Opportunity to buy after landlord passed away?

Pkiernan

Fyi, no terminations may be served whilst emergency covid measures are in effect.

So, youre 224 days is now really at least 250.

If the legislation is extended, then so will your notice period.

I

NeptunesMoon

thanks, i'd say it'll be a while before they serve notice anyway as its only been a few months since they passed away.

the syco, have a look at the plan here:


I think the measurements may be off, the estate agent said 19m3 where'as the 7.5x3 would make it a little bigger.

the yard can also be used as a private/off street parking space by the way.

HBC08

NeptunesMoon wrote: »

yea thats an option for them, but an option an investor would be interested in compared to other properties i wonder? like they are losing out on 28k rent in those two years compared to buying somewhere else where the rent was at current rates if it was 1200

If you're currently paying €600 a month then they would lose out on €14400 in two years.They could use that time to do it up in no hurry and under no real time constraints.They then could rent it out at market value forever more, it's a no brainer in my opinion.

dubrov

HBC08 wrote:

If you're currently paying €600 a month then they would lose out on €14400 in two years.They could use that time to do it up in no hurry and under no real time constraints.They then could rent it out at market value forever more, it's a no brainer in my opinion.

They'd be down a lot more if they left it empty and refurbed over 2 years. Probably 20k plus refurb costs. They just wouldn't get that back with the increased rent.

An investor would likely just increase the rent as quick as possible. Given a likely recession soon, I'd say they'd be up to market rent in a few years.

HBC08

dubrov wrote: »

They'd be down a lot more if they left it empty and refurbed over 2 years. Probably 20k plus refurb costs. They just wouldn't get that back with the increased rent.

An investor would likely just increase the rent as quick as possible. Given a likely recession soon, I'd say they'd be up to market rent in a few years.

It would take a good few years at 4% increase to get to market value (the market value would also be climbing over this time) In my opinion the scenario I described would be the optimal one for owners/investors.For example lets say spend 20k on a refurb and lose out on approx 15k rent,that's approx 35k and the place ready to rent in 2 years.They recoup the 35k in less than 3 years at market value.5 years from now that's paid for itself and you have a newish refurbished property.
It would take a lot longer going up 4% a year and you would still need to do the refurb at some stage.Like I said it's a no brainer.

spaceHopper

Reading your first post you seem to be trying to maxmise your advantages againt the family of the dead LL. If you were them would you negosiate under those cirmcunstaces so dial that back.

I would approach it like this, you will need to talk to the bank and find out howmuch you can borrow and over how long, what deposit you need and then there's home and life insurtance. Is the property mortgable.....

I reckon with a 25 year mortgage you would be looking at less than 750 a month, assuming a 20% deposiot, they would want that on a studio. Lets say to an investor it's worth 130 and to an owner it's work 165 then offer some where in the reagon of 147 that's mid way and leave it with them. They then have to weight up employing an estage agent and paying them commision or quiock simple sale.

NeptunesMoon

spacehopper, as I said, I'm not even sure id be able to pool anything together to get even 100K I don't have anywhere near 16k savings if it's 10% deposit, and definitely nowheree near 32 if it's 20%... add to that, I'm even doubting I'd get approval for a mortgage for 100k, let alone 50% more than that. This is me trying to see what options are available to allow me to stay in the home I've been in over 10 years and what my competition may be and should i even get my hopes up at all, im not some capitalist trying to add to my property portfolio or get on the property ladder, im just trying to secure somewhere to live.

Fol20

NeptunesMoon wrote: »

On your other point about investor, I actually replied between your last two posts, but I was thinking its the investor losing out on 28k, as opposed to 14k, compared to putting that investment into another property where the rent was at market rate, so I'm still not sure is it a wise choice for an investor who is looking to make a quick return

Renting is longer term is if there is value there, investors will bid. It may not achieve the exact going rate given it rental yield however the figures you showed are a little off as that is gross.

My assumption here is that their tax rate is 52pc and CGT is 33pc.

So if they left it idol for 2 years, thats a net opportunity cost of 14k. If the seller dropped the value by around 10-12k, that makes up the difference they are down while they also dont need to deal with tenants for 2 years as well as an added bonus.

If they ever sold the property, this cheaper price of 10-12k only costs them about 3k in tax vs 6k through PAYE normal tax if they were receiving rent.

Fol20

dubrov wrote: »

They'd be down a lot more if they left it empty and refurbed over 2 years. Probably 20k plus refurb costs. They just wouldn't get that back with the increased rent.

An investor would likely just increase the rent as quick as possible. Given a likely recession soon, I'd say they'd be up to market rent in a few years.

For a place that size, id say your talking small money to make it look nice again, unless toilet needs to be completed gutted. Everthing else including the kitchen as it would be small but not cost too much.

it would take a lot longer than a few years to get it to market rent. The example below also disregards the fact that you also need to give 3 months notice on any increase so add an extra 3 months to every year increase as well:
2020 600
21 624
22 649
23 675
24 701
25 729
26 759
27 789
28 821
29 853
30 888
31 923
32 960
33 999
34 1039
35 1080
36 1123
37 1168
38 1215

To get to market rate of about 1200, it would take you up to 2042 give or take when you include another 54 months as part of the existing legislation to give 3 months on any increase.

The above also doesnt account for inflation at circa 1-2pc per annum so that will mean market rate will likely be more in 20 years as well.


As you can see, this is why it makes sense for any investor to leave it idol for 2 years as there is a serious amount of money on the table when it takes 2 decades to get it to market rate.

dubrov

HBC08 wrote: »

It would take a good few years at 4% increase to get to market value (the market value would also be climbing over this time) In my opinion the scenario I described would be the optimal one for owners/investors.For example lets say spend 20k on a refurb and lose out on approx 15k rent,that's approx 35k and the place ready to rent in 2 years.They recoup the 35k in less than 3 years at market value.5 years from now that's paid for itself and you have a newish refurbished property.
It would take a lot longer going up 4% a year and you would still need to do the refurb at some stage.Like I said it's a no brainer.

Market rents won't rise linearly. I'd expect it to take less than 10 years to catch it with an initial jump and subsequent 4% annual increase. Also factor in, if there is a recession/drop in rents, the cap will likely be removed.

I also can't see anyone doing a refurb on a place at well below market rent.

Most investors won't want the hassle anyway so it would likely sell to a singe owner occupier.

MrMusician18

I think we need to rewind a bit here. Are we seriously suggesting that a studio flat that's a mere 19m2 is worth buying?

Such a tiny place might be ok as a short term rental, but to own and occupy - I think you'd need your head examined

kippy

OP you need to get your **** together either way.
If you don't have access to 150 - 180k you need to sort that out. That's your major stumbling block at the moment not some ifs and buts.

Del2005

NeptunesMoon wrote: »

spacehopper, as I said, I'm not even sure id be able to pool anything together to get even 100K I don't have anywhere near 16k savings if it's 10% deposit, and definitely nowheree near 32 if it's 20%... add to that, I'm even doubting I'd get approval for a mortgage for 100k, let alone 50% more than that. This is me trying to see what options are available to allow me to stay in the home I've been in over 10 years and what my competition may be and should i even get my hopes up at all, im not some capitalist trying to add to my property portfolio or get on the property ladder, im just trying to secure somewhere to live.

What are your plans for the future? Do you plan to have children? Is it worth loosing your 1st time buyer status for a property that doesn't even have a functioning bedroom?

HBC08

dubrov wrote: »

Market rents won't rise linearly. I'd expect it to take less than 10 years to catch it with an initial jump and subsequent 4% annual increase. Also factor in, if there is a recession/drop in rents, the cap will likely be removed.

I also can't see anyone doing a refurb on a place at well below market rent.

Most investors won't want the hassle anyway so it would likely sell to a singe owner occupier.

I hadn't actually done the maths but another poster kindly did and 22 years is how long it would take to get to current market value
Imagine what the market value would be in 22 years time,do you think it would be more than the current €1200? i think it would be in my opinion!
So you can add on another decade or so,the above completely rules out your idea.
You can also throw into the mix that if you are relying on rents collapsing in Dublin and the cap being removed to make long term decisions you are in trouble.These things may our may not happen but you couldn't base a strategy on it.

the_syco

NeptunesMoon wrote: »

the syco, have a look at the plan here:


I think the measurements may be off, the estate agent said 19m3 where'as the 7.5x3 would make it a little bigger.

the yard can also be used as a private/off street parking space by the way.

The bank will send out an assessor to the property, and possibly deny the mortgage because I'm unsure if the total square footage of the apartment is large enough to be called an apartment?

NeptunesMoon

Another question on this... if I somehow managed to buy this place, would I be able to rent it out at market rate at any stage because I've already lived here, or would I need to live here a further 2 years from the date of sale to be able to rent it at market rate?

Also, is there any way a friend or someone I trust who can get mortgage approval, could buy it through me so some how allow them to rent it at market rate?

Del2005 wrote: »

What are your plans for the future? Do you plan to have children? Is it worth loosing your 1st time buyer status for a property that doesn't even have a functioning bedroom?

No plans to have children, but I would love a bigger place, for socialising purposes, just to be able to ask people around without it feeling so crammed.

Good point about the first time buyer status, I didn't think of that!

the_syco wrote: »

The bank will send out an assessor to the property, and possibly deny the mortgage because I'm unsure if the total square footage of the apartment is large enough to be called an apartment?

How would anyone have gotten a mortgage for it in the first place though in that case, or how would anyone buy it if it went up for sale?



When did the "substantial change" clause come in with regards to having enough of a renovation to be able to rent it at market rate? Would redoing the floors and the kitchen cupboards and giving it a fresh coat of paint be enough for an investor to be able to then rent it at market rate?



Cheers again everyone!

Graham

NeptunesMoon wrote: »

Another question on this... if I somehow managed to buy this place, would I be able to rent it out at market rate at any stage because I've already lived here, or would I need to live here a further 2 years from the date of sale to be able to rent it at market rate!

You are stuck with the RPZ limits unless there's been no tenancy for 2 years.

NeptunesMoon wrote: »

Also, is there any way a friend or someone I trust who can get mortgage approval, could buy it through me so some how allow them to rent it at market rate?

No, see previous answer.

NeptunesMoon wrote: »

How would anyone have gotten a mortgage for it in the first place though in that case, or how would anyone buy it if it went up for sale?

Cash buyer

NeptunesMoon wrote: »

When did the "substantial change" clause come in with regards to having enough of a renovation to be able to rent it at market rate?

A few years back.

NeptunesMoon wrote: »

Would redoing the floors and the kitchen cupboards and giving it a fresh coat of paint be enough for an investor to be able to then rent it at market rate?

Almost certainly no. The definition is something along the lines of a substantial change in the nature of the property. E.g. adding a bedroom, additional living space.

Some other changes or a combination of changes may qualify. The RTB has a guidance document with further detail.

Some other useful info here: https://www.rtb.ie/during-a-tenancy/rent-review-in-a-rent-pressure-zone-rpz/exemptions-to-the-rent-pressure-zone-rental-cap

NeptunesMoon

cheers for all that, alright so I basically need to stop being a "tenant", and by buying it, I'm no longer a tenant, but can just continue on here for 2 years paying a mortgage instead of rent, and then after 2 years I'm free to do what I want, stay on or move somewhere else and charge the market value for this place to help me rent somewhere else for example?


Interesting about the substantial changes really, I don't think it's possible to do such changes on this property.