Why is the cost of property, esp renting, so high in Dublin?

beauf wrote: »

That will only happen on a large scale is if there is legislation to limit the profits you can make on housing. Do that and its likely a lot of these Larger LL with lose interest.

You might a tiny of % of people who will do this for altruistic reasons. But it will never be enough to satisfy demand.

I never mentioned anything to do with altruism or anything similar.

Just pointing out that it isn't efficient to have amateur landlords having one extra property as a theoretical "passive" investment.

If you are inefficient, and know that you are inefficient, then you can't be moaning and whinging if you can't manage later

beauf wrote: »

So your scenario is someone buys a BTL that needs renovating and/or a boiler (a boiler is not major cost) without factoring that into the purchase of the property. Who on earth would do this?????

Apart from that being just dumb example on so many levels. A Large investor could equally over extend themselves, make a bad purchase, as many did in the crash, and were wiped out. None of this has anything to do with being amateur or professional. Its just being insanely stupid. Neither is limited to being big or small.

Dude. It has been explained to you in fairly simple terms a few times. If you don't understand the benefits of diversification in terms of smoothing out large shocks then there is not much more that can be done. Go on there and do what you want. It doesn't bother me if you make bad personal decisions.

Buying a property that isn't cash flow positive isn't an investment.

Its a liability.

Ray Palmer wrote: »

Wow! I didn't realise you didn't understand the basics of finance. Nobody would invest in that due to the taxes and the limited return. ReITs have a huge tax advantage and aren't borrowing the money.

What you are suggesting is a large private landlord using restricted rents in place. They would have to have the cash themselves and wouldn't be able to set the rents that REITs can.

When you say you aren't a businessman why do you seem to think you can come up with a business plan for a sector. The suggestion is you know better but if it made so much sense then somebody would do it. Why aren't they? I told you why it wouldn't work and you only responded to one part ignoring the other all important factors.

You really don't have a clue do you?

You probably don't even know that bank loans are only one of many possibly sources of funding/debt.

I hope for your own sake that you don't have a large percentage of your wealth/pension tied up in a single house somewhere.

You post is completely incoherent and has no relevance to the post you replied to.

Donald Trump wrote: »

It was foreseeable. The same as an over-holding tenant is foreseeable. A professional landlord will be able to plan for, and manage, such scenarios better than the 9-5 office worker with a family who just took out a loan and bought a house to rent, hoping it would be a passive investment.


Nobody is saying a person cannot spend or invest their money how they would like to, but you have to manage the risks. That might include having more equity, or having a capital buffer set aside, or else access to an additional line of credit, to get you over a particular hump.


Here is a toy example:
Suppose there is a 10% random chance in any year of any landlord getting stung by a tenant for any given property. If you have one house, then you have a 90% chance that you will get all your money and a 10% chance that you will get zero. The issue here is that for the first scenario everything is rosy. For the latter, you might be fecked.

For the professional landlord, they might have 100 properties they are managing. They will expect about 10 of these to cause trouble. Statistically, they will be unlikely to have a situation where they get 100% of their money. But similarly, they will not be in a situation where they get zero.

the professional person can put aside, say 15%, to cover any default. The individual can also put aside 15%, but it is useless. If they actually need the buffer, they will need 100%.

How can they put away 15pc if you expect them to top it up with other income sources.

Fol20 wrote: »

How can they put away 15pc if you expect them to top it up with other income sources.

You'll need to be a little clearer. Who are you talking about? The professional person? They aren't necessarily trying to get the capital paid for free. That is the point.

See my example above of getting a 10 year mortgage/secured loan at 3%. on 300k that's 750 a month in interest. Lets suppose they rent the property for 1500 a month.

750 goes on interest.
150 (or 10%) on routine maintenance/expenses.
225 (or 15% on the other non-routine expenses such as non-paying tenants etc)

That leaves 375. But maybe they are managing dozens of properties. And they can have proper contacts and procedures in place when something goes wrong. They can have a local tradesperson on call etc.

The financial genius fella a few posts back, sure one of the last threads he started on this forum was asking randomers on an internet board on who he had to get to fix a light socket for his tenant. That is the problem with amateurs.

Donald Trump wrote: »

You'll need to be a little clearer. Who are you talking about? The professional person? They aren't necessarily trying to get the capital paid for free. That is the point.

See my example above of getting a 10 year mortgage/secured loan at 3%. on 300k that's 750 a month in interest. Lets suppose they rent the property for 1500 a month.

750 goes on interest.
150 (or 10%) on routine maintenance/expenses.
225 (or 15% on the other non-routine expenses such as non-paying tenants etc)

That leaves 375. But maybe they are managing dozens of properties. And they can have proper contacts and procedures in place when something goes wrong. They can have a local tradesperson on call etc.

The financial genius fella a few posts back, sure one of the last threads he started on this forum was asking randomers on an internet board on who he had to get to fix a light socket for his tenant. That is the problem with amateurs.

All tax free?

Which bank gives interest only loans for investment now?

Incidentally, if you listen to The Last Word podcast this evening, just after the 6pm news, you will hear discussion of a new report which confirms that REITs, because of the way they are leveraged and pay dividends, paid a whopping 1.37% tax on income from rentals here last year. It’s nice being a professional in Trumpworld.

Donald Trump wrote: »

A Bank might not give you or me an interest only loan. They might give such a loan to a professional business that has enough equity to put into the deal.

There are not only banks either btw. They could get money via equity, albeit at a higher rate of return (but unsecured). Or if big enough, they could issue their own debt to other investors - but you are talking about those REITs at that stage.

Do you think any of the above go shopping for single units?

I see the merit of your argument when applied to whole developments in Dublin, but this accounts for a very small percentage of the rental market, fo you think “professional” landlords as described above would be interested in properties outside of whole developments? They will not, so the “amateur” landlords are the owners of the other 95%. You want them to leave the market, many are, you really are talking complete BS.

But anyways, in your financial wisdom, you seem to be excluding tax on the €1500 rental, do you want to have another pass at it?

Donald Trump wrote: »

Hi again

You can write off interest against tax. That reduces your 1500 income to 750.
With enough units, the average percentage expenses and losses are more or less accurate. We pulled a figure of 10% for expenses and maintenance. That takes off another 1500. Now down to 600. We put in 15% for unexpected losses (in the sense that they are contingent on say a tenant overstaying or an unforeseeable, on an individual basis, expense). Again, with enough units the average number will be more or less accurate. This reduces your taxable amount by 225 so you are down to 375.

That 375 will still be a sort of company income. Same as for any other company. If you pay tax on the 1500, then you'd want to get a better accountant!

All interest is written off against rental income, reducing your taxable income to €750?

"why are there not enough houses?"

Cue a discussion about houses.



Has anyone considered the ever increasing number of people as a factor at all? Has anyone looked at the statistics whatsoever?

Build it, and they shall come, as the quote goes. In reality, it's "don't build it, and they'll come anyway".

Don't forget the stated, very visible, mandate of the government to "grow" the population by 1 million by 2030. It isn't the people already struggling to keep a roof over their heads that are multiplying.

Feigned ignorance all over the place, bloody dogs in the street know the story by now.

Fol20 wrote: »

Your logic makes no sense. A professional doesn’t expect the property to be paid for by tenants paying rent but an amateur does. Please explain how this makes sense.

Hello,

As illustrated above by numerous posts, the amateur landlords posting on the thread appear to expect that they should get enough rental income, after tax, to cover at least all mortgage repayments for the life of the mortgage. If they don't, again as evidenced above, they will be moaning. Basically they appear to think that a few hours in a bank, plus a few visits to an estate agent should be enough to secure a passive investment that they can forget about and come back to in 30 years and have a grand house for free.

The professional investor will just look and decide on whether the return justifies the risk of a particular investment. They might look at a house that costs 300k and see that they can make a return of 50k (in PV terms) over the life of the investment i.e. after they dispose of the property on the far end. They will be happy with it.

Amateur landlord looks at the investment and sees a return of 50k (PV) in that they have to top up the mortgage by a 250k (PV) in order to have the 300k property at the end and moans. They probably won't go for it.

In response to posts that plenty of accidental or wannabe amateur landlords are leaving, then that is fully understandable. Many are probably leaving for the reasons I've outlined above. They discover the harsh reality after a while, or maybe they were waiting to be in a position to sell due to negative equity.

It's your money, invest it how you want. But have realistic returns expectations. Understand that it will likely cost you more time and effort than the property management professionals who will also be in the business. Be aware of, and manage your risks as best you can.

Renting out a house and having the tenant default is no different to running your own business and having a large client refuse to pay or defaulting and closing without paying you. It hopefully won't happen but it can happen. If it does happen, hopefully you will have taken measures and built up buffers to allow you to cope with it and not go to the wall yourself.