Roughly how much would be earned from a monthly rent of €2,200 ?

St1mpMeister

As per the title, assuming my property could be rented for €2,200 roughly what is average take home after all taxes/costs have been accounted for?

Assume for the sake of argument that I have good tenants that pay on time and the only costs would be typical wear and tear.

L1011

Is the property mortgaged or held outright?

Thierry12

L1011 wrote: »

Is the property mortgaged or held outright?

Interesting question

If someone is doing a calculation, could mine be done too :pac: ?

1200 rent pm ( no mortgage, house owned outright )

Combined married couple salary of €60,000 per year

St1mpMeister

L1011 wrote: »

Is the property mortgaged or held outright?

Not sure why that would matter, does it affect the tax level or something similar?

For reference I would be on the higher tax rate.

Pkiernan

St1mpMeister wrote: »

As per the title, assuming my property could be rented for €2,200 roughly what is average take home after all taxes/costs have been accounted for?

Assume for the sake of argument that I have good tenants that pay on time and the only costs would be typical wear and tear.

If you're already paying the marginal rate, then assume 53% tax on the income.

You can deduct mortgage interest if any, repairs, insurance and management company fees if applicable.

thomas 123

St1mpMeister wrote: »

Not sure why that would matter, does it affect the tax level or something similar?

You would need to subtract the mortgage cost off the rent price.

Owned = more profit.

St1mpMeister

thomas 123 wrote: »

You would need to subtract the mortgage cost off the rent price.

Owned = more profit.

No I wasn't talking about profit.. I was just talking about net income from the property alone, not factoring in my own private expenditure.

Thierry12

St1mpMeister wrote: »

Not sure why that would matter, does it affect the tax level or something similar?

You can deduct the interest on mortgages used to purchase, improve or repair rented residential property when working out your rental income for tax purposes.

St1mpMeister

ok so as a VERY ROUGH approximation.

€2,200 rent would get €1,034 after tax assuming no mortgage or repairs.


I'm currently looking at getting a 2nd property that would have roughly €500/month mortgage, so it's good to know I'll be able to pay it off using the rent from the first place.

Lizardlegz

Does that rate of tax change if you rent your property while your out of the country and have an overseas bank account?

redarmyblues

Lizardlegz wrote: »

Does that rate of tax change if you rent your property while your out of the country and have an overseas bank account?

That depends where you are tax resident.

OP this is not a good time to get into the private rental market.

circular flexing

Lizardlegz wrote: »

Does that rate of tax change if you rent your property while your out of the country and have an overseas bank account?

Yes, you generally don't get the full tax credit, you can get a small tax credit based on the percentage of income earned from the rent vs. your total worldwide income. If you are resident of a country that has a tax treaty with Ireland then you can offset the tax paid in Ireland against the tax paid in the country where you are resident.

Grumpypants

Put aside about 2k for insurance, costs and upkeep etc. Some years it will be less, other years a boiler might go and it will be more. So average about 2k.

Then add up all the rest and half it for tax, and you are in the ball park of 12k.

It's not the most accurate but a good finger in the wind estimate.

triggermortis

If the property is mortgaged then you'll need to notify the mortgage lender as your tax allowance on the mortgage will change if it is no longer your main residence. We recently sold our house and got hit with an unexpected bill as we didn't do this at the time of renting it out. We were out of the country for part of the rental time and so the income wasn't as badly taxed as when we came home, but the tax bill for what I mentioned earlier was unwelcome news.
Glad to be out of the rental market now though.

Samuel T. Cogley

triggermortis wrote: »

If the property is mortgaged then you'll need to notify the mortgage lender as your tax allowance on the mortgage will change if it is no longer your main residence. We recently sold our house and got hit with an unexpected bill as we didn't do this at the time of renting it out. We were out of the country for part of the rental time and so the income wasn't as badly taxed as when we came home, but the tax bill for what I mentioned earlier was unwelcome news.
Glad to be out of the rental market now though.

Not only will your tax allowance change if in receipt of TRS, but in most cases you'd have to convert to a Buy to Let mortgage with the attached exorbitant interest rate.

Sheep Shagger

Samuel T. Cogley wrote: »

Not only will your tax allowance change if in receipt of TRS, but in most cases you'd have to convert to a Buy to Let mortgage with the attached exorbitant interest rate.

Not always, depends on if its stipulated as owner occupier in the fine print - we are on a tracker and the bank advised no change when we started renting the place out.

IF you do have to change to a higher interest rate, that's more to write off as an expense.

Samuel T. Cogley

Sheep Shagger wrote: »

Not always, depends on if its stipulated as owner occupier in the fine print - we are on a tracker and the bank advised no change when we started renting the place out.

Hence the use of 'in most cases'. :pac:

Sheep Shagger

thomas 123 wrote: »

You would need to subtract the mortgage cost off the rent price.

Owned = more profit.

You can write off the interesf cost (not the full mortgage amount you pay the bank each month). The bank provides you a breakdown of principal and interest paid each calendar year.

St1mpMeister

redarmyblues wrote: »

OP this is not a good time to get into the private rental market.

Why is that?

As I mentioned I'd be satisfied ending up with circa €500 per month for the €2,200 rent after factoring the other costs.

accensi0n

St1mpMeister wrote: »

Why is that?

As I mentioned I'd be satisfied ending up with circa €500 per month for the €2,200 rent after factoring the other costs.

you might end up getting €0 per month.

0gac3yjefb5sv7

Has anyone on boards.ie ever said it's a good time to get into the rental market? Go for it if it works for you OP. You would think owning a second property is worse than hell according to most on here.

Cuddlesworth

St1mpMeister wrote: »

Why is that?

As I mentioned I'd be satisfied ending up with circa €500 per month for the €2,200 rent after factoring the other costs.

Because there is risk in the investment and time invested managing the tenant or property.

Your assuming 100% occupancy rates.
Your assuming your time investment will be minimal or hands off.
You could get stung for very high repair costs in the property itself, naturally.
You could get the atypical bad tenant, loose 1 to 2 years of rent and be faced with significant repair bills.
Market forces could devalue the property.

Cuddlesworth

MattS1 wrote: »

Has anyone on boards.ie ever said it's a good time to get into the rental market?

I don't think so. But this board gets to see the bad side of the market clearer then most.

But we are currently in a situation where the established industry is leaving in droves. For new investors, it would be worth their while considering why that is currently happening before investing significant sums of their money.

Simply put, if its such a good investment, why are investors leaving in droves?

0gac3yjefb5sv7

Cuddlesworth wrote: »

I don't think so. But this board gets to see the bad side of the market clearer then most.

But we are currently in a situation where the established industry is leaving in droves. For new investors, it would be worth their while considering why that is currently happening before investing significant sums of their money.

Simply put, if its such a good investment, why are investors leaving in droves?

Was there ever a time when they had entered it? Not according to people on here. There is bad tenants but its completely overblown here. There can be good tenants as well that stay for 5-10 years with very little issues. It may be better investing money elsewhere of course, like any investment but no guarantee in that either (unless a savings account with very low interest rates).

St1mpMeister

Cuddlesworth wrote: »

Because there is risk in the investment and time invested managing the tenant or property.

Your assuming 100% occupancy rates.
Your assuming your time investment will be minimal or hands off.
You could get stung for very high repair costs in the property itself, naturally.
You could get the atypical bad tenant, loose 1 to 2 years of rent and be faced with significant repair bills.
Market forces could devalue the property.

Would outsourcing this to an agency to manage offset some of these issues?

I'd probably want to meet the tenants to vet them before they moved in, but after that I could give it to an agency to manage.

The property is in a high demand area so I suspect no issues getting it rented.


Also just to be clear, the €500 per month is something I could pay myself without relying on the rent, so downtime between tenants is fine or having some periods where I end up with nothing due to repairs etc, but it's just a nice additional income for the times when it does work out.

Bandana boy

using my own rental as a budget template

Expenses ~1000 a year
this is replacing white goods every 4 or so years painting and carpets every 3 years and repairs.
If your renting fully furnished you could increase this to ~1500
Dead time between tenants subtract 1 months rent per year
if your using a letting company to manage the property subtract 1 more month each year
Gardening costs ?

Insurance ~600 a year
Accountant for tax return ~200 a year
property tax ~300

So Income for tax purposes 2200*11 = 24,200
Expenses ~4300
=19900
tax bill -10,547

Income 9353 after tax

if you have a mortgage you can subtract the cost of interest as an expense but not the mortgage payment
So with a mortgage payment of 6,000 a year you would earn a little over 3k a year while also gradually buying an appreciating asset

St1mpMeister

Grand thanks, the expenses would be higher than I'd estimate for my place though since it's a largely low-maintenance place.

py

Just a note on the interest from your mortgage, it can only be deducted if the tenancy is registered with RTB.

Good information here.

Thierry12

MattS1 wrote: »

Has anyone on boards.ie ever said it's a good time to get into the rental market? Go for it if it works for you OP. You would think owning a second property is worse than hell according to most on here.

Never a good time to buy a house, car, graphics card, you name it :pac:

Most risk aversed place around

Samuel T. Cogley

MattS1 wrote: »

Has anyone on boards.ie ever said it's a good time to get into the rental market? Go for it if it works for you OP. You would think owning a second property is worse than hell according to most on here.

There have been brilliant times to get into the market and there will be again. Cash buyer at the depths of a recession especially if there is a break on CAT is one of them.

In a property bubble when evictions have been banned is not a good time to become a LL. The legislative backdrop has been getting worse for years hence why people advise prudence.

While worse than hell might be an exaggeration, it's a constant worry - even with good tenants and very stressful if you get someone who doesn't pay the rent and is probably trashing the place. Delinquent tenants exist in all segments of the market.

I'm open to correction on the legal costs but a full blown eviction taking 18 months is what €10K? Damage can be anyone's guess. Zero chance of recovery from the tenant. Fine if you've the cash flow and contingency fund but many people go into this with neither.

Samuel T. Cogley

Thierry12 wrote: »

Never a good time to buy a house, car, graphics card, you name it :pac:

Most risk aversed place around

With two potentially revolutionary new architectures being launched in a matter of weeks you'd be wise to hold off getting a new GPU. I would have thought now would have been an ideal time to buy a car.

circular flexing

St1mpMeister wrote: »

Would outsourcing this to an agency to manage offset some of these issues?

I'd probably want to meet the tenants to vet them before they moved in, but after that I could give it to an agency to manage.

The property is in a high demand area so I suspect no issues getting it rented.


Also just to be clear, the €500 per month is something I could pay myself without relying on the rent, so downtime between tenants is fine or having some periods where I end up with nothing due to repairs etc, but it's just a nice additional income for the times when it does work out.

Using an agency will just eat into your profit and won't really guarantee perfect tenants. Typical agencies will charge 8% of rent (or one month rent) and you would still have to pay for the repairs.



IMO if you have some money to invest long term then just invest in some mutual funds or ETFs. They come with less risk and are more liquid than a house.

ExMachina1000

Pkiernan wrote: »

If you're already paying the marginal rate, then assume 53% tax on the income.

You can deduct mortgage interest if any, repairs, insurance and management company fees if applicable.

Highway robbery as they say. Nordic level taxation in return for 3rd world level public services

0gac3yjefb5sv7

Samuel T. Cogley wrote: »

There have been brilliant times to get into the market and there will be again. Cash buyer at the depths of a recession especially if there is a break on CAT is one of them.

In a property bubble when evictions have been banned is not a good time to become a LL. The legislative backdrop has been getting worse for years hence why people advise prudence.

While worse than hell might be an exaggeration, it's a constant worry - even with good tenants and very stressful if you get someone who doesn't pay the rent and is probably trashing the place. Delinquent tenants exist in all segments of the market.

I'm open to correction on the legal costs but a full blown eviction taking 18 months is what €10K? Damage can be anyone's guess. Zero chance of recovery from the tenant. Fine if you've the cash flow and contingency fund but many people go into this with neither.

When property prices were low, so was rent. What about people who get good tenants too that have respect for the place and stay for years?

Samuel T. Cogley

MattS1 wrote: »

When property prices were low, so was rent. What about people who get good tenants too that have respect for the place and stay for years?

But you knew you were going to see capital appreciation.

I'd say the vast majority of tenancies are hassle free good tenants but it's always at the back of your mind and a risk. Unless you're getting into the game for other reasons one would assume you're looking for the best possible return on investment. Once risk is factored in - is property in the current climate the best investment? I can't answer that, but I would firstly be asking the question and secondly not relying on boards to find the answer.

Don't get me wrong Boards isn't a bad starting place but proper financial advice is a must.

St1mpMeister

circular flexing wrote: »

Using an agency will just eat into your profit and won't really guarantee perfect tenants. Typical agencies will charge 8% of rent (or one month rent) and you would still have to pay for the repairs.

IMO if you have some money to invest long term then just invest in some mutual funds or ETFs. They come with less risk and are more liquid than a house.

What's to say I don't?

The 2nd property for €500 pm isn't an investment, it would be a home. It's cheap because it's well out in the schticks. The 1st property is an investment.

I'm only estimating 2,200 per month.. I think in fact that my neighbours are paying 2,800.

If I get €500 out of that per month I'll be satisfied. I'm not in it for the money, it's just to ensure it's not left empty.

It needs to be rented rather than left empty. It's definitely not going to be sold as it's appreciating year on year.

Sheep Shagger

circular flexing wrote: »

Using an agency will just eat into your profit and won't really guarantee perfect tenants. Typical agencies will charge 8% of rent (or one month rent) and you would still have to pay for the repairs.

Agency fees are a fully deductible expense.

circular flexing

St1mpMeister wrote: »

What's to say I don't?

The 2nd property for €500 pm isn't an investment, it would be a home. It's cheap because it's well out in the schticks. The 1st property is an investment.

I'm only estimating 2,200 per month.. I think in fact that my neighbours are paying 2,800.

If I get €500 out of that per month I'll be satisfied. I'm not in it for the money, it's just to ensure it's not left empty.

It needs to be rented rather than left empty. It's definitely not going to be sold as it's appreciating year on year.

So you want to rent out home A and use the rent to pay the mortgage on home B?



Having being a landlord I tend to look at the downside a bit more. Sure you can make an easy 500 a month but the potential downside is ending up with bad tenants who don't pay rent and who cause damage to the house and you can't really predict who the good/bad tenants will be. So even though the asset is appreciating in value, it could still cost a lot in cashflow. If the damage is bad enough the asset might be worth 0 as no one will buy it. As a single property landlord, the odds are stacked against you these days imo.

Sheep Shagger

circular flexing wrote: »

So you want to rent out home A and use the rent to pay the mortgage on home B?



Having being a landlord I tend to look at the downside a bit more. Sure you can make an easy 500 a month but the potential downside is ending up with bad tenants who don't pay rent and who cause damage to the house and you can't really predict who the good/bad tenants will be. So even though the asset is appreciating in value, it could still cost a lot in cashflow. If the damage is bad enough the asset might be worth 0 as no one will buy it. As a single property landlord, the odds are stacked against you these days imo.

Would agree with this.

As an accidental landlord there is no way i'd choose to go into the rental sector. There are other options you should explore.

If you still feel it is for you then go ahead but it certainly isn't stressfree or 'easy money'. I suspect there are a load of landlords not declaring rental income as they think they are not making a profit- Revenues definition of profit is different to most.

Tenants also have a disproportionate level of rights, these might be warranted against a professional landlord of which some are unscrupulous, but not a one property landlord being taxed as additional income over PAYE who are just trying to cover their costs given the situation they are in.

Cuddlesworth

St1mpMeister wrote: »

Would outsourcing this to an agency to manage offset some of these issues?

Personally, I would never go with a management agency. The reason is pretty simple, when the **** hits the fan its your problem not theirs. Their contract will simply state, securing a tenant and managing the maintenance of the property. None of that includes eviction, recovery of funds or even responsibility for bringing in the bad tenant etc.

Which means their incentive is to fill the property as quickly as possible with the least amount of work. In practise this means the majority of them will quite literally hand the property to the first person who calls. And that's a issue because there is a handful of people out there who have made careers out of getting into property's and living rent free.

Eric Cartman

rule of thumb is the rent has to be twice the mortgage for the property to wash its own face. After tax you'll only keep half the rent payment.

Yyhhuuu

Cuddlesworth wrote: »

Personally, I would never go with a management agency. The reason is pretty simple, when the **** hits the fan its your problem not theirs. Their contract will simply state, securing a tenant and managing the maintenance of the property. None of that includes eviction, recovery of funds or even responsibility for bringing in the bad tenant etc.

Which means their incentive is to fill the property as quickly as possible with the least amount of work. In practise this means the majority of them will quite literally hand the property to the first person who calls. And that's a issue because there is a handful of people out there who have made careers out of getting into property's and living rent free.

People think management agencies remove all hassle, they dont. The agent will still contact you to let you know a problem has arisen e.g. requiring a tradesman. There will be no incentive to hire the best or best priced tradesman to complete the work and some agents may even charge a premium themselves. It can be easier said than done getting rid of some agents. They are legally obliged to get you to sign a standard letting PSRA contract but I have heard cases of them unilaterally installing themselves for 3+ years on such agreements without explicit instructions to this effect from landlord.

Do they actually hand the property to the first person in the door. If you hire them to simply obtain the tenant and not manage them I suppose they couldnt care less who they get as they have their money irrespective of what happens afterwards?

St1mpMeister

circular flexing wrote: »

So you want to rent out home A and use the rent to pay the mortgage on home B?

Not strictly, I can pay home B fine without the rent if needs be.

circular flexing wrote: »

you can't really predict who the good/bad tenants will be.

I'd question this. I'm sure it's possible to judge a tenants character when you meet them, and I'd look for past references.

I can afford to be picky as I'm not desperate for the income.

Back Home

redarmyblues wrote: »

That depends where you are tax resident.

OP this is not a good time to get into the private rental market.

Why not? does it not depend on the individual investors circumstances?

perfectkama

invest in something less risky buy apple and gold

mrcheez

perfectkama wrote: »

invest in something less risky buy apple and gold

Lol Gold is probably the riskiest thing you can buy ... Take it from someone who knows

dubrov

perfectkama wrote:

invest in something less risky buy apple and gold

I'm hoping you are joking

perfectkama

ok not gold tho am invest with a miner but risky, so well at least apple/amzn last 2 years no regrets property BTL "your havin alaugh"

0gac3yjefb5sv7

Go for it OP. It will pay off in the end.

Irish_peppa

Eric Cartman wrote: »

rule of thumb is the rent has to be twice the mortgage for the property to wash its own face. After tax you'll only keep half the rent payment.

Im not a property investor or landlord but a friend is and the way he looks at it, He makes roughly 2k a month on each of his properties, his mortgage is approx 1000 on each he pays his taxes he still makes about 150 a week profit from each pad. BUT after 30 years (his retirememnt age) he effectively has properties paid for ready for sale fully paid off. So long term isnt it a sweet deal? He has about 20 years to go on his 3 investment properties and that will be worth about even at current house prices over 1 Million Euros. They could be well worth 2 millions plus So he would have made a killing long term.

DubCount

Irish_peppa wrote: »

Im not a property investor or landlord but a friend is and the way he looks at it, He makes roughly 2k a month on each of his properties, his mortgage is approx 1000 on each he pays his taxes he still makes about 150 a week profit from each pad. BUT after 30 years (his retirememnt age) he effectively has properties paid for ready for sale fully paid off. So long term isnt it a sweet deal? He has about 20 years to go on his 3 investment properties and that will be worth about even at current house prices over 1 Million Euros. They could be well worth 2 millions plus So he would have made a killing long term.

Ah the Sirens Call to Irish residential property. Sounds sweet, sounds appealing, but take care not to be smashed on the rocks while you follow the call.

The back of a fag packet maths that you'll pay off the mortgage over 20-30 years and own a property outright so you can make a killing in the long run just does not hold up when you look at the risk v return.

A typical yield (Gross rent / property cost) on an Irish property is about 8%. Maybe if you hunt around, you might get up to 10%. Sometimes you're only looking at 5-6%. The interest rate on a Buy2Let mortgage is about 4.5%. A cash buyer is making about 8% before costs and takes. The mortgage element is making about 3.5% before costs and taxes.

That's better than you'll do with deposit interest, but is not better than other risk investments such as stocks and shares. Speaking of risk, consider what happens your finances if you get a rogue tenant along your 30 year journey to your cash cow. 2 years of a non-paying tenant, even if your mortgage is 1k per month, is 24k of negative cash flow. Add in damage to property and legal costs, and you may have to sustain a 35k+ loss along the journey.

Investing 500 per month in anything over 30 years will leave you sitting pretty at the end of it.

OP. Go talk to an independent financial advisor. For a small fee they will discuss tax efficient investments such as pensions that will be better for you and your individual circumstances than putting your entire financial stability in the hands of some random tenant that may make an omelette out of your nest egg.