Real Estate Investing in Ireland

rmorrissey63 · 04-08-2018 4:10am #1

Hey everyone,

My name is Rob and I've been looking to find a local forum for landlords and other property investors for a while and I believe I finally stumbled upon one. I'm 18 and looking to get into R.E investing and wondered if any of you have any advice for doing so within Ireland?

I've been watching many videos on R.E and gathered as much information as possible from forums like BiggerPockets but a lot of these gurus are based in the States and I'm wondering would basic strategys like "house hacking" and "BRRRR" work here in Ireland almost as well?

Thanks,
Rob.

DubCount · 04-08-2018 6:09pm

Firstly, well done at thinking about investments at 18 - I wish I had that attitude at that age !!
The Irish market is different in 2 major respects in my view - banking arrangements and tenancy rights. These make the kind of strategies you see in other markets difficult to replicate here.
Irish banks insist on high LTV ratios for non-buy to own mortgages. They also charge high interest rates. Finally, most of them don't really do interest only mortgages, and insist on capital repayments. Take BRRRR (Buy, renovate, rent, re-finance, repeat - I hope I got that right). When you need 40% deposit plus cost of acquisition, and you have to make capital repayments on a mortgage with rates over 5%, its hard to make that strategy work, as you wont be able to extract enough equity from your first property to refinance and repeat - especially when you are making capital repayments on a mortgage.
Even if you get past the finance issues, the regulatory environment makes becoming a landlord very risky. If you end up with a rogue tenant, the potential costs are massive. There's lots of horror stories on that side in other posts on this forum.
Overall, Ireland is not an attractive location for a budding RE investor.

handlemaster · 04-08-2018 6:38pm

rmorrissey63 wrote: »

Hey everyone,

My name is Rob and I've been looking to find a local forum for landlords and other property investors for a while and I believe I finally stumbled upon one. I'm 18 and looking to get into R.E investing and wondered if any of you have any advice for doing so within Ireland?

I've been watching many videos on R.E and gathered as much information as possible from forums like BiggerPockets but a lot of these gurus are based in the States and I'm wondering would basic strategys like "house hacking" and "BRRRR" work here in Ireland almost as well?

Thanks,
Rob.

Do you have cash to buy without mortgage ? For BTL you are looking at 20% deposit plus all the extras

rmorrissey63 · 05-08-2018 12:51am

First time buyer so yea I have enough money for the 10% down payment and yeah I've taken into account closing costs, renovation costs and other things like that.

rmorrissey63 · 05-08-2018 12:52am

Thanks for the reply, I'll be taking that into account.

05-08-2018 12:53am

And do you have an income that would make you a candidate for the 90% mortgage?

handlemaster · 05-08-2018 9:00am

rmorrissey63 wrote: »

First time buyer so yea I have enough money for the 10% down payment and yeah I've taken into account closing costs, renovation costs and other things like that.

So your not investing your buying PPR thats differnet. Looks like your all set.

Fol20 · 05-08-2018 1:37pm

If your just starting out, I would recommend looking at house hacking. It’s better and more financial efficient if you get yourself your own place first and let out some of the rooms in it. At least that way you don’t pay rent, your receiving tax free rent and your paying down equity in your first home.More importantly, you also avoid the mess of the tenancy regulation and have much more control. After you get your own ppr down to a reasonable level then you can start saving for the next one. The first 1 or 2 are always the longest,most time consuming and slowest to get off your feet but once you get going, it’s basically rinse and repeat. There will be bumps along the way and it’s a long game mentality so don’t expect to get rich in the next 20years from it. You will probably be in your 50’s before you really reap the rewards for it but then you should have a nice cushion while others will still be doing their day job with no side hustle.

rmorrissey63 · 05-08-2018 2:21pm

Fol20 wrote: »

If your just starting out, I would recommend looking at house hacking. It’s better and more financial efficient if you get yourself your own place first and let out some of the rooms in it. At least that way you don’t pay rent, your receiving tax free rent and your paying down equity in your first home.More importantly, you also avoid the mess of the tenancy regulation and have much more control. After you get your own ppr down to a reasonable level then you can start saving for the next one. The first 1 or 2 are always the longest,most time consuming and slowest to get off your feet but once you get going, it’s basically rinse and repeat. There will be bumps along the way and it’s a long game mentality so don’t expect to get rich in the next 20years from it. You will probably be in your 50’s before you really reap the rewards for it but then you should have a nice cushion while others will still be doing their day job with no side hustle.

Exactly man. On top of increasing the equity by having my tenants pay down my mortgage, I'm also going to renovate it and generate more 'sweat equity' while generating cash flow and yeah my plan is to rinse and repeat and slowly work my way up to apartment complexes. Also just out of curiosity, are you an experienced investor yourself and if so, how long have you been investing for? @Fol20

rmorrissey63 · 05-08-2018 2:24pm

handlemaster wrote: »

So your not investing your buying PPR thats differnet. Looks like your all set.

By PPR I'm assuming you mean Principle Place of Residence? And yea, the idea of "house hacking" pretty much means I buy a multi-family property (in this case a duplex) I then rent out 1 unit of the duplex and have the other unit to myself while my tenant pays down my mortgage and other side expenses while I essentially live for free while also generating cash flow.

rmorrissey63 · 08-08-2018 2:53am

Graham · 08-08-2018 7:30am

Mod Note

Similar threads merged.

Baby01032012 · 08-08-2018 8:27am

rmorrissey63 wrote: »

By PPR I'm assuming you mean Principle Place of Residence? And yea, the idea of "house hacking" pretty much means I buy a multi-family property (in this case a duplex) I then rent out 1 unit of the duplex and have the other unit to myself while my tenant pays down my mortgage and other side expenses while I essentially live for free while also generating cash flow.

PPR is principle private residence. PPRs are exempt from CGT. A duplex is one unit otherwise it won’t qualify for rent a room relief and will be subject to CGT on the portion not your PPR. As a 19 yr won’t having a family in your own home not kill the vibe..imaging bringing a girl home to your pad only to meet “your family” that’s not your family. And will a family want to live with a 19 yr old. And what happpends when the tenant ( by the way if you qualify for rent a room relief they are not your tenant) stops paying rent and refuses to leave, wrecks your gone and takes two years through rtb and courts with solicitor and barrister costs to get out.

C3PO · 08-08-2018 8:36am

I would seriously suggest that you get employment in the field for a few years to learn the way the market operates before considering investing!

Fol20 · 08-08-2018 8:48am

rmorrissey63 wrote: »

Exactly man. On top of increasing the equity by having my tenants pay down my mortgage, I'm also going to renovate it and generate more 'sweat equity' while generating cash flow and yeah my plan is to rinse and repeat and slowly work my way up to apartment complexes. Also just out of curiosity, are you an experienced investor yourself and if so, how long have you been investing for? @Fol20

Careful with renovations. They may help for the type of clientele you appeal to but in terms of equity increase. It may not add that much. Maybe if you spend 10k on it it might add max of 5k. Yes I am an experienced invester

Fol20 · 08-08-2018 8:51am

rmorrissey63 wrote: »

By PPR I'm assuming you mean Principle Place of Residence? And yea, the idea of "house hacking" pretty much means I buy a multi-family property (in this case a duplex) I then rent out 1 unit of the duplex and have the other unit to myself while my tenant pays down my mortgage and other side expenses while I essentially live for free while also generating cash flow.

In terms of Ireland I meant house hacking by buying your first house you actually live in and let rooms in it as others have pointed out so you can get up to 14k tax free and also be free of capital gains. To put it into perspective. To earn 14k tax free from standard rentals, you would need to have a profit of about 28k

Fol20 · 08-08-2018 8:53am

Baby01032012 wrote: »

PPR is principle private residence. PPRs are exempt from CGT. A duplex is one unit otherwise it won’t qualify for rent a room relief and will be subject to CGT on the portion not your PPR. As a 19 yr won’t having a family in your own home not kill the vibe..imaging bringing a girl home to your pad only to meet “your family” that’s not your family. And will a family want to live with a 19 yr old. And what happpends when the tenant ( by the way if you qualify for rent a room relief they are not your tenant) stops paying rent and refuses to leave, wrecks your gone and takes two years through rtb and courts with solicitor and barrister costs to get out.

If it’s rent a room, they have no rights and you can get rid of them in days. If they refuse to leave, call the gardai for thresspassing. If it’s standard letting it’s a different story and personally you would be a bit young for managing stuff as some people might take advantage of your age. It might be better if you shadow someone to see how they operate

Graham · 08-08-2018 8:56am

rmorrissey63 wrote: »

By PPR I'm assuming you mean Principle Place of Residence? And yea, the idea of "house hacking" pretty much means I buy a multi-family property (in this case a duplex) I then rent out 1 unit of the duplex and have the other unit to myself while my tenant pays down my mortgage and other side expenses while I essentially live for free while also generating cash flow.

As much as I admire the enthusiasm, I think you need a bit of a reality check.

You won't get a 'multi-family' property for 10% down. At your age you will be doing incredible well to get any kind of mortgage.

You will need somewhere in the region of a six figure deposit or 30%+.

There's a good chance the bank will wan't evidence that you can manage the mortgage repayments when the property is not generating an income (i.e. you will need a job sufficient to cover the mortgage payments).

You will almost certainly not be generating positive cashflow in the early years.

Stop reading the American books on 'real estate', they bare little to no resemblance to the Irish property market.

That's not meant to be deliberately harsh but I do think the American books have given you a false expectation that you're going to find impossible to meet.

scheister · 08-08-2018 9:05am

fair play thinking about it from a young age. items like property and pension people forget till they are further down the line.

I would agree with others look to work in the field first and serve an apprenticeship before looking at using your capital first.

Fol20 · 08-08-2018 9:12am

Graham wrote: »

As much as I admire the enthusiasm, I think you need a bit of a reality check.

You won't get a 'multi-family' property for 10% down. At your age you will be doing incredible well to get any kind of mortgage.

You will need somewhere in the region of a six figure deposit.

There's a good chance the bank will wan't evidence that you can manage the mortgage repayments when the property is not generating an income (i.e. you will need a job sufficient to cover the mortgage payments).

You will almost certainly not be generating positive cashflow in the early years.

Stop reading the American books on 'real estate', they bare little to no resemblance to the Irish property market.

Your right about a lot of aspects however it’s good to see someone his age thinking of his future to see how he can invest instead of “what are the lads doing on the weekend”

I assume that he has a decent paying job and he has the deposit.

markjbloggs · 08-08-2018 10:24am

Is there a definitive report analysing the Irish property market? For example, what is the average / best yield obtainable?

08-08-2018 10:26am

Fol20 wrote: »

.............

I assume that he has a decent paying job and he has the deposit.

Not many 18 year olds have decent paying jobs and deposits..........

Caranica · 08-08-2018 1:50pm

rmorrissey63 wrote: »

By PPR I'm assuming you mean Principle Place of Residence? And yea, the idea of "house hacking" pretty much means I buy a multi-family property (in this case a duplex) I then rent out 1 unit of the duplex and have the other unit to myself while my tenant pays down my mortgage and other side expenses while I essentially live for free while also generating cash flow.

If you mean duplex in terms of apartments here you'll find that dividing it into multiple letting units is against the terms of the contract you sign.

mariaalice · 08-08-2018 2:04pm

couples getting married and buying a house in their early twenties was the norm when I was young. They were not looking at it as an investment though.

Samuel T. Cogley · 08-08-2018 2:09pm

markjbloggs wrote: »

Is there a definitive report analysing the Irish property market? For example, what is the average / best yield obtainable?

DAFT rental/sales reports will give you headline figures.

Fol20 · 08-08-2018 2:12pm

Augeo wrote: »

Not many 18 year olds have decent paying jobs and deposits..........

Most don’t but I saw a thread recently where someone was on 60k at 21 in their family business so you might be surprised

rmorrissey63 · 08-08-2018 2:19pm

Graham wrote: »

As much as I admire the enthusiasm, I think you need a bit of a reality check.

You won't get a 'multi-family' property for 10% down. At your age you will be doing incredible well to get any kind of mortgage.

You will need somewhere in the region of a six figure deposit or 30%+.

There's a good chance the bank will wan't evidence that you can manage the mortgage repayments when the property is not generating an income (i.e. you will need a job sufficient to cover the mortgage payments).

You will almost certainly not be generating positive cashflow in the early years.

Stop reading the American books on 'real estate', they bare little to no resemblance to the Irish property market.

That's not meant to be deliberately harsh but I do think the American books have given you a false expectation that you're going to find impossible to meet.

Yea, I've taken that into consideration and I know the checks that go on behind getting a mortgage and in regards to my age preventing me from taking out a mortgage, my friend who is 25 in November recently went to a mortgage broker and took out a 200k+ for the next 30 years.

rmorrissey63 · 08-08-2018 2:21pm

Fol20 wrote: »

Most don’t but I saw a thread recently where someone was on 60k at 21 in their family business so you might be surprised

Yea, sharing a room with a family is the last thing I'd do.

Fol20 · 08-08-2018 2:30pm

rmorrissey63 wrote: »

Yea, sharing a room with a family is the last thing I'd do.

Normally you would just house share with people in early to late 20's

rmorrissey63 · 08-08-2018 2:32pm

Fol20 wrote: »

Normally you would just house share with people in early to late 20's

I wouldn't mind house sharing with someone I know but not a family that I don't know.

joxer1988 · 08-08-2018 3:03pm

Fol20 wrote: »

Careful with renovations. They may help for the type of clientele you appeal to but in terms of equity increase. It may not add that much. Maybe if you spend 10k on it it might add max of 5k. Yes I am an experienced invester

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!

Real Estate Investing in Ireland

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