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More landlords to sell up over taxes and cost of letting property

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    #92
    April 73
    Registered Users Posts: 846 ✭✭✭April 73


    handlemaster wrote: »
    Dont Forget there are alot of renters wheather or not they could afford it have no interest in buying

    True. There has to be a rental market for people who aren't intetested in the commitment of a mortgage or home ownership.


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    #93
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    RainyDay wrote: »
    Most 4-beds include 2 box rooms, which are definitely NOT designed to accomodate 2 adults - 2 kids in bunk beds maybe, but not 2 adults.



    What is their definition of 'not worth it to buy'? Do they mean 'can't get someone else to pay for my asset for me', which seems to be the usual definition when it comes to landlords?



    It means it would cost the investor money every month to service the debt plus expenses on top. Its a very populist view at the moment to say the tenant is paying for the asset etc. Do you go into a shop keeper and say im not buying these apples because with that money your paying off your loan for the shop ?


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    #94
    draiochtanois
    Registered Users Posts: 2,655 ✭✭✭draiochtanois


    This post has been deleted.


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    #95
    Blured
    Registered Users Posts: 394 ✭✭Blured


    Magnolia Enough Typographer wrote: »
    We built a new shed on the farm, we write off a considerable amount of the cost of building it every year against a combination of farm income and off-farm PAYE income. Over a number of years it will cost a fraction of the initial outlay due to the tax being written off, VAT we are allowed to reclaim on buildings (even when not VAT registered) etc.

    From a landlords point of view, they can claim some capital expenditure against tax, just not the capital outlay for the mortgage. They can write off the capital expenditure for fitting the rental property over 8 years


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    #96
    borderlinemeath
    Registered Users Posts: 5,339 ✭✭✭borderlinemeath


    RainyDay wrote: »
    Most 4-beds include 2 box rooms, which are definitely NOT designed to accomodate 2 adults - 2 kids in bunk beds maybe, but not 2 adults.



    What is their definition of 'not worth it to buy'? Do they mean 'can't get someone else to pay for my asset for me', which seems to be the usual definition when it comes to landlords?


    Off you go and save 20% deposit for a house. Even to buy a cheap* house at €150K you're looking at investing at least 40K of your own capital between deposit, fees and furnishings. That's if it doesn't need refurbishing.

    *I'm well aware that property can be purchased at under €150k, but an investor will want to buy in an area that's near a city/big town or has good transport links to them.


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    #97
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    borderlinemeath wrote: »
    Off you go and save 20% deposit for a house. Even to buy a cheap* house at €150K you're looking at investing at least 40K of your own capital between deposit, fees and furnishings. That's if it doesn't need refurbishing.

    *I'm well aware that property can be purchased at under €150k, but an investor will want to buy in an area that's near a city/big town or has good transport links to them.


    30% deposit for investors. But investors are lucky they have magic money trees they shake and it appears


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    #98
    RainyDay
    Closed Accounts Posts: 6,925 ✭✭✭RainyDay


    handlemaster wrote: »
    It means it would cost the investor money every month to service the debt plus expenses on top. Its a very populist view at the moment to say the tenant is paying for the asset etc. Do you go into a shop keeper and say im not buying these apples because with that money your paying off your loan for the shop ?

    And when you say 'service the debt', are you including capital repayments (which increase the equity in the property) or just interest?


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    #99
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    RainyDay wrote: »
    And when you say 'service the debt', are you including capital repayments (which increase the equity in the property) or just interest?

    Final word is its not an investment proposition for an investor. It will all end in higher rents next year and the year after.... trying to create an argument on what you think an investor should or shouldnt view as exceptable is pointless. Investors arent buying by the reports that are out.


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    #100
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    handlemaster wrote: »
    Dont Forget there are alot of renters wheather or not they could afford it have no interest in buying

    In fairness that number would be fairly low (certainly among Irish people). The majority would intend to buy at some stage, I don't think I know anyone who doesn't intend to buy at some point, I know many who didn't even move out of home until they bought as renting was seen as a waste.
    RainyDay wrote: »

    What is their definition of 'not worth it to buy'? Do they mean 'can't get someone else to pay for my asset for me', which seems to be the usual definition when it comes to landlords?

    Well isn't the the point of buying to let, covering the cost of buying it is surely the minimum and the intention would be to make money on top of that.

    What's wrong with expecting a rented property to pay for itself? If I were to buy somewhere to let the minimum I would expect was for the rent to cover the mortgage (after tax).


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    #101
    _Brian
    Registered Users Posts: 18,485 ✭✭✭✭_Brian


    There is a serious begrudgement in many aspects of society against a Landlord making a profit on rented property. That's how we ended in the current position.
    The expectation that the landlord should wait until the mortgage is paid in 20-30 years for their return is just bizzare.

    People peddling this notion are entitled to their opinion and while this remains the case fewer properties are available to rent, rents will increase and essentially more people cannot afford same rents.

    Some just have a chip in their shoulders against landlords but all modern societies need a functioning rental market - when landlords cannot make actual profit there will be a severely reduced rental market and tenants should expect to pay more on the back of this.

    It's the old saying "be careful what you wish for - it Might come true"


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    #102
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    I agree with Brian ... The way some people talk its as if LL s are from another world. Their just people that put their money in property. Anyone can do the same if they want. Why all the hate. Its not magic save up and invest and give your property out at below market levels to keep yourself happy.


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    #103
    khamilto
    Closed Accounts Posts: 221 ✭✭khamilto


    Magnolia Enough Typographer wrote: »
    Well isn't the the point of buying to let, covering the cost of buying it is surely the minimum and the intention would be to make money on top of that.
    Person A takes out a 100% mortgage of €200,000 from Bank B to buy property C, with a total repayments over 20years of €450,000.

    Cost of letting over 20 years is €100,000

    Person B(C,D...N) pays €600,000 over 20 years in rent, and property is now worth €470,000.

    Person A has made €50,000 'profit' (using your silly deluded definition) as well as an increase in equity of €470,000. Thus, their profit every year is €26,000, even though their unleveraged investment was €0.
    What's wrong with expecting a rented property to pay for itself? If I were to buy somewhere to let the minimum I would expect was for the rent to cover the mortgage (after tax).
    See above.

    Your posts quite literally pain me at this stage.


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    #104
    draiochtanois
    Registered Users Posts: 2,655 ✭✭✭draiochtanois


    This post has been deleted.


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    #105
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    khamilto wrote: »


    Your posts quite literally pain me at this stage.

    Afraid of someone taking sense are you?
    draiochtanois wrote: »
    This post has been deleted.

    I would say the absolute minimum that any investor would want is that the rent is covering the mortgage and all costs i.e. It's not costing them money to rent the place out. Ideally they would be making more money on top of this, i.e. Profit on the rent that they have for saving or spending etc.

    Then when the property is paid off they can either sell it to cash in on it or keep renting it for an increased profit as there is no mortgage repayments.


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    #106
    RainyDay
    Closed Accounts Posts: 6,925 ✭✭✭RainyDay


    Magnolia Enough Typographer wrote: »
    I would say the absolute minimum that any investor would want is that the rent is covering the mortgage and all costs i.e. It's not costing them money to rent the place out. Ideally they would be making more money on top of this, i.e. Profit on the rent that they have for saving or spending etc.
    What value does the investor/landlord add in this scenario? Why wouldn't the tenant just pay their own mortgage?


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    #107
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    RainyDay wrote: »
    What value does the investor/landlord add in this scenario? Why wouldn't the tenant just pay their own mortgage?

    Why wouldn't they indeed, people don't call rent dead money for nothing. Obviously renting has its place before people decide where to settle down or for people who never intend to settle down and of course those who can't get enough money for a deposit etc. But as a long term thing many people (including myself) would consider it a waste for those who choose to rent over buying.

    It shouldn't be a surprise that people are not renting out property out of the goodness of their hearts, they want to make money doing it.


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    #108
    khamilto
    Closed Accounts Posts: 221 ✭✭khamilto


    RainyDay wrote: »
    What value does the investor/landlord add in this scenario? Why wouldn't the tenant just pay their own mortgage?

    I'll answer on behalf of Nox:
    I don't understand equity. I don't know what an investment is. What is profit, baby don't hurt me, don't hurt me no more. I don't understand the difference between interest repayments on a loan and principal repayments. I don't know what an asset is. Building a shed used for carrying on business activities is the same as buying a commercial property investment. Property purchases should be infinite profit based on anyone being able to take out an unleveraged loan or else it's unfair to landlords. Everyone should be able to AT LEAST invest zero money and make several hundred thousand euros in return.


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    #109
    keane2097
    Registered Users Posts: 17,770 ✭✭✭✭keane2097


    khamilto wrote: »
    I'll answer on behalf of Nox:
    I don't understand equity. I don't know what an investment is. What is profit, baby don't hurt me, don't hurt me no more. I don't understand the difference between interest repayments on a loan and principal repayments. I don't know what an asset is. Building a shed used for carrying on business activities is the same as buying a commercial property investment. Property purchases should be infinite profit based on anyone being able to take out an unleveraged loan or else it's unfair to landlords. Everyone should be able to AT LEAST invest zero money and make several hundred thousand euros in return.

    Can you also post that again tomorrow and the following day in this and several other threads?


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    #110
    draiochtanois
    Registered Users Posts: 2,655 ✭✭✭draiochtanois


    This post has been deleted.


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    #111
    vandriver
    Registered Users Posts: 3,460 ✭✭✭vandriver


    Magnolia Enough Typographer wrote: »
    Afraid of someone taking sense are you?



    I would say the absolute minimum that any investor would want is that the rent is covering the mortgage and all costs i.e. It's not costing them money to rent the place out. Ideally they would be making more money on top of this, i.e. Profit on the rent that they have for saving or spending etc.

    Then when the property is paid off they can either sell it to cash in on it or keep renting it for an increased profit as there is no mortgage repayments.
    There is no increased profit after the final year's mortgage.There is a cash flow boost. You don't (or won't ) seem to understand the difference.


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    #112
    RainyDay
    Closed Accounts Posts: 6,925 ✭✭✭RainyDay


    Magnolia Enough Typographer wrote: »
    Why wouldn't they indeed, people don't call rent dead money for nothing. Obviously renting has its place before people decide where to settle down or for people who never intend to settle down and of course those who can't get enough money for a deposit etc. But as a long term thing many people (including myself) would consider it a waste for those who choose to rent over buying.

    It shouldn't be a surprise that people are not renting out property out of the goodness of their hearts, they want to make money doing it.

    So the answer then is 'none' - the landlord adds no value to the business?

    Or maybe a small amount of value by allowing people to live in areas/locations that they aren't ready to commit to yet?

    Is that really it? And you wonder why landlords are struggling?


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    #113
    gaius c
    Registered Users Posts: 3,528 ✭✭✭gaius c


    borderlinemeath wrote: »
    Off you go and save 20% deposit for a house. Even to buy a cheap* house at €150K you're looking at investing at least 40K of your own capital between deposit, fees and furnishings. That's if it doesn't need refurbishing.

    *I'm well aware that property can be purchased at under €150k, but an investor will want to buy in an area that's near a city/big town or has good transport links to them.

    The real headline should be "property prices are too high to allow investors make a reasonable return".


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    #114
    draiochtanois
    Registered Users Posts: 2,655 ✭✭✭draiochtanois


    This post has been deleted.


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    #115
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    gaius c wrote: »
    The real headline should be "property prices are too high to allow investors make a reasonable return".

    Going by dafts figures investors would be making a loss at todays prices


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    #116
    Tarzana2
    Closed Accounts Posts: 3,553 ✭✭✭Tarzana2


    Magnolia Enough Typographer wrote: »
    I would say the absolute minimum that any investor would want is that the rent is covering the mortgage and all costs i.e. It's not costing them money to rent the place out.

    Well, this depends on the market. Currently, this will be fulfilled as it's a hard market for renters. But in a soft market, the rent might not cover the mortgage even, never mind costs. All investments are a risk and the investor doesn't always get what they might want.

    Even if the rent isn't completely covering the mortgage, the investor is still getting help towards paying for an asset.


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    #117
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    vandriver wrote: »
    There is no increased profit after the final year's mortgage.There is a cash flow boost. You don't (or won't ) seem to understand the difference.

    There is increased profit as the major cost (paying the mortgage) is gone.

    I don't consider building equity as making an ongoing profit from your rental business. Covering your repayments (and other costs) is breaking even.


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    #118
    RainyDay
    Closed Accounts Posts: 6,925 ✭✭✭RainyDay


    gaius c wrote: »
    The real headline should be "property prices are too high to allow investors make a reasonable return".

    Or perhaps "property prices are too high to allow investors have their tenants pay their mortgages for them"?

    Magnolia Enough Typographer wrote: »
    I don't consider building equity as making an ongoing profit from your rental business.
    Basic maths and basic accounting would disagree with you.


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    #119
    duskyjoe
    Closed Accounts Posts: 643 ✭✭✭duskyjoe


    Big problem now is that landlords that bought in the boom are now having to pay capital and interest plus no offset of interest against tax, all property tax investment vehicles just cleavered by the government , increase in service charges etc. Leaves very little room for actual maintenance on the units. Banks won't negoiate with landlords so the rot sets in. Not looking for a violin but the govt are screwing property owners and it's a mugs game to be in now unless your a pro.


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    #120
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    RainyDay wrote: »

    Basic maths and basic accounting would disagree with you.

    An asset is not profit until it's sold. You can't do your shopping with the increased equity in an asset or you can't put it in a savings account.

    It's only realised when/if it's sold. The business of renting is to make an ongoing profit hopefully after covering all costs including the mortgage. Selling the property at a later date I would not be taking into account during my day to day operating of the business.

    Having an investment property is definitely something I consider having but I wouldn't do it unless I was having my mortgage and all costs completely covered by the rent and preferably I'd be making profit every month on top of that also.

    This is of course very difficult to achieve which is why I would only do it if (a) I lived in the place for a few years first and then rented it out when moving to where I planned to stay living for good or (b) the right circumstances (money to invest, low mortgage, fairer tax treatment for LLs etc) meant that it was possible for an ongoing profit (i.e. additional monetary income) to be made every year.


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    #121
    draiochtanois
    Registered Users Posts: 2,655 ✭✭✭draiochtanois


    This post has been deleted.


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