Buy to let apartment in Cork.

Barr

Hi All

My Uncle has been made redundant and is looking to invest the money in an apartment and try and get some income coming in. He will be putting in savings and taking a small part loan.

He is looking for Apartments around the €100k mark as his budget.

I’m just wondering where the best areas for rental return? I would say city centre – the likes of these.

http://www.daft.ie/searchsale.daft?id=645725

http://www.daft.ie/searchsale.daft?id=567854


My uncle reckons an apartment in the likes of Douglas/ Blackrock e.g Jacobs Island , Eden etc is a better bet?


What do ye reckon? Feedback welcome

This is solely an investment and will be rented out.

Faith

Honestly, I'd stay well away from the two places you posted. Pope's Quay is fairly horrible and I've had many people advise me to stay well away from there. The South Terrace apts are supposed to have all sorts of problems too, as well as being overpriced and there's no parking available.

A city centre location is great, but renters will look for things like parking most of the time, especially if he's aiming at professionals.

One word: depreciation. He'll lose far more on that then he'll ever make on rent.

Investing in property when the market is in free fall is absolute madness. Wait until NAMA starts offloading the huge glut of housing stock they took off the hands off FFs buddies, property values will go through the floor.

We are a long, long way from the bottom of this property crash.

Just my 2c.

Deleted User

Deleted User wrote: »

One word: depreciation. He'll lose far more on that then he'll ever make on rent............

Over 20 to 30 years that's unlikely really.
If he is buying a property outright for €100,000 the rental return even if idle 2 months every year would see an after expenses income of about €5000/annum, there won't be a mortgage.

I can't conceptually imagine how a €100,000 property will depreciate as you predict it will over the next 20 to 30 years.

No doubt property prices aren't at rock bottom yet though.

RoverJames

RoverJames wrote: »

Over 20 to 30 years that's unlikely really.
If he is buying a property outright for €100,000 the rental return even if idle 2 months every year would see an after expenses income of about €5000/annum, there won't be a mortgage.

I can't conceptually imagine how a €100,000 property will depreciate as you predict it will over the next 20 to 30 years.

No doubt property prices aren't at rock bottom yet though.

But why buy it now when you could buy it in 3-5 years for half the price?

That's like buying a new coat in a shop for 100 quid the day before a 50% off sale.

evilivor

Barr wrote: »

Hi All

My Uncle has been made redundant and is looking to invest the money in an apartment and try and get some income coming in. He will be putting in savings and taking a small part loan.

He is looking for Apartments around the €100k mark as his budget.

I’m just wondering where the best areas for rental return? I would say city centre – the likes of these.

http://www.daft.ie/searchsale.daft?id=645725

http://www.daft.ie/searchsale.daft?id=567854


My uncle reckons an apartment in the likes of Douglas/ Blackrock e.g Jacobs Island , Eden etc is a better bet?


What do ye reckon? Feedback welcome

This is solely an investment and will be rented out.

I would advise your uncle to get independent financial advice rather than taking the word of anonymous people on the Internet.

Personally, I believe the apartment market is busted as an investment vehicle. The property price decline has slowed down for houses - it aint finished with the apartment sector yet.

I certainly wouldn't borrow money to put into investing in an apartment.

Deleted User

Deleted User wrote: »

But why buy it now when you could buy it in 3-5 years for half the price?.........

Different point
I did mention I don't think prices are at their bottom

I wouldn't think they'll be dropping as much as you expect though, I'll bump this thread in 3 and 5 years time and we'll see

Owen

I'm nearly a year trying to find someone for a house share. The rent I'm asking is below the norm too, and the house is lovely, in a great housing estate in a nice part of the city. Renting is at a standstill at the moment, and your Uncle would need his head examined if he thinks it's a good place to invest his cash.

Owen

Owen wrote: »

........... Renting is at a standstill at the moment, and your Uncle would need his head examined if he thinks it's a good place to invest his cash.

I'd agree with that

kart

RoverJames wrote: »

I'd agree with that

Same here.

If i would have that sort of money to invest at moment, i would stay well clear from rental property market as it stands.

As Owen mentioned it is not easy to let anything at the moment. Theres too many places vacant, u can eaasily expect to have a place empty most of the year. If u manage to get people in, chances are, its going to be 6 months max and u have to go through all the trouble again.

The rental income you end up getting per year will not be as high as the amount by which the value of ur property is falling... which means that your uncle would end up losing money instead of making some.

None of the properties that u put the links up for are even worth the asking price at this moment, so that would already be unwise decision to go and buy one.

Being a landlord is not just buying a place and then start cashing in. There is many things involved. Has he thought about it from all aspects? Insurance, possible repairworks, even little things like replacing household appliances like washing machine...who manages the property and what do they charge?...what if he gets bad tenants who don't pay and trash the place? It takes time and effort to get rid of some sort - just saying 'Thats it, its ur time to leave' might not cut it... Extra expenses that might not even occur to him at moment might build up sky high.

It is not the time to try hand on rental property market. Honestly.

dory

I believe we're not far off getting a decent house for about the money you're talking. This one is currently €150k http://www.myhome.ie/residential/brochure/44-glenview-park-dillions-cross-ballyvolane-cork-city/1839837

Walking distance to town and all. But I know, houses are a lot of hassle. I'm renting rooms in one at the moment and it's just one thing after the other. Personally with €100k I'd be investing and just getting a bit of interest every year until prices go down a bit more. Or shares! They look like fun.

evilivor

dory wrote: »

I believe we're not far off getting a decent house for about the money you're talking. This one is currently €150k http://www.myhome.ie/residential/brochure/44-glenview-park-dillions-cross-ballyvolane-cork-city/1839837

Walking distance to town and all. But I know, houses are a lot of hassle. I'm renting rooms in one at the moment and it's just one thing after the other. Personally with €100k I'd be investing and just getting a bit of interest every year until prices go down a bit more. Or shares! They look like fun.

The problem with interest rates at the moment is they are way too low for depositors - with inflation running at 2.2%, you need to be earning interest in excess of that just to avoid the lump sum losing value.

If I had 100k to invest on a long term I'd put it into a 10 Year National Solidarity Bond which gives a gross return of 50% over 10 years - in other words it pays you €1,000 a year for the first 10 years - subject to DIRT and the, on maturity, a tax-free bonus of 40k - and you're helping the state.

run_Forrest_run

kart sums it up perfectly, your uncle would be mad to put his money into rental property.

god, seeing those South Terrace apartments brings me back, when I first moved down to Cork I rented there with the girlfriend (now wife). Place was a bit of a kip and the underground parking was extra and we caught the landlord actually sub-letting the parking space after 6 months of being there...I don't miss the whole rental game.

yllw.ldbttr

Put it in a moderate - low risk, low cost ETF for 3-5 years (if he wants some kind of cap growth).

Revisit every year and see if his risk/reward appetite is the same.

Stay away from a property investment in the medium term.

Barr

Thanks for the feedback.

The overwhelming opinion appears to be against buying property at the moment. I suppose with NAMA due to sell nearly 4500 properties this year prices are about to fall hard.

Anyways armed with this thread and its contents I showed it to my uncle and he seems to be deterred only slightly.

Last week an estate agent advised him of a 2 bed apartment that will be coming to market in Jacobs Island by Douglas. Its a 2-bed ground floor and comes with an existing tenant who wants to stay on long-term.

He has been told the vendor is “distressed financially“ and will accept €80k for a cash sale. I’m not exactly sure what the rental income is but I’d guess €700 - €750 p/m. The area seems really nice.

Would ye reckon this is a safer bet? I know no one can predict the future but I would find it very difficult to see the value ever dropping more than this – then again I’m only guessing. My uncle comes from a generation where he sees property as a good investment over shares etc.
I like the idea of a fixed term deposit but the interest seems to be poor.

The apartment is very similar to this but the price difference is huge

http://www.daft.ie/searchsale.daft?id=329366

The next cheapest I could find online is this for 130k asking price

http://www.denisbarrett.com/en/properties_detail/letting/Cork-City/no-100-the-haven-jacobs-island


I was fully gone off the idea of an apartment but is the place in Jacobs a good find for my Uncle if the agent is correct with the price?

Opinions welcome again.

the_syco

Barr wrote: »

Its a 2-bed ground floor and comes with an existing tenant who wants to stay on long-term.

He has been told the vendor is “distressed financially“ and will accept €80k for a cash sale. I’m not exactly sure what the rental income is but I’d guess €700 - €750 p/m. The area seems really nice.

It could be a social welfare person that doesn't want to move, and they can't evict him.

A fool is parted easily with his money, and your uncle sounds like such a fool.

Ask if any of his friends have apartments, and then see if they're all empty. I ask this, as I find it odd that he still wants to buy the apartment after being told not to get one.

namloc1980

Barr wrote: »

Anyways armed with this thread and its contents I showed it to my uncle and he seems to be deterred only slightly.

Last week an estate agent advised him of a 2 bed apartment that will be coming to market in Jacobs Island by Douglas. Its a 2-bed ground floor and comes with an existing tenant who wants to stay on long-term.

He has been told the vendor is “distressed financially“ and will accept €80k for a cash sale. I’m not exactly sure what the rental income is but I’d guess €700 - €750 p/m. The area seems really nice.

Would ye reckon this is a safer bet? I know no one can predict the future but I would find it very difficult to see the value ever dropping more than this – then again I’m only guessing. My uncle comes from a generation where he sees property as a good investment over shares etc.
I like the idea of a fixed term deposit but the interest seems to be poor.

The apartment is very similar to this but the price difference is huge

http://www.daft.ie/searchsale.daft?id=329366

The next cheapest I could find online is this for 130k asking price

http://www.denisbarrett.com/en/properties_detail/letting/Cork-City/no-100-the-haven-jacobs-island


I was fully gone off the idea of an apartment but is the place in Jacobs a good find for my Uncle if the agent is correct with the price?

Opinions welcome again.

As advised previously buying property in Ireland is little more than a gamble. The property market in Ireland has a long way to go before it bottoms out. While this property may "appear" to be a bargain your uncle should think long and hard before parting with his money. An examle of how long property slumps can last is Japan. The Japanese property bubble burst in 1990:



and continued to decline before bottoming out in 2007! That's 17 years!!! We in Ireland are only 4/5 years into the slump. Worse still Japanese property has actually started to decline again in recent years so they are over 20 years into a property slide. And this is in one of the largest most dynamic economies in the world!

Has your Uncle thought about the hassle and responsibilities of owning a Buy to let property?
- making Tax returns
- NPPR and household charges
- dealing with difficult tenants
- doing maintenance and repair & more!

Also consider what kind of long term investment an apartment is. Apartments are the weakest sector in the very weak Irish property market and I'm not too sure that apartments will age well longer term. Irish people are not really apartment dwellers.

There are many other safer investments for your uncle to invest his money in, many of which are capital guaranteed such as the Solidarity Bond and Cap Guaranteed tracker bonds with various investment companies. If your Uncle is looking for an income there is always the option of putting some on deposit or putting a portion into a dividend yielding ETF.

tl;dr Putting all his eggs in the Irish property market basket is a bad idea.....avoid it and diversify!

evilivor

Investing in apartments in Ireland only ever made sense when one was getting the section 31 tax breaks.

Buying to let in the second hand apartment market is a mug's game unless you are doing it on a massive scale where managing multiples is your business.

Your Uncle would be insane to get into the game now. Put the 100k into gov bonds or a cash only pension fund is his best bet. Guaranteed return and tax efficient.

Sea Filly

Faith wrote: »

Pope's Quay is fairly horrible and I've had many people advise me to stay well away from there.

I live in Pope's Quay Court, and I'm genuinely interested to know what's supposed to be so horrible about it? I dislike apartments in this country as a general rule and they tend to be tiny, but the one I live in there is very spacious and quite homely.

kart

Aint gonna repeat what i just said i my last post, just read it again. u dont see that price going much lower? Think again. Did u expect to get a decent house in ireland for 70-100k five years ago? I bet u didnt, and look at the prices now.

Ur taking ur advice from an ESTATE AGENT??? As a buyer... well, good luck with that one then, cos they are out there to SELL. So they tell u anything they need to tell u to guarantee a sale.

Point made.

Padraig Mor

Jacobs Island? Forget it. Place will be a ghetto in 10 years.

Monty Burnz

RoverJames wrote: »

Over 20 to 30 years that's unlikely really.
If he is buying a property outright for €100,000 the rental return even if idle 2 months every year would see an after expenses income of about €5000/annum, there won't be a mortgage.

You'd get a similar return just plonking the money into a high interest bank account and you'd never have any grief from tenants and all the other risks of being a landlord...

Owen

Exactly, being a landlord entails responsibilities, if the Cooker breaks you're down nearly a months income to replace it and pay for someone to install, same with any other appliance. If the plumbing leaks (Which it can do with the freezing cold winters we've had) you've to pay for that, some tenants are even miserable enough to ask landlords for light bulbs.

run_Forrest_run

Padraig Mor wrote: »

Jacobs Island? Forget it. Place will be a ghetto in 10 years.

true. A real white elephant of the Celtic Tiger era. The asking prices for the original properties were shocking.

Monty Burnz

Monty Burnz wrote: »

You'd get a similar return just plonking the money into a high interest bank account and you'd never have any grief from tenants and all the other risks of being a landlord...

I'm not disputing that, I disputed what I quoted and explained why

KungPao

run_Forrest_run wrote: »

true. A real white elephant of the Celtic Tiger era. The asking prices for the original properties were shocking.

I lived there for a while, nice enough place but can definitely see it going down hill in the years to come.

The signage outside always made me chuckle "Where the highstreet meets the water" I think it was. Real Celtic Tiger pretension.

pwurple

Renting out apartments is like giving to charity at the moment. The tax situation was changed in the last few years. It is almost impossible to make money, unless the place is bomb-proof, and you own it outright.

Tell your uncle the rent will be classed as income. It will be taxed as such.
He won't be able to get any regular mortgage interest relief at source as an investment mortgage. He will be able to offset 75% of the mortgage interest off against his rental income as an expense. Not 100% like it used to be.

So, if he has a mortgage of 1000 a month, and a rental income of 1000 a month, he will owe the taxman 200 to 300 euro a month in tax depending on other earnings.

You then have PRTB to pay, NPPR and the household charge. Call that 500 a year.

Plus building and apartment maintenance on the place. I have a city center flat, 900 a year building maintenance on public areas. I have tenants who have been in the place 3 years, and are moving in July. I will have to completely repaint, replace some furniture, give them their deposit, advertise for new tenants. etc.

Plus you become self employed, with all the hassle and cost of tax returns. If you use an accountant, maybe 300 or 400 a year.

Be VERY careful financially going down this path. The govt and the public think that landlords are loaded and are easy pickings for new taxes. Estate agents can make it sound like the place pays for itself, but that is no longer the case.

BTW, Jacobs Island is no more Douglas than I am. It's Mahon.

RubyXI

Sea Filly wrote: »

I live in Pope's Quay Court, and I'm genuinely interested to know what's supposed to be so horrible about it? I dislike apartments in this country as a general rule and they tend to be tiny, but the one I live in there is very spacious and quite homely.

Is Pope's Quay Court the Pink & Blue apartments across the river from the cinema? Do these have an external entrance only? Do they have any lift access?