investment

Mad_maxx · 27-11-2021 2:36pm #1

Ive come across an interesting office investment property in Dublin , well known area in Rathfarnham , its a modest sized office but the tenant appears solid , yield would be circa 8% based on asking price , Ive a dividend yield of 4.5% from my Hibernia REIT investment and Hibernia holds assets with tenants like Twitter in central dublin

suppose on one hand I like the idea of a direct commercial property ( already own one in the mid west since 2016 with a 10% yield ) but on the other , offices do get vacated and end up empty for extended periods of time

suppose the question is whether 4.5% with a commercial REIT is superior to 8% with a single office owned direct ?

lawrencesummers · 27-11-2021 2:38pm

what are the taxation implications of both?

Mad_maxx · 27-11-2021 3:04pm

https://www.boards.ie/discussion/comment/118231806#Comment_118231806

probably similar as Im not in the higher tax bracket though might well enter it soon

DubCount · 28-11-2021 12:02am

Firstly, are you calculating the net yield on the single property let. Have you factored in insurance and maintenance etc.

The higher yield comes with higher risk. The REIT has some inherent diversity, so problems that arise with one property or one tenant dont have as big an effect. Void periods are also more spread across many properties. The REIT is also more liquid - its quicker to convert back to cash quickly.

The choice is really about your personal risk profile.

Mad_maxx · 28-11-2021 11:28am

https://www.boards.ie/discussion/comment/118233961#Comment_118233961

Insurance and rates etc fall to tenants with commercial property

Agree with the rest of you're points, plenty of investors do choose direct property though, are they all foolish not to opt for REITs ?

Claw Hammer · 28-11-2021 4:36pm

The trouble with commercial tenancies is that bif you get into a dispute it can be very expensive in terms of legal fees and lost rent. If the tenant thinks you do not have deep pockets to withstand a couirt case there could be no end of trouble. When an office goes vacant, the landlord has to pay the rates and insurance as well as not getting any rent in. Sourcing a tenant for an office can be a slow process.