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

The Student · 17-01-2020 9:28am

Ray Palmer wrote: »

I don't quite agree with you as I believe the narrative of rent allowance schemes is not a huge draw on the private sector. There are plenty of people able to house themselves in private rentals and they are the majority.

Using HAP does have an effect but often overblown. Time will make the situation worse as private tenants retire and then may start looking for HAP. Right now a minor issue.

The financial restrictions are enough to say not everybody can be a landlord. It is a case of have and have nots. If you can never become a landlord in the normal course of events and the same applies to friends and family of course you will resent those that can. Hence you have idiotic statements like the landlord and asset classes. So people do see themselves as different along with the resentment.

They are why people complain about people making profit. That and the history in Ireland that gives us a post colonial chip on our shoulder. Don't here people complain about Tesco profits in the same way because they never encounter the board of directors. They will meet a landlord and already think they are scum

I think we may have to agree to disagree. HAP has put a floor on rents which has artifically increased rents.

I can personally attest to this, when I was renting a property two years ago a prospective tenant informed me that they were entitled to €1800 although the market rent was only €1650.

I did not rent to this person as I go with "my gut" and ended up renting at €1650. Had I gone with this person the €1800 would have increased 4% each year rather than the €1650 increasing by 4% each year.

There are a significant number of people who do have access to funds to purchase or at a min have a deposit for rental properties, those in their 40's and over who have savings earning very little in various financial institutions etc.

Landlords are not asset classes, they are simply business people. I do agree we have this historical bias to landlords because of our past.

The Student · 17-01-2020 9:39am

Donald Trump wrote: »

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.

Landlords are business people pure and simple, the market is effecient and those who can't succeed will leave as in any industry.

You appear to be muddying the waters by trying to differentiate what "professional" v "amateur" landlords expect as a return on their investment. REITS don't have the cost of capital (other than the opportunity cost) they are cash buyers and are charging market rent or above.

An amatuer landlord is charging the same rent but the breakdown of his income is covering both capital and income whereas the professional landlord is purely income (as they don't have capital repayments).

Renting is not like any other business as you allude to. No other business that I am aware of forces you to continue providing a service even when you are not being paid. If you can provide an example of another business where this is the case I would like to hear of it.

If you have a large client who defaults on an invoice you have some chance of getting some of your outstanding balance back, large clients always have some assets and even if they go down the road of liquidation, receivership or examinership in the majority of cases all creditors receive a dividend against their outstanding balance even if it is only 10c in the Euro.

VonBeanie · 17-01-2020 9:57am

Donald Trump wrote: »

………..
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.

Its very different - that's the single biggest problem with the rental market today.

In a normal business, when you don't get paid, you stop providing goods/services to that customer. In residential property letting, when you don't get paid, you have to continue providing the service for up to 2 years.

Lets consider the "buffer" you need if you get a non-paying tenant. 2 years mortgage payments with no rental income, costs of legal representation at various RTB and court appearances, costs of repairing any damage/theft your non-paying tenant does to your property before they are finally evicted. All in, you are talking €50k or maybe more.

"Amateur Landlords" don't usually have €50k+ spare cash. No matter what the returns, or whether the rent covers the mortgage or not - they cant afford the commercial risk of being in the business. That's why they are leaving.

Consider what taking €50k out of your family budget over the next 2 years would look like and see if you fancy the game of Irish Landlord roulette.

Gumbo · 17-01-2020 10:08am

Donald Trump wrote: »

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.

Listen Dude, your all over the place with your posts.

You still bang on that an Amateur Landlord expects a tenant to pay the mortgage, yet you still maintain that a professional Landlord doesn't

Tenants are paying for a service. End of.
Do you begrudge the taxi driver his/her fare as he/she will be using that money to part pay any loans he has?

coolshannagh28 · 17-01-2020 10:59am

The elephant in the room is FDI , for 7 years US big money in the form of Vultures , hedge funds, REITS , and cuckoo funds have descended and bought up huge chunks of available property and are now in a position to manipulate the market to maximise rents and profit and are operating under very favourable tax status over individuals who are being ousted from the market under government policy . This was a quid pro quo for continued US investment when Ireland struggled and is now a fact of life ; the question to be asked is; was it worth it ?

17-01-2020 11:45am

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 150. 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!

I don't think this underlined part is correct. You can't squirrel away 15% of your income for a rainy day and not pay tax on it. Sure, why not say "I'm putting 100% of it offside 'just in case'" and then pay zero tax?

Shelga · 17-01-2020 12:42pm

If you own a property but then leave Ireland and rent it out- presumably you then pay far less tax as it's the only income you then have within the country?

Ie the equivalent of having a job that pays ~€15k a year.

The Student · 17-01-2020 12:59pm

Shelga wrote: »

If you own a property but then leave Ireland and rent it out- presumably you then pay far less tax as it's the only income you then have within the country?

Ie the equivalent of having a job that pays ~€15k a year.

You would pay 20% tax and then you disclose it as income in the country you are living. Technically the tenants are supposed to withhold the 20% of rent and remit it to Revenue but in practice this does not happen.

Donald Trump · 17-01-2020 1:09pm

Deleted User wrote: »

I don't think this underlined part is correct. You can't squirrel away 15% of your income for a rainy day and not pay tax on it. Sure, why not say "I'm putting 100% of it offside 'just in case'" and then pay zero tax?

You didn't understand my point. Perhaps I was confusing.

With a large sample size, the empirical observation will converge on the average. So your expense/write off will be close to the expected amount.

Don't get hung up on the number. We'll say it's 10% of tenants default. And each tenant is equally likely, from what you can tell, to default. And we assume that defaults are uncorrelated (the latter will not be accurate in the case of something like the meltdown a decade ago)

If you have one tenant, then you cannot have 10% of your tenants defaulting. You will either have 0 with 90% probability or 1 with 10%.

If you have 10 tenants, you can expect 1 (38% probability) of them to default. But it could be 0 (@35%), 2 (@19%), 3 (@6%), 4 (@1%),.. etc. So it is still reasonably uncertain. You expect not to get 10% of your income, but lets say that the range of uncertainty is (0-30%). You will be in that range roughly 99% of the time.

Now, if you have 1000 tenants, then you will expect there to be 100 defaults (@4.2% probability). The corresponding range for 99% probability is (87-123) which is (8.7 - 12.3%).

Putting that all together, the business is not squirreling away 15%. They are allowing a buffer of say 15% to cover what will be a likely business cost. This is manageable.

But if you only have one tenant, then 15% is irrelevant and not manageable. 15% will either not be required at all, or it won't be enough. Because you are will either have 0% or 100% of defaults and you will need either 0% or 100% as a buffer.

So if you don't care about the figures then consider these two scenarios.
Scenario A) 100 houses, each owned by single-property-landlords.
Scenario

100 houses owned by one property company with 100 equal shareholders.

10 tenants default.
Under scenario A, this might bankrupt 10 property owners.
Under scenario B, it's just a 10% loss which was somewhat expected for the shareholders.

Because scenario B is much less risky, shareholders will require less of a return. It's just an investment. A reasonable investor would not think that they can get a loan of say 300k to become a shareholder under scenario B, that the income from those shares will fully pay back their loan, and that in 30 years they will have an inflation protected asset worth 300k real. I am sure that they won't complain if that is the case, but they're still going to invest if the end asset is 100k real. Because that would be a great investment! Do you not agree? But tell that to the individual landlord - that they can put all the income towards the mortgage and at the end of it have to sell the house and only be left with 33% of the sale price after paying off the loan and they'll think it's not good. They are risking possibly being bankrupted for that. They realise this over time and they want to get out of the market. That is completely understandable (and advisable IMO if they do not have capacity to cope in the worst case scenario)

Where does this come into price of housing etc. Well the individual landlords bring in inefficiencies. The might find it more difficult to deal with overholding tenant. They might not have the funds to renovate a property after the last tenant made shite of the place. Maybe they get stung by one tenant and don't want to rent it out again for a while. Plus then builders and estate agents and legal have to deal with multiple purchasers. And the builder needs bridging finance etc etc to maybe build a new development. All of these things create frictions. End result for the consumer is higher prices.

katiek102010 · 17-01-2020 1:20pm

Basic economics, supply and demand.

A shortage of any product with and increase in the consumers of that product leads to increase in the sale price / rental price . It does not matter if its bread or property.

Gumbo · 17-01-2020 1:37pm

Donald Trump wrote: »

You didn't understand my point. Perhaps I was confusing.

With a large sample size, the empirical observation will converge on the average. So your expense/write off will be close to the expected amount.

Don't get hung up on the number. We'll say it's 10% of tenants default. And each tenant is equally likely, from what you can tell, to default. And we assume that defaults are uncorrelated (the latter will not be accurate in the case of something like the meltdown a decade ago)

If you have one tenant, then you cannot have 10% of your tenants defaulting. You will either have 0 with 90% probability or 1 with 10%.

If you have 10 tenants, you can expect 1 (38% probability) of them to default. But it could be 0 (@35%), 2 (@19%), 3 (@6%), 4 (@1%),.. etc. So it is still reasonably uncertain. You expect not to get 10% of your income, but lets say that the range of uncertainty is (0-30%). You will be in that range roughly 99% of the time.

Now, if you have 1000 tenants, then you will expect there to be 100 defaults (@4.2% probability). The corresponding range for 99% probability is (87-123) which is (8.7 - 12.3%).

Putting that all together, the business is not squirreling away 15%. They are allowing a buffer of say 15% to cover what will be a likely business cost. This is manageable.

But if you only have one tenant, then 15% is irrelevant and not manageable. 15% will either not be required at all, or it won't be enough. Because you are will either have 0% or 100% of defaults and you will need either 0% or 100% as a buffer.

So if you don't care about the figures then consider these two scenarios.
Scenario A) 100 houses, each owned by single-property-landlords.
Scenario 100 houses owned by one property company with 100 equal shareholders.

10 tenants default.
Under scenario A, this might bankrupt 10 property owners.
Under scenario B, it's just a 10% loss which was somewhat expected for the shareholders.

Because scenario B is much less risky, shareholders will require less of a return. It's just an investment. A reasonable investor would not think that they can get a loan of say 300k to become a shareholder under scenario B, that the income from those shares will fully pay back their loan, and that in 30 years they will have an inflation protected asset worth 300k real. I am sure that they won't complain if that is the case, but they're still going to invest if the end asset is 100k real. Because that would be a great investment! Do you not agree? But tell that to the individual landlord - that they can put all the income towards the mortgage and at the end of it have to sell the house and only be left with 33% of the sale price after paying off the loan and they'll think it's not good. They are risking possibly being bankrupted for that. They realise this over time and they want to get out of the market. That is completely understandable (and advisable IMO if they do not have capacity to cope in the worst case scenario)

Where does this come into price of housing etc. Well the individual landlords bring in inefficiencies. The might find it more difficult to deal with overholding tenant. They might not have the funds to renovate a property after the last tenant made shite of the place. Maybe they get stung by one tenant and don't want to rent it out again for a while. Plus then builders and estate agents and legal have to deal with multiple purchasers. And the builder needs bridging finance etc etc to maybe build a new development. All of these things create frictions. End result for the consumer is higher prices.

So the large REITs increase the rent of all their units to a higher figure to allow for the 10% of tenant defaults. Lovely.

Ray Palmer · 17-01-2020 1:41pm

Assetbacked wrote: »

Eh?!

A tenant can break a lease with no consquences. They did this when the rents dropped or threatened to. If a landlord tried to do that they are fined. Not an equal standing and unfair which has been abused.

Donald Trump · 17-01-2020 1:43pm

kceire wrote: »

So the large REITs increase the rent of all their units to a higher figure to allow for the 10% of tenant defaults. Lovely.

Seriously? You can't understand basics?

I think my time here is done. Not much point sticking around.

I'll leave the amateur wannabe landlords here wanting someone to do the work to pay for their house to give it to them for free.

The country was destroyed for hundreds of years by English landlords thinking they were entitled to have Paddy do all the work and for the landlord to live off their back for no more value-add than having their name on a piece of paper. Seems like independence just brought on plenty of cases of "monkey see monkey do" 100 years later!

Donald Trump · 17-01-2020 1:44pm

Ray Palmer wrote: »

A tenant can break a lease with no consquences. They did this when the rents dropped or threatened to. If a landlord tried to do that they are fined. Not an equal standing and unfair which has been abused.

You're gas.

17-01-2020 1:56pm

Donald Trump wrote: »

You didn't understand my point. Perhaps I was confusing......

I get your point re: having other properties as a backup so you aren't reliant on one gaff / don't feel the pinch when they do default on rent etc. (It's similar to diversification of stocks etc....essentially don't put all your eggs in one basket).

Your underlined point, though, was in relation to tax. Actually, while typing this out I think I get where you're coming from. Are you saying that you obviously won't have to pay tax on rent if you don't receive it? So if 15% of your tenants default, that's 15% of your projected income which you don't receive and, therefore, isn't taxable?

The Student · 17-01-2020 2:08pm

Donald Trump wrote: »

Seriously? You can't understand basics?

I think my time here is done. Not much point sticking around.

I'll leave the amateur wannabe landlords here wanting someone to do the work to pay for their house to give it to them for free.

The country was destroyed for hundreds of years by English landlords thinking they were entitled to have Paddy do all the work and for the landlord to live off their back for no more value-add than having their name on a piece of paper. Seems like independence just brought on plenty of cases of "monkey see monkey do" 100 years later!

This is a ridicolus post. You appear to be someone who does not agree with the concept of business. You want a service supplied but on your terms and you are not happy when business does exactly it is supposed to ie maximise profit.

Looking at your posts you seem to be intelligent but are blinded/unhappy with capitalism.

You are certainly entitled to your opinion as are others on this forum, but you can't deny the facts that are blatantly obvious as to why property costs are so high in Dublin.

Simple economics demand is outstripping supply, nothing more nothing less this is fact. Additionally supply of rental properties are reducing each year and will continue to do so until there is a balance between both tenants and landlords.

Finally, you have referenced professional landlords on numerous occassions in your posts as those who will bring a professionalism to the sector etc. I hope what you want does not happen for the simple reason if you have a small number of influential suppliers with the financial backing they will control the market and as capitalists their sole aim will be to extract as much profit as possible.

Donald Trump · 17-01-2020 2:16pm

Deleted User wrote: »

I get your point re: having other properties as a backup so you aren't reliant on one gaff / don't feel the pinch when they do default on rent etc. (It's similar to diversification of stocks etc....essentially don't put all your eggs in one basket).

Your underlined point, though, was in relation to tax. Actually, while typing this out I think I get where you're coming from. Are you saying that you obviously won't have to pay tax on rent if you don't receive it? So if 15% of your tenants default, that's 15% of your projected income which you don't receive and, therefore, isn't taxable?

Yeah, it would be a writeoff regardless of whether you are individual or large company. It's just that for the individual, they might have to pay tax on the amount needed to build up their buffer if they want one (which might have to be 100% or 1 years rent say). So there is a cost to them to build that up. They might never have to use it, and if they do, then they won't pay tax on the income for that year because they won't have received income that year. But the buffer would be needed to keep paying the mortgage.

Now for the theoretical landlord with 1000 units, they can be fairly certain of realising something close to the expected loss. They don't need to have a one-year buffer built up. They just need to plan to be able to cope with say 15% default in that year.

So even if, over the life of the mortgage, the both experience the same rate of default in the sense that 10% of the big landlords tenants default per year, and that the individual landlord had 3 years out of 30 that were defaults, the big landlord can plan and manage that risk much better. The individual might go bankrupt. So it's a bigger risk. Bigger risk requires more return.

Donald Trump · 17-01-2020 2:28pm

The Student wrote: »

This is a ridicolus post. You appear to be someone who does not agree with the concept of business. You want a service supplied but on your terms and you are not happy when business does exactly it is supposed to ie maximise profit.

Looking at your posts you seem to be intelligent but are blinded/unhappy with capitalism.

You are certainly entitled to your opinion as are others on this forum, but you can't deny the facts that are blatantly obvious as to why property costs are so high in Dublin.

Simple economics demand is outstripping supply, nothing more nothing less this is fact. Additionally supply of rental properties are reducing each year and will continue to do so until there is a balance between both tenants and landlords.

Finally, you have referenced professional landlords on numerous occasions in your posts as those who will bring a professionalism to the sector etc. I hope what you want does not happen for the simple reason if you have a small number of influential suppliers with the financial backing they will control the market and as capitalists their sole aim will be to extract as much profit as possible.

I don't know what you are reading into capitalism. I would be advocating the mobilization of capital in more efficient forms.

You see, the individual landlords require greater return because that system is more risky (and inefficient).

Consider what I said in a previous post in relation to the two scenarios. 100 people buying one house (@300k) each or 100 people putting their money together. For the former scenario, each will require a greater rate of return and won't hand over their money unless that is reached. So maybe it's not worth their while at the minute so the builders won't build. But the latter have less risk and will buy their property now. So that will create demand to develop it. There could be 100 people on this forum looking to invest 300k and waiting for some scheme to start building. Maybe you want to do it. But if you ring up a builder and tell him you want one house, he isn't necessarily going to start building an estate. now, if you have 100 people with a total of 30m, then you go to the developer, you tell him we have 30m, what can you do for us. He is not dealing with 100 different individuals or promises. It's just 1 entity. He won't need as much finance, or if he does, it won't be as risky and therefore cheaper so maybe he can actually turn a few quid on building it now because it will be nice and clean.

Back a few decades ago, every day goods were relatively much more expensive. There were small corner shops etc. Maybe the shop owner also had a pub and opened the shop only on a Saturday and that suited because people bought their things on a Saturday and that was the way it was always done. Nobody would say that those little shop owners were creaming it just because the end buyer was paying relatively more.
Then the supermarkets came. And they were more efficient. Ok, some people lost their small corner shops but overall things were better. Later on the foreign multiples came in (bringing in problems of the other extreme but that is a different topic).
It would hardly be perceived as anti-capitalist to say that they second system was better for the consumer than the first?
The above example is analogous to the rental sector in a simplistic way. The individual 1-property landlord is the corner shop. Then we have the professionals which are analogous to the local independent supermarket. It is their business, they are making a living out of it, but they are serving more people. Then the multiples like Tesco/Dunnes would maybe be analogous to the REITs etc.

So I don't know where you are getting anti-capitalist from. All I am saying is that if you are in the town, there are two local supermarkets, Aldi are looking at buying and developing a warehouse-style shop on the edge of town, then maybe it's not a good time to try to open up a corner shop selling a few groceries and newspapers etc.

BTW, absentee landlords leeching off the people of this country for centuries was not "capitalism". It was exploitation. They added very little. Some attitudes do appear to be a little similar in the sense of "I can use my name to get a loan, Paddy can pay it off for me and then I keep the property, having had to do relatively little to justify my return".

The Student · 17-01-2020 2:37pm

Donald Trump wrote: »

I don't know what you are reading into capitalism. I would be advocating the mobilization of capital in more efficient forms.

You see, the individual landlords require greater return because that system is more risky (and inefficient).

Back a few decades ago, every day goods were relatively much more expensive. There were small corner shops etc. Maybe the shop owner also had a pub and opened the shop only on a Saturday and that suited because people bought their things on a Saturday and that was the way it was always done. Nobody would say that those little shop owners were creaming it just because the end buyer was paying relatively more.
Then the supermarkets came. And they were more efficient. Ok, some people lost their small corner shops but overall things were better. Later on the foreign multiples came in (bringing in problems of the other extreme but that is a different topic).
It would hardly be perceived as anti-capitalist to say that they second system was better for the consumer than the first?
The above example is analogous to the rental sector in a simplistic way. The individual 1-property landlord is the corner shop. Then we have the professionals which are analogous to the local independent supermarket. It is their business, they are making a living out of it, but they are serving more people. Then the multiples like Tesco/Dunnes would maybe be analogous to the REITs etc.

So I don't know where you are getting anti-capitalist from. All I am saying is that if you are in the town, there are two local supermarkets, Aldi are looking at buying and developing a warehouse-style shop on the edge of town, then maybe it's not a good time to try to open up a corner shop selling a few groceries and newspapers etc.

Well then can you explain why the REITS are targeting the high end of the market and not undercutting existing landlords?

How is this good for the consumer in the rental market if I am to use your analogy above regarding the supermarket multiples v the corner shops ?

Fol20 · 17-01-2020 2:47pm

The Student wrote: »

Well then can you explain why the REITS are targeting the high end of the market and not undercutting existing landlords?

How is this good for the consumer in the rental market if I am to use your analogy above regarding the supermarket multiples v the corner shops ?

Using his analogy, costs came down and more stock was available as a result of reits(super markets) taking over and amateur ll(corner shops) leaving.

I can see your analogy and what you mean but I don’t think it’s like for like. Would you say reits are a disrupter then? Has there been any other western nation where something similar as happened that have benefited tenants?

Ush1 · 17-01-2020 2:54pm

Donald Trump wrote: »

Seriously? You can't understand basics?

I think my time here is done. Not much point sticking around.

I'll leave the amateur wannabe landlords here wanting someone to do the work to pay for their house to give it to them for free.

The country was destroyed for hundreds of years by English landlords thinking they were entitled to have Paddy do all the work and for the landlord to live off their back for no more value-add than having their name on a piece of paper. Seems like independence just brought on plenty of cases of "monkey see monkey do" 100 years later!

What extra "work" should they be doing? What extra "work" do REITS do exactly?

Donald Trump · 17-01-2020 2:57pm

Fol20 wrote: »

Using his analogy, costs came down and more stock was available as a result of reits(super markets) taking over and amateur ll(corner shops) leaving.

I can see your analogy and what you mean but I don’t think it’s like for like. Would you say reits are a disrupter then? Has there been any other western nation where something similar as happened that have benefited tenants?

I'm not necessarily in favour of wholescale REIT kind of ownership. I believe they have a place and a use. Legislation would need to be there to protect the tenant (I know that that is more or less the case now).

I'm not against individual landlords per se. People can do what they want with their money and property ownership is a protected right. Just as long as you know the risks. Expected return might not turn out the way you want it to. You will be competing with the bigger boys at some stage.

A big chunk in the happy medium in between single-landlord and REITs might be beneficial

Donald Trump · 17-01-2020 3:03pm

Ush1 wrote: »

What extra "work" should they be doing? What extra "work" do REITS do exactly?

They mobilize capital and do the deals. They can create the developments. Currently you might have a smaller Johnny Ronan in that role. He's not out laying blocks. His main value-add is just getting the money together. The REITs can perform the same role.

Ush1 · 17-01-2020 3:18pm

Donald Trump wrote: »

They mobilize capital and do the deals. They can create the developments. Currently you might have a smaller Johnny Ronan in that role. He's not out laying blocks. His main value-add is just getting the money together. The REITs can perform the same role.

Getting a loan from a bank is mobilising capital. Most REITs are paying for developments in cash so capital isn't an issue, less "work" really.

If doing deals is the work I'm not really seeing it to be honest. Johnny Ronan can get money together but he's gonna make a lot more out of it than someone with a single property they rent out.

I agree they can fund developments but just large scale apartment blocks near the city(high yield). The vast majority of the market is small scale landlords.

Gumbo · 17-01-2020 3:18pm

Donald Trump wrote: »

You see, the individual landlords require greater return because that system is more risky (and inefficient).

.

But in the real world, the Pro Landlord (as you call them), REITS, finds etc are all charging significantly more than the small individual landlord.

Ush1 · 17-01-2020 3:26pm

kceire wrote: »

But in the real world, the Pro Landlord (as you call them), REITS, finds etc are all charging significantly more than the small individual landlord.

I hope he's not suggesting that because REITs can absorb costs that he's expecting them to not maximise profit by charging as much as they can.

Ray Palmer · 17-01-2020 4:01pm

Donald Trump wrote: »

You're gas.

Did I say something untrue?
Still waiting for you to explain away how your new "professional' landlord can get around the rent caps on places previously rented and the taxes being more than REIT. Without those addressed your idea can't possibly work.

The Student · 17-01-2020 4:16pm

Donald Trump wrote: »

I don't know what you are reading into capitalism. I would be advocating the mobilization of capital in more efficient forms.

You see, the individual landlords require greater return because that system is more risky (and inefficient).

Consider what I said in a previous post in relation to the two scenarios. 100 people buying one house (@300k) each or 100 people putting their money together. For the former scenario, each will require a greater rate of return and won't hand over their money unless that is reached. So maybe it's not worth their while at the minute so the builders won't build. But the latter have less risk and will buy their property now. So that will create demand to develop it. There could be 100 people on this forum looking to invest 300k and waiting for some scheme to start building. Maybe you want to do it. But if you ring up a builder and tell him you want one house, he isn't necessarily going to start building an estate. now, if you have 100 people with a total of 30m, then you go to the developer, you tell him we have 30m, what can you do for us. He is not dealing with 100 different individuals or promises. It's just 1 entity. He won't need as much finance, or if he does, it won't be as risky and therefore cheaper so maybe he can actually turn a few quid on building it now because it will be nice and clean.

Back a few decades ago, every day goods were relatively much more expensive. There were small corner shops etc. Maybe the shop owner also had a pub and opened the shop only on a Saturday and that suited because people bought their things on a Saturday and that was the way it was always done. Nobody would say that those little shop owners were creaming it just because the end buyer was paying relatively more.
Then the supermarkets came. And they were more efficient. Ok, some people lost their small corner shops but overall things were better. Later on the foreign multiples came in (bringing in problems of the other extreme but that is a different topic).
It would hardly be perceived as anti-capitalist to say that they second system was better for the consumer than the first?
The above example is analogous to the rental sector in a simplistic way. The individual 1-property landlord is the corner shop. Then we have the professionals which are analogous to the local independent supermarket. It is their business, they are making a living out of it, but they are serving more people. Then the multiples like Tesco/Dunnes would maybe be analogous to the REITs etc.

So I don't know where you are getting anti-capitalist from. All I am saying is that if you are in the town, there are two local supermarkets, Aldi are looking at buying and developing a warehouse-style shop on the edge of town, then maybe it's not a good time to try to open up a corner shop selling a few groceries and newspapers etc.

BTW, absentee landlords leeching off the people of this country for centuries was not "capitalism". It was exploitation. They added very little. Some attitudes do appear to be a little similar in the sense of "I can use my name to get a loan, Paddy can pay it off for me and then I keep the property, having had to do relatively little to justify my return".

Now I see your true colours with your edited post. So now landlords be they national or international are not capitalists they are exploiters. This speaks volumes about your view. You are comparing landlords of the post where tenants had no rights whatsoever with tenants now who have significant rights even more so than landlords.

I will now bow out of responding to any of your future posts on this topic as you appear unwilling to accept that being a landlord is a business and the aim of which is to earn max profits. It would appear that you want professional landlords but don't want to pay for the service they give.

You have also failed to answer questions that I an other posters have posed either because you either don't/can't answer.

daithi84 · 17-01-2020 4:51pm

Main reasons is because our housing stock was sold off at rock bottom prices by NAMA in order to pay off banking bailout loans as quick as possible. Another reason is the hording of land in key areas by land owners, therefore pushing up the price of land which has a knock on effect onto construction costs and eventually rental prices. There is a huge housing supply deficit and collusion i with construction industry pushing up prices. You also have the effect of lots of ordinary people pushed out of the housing purchase market due to central bank lending rules and wages not increasing inline with house inflation. Therefore this pushes more people into the rental market and increasing demand.

Ray Palmer · 17-01-2020 5:15pm

daithi84 wrote: »

Main reasons is because our housing stock was sold off at rock bottom prices by NAMA in order to pay off banking bailout loans as quick as possible. Another reason is the hording of land in key areas by land owners, therefore pushing up the price of land which has a knock on effect onto construction costs and eventually rental prices. There is a huge housing supply deficit and collusion i with construction industry pushing up prices. You also have the effect of lots of ordinary people pushed out of the housing purchase market due to central bank lending rules and wages not increasing inline with house inflation. Therefore this pushes more people into the rental market and increasing demand.

Really isn't. Much simpler explanation more people rent now and construction stopped for a number of years causing a shortage. Nama is a tiny drop in the ocean on effects.

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

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