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Long term investment property / cash

  • 28-05-2019 3:35pm
    #1
    winx2
    Registered Users Posts: 9 ✭


    Hi all

    I've read as much as I can on past threads in this forum and I know a lot of people may say i'm crazy of what im proposing but i'm trying to get some feedback.

    I woud like to invest in 1 bed apartment in Dublin city center or very close. I would use it to rent long term and i wont be looking to sell in the next 10 years.

    I'm planning to buy cash only so i'm looking at properties at around 250K mark max.

    Thinking to bid for a 1 bed apartment in D7 (Smithfields area) with parking with asking of 270. I will go lower not only cause that's my budget but also i may get an advantage as a cash buyer. Do you think offering 250 on a 270 asking price would go long way at the market right now?

    The property i'm looking for can be rented for 1700 per month. Ideally long term tenants would suit and this would fit a couple as it's about 45sqm very nicely decorated etc. Management fees are 1400 per year.

    I understand that i may be buying at the peak of the market as i've missed the wagon in some nicer areas. Still if things go bad i want to still be able to rent this even at 1400-1500 which will still give me some cash flow.

    Having easy access to the city plus a parking space should always attract tenants.

    D7 is still an affordable close to city location vs D2/D8 etc.

    Thanks!



    Based on my calculations this would generate around 700per month after tax, insurance, mgt fees etc. It's not a lot of again for the last few years i've earned 0% interest on my savings.


Comments

  • #2
    pc7
    Moderators, Entertainment Moderators, Society & Culture Moderators Posts: 13,962 Mod ✭✭✭✭pc7


    Do you have any other property? Are you currently renting? You would be absolutely bat**** crazy to blow 1/2 mil, as the ads say investments can go up and down. What happens if you wake up in 6 months with a serious illness or sick family member and all your cash is tied up. What if you want to had kids (they are expensive). Really there are so many questions we'd need the answer too before giving our 'opinions' . Would you be better investing some of it in a REIT? With that sort of disposable income I'd get good and proper advise, last resort would be property at the minute (without knowing your own situation).


  • #3
    AndrewJRenko
    Registered Users Posts: 28,273 ✭✭✭✭AndrewJRenko


    How much of your personal wealth will be dependent on the Irish residential property market?

    All your eggs in one basket is a high risk investment strategy.


  • #4
    winx2
    Registered Users Posts: 9 ✭winx2


    pc7 wrote: »
    Do you have any other property? Are you currently renting? You would be absolutely bat**** crazy to blow 1/2 mil, as the ads say investments can go up and down. What happens if you wake up in 6 months with a serious illness or sick family member and all your cash is tied up. What if you want to had kids (they are expensive). Really there are so many questions we'd need the answer too before giving our 'opinions' . Would you be better investing some of it in a REIT? With that sort of disposable income I'd get good and proper advise, last resort would be property at the minute (without knowing your own situation).

    Yes i do have other property abroad and might be living on and off in Ireland. Will still keep an emergency fund for illness etc (very small). That would be the first property in Ireland though.

    And i've considered REIT as well, i've posted here mainly on the 'what if' scenario in a 1-bed and the particulars of that location.


  • #5
    winx2
    Registered Users Posts: 9 ✭winx2


    AndrewJRenko wrote: »
    How much of your personal wealth will be dependent on the Irish residential property market?

    All your eggs in one basket is a high risk investment strategy.

    It would be the majority! I know I need to diverse


  • #6
    AndrewJRenko
    Registered Users Posts: 28,273 ✭✭✭✭AndrewJRenko


    winx2 wrote: »
    It would be the majority! I know I need to diverse

    No better time to diversify than now.


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  • #7
    pc7
    Moderators, Entertainment Moderators, Society & Culture Moderators Posts: 13,962 Mod ✭✭✭✭pc7


    Have you done the calculations if you went with a buy to let mortgage? maybe 50/50? that way you aren't using all your cash, can write off some interest etc?
    Has the place been rented before? what if you get a dodgy tenant? honestly I'd be seriously wary. What if the governement say you can't take property back for self/family use in the next 'x' years due to the emergency as being suggested by the likes of Peter McVery.


  • #8
    Del2005
    Registered Users Posts: 18,847 ✭✭✭✭Del2005


    Tenants are getting more and more rights and small landlords are being classified as evil money grabbing people.

    Can you afford no rent for 2+ years, but still need to pay tax/management fees/insurance, and the apartment completely destroyed when you eventually get it back? Because that is what is happening to too many landlords these days. In a market where the price is increasing why are current landlords leaving in droves?


  • #9
    winx2
    Registered Users Posts: 9 ✭winx2


    pc7 wrote: »
    Have you done the calculations if you went with a buy to let mortgage? maybe 50/50? that way you aren't using all your cash, can write off some interest etc?
    Has the place been rented before? what if you get a dodgy tenant? honestly I'd be seriously wary. What if the governement say you can't take property back for self/family use in the next 'x' years due to the emergency as being suggested by the likes of Peter McVery.

    That's that would be something that i want to consider.

    The place hasn't been rented before and the landlord lives there right now.

    Dodgy tenants are always a risk. References etc only try to assist you into choosing the right "tenants" but yes I understand that's a risk.

    Taking the property for self/family use was something that i had in mind maybe not in the immediate 5 years but after that.I wasn't aware of the suggested legislation.


  • #10
    winx2
    Registered Users Posts: 9 ✭winx2


    Del2005 wrote: »
    Tenants are getting more and more rights and small landlords are being classified as evil money grabbing people.

    Can you afford no rent for 2+ years, but still need to pay tax/management fees/insurance, and the apartment completely destroyed when you eventually get it back? Because that is what is happening to too many landlords these days. In a market where the price is increasing why are current landlords leaving in droves?


    That's the worst case scenario but yes it makes you realize what you are in for.

    I think the current landlords are leaving because they assume the market is at the peak and can capitalize on their property (or get most of what they've lost back). Quite a lot of properties i've seen are from landlord/owners.

    What is worrying that bids would go easily 10% of asking price sometimes even more and properties do move quickly (in good postcodes).


  • #11
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,278 Mod ✭✭✭✭The_Conductor


    winx2 wrote: »
    That's the worst case scenario but yes it makes you realize what you are in for.

    I think the current landlords are leaving because they assume the market is at the peak and can capitalize on their property (or get most of what they've lost back). Quite a lot of properties i've seen are from landlord/owners.

    What is worrying that bids would go easily 10% of asking price sometimes even more and properties do move quickly (in good postcodes).

    Honestly- the reason so many landlords are heading for the door- is not to lock in capital- its because the regulatory regime has become toxic for landlords in Ireland.

    You genuinely are wearing rose tinted glasses with your proposal.


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  • #12
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    I don't think you'll secure a property in a good block in Smithfield and some areas around there are a bit rough.


  • #13
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,278 Mod ✭✭✭✭The_Conductor


    Samuel T. Cogley wrote: »
    I don't think you'll secure a property in a good block in Smithfield and some areas around there are a bit rough.

    +1 - there are some really nice units in good blocks in Smithfield- however, not in the OP's price range.


  • #14
    winx2
    Registered Users Posts: 9 ✭winx2


    The_Conductor wrote: »
    Honestly- the reason so many landlords are heading for the door- is not to lock in capital- its because the regulatory regime has become toxic for landlords in Ireland.

    You genuinely are wearing rose tinted glasses with your proposal.

    Yep i understand the risks, but i still see some value in holding is as a 10+ year investment. It should generate a return , better than the bank. I know there are other investment but aren't similar risks (maybe less effort) carried in the stock market or elsewhere..


  • #15
    AndrewJRenko
    Registered Users Posts: 28,273 ✭✭✭✭AndrewJRenko


    winx2 wrote: »
    . I know there are other investment but aren't similar risks (maybe less effort) carried in the stock market or elsewhere..
    You certainly don't have the 'lack of diversification' problem with a stock market investment. You can very easily invest in fund or funds that spread their activities right across the globe across all sectors. So if, for example, US Pharma is down, SE Asia Tech is up and balancing it out.



    All your eggs in one basket is high risk.


  • #16
    winx2
    Registered Users Posts: 9 ✭winx2


    Samuel T. Cogley wrote: »
    I don't think you'll secure a property in a good block in Smithfield and some areas around there are a bit rough.

    Thanks for your response.

    Which areas are a bit rough ?

    The ones I’m looking are either directly at the square or towards Museum Luas stop , Collins square.


  • #17
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Well in fairness all of Smithfield has 'characters' but directly on the square should be okay. You'd really need to do a few reccies down there to see what level you're happy with. I'd be a bit more dubious of coming out the otherway that eventually leads on to Dorset Street.


  • #18
    Edgware
    Registered Users Posts: 5,875 ✭✭✭Edgware


    winx2 wrote: »
    It would be the majority! I know I need to diverse

    One bed near city centre should always be good for rental. Is the return after tax worth it


  • #19
    drunkmonkey
    Registered Users Posts: 28,067 ✭✭✭✭drunkmonkey


    Isn't it the 1 beds that will get hammered first if there's any wobble.

    You could pick up 4 X 3 bed semi's around the country and let them to the council for the next 10/20yrs for the same money. Nothing to do so none or the normal landlord worries.


  • #20
    winx2
    Registered Users Posts: 9 ✭winx2


    Thanks for the insights on Smithfield. Property should be directly on the square or very very close. You do see the odd characters around yes.


    One bed should always be appealing even if rent market crashes, at least a 1 bed in the city center.


    I'll check the options to pick up semi's and rent them to the council however you would expect a serious budget to renovate this once they are handed back!


    Would a 1 bed qualify for rent-a-room relief for let's say 9/12 months of the year (when i'm not around)? That would be one way to avoid the strict landlord/tenancy laws. I know it would make more sense if it was a 2 bed.


  • #21
    SteM
    Registered Users Posts: 6,515 ✭✭✭SteM


    winx2 wrote: »
    Thanks for the insights on Smithfield. Property should be directly on the square or very very close. You do see the odd characters around yes.


    One bed should always be appealing even if rent market crashes, at least a 1 bed in the city center.


    I'll check the options to pick up semi's and rent them to the council however you would expect a serious budget to renovate this once they are handed back!


    Would a 1 bed qualify for rent-a-room relief for let's say 9/12 months of the year (when i'm not around)? That would be one way to avoid the strict landlord/tenancy laws. I know it would make more sense if it was a 2 bed.

    Pretty sure the councils renovate them before they're handed back to the landlord.

    You have to rent a room in your primary residence to qualify for the rent a room scheme iirc. If you're not there it's not your primary residence.


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