1 investment property in Stillorgan/Renelagh Vs. 2 in Tallaght/clondalkin

dublin2000

Hi guys, what would be your opinion if one want to buy investment properties, for the same budget of 500k ish, to buy 1 property in around Stillorgan/Renelagh or to buy 2 in the areas like Tallaght/Clondalkin?

Note: properties won't be bought by cash, it will be mortgaged.

Thanks

3DataModem

In general splitting is better, if you have an occupancy issue (overholding, damage, whatever) it will not kill your entire income.

Danny Drier

https://www.boards.ie/discussion/2058330370/1-investment-property-in-stillorgan-renelagh-vs-2-in-tallaght-clondalkin

Stay out of scrote-land areas

GAAcailin

I would go for 1; two sets of tenants - collecting rent, rtb, furniture, bills etc total pain

xyz13

Ranelagh.

dublin2000

https://www.boards.ie/discussion/comment/121590275#Comment_121590275

It is one of our concerns alright if renting in those areas, though the attraction is yield, like you could get very simlar rent in a 250k apartment in Tallaght vs. a 450k apartment in Renelagh.

Doc07

https://www.boards.ie/discussion/comment/121592020#Comment_121592020

Is a bank/lender agreeing to give you two mortgages? (in addition to your own house or maybe that’s paid off)

do you have a large deposit ? Might be better to buy one additional property in the area unlikely to lose value/demand

BoardsMember

Ranelagh!

herbalplants

https://www.boards.ie/discussion/2058330370/1-investment-property-in-stillorgan-renelagh-vs-2-in-tallaght-clondalkin

Depends what you are looking for. I would say buying 2 in Clondalkin/Tallagh will bring you more rent in total.

But if you plan at a later stage to use it for your family, buying one property in Stillorgin is better.

ted1

I wouldn’t. I’d find some other investment that doesn’t make me a landlord

3DataModem

https://www.boards.ie/discussion/comment/121594262#Comment_121594262

I don't think any of his proposed investments make you a landlord.

SupaCat95

You know which one I would go for as an investment? Neither.

Before you part with any cash check out the "right to accomodation" act. Read it carefully and look at the wording. Its coming and it will be passed one way or the other.

dublin2000

https://www.boards.ie/discussion/comment/121592438#Comment_121592438

Yes, bank agree to give 2 mortgages. When you say areas less to loose value I presume you meant areas like Stillorgan/Renelagh

dublin2000

https://www.boards.ie/discussion/comment/121595024#Comment_121595024

Thanks or this suggestion, I will give a read! We are just looking to do some investment that will not have to wait until we retire to vest, i.e. something can give a steady regular income hence the thought of a rental property.

GAAcailin

https://www.boards.ie/discussion/comment/121596385#Comment_121596385

Have you done the sums? rental income is taxed as regular income, plus USC and PRSI; Property tax is non deductable. If you need any jobs done its almost impossible to get any tradesmen to provide a receipt - hence non deductable too. You will also have to pay capital gains tax if you sell up.

We have an investment property in Dublin 6W and honestly it costs us money; we are stuck in a RPZ but the tenants have been in the house for a long time and give us no grief so that is worth something.

dublin2000

https://www.boards.ie/discussion/comment/121596471#Comment_121596471

Does the mortgage interest not get deducted? so if I take buy with mortgage normally speaking the first 5-10 years the interest repayment is the major part of the monthly payment. Good point the tradesmen receipts, I haven't thought of that! Our struggle is not sure what other investment option is out there that will give a regular income.

AndrewJRenko

https://www.boards.ie/discussion/comment/121596385#Comment_121596385

Have you considered the associated risks, specifically;

1) Concentrating all of your investment in one small market (Dublin residential property), and

2) Leveraging your investment by borrowing, so a small loss on the overall value could potentially wipe out your entire capital.

herbalplants

https://www.boards.ie/discussion/comment/121597035#Comment_121597035

This may also give you a massive loss!! Remember that!

GAAcailin

https://www.boards.ie/discussion/comment/121597035#Comment_121597035

This really doesn't amount to a whole lot, even with a sizable loan. The Govt did revert to this being deductable at 100% (was 75%). If your loan is 2k per month and the interest portion is €1,100, you can offset this (which would amount to €440); still not huge.

Donald Trump

https://www.boards.ie/discussion/comment/121597523#Comment_121597523

You can deduct allowed expenses (the same as any other venture). That will be your running/maintenance costs and interest. Capital repayments are not deductible because that is in essence a personal savings scheme for you. On the other side of that though - you will not be taxed for CGT on the original price of the house when you have it paid off if you sell it.........which would have to be the case if, in theory, you depreciated it over the lifetime. Yes, there are various special ways of extracting such capital from other ventures, but those don't suit everyone and there are limits and conditions.

In your own case, you cannot claim the investment is costing you money while at the same time say that writing off the interest "doesn't amount to a whole lot". The only way that could be so would be if your other expenses (which you could write off anyway) like maintenance were very high. What you likely mean is that the net after tax income is not more than the amount you are effectively putting into your personal "savings scheme" (i.e. your equity in the house by paying off the capital repayments)

spuddy

https://www.boards.ie/discussion/comment/121597035#Comment_121597035

Just make sure you're not falling into this trap. There was a TD recently on the radio a while ago who thought that increasing interest rates didn't matter to landlords as they could deduct the interest as an expense. He totally misunderstood how the tax system actually works. All it does is reduce the LL's tax bill by the interest paid, times the % tax they pay. So the LL actually foots most of the rate increases.

dublin2000

https://www.boards.ie/discussion/comment/121597523#Comment_121597523

sorry for my maybe stupid question, maybe easier to explain my thoughts with an illustrative example. Say I receive monthly rent of 2,500, my loan repayment is 2,000 per month within that 1,200 is interest, maintenance cost 300 per month, is my tax not calculated as 2500-1200-300=1000 @40%? so I'm only paying tax on the rental income that is after deducting all expenses, interest, maintenance, if I have 1k left after deducting then I pay my marginal tax on this 1k. so basically, my 2.5k rental income after paying tax will just about barely cover my mortgage repayment.

AndrewJRenko

https://www.boards.ie/discussion/comment/121600914#Comment_121600914

Why would you expect someone else to pay your mortgage for you?

The principal part of your mortgage payment isn't a business expense. It's just you moving your own money around, reducing your debt to the bank with your own money.

A Shaved Duck?

As somebody that just recently sold an investment property, i would'nt even joke about going back into the market. The return on the effort and hassle simply isn't there anymore.

50% tax - potential problem tenants and zero protection from the completely useless PRTB or our gubberment making rules up depending on what direction the wind blows..

MrRigsby

https://www.boards.ie/discussion/2058330370/1-investment-property-in-stillorgan-renelagh-vs-2-in-tallaght-clondalkin

DO NOT invest in residential property!! Ireland is a joke when it comes to landlords rights . Some scrote can rent your property, refuse to pay any rent whatsoever and it will take years to get them out if they know how to play the system. Meanwhile you will be paying legal fees for advice etc, the mortgage and will be still financially liable for all repairs and maintenance on the property . Of you are unlucky enough to get one of these tenants your property is likely to be wrecked when you eventually get it back

Donald Trump

https://www.boards.ie/discussion/comment/121600914#Comment_121600914

No offence, but it appears that you have gone further down the road of deciding where and how many to buy, than you have in working out basic facts and finances of the plan............that's a sure-fire recipe for you returning back to this forum in a year or two complaining angrily about something that you just found out which you think is unfair - but which you could and should have known about beforehand.

Marcusm

https://www.boards.ie/discussion/comment/121601249#Comment_121601249

Except that his analysis of the quantum of tax he would have to pay is correct….

Donald Trump

https://www.boards.ie/discussion/comment/121601295#Comment_121601295

I never said it wasn't. Just that they were asking it.

GAAcailin

Bear in mind, the areas you are looking at are in Rent Pressure Zones; if you purchase a property in any of these areas that were rental properties just prior to being put on the market, you will only be able to rent them for that price. E.g. if you buy a 2 bed apartment in Tallaght that was rented for €1300 just before being put on the market you will only be able to rent it for that amount. There may be another apartment in the block for rent for e.g. €2,000 but you cannot rent your for that.

Many properties (and probably more so Apartments) that are currently on the market are ex-landlords getting out.

dublin2000

https://www.boards.ie/discussion/comment/121601249#Comment_121601249

Thanks again for all your tips and advices, I haven't bought any but it is in serious thinking/started looking. I presume I did think about the potential risk of having a bad tenant that you both won't get any rent also the place is wrecked. My thinking, as mentioned above, has been that I really would like the idea of having a source of passive regular income, I have maxed my pension contribution. Not very good at investing in shares, could do some ETF, but ETF for what I understand should be a long term investment so if I will invest some ETF it will more for cash in when I retire but not for regular income of next 20 years. So I'm struggling to think of anything else except an investment property. But all your points are noted and in consideration. Thank you again.

dublin2000

https://www.boards.ie/discussion/comment/121601295#Comment_121601295

Thanks for confirming my understanding of the tax payment calculation logic.

dublin2000

https://www.boards.ie/discussion/comment/121601742#Comment_121601742

That is a question I will be asking when viewing properties. I presume if the property was owner occupied the rent restriction isn't applicable then?

dublin2000

Thank you all that have shared your thoughts, advices! How about if I take a different direction, upgrade my current family home to a better/bigger place, i.e. sell my current house buy another house is in a better location and hopefully bigger as well. The cons is that it won't give me a regular income I'm looking for, but the possible pro could be when I close to retire/or when I really need money in future years, I can downsize so cash out some of the equity as a financial support. Of course, I know this method will be depending on when I need to sell what the market is like, so there is a risk I won't get this benefit.

CoffeeImpala

https://www.boards.ie/discussion/comment/121604344#Comment_121604344

You can get distributing ETFs. Sounds like you might need to talk to a financial advisor before committing to a property purchase.

3DataModem

https://www.boards.ie/discussion/comment/121600914#Comment_121600914

Yes but you are getting 800 wealthier per month as the mortgage is cleared. That's the "hidden" profit that people forget. The cashflow may be neutral or negative but you are basically saving 800 per month at no cost. The downsides are risk (overholding, damage, interest rates) and liquidity. Over the term of a mortgage you can generally expect to have made some capital returns on the property too.

Rental yields in Ireland are still very strong. There is a lot of fearmongering due to the horror stories of the single-property highly-mortgaged average joe getting fecked over by an overholding tenant, while the mortgage piles up. However for those not so heavily geared, who spread their risk, the returns are incredible. This is why REITs are entering the market while small-holders leave.

GAAcailin

https://www.boards.ie/discussion/comment/121604374#Comment_121604374

Could you consider getting a place with a granny flat or a converted garage with separate access and do the rent a room scheme. neighbour does it for 9 months of the year and earns €14,000 tax free per annum. She then does air b n b on a casual basis during Jun/july/Aug; easy money. The way things are at the moment its simple to get tenants for shorter periods - that could change though.

She earns more per annum nett then we do on a rental property 3 bed in Dublin 6 W. NO RPZ, the main thing is that the minute you go €1 over the €14,000 the whole lot is taxed.

dublin2000

https://www.boards.ie/discussion/comment/121605519#Comment_121605519

Granny flat could be an idea worth considering. My own house does have the space to build a side granny flat, but it is not in a very demanding location for rent. In the current environment I will get tenants but when downturns, it can be hard. Also, build a granny flat though give you some income but you won't get the full capital release of say a 2 bed apartment or house when say in your 70s when you need money. What I mean is, if you own a separate property, doesn't matter its an apartment or small house, say 20 years later you need a big lump sum, you can sell that place to get the capital back, 200k or 300k whatever, but it is a large sum of cash. if you have a granny flat attached to your house, unless you sell your house, you won't get the capital release.

dublin2000

https://www.boards.ie/discussion/comment/121604722#Comment_121604722

That's what I've been thinking as well. Even if you are just breakeven, you have someone paying off the mortgage, so once paid off, you are left a house with only the downpay you made at the start, so you are actually gaining profit, but just in a long term. Of course, I understand some people's point that one bad tenant could ruin you for years.

Donald Trump

https://www.boards.ie/discussion/comment/121604344#Comment_121604344

Don't forget to consider that a house is ultimately a relatively illiquid and non-divisible investment. You cannot cash in part of it.

Donald Trump

https://www.boards.ie/discussion/comment/121605519#Comment_121605519

She runs the risk of her airbnb money pushing her over the limit. You cannot claim the relief against such income, but unless I am mistaken, it would still be counted as income towards the limit.

SharkMX

https://www.boards.ie/discussion/comment/121599745#Comment_121599745

Non other than Eoin O'Broin, the potential next minister for housing. Total thicko going around with his round glasses to make him look like there is a brain in there., Every time he opens his mouth the empty head shows itself.

spuddy

https://www.boards.ie/discussion/comment/121607469#Comment_121607469

I didn't remember it was him, although I tend to lob all politicians into the same bucket!