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Rental property value

  • 13-11-2022 11:11am
    Registered Users Posts: 1,083 ✭✭✭

    Just looking on how to get a rough sales value on a rental property achieving 750/month?

    What other information do I need?


  • Moderators, Society & Culture Moderators Posts: 36,438 Mod ✭✭✭✭Gumbo


    check what adjoining buildings have sold for recently.

  • Registered Users Posts: 1,083 ✭✭✭worlds goodest teecher

    Unique development. 9 apartments in a rural location. Previously tourism accommodation. Last few years used as rental accommodation.

  • Registered Users Posts: 996 ✭✭✭DataDude

    You need to find out the yield an investor would expect to achieve in that area.

    Some areas this can be as low as 6%.

    750*12/0.06= €150k

    Some areas it can be as high as 10%

    750*12/0.1 = €90k

    Given all that’s going on with interest rates the required return an investor will want will be much higher now than a year ago, and so the price and investor will pay would be much lower. They’ll be much less active in the market now so you might be more likely to sell to someone looking for a holiday home rather than someone who cares about the rental yield.

  • Registered Users Posts: 1,083 ✭✭✭worlds goodest teecher

    We have a management company handling these properties. Rental demand for them has been very very high for past few years but we are at a point that we are no longer able to keep them going. We are in the process of selecting a selling agent. Two auctioneers, one traditional one more of specialist. Their estimated price achievable priced differed by 20% with the traditional auctioneer the higher of the two. I appreciate that interest rates are becoming less favourable. That is why I am trying get an idea of what the more realistic estimate is. Probate value 18 months ago €110000 each. That said a large mortgage remains.

    We are trying to agree which approach to take.

    Although the tourism market brings in more per week, the season is short, and the increase in hotel numbers and Airbnb has had a major affect. Full capacity from short term let's in the 90's 5/6 per week for two month period, today not one fully occupied week if we were short term.

    What is working in our favour right now is a shortage of supply and it looks like that won't change for foreseeable future.

    But what approach to selling is the best?

    Post edited by worlds goodest teecher on

  • Registered Users Posts: 3,859 ✭✭✭3DataModem

    I was going to post almost exactly this.

    It really depends on the details; when you say a management company is keeping them going, do you mean you have been using a letting Agent, or some other setup?

    Right now you can buy a property with double that rent (or more) for about 200-220k in Dublin, with costs running at about 25% of the rent (8-10% agent, 5-8% maintenance, 8-10% management company charges), but with pretty much guaranteed 100% occupancy even if the rents drop in the next decade or so.

    Hence the 90k estimate is probably closer to the mark, unless there is some reason why you think the rental market will remain liquid in the coming years (e.g. a hospital or college within a bus ride).

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  • Registered Users Posts: 6,023 ✭✭✭Claw Hammer

    A property can have its value calculated according to the the yield or by comparison with similar properties being used as a ppr. This can result in 2 different values.

  • Registered Users Posts: 1,083 ✭✭✭worlds goodest teecher

    We are in the NW, supply is slow coming this way.

    In a very scenic location. Formerly tourism focused accommodation.

    Management company deal with letting, tenants and maintenance.

    They report on letting properties as they come available. They receive a level interest that requires a narrowing down interested persons.

  • Registered Users Posts: 1,786 ✭✭✭DownByTheGarden

    OP be careful you dont hang on to it too long. What were once nice holiday lets can become ghettos these days. And the value drops like a stone.

    My sister has a holiday home overlooking a lake in a scenic area. There are about 20 houses there and it was lovely going down there the odd weekend over the years when it wasnt booked on airbnb. But over the last 2 or 3 years they dont seem to be holiday homes anymore. More and more are being bought or rented by the council and people live in them full time. The houses are a mess. All sorts of stuff just left out the front of them. Even sheds and dog houses put up in the front gardens and one even looks like a mechanic owns it. All sorts of car parts there thrown on the footpath and different and oil all over the road. The reviews she has been getting on AirBNB make it clear that people renting it are not happy with the state of the place now and so bookings are dwindling.

    She has been trying to sell since January and there are no takers. Anyone looking to have a holiday home drives in, sees the place with the agent and says this is not what they thought it was going to be, and run a mile. I dont think normal buyers are allowed to live in them. The council have offered about 25% under the value they were selling at a few years ago. She refused and they asked could they rent it, but she want to sell. I think what has happened is the council has gone in and devalued the development as they bought up or rented the houses and now they are the only market.