let it shock you

John1648

listermint wrote: »

I'd put money down you won't get an apartment for 150k. Put money.

180 k bottom perhaps.

On one of the three apts the agent finally got an offer for 140, it was advertised for 150.

I am thinking of buying it for 143. The seller is ready to take it out of the market, if no other offers come in ....

But it is in Ballymun....

listermint

John1648 wrote: »

On one of the three apts the agent finally got an offer for 140, it was advertised for 150.

I am thinking of buying it for 143. The seller is ready to take it out of the market, if no other offers come in ....

But it is in Ballymun....

I'm basing my assessment on the tallaght ones. Not ballymun. I'd imagine that price is achievable there. Various reasons.

John1648

John1648 wrote: »

On one of the three apts the agent finally got an offer for 140, it was advertised for 150.

I am thinking of buying it for 143. The seller is ready to take it out of the market, if no other offers come in ....

But it is in Ballymun....

I asked about tallaght near the luas, not Ballymun where there is nothing transport wise.

John1648

listermint wrote: »

I know what the market is like and Boris has nothing to do with it.

The central bank rules are doing their work


And there are plenty of investors who don't visit the places. You won't pay 150 so don't base your figures off that. Be prepped for more and don't let it shock you

Thank you for these considerations!

Noted.

If the price goes above 155, no way I would buy, and not for the lack of funds. I could go up to 200k, this is not the point.

180 would mean my yield would just be too low, why looking at Dublin then? I would find other use for the funds. There has to be a balance.

John1648

[Deleted User] wrote: »

I asked about tallaght near the luas, not Ballymun where there is nothing transport wise.

Sure, right. I meant that only one of the 3 apts got any offer at all, and it was the one in Ballymun.

SteM

OP, the other posters are offering a fair assesment. I'd be shocked if the 1 bed in Tallaght Cross sold for €150k. A modern property, right beside the luas to town, college, hospital and shopping centre. It's being advertised at that price raise interest.

Del2005

There's a huge amount of apartments being built, and even more with planning or going for planning, in Citywest. It's not that far from Tallaght and has good transport options to Tallaght and Dublin.


There could be a reason why nobody is interested in a boom era apartment.

John1648

Del2005 wrote: »

There's a huge amount of apartments being built, and even more with planning or going for planning, in Citywest. It's not that far from Tallaght and has good transport options to Tallaght and Dublin.


There could be a reason why nobody is interested in a boom era apartment.

Perhaps, yes. Good point.

John1648

SteM wrote: »

OP, the other posters are offering a fair assesment. I'd be shocked if the 1 bed in Tallaght Cross sold for €150k. A modern property, right beside the luas to town, college, hospital and shopping centre. It's being advertised at that price raise interest.

Well, nobody else showed for the viewing ...

On the other pages of the boards, the public is on the contrary, shocked that a 1 bedroom in Tallaght would cost 150 000 (as in - overpriced). These blocks were sitting empty in recession, a ghost quarter ... in 2013 they sold for 50 000 with a good deal of luck.

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 ...

listermint

John1648 wrote: »

Well, nobody else showed for the viewing ...

On the other pages of the boards, the public is on the contrary, shocked that a 1 bedroom in Tallaght would cost 150 000 (as in - overpriced). These blocks were sitting empty in recession, a ghost quarter ... in 2013 they sold for 50 000 with a good deal of luck.

They have full occupancy. And most investors don't show or visit for viewings. So don't base the asking on a visit. They were bought as an entire job from nama lot which is why the price was low. There was no individual sales done with Nama perhaps if there was Nama would have got a higher yield. When I say perhaps I mean definitely

listermint

John1648 wrote: »

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 ...

Your friends have it got a notion of the property market in Ireland clearly. Absolute codswallop

Del2005

Del2005 wrote: »

There's a huge amount of apartments being built, and even more with planning or going for planning, in Citywest. It's not that far from Tallaght and has good transport options to Tallaght and Dublin.


There could be a reason why nobody is interested in a boom era apartment.

Very good point. I would rent neither in ballymun nor tallaght. My rent is 1500 next to the luas in a clean quiet estate nowhere near either areas.

I still find the price of 150k for either area difficult to believe.

John1648

listermint wrote: »

Your friends have it got a notion of the property market in Ireland clearly. Absolute codswallop

Possibly, that is why I put up the matter to the boards chat.

Myself am not sure about the real implications of Brexit on the property market in Ireland...

Plus - about the kind of overdue low of the economic cycle, or recession ... perhaps the property market only needs to grow upwards, and to never repeat the 2010 downturn ...

Some say the 2008 crisis was exceptional, and will never repeat again

BarryD2

John1648 wrote: »

Alas, I need to work on the basis of options at hand. 8% yield, only achievable in Dublin...

In a Paris suburb where I live now, I would get approx. 3 % - and do you know the French tax and bureaucratic system, as well as the crazy tenants protection laws?


If I knew a place better that Dublin, I would choose to buy there...

So basically you'd prefer to potentially screw your fellow Irish citizens because our tenancy protection laws aren't up to the standards of the continent?

Which says a fair deal about the buy to let/ rental part of the Irish property market and why Irish people are fixated on purchasing their own homes to get away from it!!

John1648

[Deleted User] wrote: »

Very good point. I would rent neither in ballymun nor tallaght. My rent is 1500 next to the luas in a clean quiet estate nowhere near either areas.

I still find the price of 150k for either area difficult to believe.

Yes, that is what I hear too, 150k too much.

Others say here that no way I could buy for 150, only 180.

On the clean and quiet, what I have seen in Ballymun and Tallaght, were clean and quiet too. Not to say that these whole regions are like this, of course ...

John1648

John1648 wrote: »

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 ...

I started a job 9 years ago and we got sent to Munich for the weekend for induction. One of the new hires was the new CFO, a cork man who gave a small speech about where the company was and where we were heading. He talked about the impending alignment of corporate tax rates in Europe and were that to happen the company would probably pull its financial headquarters from Ireland. Despite the global recession that year the company still hit a billion in revenue.

That was 9 years ago. Don't expect alignment of corporate tax in the EU any time soon and certainly don't count it among your numbers.

Boris and Brexit, the sterling went way up on the night of the election results but fell back into the doldrums yesterday. It won't be great for us but will be way worse for them. Maybe save the money for a flat in SoHo. That could be 150k three years from now.

randomrb

One thing to bear in mind and particularly if you are looking at the lower end of the market is the risk of the tenant not being able to pay rent and refusing to leave. It can take quite a long time to get stubborn tenants out the way the law is at the moment.

This is less an issue if you don't have a mortgage but the general point is that the figure you have for rent is not guaranteed year on year. The standard that rental accomodation needs to be kept at is also high so you have additional costs there. Its never as simple as it looks on paper

John1648

BarryD2 wrote: »

So basically you'd prefer to potentially screw your fellow Irish citizens because our tenancy protection laws aren't up to the standards of the continent?

Which says a fair deal about the buy to let/ rental part of the Irish property market and why Irish people are fixated on purchasing their own homes to get away from it!!

I hear you loud and clear ... no intention of screwing, really, I was in these shoes myself many years ago.

I am just buying from another landlord, not adding more suffering or pain ... and as long as certain fellow countrymen cannot buy (which is provisional in many people's lives), why not offering them a place to live in. If the renting option would not be there, what would people do ...

John1648

[Deleted User] wrote: »

I started a job 9 years ago and we got sent to Munich for the weekend for induction. One of the new hires was the new CFO, a cork man who gave a small speech about where the company was and where we were heading. He talked about the impending alignment of corporate tax rates in Europe and were that to happen the company would probably pull its financial headquarters from Ireland. Despite the global recession that year the company still hit a billion in revenue.

That was 9 years ago. Don't expect alignment of corporate tax in the EU any time soon and certainly don't count it among your numbers.

Boris and Brexit, the sterling went way up on the night of the election results but fell back into the doldrums yesterday. It won't be great for us but will be way worse for them. Maybe save the money for a flat in SoHo. That could be 150k three years from now.

Haha Soho idea great point:)

Why not.

I am tired of saving, want to get a stream of passive income sooner than 3 years

TheBoyConor

John1648 wrote: »

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

So the only question is Tallaght Square or Ballymun?

You are assuming the tenant pays and doesn't break stuff or wreck the place.

Are you including for property tax, insurances, maintenance and repair?
That 8% will start looking more like a minus figure fairly quickly.

John1648

randomrb wrote: »

One thing to bear in mind and particularly if you are looking at the lower end of the market is the risk of the tenant not being able to pay rent and refusing to leave. It can take quite a long time to get stubborn tenants out the way the law is at the moment.

This is less an issue if you don't have a mortgage but the general point is that the figure you have for rent is not guaranteed year on year. The standard that rental accomodation needs to be kept at is also high so you have additional costs there. Its never as simple as it looks on paper

Indeed, no mortgage in my case.

The point on the quality standards is noted, and makes good sense

John1648

TheBoyConor wrote: »

You are assuming the tenant pays and doesn't break stuff or wreck the place.

Are you including for property tax, insurances, maintenance and repair?
That 8% will start looking more like a minus figure fairly quickly.

Property tax is 250 and insurance 300, factored that in, as well as the management fees. Majour repair due to accidents will be insured for.

Then, choosing the right tenant can help. In other cities in Europe one would start at 3- 4% yield, then you start discounting the costs you mentioned... an alternative would be not to invest at all ... yet many do it...

NuttyMcNutty

There is a big development currently going on in Ballymun, might be student apartment's I think. Anyway nothing wrong with Ballymun, good bus routes to city center, near airport, and wouldn't be surprised if we ever get a metro it will be going through there.

beauf

John1648 wrote: »

H....want to get a stream of passive income sooner than 3 years

I think the value of a passive income is under appreciated.
Especially a modest one.

The value to all these one property landlords, in terms of security in retirement, or perhaps retiring early, will be missed one the population ages and we've stripped the value out of pension, and we have less tax payers in the system.

John1648

John1648 wrote: »

Haha Soho idea great point:)

Why not.

I am tired of saving, want to get a stream of passive income sooner than 3 years

Well if I had 150k to spare I can think of better investments than an apartment in Tallaght.

randomrb

Deleted User wrote: »

Well if I had 150k to spare I can think of better investments than an apartment in Tallaght.

such as?

randomrb

randomrb wrote: »

such as?

Whiskey
Wine
Shares
Peer to Peer lending.

HcksawJimDuggan

John1648 wrote: »

Yes, agree on LPT, did not deduct it.

4 different tax advisers confirmed to me that Irish and other EU nationals are entitled to tax credit on their Irish sourced income. Pro rata of course to their non-Irish income, but this is fine, it is taken into account.

Plus revenue.ie says the same on tax credit for non residents, on their website and in their Guide 45.01.01.

I had doubts on this, but all say the same - tax credit is available.

Apologies, I had taken the local tax of €250 mentioned in your OP to be LPT.

I was incorrect to state tax credits would be Nil on the assumption you are based outside the EU. You are correct that there is a pro rata tax credit available to other EU nationals but assuming (possibly incorrectly) that you are on a decent salary since you have stated you left as a result of the recession, the tax credit would be reduced greatly. If your employment income was €100k in country in which you are employed, your Irish tax credit available would be €188 as opposed to €1,650 included in your calculation in OP.