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Darren's Property Portfolio Diary
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07-07-2012 10:37am#1
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Darren197001 wrote: »Long time lurker here. Just never put in the effort to register.
There seems to be a lot of guessing going on on both sides here, so I was going to post a log kind of thing when I get enough posts to open a thread.
I was into investment property from 1997 to 2005.
Over the last year I have started building a new portfolio again and keep monthly records for each property.
I'll just post up the updates for each month for a typical one as I update my own records.
It will help people see what goes into running it and what the real costs and benefits are for a real example.
I won't go into the reasons I think things are picking up as they are my own analysis and are no more valid than anyone else's here for or against. They are just my opinion based on my own experiences over time. Either I am right or I am wrong, but I think i am right obviously.
I'll start the thread when I get some more posts up.
The best of luck to you
.... a difficult task on this forum trying to have a factual-level debate. I have tried twice in the past. Too many posters interested in point scoring and victrionics on both sides of the fence. 0 -
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Started in 97 when we moved in together. We had a house each and we rented one instead of selling it just in case. Also having studied economics at university I thought I was a genius economist at that stage. Turns out economics isnt as simple as that after all
So then we built up a portfolio adding an apartment or house every year until 2004, with my brother and his wife as equal partners. No commercials.
In 2005 they separated so we decided to sell everything. We figured we had ridden the wave as far as it could be ridden at that stage anyway. My opinion at the time was that there was one last surge in house prices to come with the maturity of SSIAs. €40,000 per couple with nothing else to do with it than invest in property. I figured that would lift prices ovr the tipping point and they would fall after that.
I wont pretend i knew anything about a world crash or banking crisis, or how bad it would eventually get. I was partially right, but also very lucky the way things turned out. And got very very lucky with the capital appreciation.
During that time 1997 to 2005 I learned the letting business very well, so have tweaked my strategy for this time.
1 : 1 bed apartments are the way to go for yield.
2 : Dublin is the only place where its happening for several years yet. I wouldnt even take a property for nothing in some counties.
3 : 1 bed properties in nice areas where they can be bought cheap enough and rented for a good price are what i'm going for. Swords would be an example, and where the property I will be posting about is based.
4 : Capital appreciation and taxes are something you cannot control, so leave it out of your evaluations as much as you can. Yield is the important factor. Always go for the best yield you can get.
5 : Do not go into property without being diversified otherwise also.
6 : If the yield is not performing, put the property up for sale right away.
7 : No rent allowance under any circumstances. Experience has thought me this.
8 : I have an agent who I used before will look after the properties for 8%. I dont need to do anything. In practice though they come to me with a price for a repair and I either get my own guy or tell them to go ahead. They used to charge 12% for the same service before.
9 : Get a loan, even if you dont need it for the property. You can always pay it off if it becomes the better option.
Thats just to answer a couple of questions. I am deliberately being a bit vague because I want this log to be about the facts and figures, not about what I think will happen vs what someone else would do.
I'll post my figures, everyone else can argue with each other if they want.
I'll be posting something like this (Maybe in a bit more detail) -
January (these ones are just made up numbers and comments. I'll get the real ones from my notes)
Rent received €750.
Mortgage interest paid €100.
Repairs €0
Building Management charge for Jan : €50
Agents fee : €100
Property Taxes : €0
Profit : €500
Issues : Tenant gave notice to move out on 1st March. Agent notified to have another tenant for that date.
Something along those lines. I want to hit a sweet spot between giving enough info to show the facts and giving too much personal or unneeded info.
Its just an idea for now. Some might find it useful or not. I was just asked by a friend to do it on boards, so I said OK.
EDIT : I forgot to add.
Where I am now. Bought 3 1-bed apartments in Dublin since Jan. All rented and performing more or less the same as each other. I'll only be posting a log for one of them, because I dont want to have to put too much work into this. Partners with my brother on this again. Plan to buy another one each year until we decide enough is enough or that the ship has sailed. Yields are excellent right now, and if they go below 6% then we stop.0 -
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Hi Darren, great information, I've asked the mod to split the thread as It deserves a thread of it's own.
Can I also ask about the tax implications on the profit? If you don't mind?
Thanks
Well my tax will be different to everyone elses.
Im getting help from an accountant friend to structure expenses etc so that I can get the max tax relief from them.
There are no fit out costs yet with this apartment as all the furniture etc is already there, but the accountant says he can put a sum in for it and get deductions. THe form is quite simple to fill in yourself, but I just need him to explain a couple of things peculiar to this situation to me. I'll take care of it at year end, but for now assume there is no deduction available.
And the way the mortgage is structured I will get get tax relief on the interest. There is a trade off here between how much I leave on deposit and how much I leave outstanding on the mortgage, because there is Dirt to be taken off the deposit interest and I will get 75% of the interest to knock off the rental profit.
If there are tax changes to stop me doing this, then it could be enough to get me out of property investment altogether.
Really I'm trying to beat (by a long way) what I would get with money just being on deposit in the bank.
Roughly it should look something like this for a month, but rolled up over a year.
Rent received - 775
Expenses.
Interest 75% of 230 = 172
Complex Management fee : 50
Agents fee : €62
Repairs = 0 (These should average out to about €100 PM from past experience, but they come in lumps)
Capital costs = 0 (If there were any it would be 12.5% of them)
So 775 - 172 - 50 - 62 = €492 that I will have to pay tax on.
Hopefully I'll get that down some more, but I have to pay NPPR and other property tax. And the PRTB fee of course which you cant deduct (though nobody understands why as it is an expense and in the end it will just get passed on regardless in the rent when rents pick up, though it cant be done yet).
Then the taxes from all the properties are rolled into one to offset against each other. You can see how it gets complicated and that my tax situation is completely different to anyone else. Thats why you cant wrap it up until you do your accounts, which will be done for October 2013 for this year.
What I want is the least amount of work for the maximum gain. I am already diversified and am only going into property again becasue the yield is very good.
Outsourcing everything. Aiming for an average of 4 hours work a month at this stage, shared with my brother Though this one is in my name. Its easier to buy two or four and have half owned by each of us than the red tape involved in being joint owners on the two or four.
The work for us should now be mostly just phone calls.
We are expecting to bank a nice sum per year from this property for our outlay of about €25,000, with hardly any work to do ourselves. But profits will be left in a "Property account" to cover repairs and expenses as they come up, until that property is sold. Then we can either divvy up the profit or pony up our losses.
I didnt really want to get into this much detail as you can see how it gets very complicated when individually tailored. It really is different for everyone, and I might be missing a few things off the top of my head. But since I havent really started the log yet, what harm.0 -
Darren197001 wrote: »Started in 97 when we moved in together. We had a house each and we rented one instead of selling it just in case. Also having studied economics at university I thought I was a genius economist at that stage. Turns out economics isnt as simple as that after all
So then we built up a portfolio adding an apartment or house every year until 2004, with my brother and his wife as equal partners. No commercials.
In 2005 they separated so we decided to sell everything. We figured we had ridden the wave as far as it could be ridden at that stage anyway.
Darren, how did you(or as a couple) afford buying apartments every year till 2005, banks trigger happy in lending?
And how have ye afforded to buy since then, cash buyers or mortgages with big deposits to satisfy bank lending rules?0 -
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Darren, how did you(or as a couple) afford buying apartments every year till 2005, banks trigger happy in lending?
And how have ye afforded to buy since then, cash buyers or mortgages with big deposits to satisfy bank lending rules?
This is like a look back into my childhood
There were 4 of us in it at the start and we were comfortable.
All 4 of us had bought our own houses already at the start.
We all come from the same area, more or less and I suppose we were all taught to save from a young age as there was no money around.
We first started trying to work in the 80's. All spent time abroad and here on the dole, so didnt want that again.
Then getting good jobs helped i guess. I always found it funny when we were earning the same money as our peers and that our peers seemed to have no money left at the end of the month and we would have at least one of our full wage packets, even after paying the mortgage. And we had the same lifestyle as our peers too. Yet they always had huge credit card bills.
We were very good at spotting bargains and never took anything but the yield into account.
The biggest mistake we made was to pay off the PPR ahead of time with over payments. Should have left it running for the tax relief over the years.
The banks were very strict when we started, so wouldnt loan us too much at first, and then we started making money, so didnt actually need mortgages again after that. But we learned to take them anyway, especially when we found out you could get trackers, long time before most people knew about them.
When we finally exited we made a lot of money, but the real killing came on on the capital appreciation. Like winning the lottery a few times over. Pure luck. Probably dont have to worry about money again, but still, even now we dont just waste money.
We dont have to worry about financing now at all. The banks are used by us for accounting tricks to reduce tax liability.
I suppose we have a knack and like the whole investment way of making money, markets, pensions, deposits and now feel there is profit in property again, so back to that too. Is all we know know as we gave up our 9-5 jobs a while ago.
We just decided that now is a similar situation to when we started. Property has been through the mill. Most people agree that it looks bleak. People are happy to rent. They are where our profit will come from.
The 1 - beds are the excellent yielders by a long way, and it wont be long before other investors are competing for them, they already are, so we are in to get some at good prices. Then people will just have to move on to the 2 - beds and so on.
One thing that is very strange though that we were talking about a while ago to do with the dole.
A couple on the dole now can get how much a month? Mortgage on that apartment I am posting about is €360 a month. Wouldnt get that in my day Yes I know you have to come up with 25k first and get the mortgage, but still its a crazy situation. 0 -
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Darren197001 wrote: »Started in 97 when we moved in together. We had a house each and we rented one instead of selling it just in case. Also having studied economics at university I thought I was a genius economist at that stage. Turns out economics isnt as simple as that after all
So then we built up a portfolio adding an apartment or house every year until 2004, with my brother and his wife as equal partners. No commercials.
In 2005 they separated so we decided to sell everything. We figured we had ridden the wave as far as it could be ridden at that stage anyway. My opinion at the time was that there was one last surge in house prices to come with the maturity of SSIAs. €40,000 per couple with nothing else to do with it than invest in property. I figured that would lift prices ovr the tipping point and they would fall after that.
I wont pretend i knew anything about a world crash or banking crisis, or how bad it would eventually get. I was partially right, but also very lucky the way things turned out. And got very very lucky with the capital appreciation.
During that time 1997 to 2005 I learned the letting business very well, so have tweaked my strategy for this time.
1 : 1 bed apartments are the way to go for yield.
2 : Dublin is the only place where its happening for several years yet. I wouldnt even take a property for nothing in some counties.
3 : 1 bed properties in nice areas where they can be bought cheap enough and rented for a good price are what i'm going for. Swords would be an example, and where the property I will be posting about is based.
4 : Capital appreciation and taxes are something you cannot control, so leave it out of your evaluations as much as you can. Yield is the important factor. Always go for the best yield you can get.
5 : Do not go into property without being diversified otherwise also.
6 : If the yield is not performing, put the property up for sale right away.
7 : No rent allowance under any circumstances. Experience has thought me this.
8 : I have an agent who I used before will look after the properties for 8%. I dont need to do anything. In practice though they come to me with a price for a repair and I either get my own guy or tell them to go ahead. They used to charge 12% for the same service before.
9 : Get a loan, even if you dont need it for the property. You can always pay it off if it becomes the better option.
Thats just to answer a couple of questions. I am deliberately being a bit vague because I want this log to be about the facts and figures, not about what I think will happen vs what someone else would do.
I'll post my figures, everyone else can argue with each other if they want.
I'll be posting something like this (Maybe in a bit more detail) -
January (these ones are just made up numbers and comments. I'll get the real ones from my notes)
Rent received €750.
Mortgage interest paid €100.
Repairs €0
Building Management charge for Jan : €50
Agents fee : €100
Property Taxes : €0
Profit : €500
Issues : Tenant gave notice to move out on 1st March. Agent notified to have another tenant for that date.
Something along those lines. I want to hit a sweet spot between giving enough info to show the facts and giving too much personal or unneeded info.
Its just an idea for now. Some might find it useful or not. I was just asked by a friend to do it on boards, so I said OK.
EDIT : I forgot to add.
Where I am now. Bought 3 1-bed apartments in Dublin since Jan. All rented and performing more or less the same as each other. I'll only be posting a log for one of them, because I dont want to have to put too much work into this. Partners with my brother on this again. Plan to buy another one each year until we decide enough is enough or that the ship has sailed. Yields are excellent right now, and if they go below 6% then we stop.
swords seems like an unusual place to buy a one bed , surely the obvious choice for the appartment market is the city centre or therabouts , swords strikes me as three bed semi suburbia0 -
lawnmower_man wrote: »swords seems like an unusual place to buy a one bed , surely the obvious choice for the appartment market is the city centre or therabouts , swords strikes me as three bed semi suburbia
We could get a much better yield in Swords than the city center. The ones we looked at in the city center that had similar yields were tiny and would have been tossed out if someone had a choice of those ones or another slightly bigger one for the same rent. We did find a good one in the city center eventually, but Swords will still have a higher yield than it.
We're not married to Swords either. Its whatever turns up thats going to have the highest yield. Swords is a big town with a huge population and a huge catchment area in terms of employment.
And we got a big apartment (which puts it up the pecking order when a tenant has a choice) for a good price. They'll go for the biggest one given close enough rents. This is important if you dont want empty periods.
Its very hard to find a big 1-bed in the city center now with the yield required.
I just find people I trust, who are locals and ask them for information. Swords seems like its very far out, but its not at all. People who dont know or work in the area wont be interested anyway and cant be convinced its a good place to live. Those who do know the area are very happy to live there.
I've let property in Swords before and it has always been the highest yielding or thereabouts.
Dont depend on DAFT to tell you whats empty for long periods. My agent leaves properties up on daft for years, so he can just use the same ad to rent other apartments he deals with in the same complex. This works well for apartments.
We made the mistake of going out of Dublin to get the yields from 2003, but lucked out when we left the market shortly after and didnt get hammered as we probably should have done.
Theres really not much more I can add, but that different people will have different strategies to me. Whatever works for you is best.
If you think you can do better in the city center then go for it. I know I cant, but I still want to be letting in the city center so as not to have all my eggs in the one basket either, so to speak.
Im just going to post up the odd post from now on. Already i've spent more time typing on boards this month than I spend on my portfolio 0 -
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Darren197001 wrote: »We could get a much better yield in Swords than the city center. The ones we looked at in the city center that had similar yields were tiny and would have been tossed out if someone had a choice of those ones or another slightly bigger one for the same rent. We did find a good one in the city center eventually, but Swords will still have a higher yield than it.
We're not married to Swords either. Its whatever turns up thats going to have the highest yield. Swords is a big town with a huge population and a huge catchment area in terms of employment.
And we got a big apartment (which puts it up the pecking order when a tenant has a choice) for a good price. They'll go for the biggest one given close enough rents. This is important if you dont want empty periods.
Its very hard to find a big 1-bed in the city center now with the yield required.
I just find people I trust, who are locals and ask them for information. Swords seems like its very far out, but its not at all. People who dont know or work in the area wont be interested anyway and cant be convinced its a good place to live. Those who do know the area are very happy to live there.
I've let property in Swords before and it has always been the highest yielding or thereabouts.
Dont depend on DAFT to tell you whats empty for long periods. My agent leaves properties up on daft for years, so he can just use the same ad to rent other apartments he deals with in the same complex. This works well for apartments.
We made the mistake of going out of Dublin to get the yields from 2003, but lucked out when we left the market shortly after and didnt get hammered as we probably should have done.
Theres really not much more I can add, but that different people will have different strategies to me. Whatever works for you is best.
If you think you can do better in the city center then go for it. I know I cant, but I still want to be letting in the city center so as not to have all my eggs in the one basket either, so to speak.
Im just going to post up the odd post from now on. Already i've spent more time typing on boards this month than I spend on my portfolio
not sure i agree but its an interesting perspective
i see plenty of very well finished appartments going for less than 100 k in santry , santry is no further from the city than swords , granted it doesnt have as good of transport0 -
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