Real Estate Investing in Ireland

joxer1988 wrote: »

So in this sense, you think it's better value to purchase a renovated house than an old house and do the work yourself?

Cheers!

As pointed out already it can add value but it may not be the equivalent of what you paid. If it’s your first rodeo buying a house that needs a lot of work may not be the best move in the world. Some houses can be money pits especially if they are very old and your jaw might drop once you open the house up and see problems such as subsidence, full rewire of houses, plumbing costs, insulation, windows etc. all I am saying is do your research first, have your eyes wide open before committing. If your doing a fixer upper especially if your new to the game I would add a 10-20pc contingency to cover yourself.

Is there any particular reason that you're purely focusing on property? At your age and the fact that you have some savings it could be a great time to start regular investments in the stock market. A lot less hassle, fewer barriers to entry and over the long term you should be able to beat residential property returns.

rmorrissey63 wrote: »

Thanks for the recommendation. I've been meaning to look into it and how it works for a period of time but have just gotten sidetracked and how does it compare to real estate, is it more profitable generally?

Property and stocks and shares are both real assets whose value, ultimately, depends on the performance of the national economy. The price of houses depends on what people are willilng to pay to rent or buy them, which in turn depends on employment rates, wage levels and so on, and so on the general health of the economy. The value of shares depends on company earnings which, again, depends on the health of the economy.

So, in the long run, taking the rough with the smooth, etc, etc, you expect both to have similar returns in the same economy.

But that can conceal an awful lot of rough and smooth. Over decades, you expect returns on investing in houses to be similar to returns on investing in companies, but that doesn't mean that the return on this house will bear any relationship to the return on this share over any particular period of time.

From the point of view of the private investor, the main difference between them is that it's relatively easy to leverage your investment in the property market with borrowing, but not at all easy to do the same with shares.

Suppose I have 100k to invest. I put it into a portfolion of shares over X number of years. Over that time the cumulatve return is, say, 50%. I sell out for 150k. I have 50k profit.

Now suppose, instead of buying the shares, I use the 100k, plus a 400k mortgage, to purchase a house for 500k. After X years, at a 50% return, the house is now worth 750k. I sell. I pay off the loan, 400k, plus let's say I have also payed 100k in interest over the years. Take away the 100k I originally invested, and my net profit is 150k - three times more than if I invested in shares.

On the other hand, if returns had been low over the period of X years, I'd be crucified. Suppose instead of a 50% return real assets earned only a 10% return. Investing in shares would mean that after X years I would have 110k. But investing in the house, on the same figures, after X years I'd have lost the whole of my 100k, and would owe a further 50k to the bank.

So, leveraging maximises returns, but also maximises losses.

While you can faff around with the fact that shares pay dividends while property pays rent, and the slightly different tax treatment of each, etc, etc., for the private investor the fact that property investment can be and generally is highly leverages, while share investment generally is not, swmaps all other differences.

Momento Mori wrote: »

While that may be true for property, it's a common misconception that the stock market is related to the national economy.

On reflection, yes, you're quite right. A great many of the shares that are readily available to Irish investors are exposed to international rather than local markets.
This tells you little, though, about which asset class will outperform the other.

Samuel T. Cogley wrote: »

DAFT rental/sales reports will give you headline figures.

Is there any report / analysis that goes into more depth than the headline numbers? Taxes, service fees, maintenance costs etc should all be part of any worthwhile study to compare real estate with other investment vehicles.

Below is an example of what I am looking for - it is from a NY times article comparing the benefits / drawbacks of buying vs renting. It discusses many of the metrics that should be part of a detailed analysis of property investment.

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

Again, I know this article does compare property vs other investments, but it does have the level of detail that would help answer the question - how does investing in property compare to the alternatives?

FernandoTorres wrote: »

You could argue that if the OP is an Irish resident and will be working here then investing in Irish property is doubling down on the performance of the Irish economy. If the economy took a serious downturn he could lose his job as well as take a large hit on the property portfolio. I think it's important to diversify in terms of asset classes as well as geographically. There's no real right or wrong answer but OP seeing as you've already done the research on property I'd recommend reading at least a couple of beginner investment books so you have the full picture before making any decisions.

Agree.
I have rental properties in Ireland and Germany, my own house in Germany and my shares are deliberately weighted away from these 2 countries.

I have no real clue about which company is the next big thing, so I invest passively in a MSCI ACWI ETF, a bundle of shares in app 2,400 companies spread across 23 industrialised nations and 23 emerging markets but 90% weighted towards the industrialised countries, which in turn are mostly weighted towards companies based in the United States but most/all large US companies derive profits globally so you are not overly exposed to the US economy itself.

It works for me like this as World ETFs barely factor the Irish economy in at all and even Germany is only 3% or something like that.

pnecilcaser wrote: »

I wonder have you considered teaming up with any friends or family to buy property? I am testing the water with my immediate family and one or two of my friends. I currently have a house which I am "house hacking" (I don't really like that term, rent-a-room scheme is more accurate). I want to invest in another property and I am currently saving and exploring options.

I looked into releasing equity from my current house but AIB said NOPE. (They would do it for refurbishing the current house but not for investing in a new property). Someone on here very recently suggested I look at Pepper Finance so I will be exploring that option very soon. In the mean time I will be saving for a 20% deposit and finding ways to increase my income.

I would not buy property with family and friends.  Nothing tests a relationship like money.  Even if everyone is in agreement when the investment is made, circumstances change.  One party might want to sell, or be impacted by the investment in getting another mortgage, or other life events may mean not everyone is aligned.  Will excess income be distributed or used to pay down a mortgage quicker?  Who decides when to sell?  If further investment is required, what if one party cant afford the additional investment?

Suggestions on ways to get involved in property, all come with their own health warnings though:

Buy an investment property with close friends/family - ensure it is set up on a legally sound basis though
Do a training course with e.g. Irish Property Owners Association or similar to get more acquainted with system and met great experienced people.
Get a job as a trainee in a Letting company or Real Estate Company
Purchase a cheap property in a large town or small city e.g. Waterford (bigger markets), do it up yourself or as much as possible over toime
Buy shares in property companies on ISEQ (great Annual Reports and see how property is managed well)
Train to become a builder/carpenter etc. and after time renovate a property

The Irish market is not as sophisticated as US or UK markets but has niches and opportunities. Many of the above comments I concur with - long game, lots of hassle.