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Why I'm taking my rental off the market
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Join Date:Posts: 30613
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The_Conductor wrote: »In which case- the most sensible financial assessment might quite simply be to sell into the current market and get out of business (depending on when he bought, of course).
It depends what your after, more than likely if he bought at the bottom and has the capital gain exemption, he would should be easily netting 100k+. It’s a good net profit however would it be better to keep it for the long game so that in 20 or 30 years, you could either keep it for your pension top up or just sell it off0 -
Join Date:Posts: 30613
It depends what your after, more than likely if he bought at the bottom and has the capital gain exemption, he would should be easily netting 100k+. It’s a good net profit however would it be better to keep it for the long game so that in 20 or 30 years, you could either keep it for your pension top up or just sell it off
Honestly- given the current regulatory environment- and the vitriol being paraded on a daily basis in the media- I just don't see how/why its a viable operation (unless of course the owner has a long term tenant that they're happy to run with- in which case, the obvious thing to do is to divest if/when the tenancy comes to a conclusion).0 -
Loves_lorries wrote: »Your confusing the HAP scheme with the long term lease scheme.
My rent is guaranteed even the place is empty during periods. I've never met who lives in my house, I don't even know their name.0 -
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The_Conductor wrote: »Honestly- given the current regulatory environment- and the vitriol being paraded on a daily basis in the media- I just don't see how/why its a viable operation (unless of course the owner has a long term tenant that they're happy to run with- in which case, the obvious thing to do is to divest if/when the tenancy comes to a conclusion).
Very valid point. Personally i am of the traditional mind set and would hope that houses can continue as a viable opportunity in the long run. That plus the fact i wouldn't be smart enough to invest in large quantities of shares(bar pension schemes) . Its one of these things where i stick to what i enjoy and am good at.0 -
Relevant to this thread, but so crazy.... and supports the earlier assertions that the RTB is not fit for purpose, or is at minimum ineffective.
https://www.independent.ie/irish-news/i-would-not-follow-the-law-the-next-time-landlord-who-lost-25k-in-ordeal-with-rentdodging-tenants-37317965.html0 -
Rental income is no different from income earned by working overtime or any other money earning enterprise. Landlords have to accept this. All across the board the Revenue have tightened up their tax gathering capability. The rental market is a lot more regulated now than 20 years ago where cash was king and there was massive undeclararation of income.
Many landlords cannot accept this. There are also too many amateur landlords who own one rental property, maybe bought in the boomtime and still in negative equity.
It is nobodys fault but their own that they are not getting the return they think they should.
If landlords think that they should get more favourable tax relief then why shouldnt every other income earner get the same
What landlords would like I think is for tax to be based on profit (if any).
Not just income.
There is certainly grounds to not be happy with the current rental model.
But if we have a load of landlords leaving the market and those landlords are citing various issues we really should be paying attention.
Tax taking up too much rental income???? - right drop it then. We insist on having a very low corporation tax for FDI because we recognise benefits of doing so. Ditto landlords.
Can't get rid of tenants who are either bad tenants or are overholding. Well a fast track easily accessed reliable system is needed possibly through the district court.
Losing money through damage????. Should we have a workable insurance scheme through the state that landlords and tenants can pay into at reasonable rates per month. So if someone does 17 k worth of damage then theres a payout.
You wouldnt be happy to have 17 k worth of damage to your car and ZERO comeback would you.0 -
Old diesel wrote:You wouldnt be happy to have 17 k worth of damage to your car and ZERO comeback would you.
Buy car accidents are generally accidents, in this case, it's destruction of someone else's property, why should landlords have to pay?0 -
Buy car accidents are generally accidents, in this case, it's destruction of someone else's property, why should landlords have to pay?
I'm talking about the landlord getting a payout from insurance.
I mention the car example because having an insurance policy for said car means there is a mechanism for claiming for the damage.0 -
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Instead of the traditional deposit, tenants could be required to take out an insurance policy to cover damages/overholding/legal costs above a certain excess. Policy would be very cheap for those with a good record or who provide little risk of default, but more costly for anybody who has defaulted or wrecked property in the past.
This would give advantages to good landlords and good tenants.0 -
[Deleted User] wrote: »Instead of the traditional deposit, tenants could be required to take out an insurance policy to cover damages/overholding/legal costs above a certain excess. Policy would be very cheap for those with a good record or who provide little risk of default, but more costly for anybody who has defaulted or wrecked property in the past.
This would give advantages to good landlords and good tenants.
That could work if the tenant actually paid monthly into it. They could do it for a month and then stop paying though0 -
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A very healthy yield in the low interest rate environment. 12% gross on what you paid or 12% on what it's currently worth?
House cost me 72 k, 3k on stamp duty, registration of property and solicitors fee,thats 75 k
Upstairs carpets, insulation of attic, two fire escape windows, white goods ( all new) = washing machine, dishwasher, fridge freezer, oven, hood filter.
New furniture, Beds, sofa, kitchen table and chairs, coffee table. Wardrobe
1400 euro worth of electrical improvements which included periodic report.
Blinds for windows, air vent from bedrooms through attic and out roof.
Other miscellaneous items and repairs including 5 foot High Garden backyard panel to blind off shakey boundary wall( neighbours wouldn't agree to removing wall)
Total cost 84k
Rent = 850 per month with next review 2021.
Insurance 600 per annum
Property tax 100
Im setting aside a grand per year for repairs over the ten year lease as while I'm only responsible for structural issues after the first six months( replacing electrical appliances or painting won't be my job) , you could spend several grand doing roof work.
850 x12 = 10200
Minus 1700 for insurance, tax and maintenance.
Ten months rent NET.
84000 over 8500 = 10% net yield rounded off0 -
Yup, seems I was. It seems this may be the best way for landlords who consider doing HAP.
Can understand why someone with a valuable house would be reluctant to lease a property for ten years and also the fact that the council tends to house risque folks in these properties.
I've a small amount of capital staked here.0 -
Loves_lorries wrote: »Yup, seems I was. It seems this may be the best way for landlords who consider doing HAP.
Can understand why someone with a valuable house would be reluctant to lease a property for ten years and also the fact that the council tends to house risque folks in these properties.
I've a small amount of capital staked here.
https://www.independent.ie/irish-news/i-would-not-follow-the-law-the-next-time-landlord-who-lost-25k-in-ordeal-with-rentdodging-tenants-37317965.html
Actually I do not know how some truth about the Irish rental market came out in the Indo today. I thought the Editor was absolutely opposed to showing the massive issues faced by landlords in Ireland.0 -
That could work if the tenant actually paid monthly into it. They could do it for a month and then stop paying though
There could be a link to the rent - ie the cost of insurance per month is added to your normal rent and is part of contract.
Fail to pay and you are in breach of contract*.
*obviously you need a fast remedy to any breach of contract0 -
listermint wrote: »I hope the government insure that Airbnb laws are pushed like Toronto's.
There's a raft of people on here who think nothing of going the air BnB route and think nothing of the neighbours that live next door to your short term let. You don't pay business rates like equivalent hotels or bnbs . You think it's fine and dandy to run rough shod over it just because Airbnb is a massive organisation.
The sooner the government sorts this out the better. I'd put money down you'd go nuts if your neighbours had 3 different sets of people coming into their house each week .
Bet you wouldn't be a big fan of that carry on.
But that happens in rentals too, and there is limited opportunity for a neighbour to do anything about it too, the rtb sure, if you dont mind your car trashed or your windows smashed, it really depends on who you are dealing with.How could it be a 75% loss when the capital fronted by the investor was 100k and the return was 125k. For the sake of simplification I omitted calculation on tax and interest but they don't matter to the point I'm making - that the underlying asset has a capital value.
Say the same person buys a property for 200k and the rent covers the whole 100% mortgage and interest after tax as well as maintenance. Property values in the area fall by 2.5% between the beginning and the end of the term. Has the landlord made a loss? Or an outsized profit? Has his net wealth increased or decreased?
Seemingly landlords here think they're making a loss unless they essentially acquire a property/asset for free
How much interest do you think the person is paying over the lifetime of the rental/mortgage? As for omitting tax and interest, well they matter very much in that, tax is on the income and not the profit, but the bank takes their cut every month, you need to have enough return to pay whatever the costs associated with purchasing the property, whatever is invested wont be earning interest elsewhere.
You are assuming the rent covers the whole 100% of mortgage (incl interest, tax and maintenance) time isnt even included, do you simply think people should invest their own savings or take out loans to provide accommodation for someone else, where the state wont and that this should generate no return for all of the duration of the use of rental? it is not simply a matter of waiting until the end for someone to realise any benefit and if it was more realistic to make a reasonable and fair amount, then rentals might make sense. People are bailing out and the Govt of the day and last 7 years has done nothing, its on their heads that this problem is to blame, not all landlords.I think the general thought from non landlords posting is with the highest rents ever in the history of the state then landlords have to be making money.
If the State was willing to reduce the tax take, then landlords could offer reduced rents and still make a certain return and cover costs, if the state isnt willing or is unable to provide accomodation then I dont understand why they wont incentivise this, costs associated with renting should all be deductible such as interest and interfering in certain miuntae, only x costs for certain things like white goods or even requiring them in rentals at all is ridiculous, same for requiring a 4 ring hob in a bedsit sized accomodation, or banning them outright, seems to be they had a place and it is not better that people froze in doorways. I understand providing a reasonable standard but people have different requirements and means and accomodation should fill these requirement differently, fixed rules and legislation does not help cater to differing needs.Ill give an example
Rent 1500
Mortgage(interest only part) 700
Maintenance +misc @20pc =300
That leaves you with 1500-(700+300)=500
Tax &50pc =250
After all is said and done, your left with 250 in your pocket to pay towards the principle and if you have a boiler that breaks down or a dodgy tenant, you may as well knock out a few years worth of your “profit”. And that’s at peak rent. Everything is cyclical so you get the picture. Most small time ll aren’t in to make a quick buck or to have wadd of cash from it. It’s a slow burner where you can make a steady gain but nothing like what people think notwithstanding all the risks and stress from it.
I understand what you are saying, nothing left in it, but its worse than you make out, tax comes off first on the income, you seem to have said its on profit at the end, Im open to correction but I believe Im correct on that, otherwise I understand and agree with what you meanI reckon I've spent about €80,000 on rent since 2005 - my current landlord has gotten nearly €30,000 from me. He moans about bills, taxes, his debts etc. and then says, oh I won't be contactable for the next few weeks as I will be in France for a wedding and then on to Thailand for two weeks. While we're paying him a grand a month for a rat infested hole just so we can get the money together for a deposit for our own place. And we're the lucky ones - it could be two grand!!!
Do any landlords have empathy for their tenants and their experience of our crappy housing system?
By the by, how much do you think you'd fork out to banks in interest if you were paying your own mortgage, will you then allow anyone to live in your property for no cost or even below a market rate?I don't believe tenancy laws are what's really influencing investor decisions not to purchase properties to let - it's the low return on investment and high tax rates. Unless you're a cash buyer, you're not making much of a profit after maintenance and your tax bill is paid. The risk of getting stuck with a dodgy tenant is probably a risk worth taking if the profits are high, which is why people are jumping into short-term lettings.
You are wrong, I agree with a certain amount of rent controls, but tenancy laws mainly crucified any landlord who was being decent and forced people to max out what they could get for fear of being locked into too low rates for being understanding. At least its known what the high tax rates are, I think there should be lower flat tax rates or tax on profits rather than incomes, its the govt that is raking the lions share, the landlord is a middleman and the tenant is getting crucified, the state isnt exactly incentivising anyone to provide accomodation and they arent doing it themselves, its all ill conceived knee jerk reactions. The risk of getting stuck with a dodgy tenant is not worth taking so people are leaving properties idle or getting out, it is not worth it if the costs are not being met.
If you think the risks are worth it you could jump into the market yourself, run the risk of not being able to fund a roof over someone elses head that the state wont provide and take it on the chin if they destroy the property and you are still in hoc for the cost.And that would be very awful value for the taxpayer/exchequer. The government can borrow cash for ten years at sub 1% - you're advocating they guarantee a rental yield of 5% and have no asset at the end of the ten years.
If so, then why arent they getting councils to build houses? as in previous decades? why are they even engaging private organisations to do this and letting them take in the profits? the state owns the land, why give it away? private landlords could have always existed and are probably necessary but there seems to be an agenda to make that impossible, I think any future of REITS in charge of the majority of property will be more mercenary.0 -
If so, then why arent they getting councils to build houses? as in previous decades? why are they even engaging private organisations to do this and letting them take in the profits? the state owns the land, why give it away? private landlords could have always existed and are probably necessary but there seems to be an agenda to make that impossible, I think any future of REITS in charge of the majority of property will be more mercenary.
The state is heavily borrowed with a very high national debt. It can't just borrow money, even on very favourable terms. It can't allow emanations of the state to borrow money either. This is what is governing the whole process. The government wants the private sector to borrow the money and build houses. That way the national debt does not increase. There's also the fact that when councils did build houses, it costs a lot more to build each house that houses could be purchased for from speculative builders.0 -
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Claw Hammer wrote: »The state is heavily borrowed with a very high national debt. It can't just borrow money, even on very favourable terms. It can't allow emanations of the state to borrow money either. This is what is governing the whole process. The government wants the private sector to borrow the money and build houses. That way the national debt does not increase. There's also the fact that when councils did build houses, it costs a lot more to build each house that houses could be purchased for from speculative builders.
Ok, I get that, but even if it cost the councils (in the past) more to build then they could buy for, the asset still existed.
My take on it all is that the state wanted long before the economic problems threw a spanner in the works to shift the cost of running and maintaining council properties (and most rentals) onto private individuals (it was encouraged). I think they did this in an effort to reduce costs or what it was apparently costing at the time, shift funds into self employed businesses in maintenance indirectly through private owned rentals and reap in any taxes that came in from rentals.
The best and quickest way I can see to start fixing this situation is to encourage private rentals back into the market and in the open,
by reducing tax take on rentals but only approved alongside registered landlords in an environment of some rent controls and with realistic accomodation standards that were met in the last 15-20 years (not as councils would have in standards that barely exist anywhere),
Dealing with rogue and anti social tenants for the sake of not just landlords but all tenants, and neighbouring residences, rented or owned.
Make it illegal for state funded NGOs to incite illegal activity,
The state to start a program of buidling that caters to different requirements of people, not everyone is in the same situation.0 -
Claw Hammer wrote: »The state is heavily borrowed with a very high national debt. It can't just borrow money, even on very favourable terms. It can't allow emanations of the state to borrow money either. This is what is governing the whole process. The government wants the private sector to borrow the money and build houses. That way the national debt does not increase. There's also the fact that when councils did build houses, it costs a lot more to build each house that houses could be purchased for from speculative builders.
It's true we're heavily indebted but they can't just stop paying HAP in the morning either - it looks like a lot of extend and pretend is going on from the government's side and hoping that within a few years the HAP recipient totals will decrease. The department of finance released a value for money study on HAP recently which I must read.
If institutional investors start to consume more and more of the HAP spend, very little in income tax will come back in tax revenues as opposed to paying it to individual landlords who on average will pay 40 to 50% marginal.0 -
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Claw Hammer wrote: »The councils can, and do, by properties which are on the open market. They pay less than if they had built themselves and they have an asset.
I dont think its on the scale that is needed to fix the problem that exists now, you mentioned yourself that the State nor State entities can borrow to build large scale.
So it must surely be cheaper to negotiate to rent private dwellings that exists already, if they are in a suitable condition, not unrealistic HAP requirements which barely exist for more expensive privately purchased or upgraded properties), that have reasonable terms for landlords (I would consider it reasonable, fair and to be paid directly without creating the mess of part payment from tenant and the problems that go with missed payments, return property in same condition and a commitment to deal with anti social tenants, if that was the case landlords would already be all over them,
On top of that I think a flat tax rate or set allowances regarding costs for non social payment tenants, lower tax along with commitments for rent controls so that margins stay the same but costs can be paid and the state has to foot nothing for this except a reduced rent, with the end goal that they create alongside this some form of housing that caters to different groups financially.
The state already stands to lose tax take from REITS and other large organisations, I think a range of accommodation providers reduce the chance any one group could manipulate rents, some large organisations seem to be exempt not only from tax but also from part 4 regulations.
Im either naive and cant see whats going on or Im cynical and suspicious as I cant see any benefit for the state, tenants or landlords, except large organisations.0 -
You are assuming the rent covers the whole 100% of mortgage (incl interest, tax and maintenance) time isnt even included, do you simply think people should invest their own savings or take out loans to provide accommodation for someone else, where the state wont and that this should generate no return for all of the duration of the use of rental? it is not simply a matter of waiting until the end for someone to realise any benefit and if it was more realistic to make a reasonable and fair amount, then rentals might make sense. People are bailing out and the Govt of the day and last 7 years has done nothing, its on their heads that this problem is to blame, not all landlords.
That kind of investment may have been available here in the nineties, but it's gone now and it's never coming back. You'll have to be content with a modest 8-10% annual return not the 15+% you seem to be after.0 -
So finally we see what this is all about - not content with someone else paying the mortgage on an appreciating property, you want a cash surplus after mortgage, tax and running expenses? There is no investment that can make that kind of return, without considerable risk on a year to year basis.
That kind of investment may have been available here in the nineties, but it's gone now and it's never coming back. You'll have to be content with a modest 8-10% annual return not the 15+% you seem to be after.
Wanting a cash surplus is fine.
The worry I have is that it means a VERY expensive rent.0 -
So finally we see what this is all about - not content with someone else paying the mortgage on an appreciating property, you want a cash surplus after mortgage, tax and running expenses? There is no investment that can make that kind of return, without considerable risk on a year to year basis.
That kind of investment may have been available here in the nineties, but it's gone now and it's never coming back. You'll have to be content with a modest 8-10% annual return not the 15+% you seem to be after.
I dont know if you slept through the last 10 to 15 years but property is most certainly not a guaranteed 10-15% appreciating asset.
Irish property is an absolutely WILD ride with huge ups and downs.0 -
So finally we see what this is all about - not content with someone else paying the mortgage on an appreciating property, you want a cash surplus after mortgage, tax and running expenses? There is no investment that can make that kind of return, without considerable risk on a year to year basis.
That kind of investment may have been available here in the nineties, but it's gone now and it's never coming back. You'll have to be content with a modest 8-10% annual return not the 15+% you seem to be after.
I don't rent a property, but as a business how do you expect something to operate on a monthly basis if there is no profit or at least for the rental to cover the tax, that would require anyone (business or an individual) to put all their own money in (without borrowing) should they or would anyone do that if there is no return when they could place it elsewhere for no effort and get a return? would you?
Its possible for corporate type letting businesses that are exempt from the kind of tax that individuals or smaller businesses are,
So given that housing costs are increasing, the amount anyone needs to borrow and/or invest will increase, rent will increase, tax will increase, how do you suppose any new properties will be funded?
Unless you can get them for a steal (vulture funds?) are you happy for vulture funds to steal properties and pay very low or no tax and still charge the max market rate? and they seem to be exempt from the kind of regulations that ordinary landlords are regarding evicting tenants.
As for the considerable risk, there is no business that will allow you to avail of their services or products for free (theft) and not be able to have you removed or be able to demand payment, and none that will allow you to remain in place if you vandalise their premises whether doing the above or not. The risks are so great people are and have bailed out, all the problems could be fixed with a pen stroke and simple courses of action that force responsibility on delinquent tenants, there are good tenants and landlords but unless the Govt of the day is willing to solve the problems then they need to provide housing for people who cannot afford to provide it for themselves, its not the responsibility of anyone to do so for them and certainly not for no benefit when you can be dragged along for 2 years without payment by a tenant who can play the system.
The current regulations play into the hands of of the worst kind of tenants, I dont think the majority of tenants are bad nor are the majority of landlords, but the current situation isnt beneficial to anyone.
The problem is, the current Govt and those before them have allowed social housing to be disposed of, any interference they had in the housing market worsened it for owners and buy to lets, they could have imposed simple measures to discourage overheating and its happening again (they dont care and I think its intentional) , none of which serves owners, landlords or tenants as it just pushes all the money up, mainly to the banks and the tax man! and its not being reinvested in housing, thats for sure.
So I never said I wanted the % you are talking about but funding the running costs is funding the tax and the mortgage, if you think anyone will invest their own money for no return, then jump right in, if you cant afford, I'll just assume you want it all handed to you on a plate for no cost, free house, great, where does it come from?0 -
I don't rent a property, but as a business how do you expect something to operate on a monthly basis if there is no profit or at least for the rental to cover the tax, that would require anyone (business or an individual) to put all their own money in (without borrowing) should they or would anyone do that if there is no return when they could place it elsewhere for no effort and get a return? would you?
Its possible for corporate type letting businesses that are exempt from the kind of tax that individuals or smaller businesses are,
So given that housing costs are increasing, the amount anyone needs to borrow and/or invest will increase, rent will increase, tax will increase, how do you suppose any new properties will be funded?
Unless you can get them for a steal (vulture funds?) are you happy for vulture funds to steal properties and pay very low or no tax and still charge the max market rate? and they seem to be exempt from the kind of regulations that ordinary landlords are regarding evicting tenants.
As for the considerable risk, there is no business that will allow you to avail of their services or products for free (theft) and not be able to have you removed or be able to demand payment, and none that will allow you to remain in place if you vandalise their premises whether doing the above or not. The risks are so great people are and have bailed out, all the problems could be fixed with a pen stroke and simple courses of action that force responsibility on delinquent tenants, there are good tenants and landlords but unless the Govt of the day is willing to solve the problems then they need to provide housing for people who cannot afford to provide it for themselves, its not the responsibility of anyone to do so for them and certainly not for no benefit when you can be dragged along for 2 years without payment by a tenant who can play the system.
The current regulations play into the hands of of the worst kind of tenants, I dont think the majority of tenants are bad nor are the majority of landlords, but the current situation isnt beneficial to anyone.
The problem is, the current Govt and those before them have allowed social housing to be disposed of, any interference they had in the housing market worsened it for owners and buy to lets, they could have imposed simple measures to discourage overheating and its happening again (they dont care and I think its intentional) , none of which serves owners, landlords or tenants as it just pushes all the money up, mainly to the banks and the tax man! and its not being reinvested in housing, thats for sure.
So I never said I wanted the % you are talking about but funding the running costs is funding the tax and the mortgage, if you think anyone will invest their own money for no return, then jump right in, if you cant afford, I'll just assume you want it all handed to you on a plate for no cost, free house, great, where does it come from?
From your post above it's perfectly clear you don't understand how the business model works. You're far from some in this as there are plenty of landlords here who don't understand it either and it seemingly pains them to have to make top up payments to cover the mortgage/running cost/tax etc.
If someone isn't having a cash surplus on a month to month basis, it doesn't mean that it's not a profitable endeavor if it means that their mortgage on a property that they will own outright is closer to being paid off. If someone has to top up a monthly mortgage payment by €100 over rent after tax and running expenses, over 30 years they will have invested €36k additionally into the property over their 30% deposit. For a house of €300k, and a 30% deposit with a €100 monthly top up payment the landlord will have invested a total of €126k of his capital not derived from the property in the property - effectively doubling his money in today's terms.
It is a point often overlooked that the landlord has effectively someone else paying a large proportion of the mortgage - of a property that he will fully own when the term is over.
Yes, it's not without risk, but no investment is.0 -
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Topgear on Dave wrote: »I dont know if you slept through the last 10 to 15 years but property is most certainly not a guaranteed 10-15% appreciating asset.
Irish property is an absolutely WILD ride with huge ups and downs.
Over the past 20 years, Irish property has appreciated on average by 4% annually. If a landlord cannot be getting at least 4-5% of the property value in annual rent, in today's market -he should be out of the game.
Property is a long game, but returns of 8-10% annually are obtainable.0
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