Darren's Property Portfolio Diary

bear_hunter

interesting project OP

was wondering , was stoneybatter ever on your radar for investing ?

eclectichoney

Nice thread OP. Just wondering where you are getting 4%+ AER on your savings?

Thanks

kkelliher

Darren197001 wrote: »

Insurance is included in the management fee.

Just to be carful on this issue as alot of people get caught out.

The building in an apartment complex situation is covered by the management fee. Landlord contents and liability as an owner of a rented property is not covered by the management fee and therefore you should have a separate policy for this.

jmayo

Darren197001 wrote: »

Why do people always assume you are doing something illegal when you say you are trying to lower your tax liability?

He is trying to find out if the tax situation can be improved. If it cant it cant and nothing changes. There will be nothing illegal. Its just something which may provide a lower taxable amount if its possible.

Some people see tax avoidance as tax evasion.
There is a difference and there is nothing wrong with writing off expenses encurred or finding ways of lowering one's tax liability.

Darren197001 wrote: »

Definitely no more posts for a while from me now. Its starting to get argumentative, which is not what I wanted. I'll look in again in a few weeks.

BTW good idea for a thread.
Can I ask one thing ?
If your partners relationship hadn't broken up circa 2005, do you think you would have still sold off your investments or would you have held on ?

Man007 wrote: »

Fair play darren this is exactly what this forum needs some factual info from someone like yourself instead of the armchair econonimists who will have you believe the world is about to end and who won't listen to reasoned arguments.

I think you have it ar**ways.
Usually the reasoned arguments have been coming from the bears who believe the market has a bit to fall yet and that there will be no great recovery as claimed by others.
You may call the bears armchair economists, but some might say a lot of it is common sense what with the way the economy and market has been.

As pointed out by others, there have been a fair few posters who have been talking up the property market, but refuse to give any concrete reasons for doing so.

Duggys Housemate

jmayo wrote: »

Some people see tax avoidance as tax evasion.
There is a difference and there is nothing wrong with writing off expenses encurred or finding ways of lowering one's tax liability.

In this case it was evasion.

As pointed out by others, there have been a fair few posters who have been talking up the property market, but refuse to give any concrete reasons for doing so.

Darren's posts are fairly informative. Thinking of getting in myself.

bear_hunter

jmayo wrote: »

Some people see tax avoidance as tax evasion.
There is a difference and there is nothing wrong with writing off expenses encurred or finding ways of lowering one's tax liability.



BTW good idea for a thread.
Can I ask one thing ?
If your partners relationship hadn't broken up circa 2005, do you think you would have still sold off your investments or would you have held on ?



I think you have it ar**ways.
Usually the reasoned arguments have been coming from the bears who believe the market has a bit to fall yet and that there will be no great recovery as claimed by others.
You may call the bears armchair economists, but some might say a lot of it is common sense what with the way the economy and market has been.

As pointed out by others, there have been a fair few posters who have been talking up the property market, but refuse to give any concrete reasons for doing so.

while i agree that property market may have further to fall , when yields of over 6% are available, this in itself offers a compelling investment , the so called experts are predicting that the appartment market ( even in dublin ) has further to fall but if someone can buy a one bed for around 100 k and look forward to 750 euro per month rent , thats 9% per year gross , hard to call its a poor shot

murphaph

Duggys Housemate wrote: »

In this case it was evasion.

If he bought a 90k apartment furnished then some of that 90k went on....furniture, which is a capital expense and he can depreciate it over the 8 years @12.5% p.a.

It is not only legal, it is fair. The furniture won't last forever and it is an expense when it needs replacing.

Duggys Housemate

murphaph wrote: »

If he bought a 90k apartment furnished then some of that 90k went on....furniture, which is a capital expense and he can depreciate it over the 8 years @12.5% p.a.

It is not only legal, it is fair. The furniture won't last forever and it is an expense when it needs replacing.

Hmmm, maybe. Fair enough, avoidance then. And who can talk about avoidance who has a pension fund?

D3PO

Darren197001 wrote: »

I won't go into the reasons I think things are picking up .

I was interested until I read this. You are already pre empting the future and therefore have a skewed perception.

makes this thread no more use than anybody elses opinion from either side of the fence

murphaph

D3PO wrote: »

I was interested until I read this. You are already pre empting the future and therefore have a skewed perception.

makes this thread no more use than anybody elses opinion from either side of the fence

He's going to post up his figures each month for all to see. Everyone has a position on the property market but this guy is actually in it and can see how it's performing on a small scale. The thread is not about the market at large anway, just about the OP's portfolio

D3PO

murphaph wrote: »

He's going to post up his figures each month for all to see. Everyone has a position on the property market but this guy is actually in it and can see how it's performing on a small scale. The thread is not about the market at large anway, just about the OP's portfolio

But how can you view this as a microcosm of the irish property market.

high level figures mean nothing to be honest. Just becasue somebody is turning a "profit" monthly doesnt mean anything.

I notice some massive massive things people are missing.

a) asset value. Is it depreciating
b) how much was paid for the property, how much was his deposit. if you dont know how can you work out the yield.

if you dont know the yield how can you properly judge if its a good investment. just because your turning a profit doesnt make it a good thing.

murphaph

D3PO wrote: »

But how can you view this as a microcosm of the irish property market.

high level figures mean nothing to be honest. Just becasue somebody is turning a "profit" monthly doesnt mean anything.

I notice some massive massive things people are missing.

a) asset value. Is it depreciating
b) how much was paid for the property, how much was his deposit. if you dont know how can you work out the yield.

if you dont know the yield how can you properly judge if its a good investment. just because your turning a profit doesnt make it a good thing.

a) Too much interest was placed on asset value in the past. Landlords were more speculators than anything else. The OP is focused on yield, where all pro landlords should be focused. So long as the asset delivers the required yield, the value of the asset is less relevant. It could plummet of course, but the OP would see his yield drop off as tenants moved to cheaper property or bought themselves and he says he'll bail out if yield hits 6%.

b) He had the purchase price in cash, but he took out a mortgage to take advantage of current tax law, not because he needed funding. He keeps the full purchase price on deposit earning more interest than he pays in mortgage interest. He can pay down the loan at any time if tax code changes make it more appealing to do so.

It's an interesting thread to me as someone who rents out a residential property anyway.

Zab

What is the tax incentive that made OP get the mortgage? I see mortgage interest relief but this only appears to apply to your primary residence, and I assume can't be applied to multiple properties anyway.

D3PO

Zab wrote: »

What is the tax incentive that made OP get the mortgage? I see mortgage interest relief but this only appears to apply to your primary residence, and I assume can't be applied to multiple properties anyway.

Mortgage Interest (75%) of it can be written off against tax. So i.e 4% interest OP is essentially paying 1% interest.

if he can earn more after dirt deduction with the cash on deposit it makes more sense to have the mrotgage write off thye interest against tax and earn more off the deposit.

its clever, not something most would be in a position to do but if you were its the right strategy.

D3PO

murphaph wrote: »

a) Too much interest was placed on asset value in the past. Landlords were more speculators than anything else. The OP is focused on yield, where all pro landlords should be focused. So long as the asset delivers the required yield, the value of the asset is less relevant. It could plummet of course, but the OP would see his yield drop off as tenants moved to cheaper property or bought themselves and he says he'll bail out if yield hits 6%.

b) He had the purchase price in cash, but he took out a mortgage to take advantage of current tax law, not because he needed funding. He keeps the full purchase price on deposit earning more interest than he pays in mortgage interest. He can pay down the loan at any time if tax code changes make it more appealing to do so.

It's an interesting thread to me as someone who rents out a residential property anyway.

agree yield is more important. didnt read enough to see point B. Right strategy by the OP of course but I see dont see the value of the thread.

what does it show or prove ? It doesnt prove that property investment is right in the current market or wrong all it does is allow the OP show he has made good or bad investments nothing more.

in the grand scheme of things it has no value in helping people from any more educated opinion on the general market.

Zab

D3PO wrote: »

Mortgage Interest (75%) of it can be written off against tax. So i.e 4% interest OP is essentially paying 1% interest.

if he can earn more after dirt deduction with the cash on deposit it makes more sense to have the mrotgage write off thye interest against tax and earn more off the deposit.

its clever, not something most would be in a position to do but if you were its the right strategy.

Okay, so this is something you put on your tax return in order to reduce your tax due, rather than the scheme I linked above. I assume most aren't in a position to do it as it requires you to have enough cash to buy the property in the first place.

Darren197001

Jul 2012
Rent : 775
Interest : 230
Complex Management fee : 50 (€600 per year)
Repairs €0
Agents fee : €62


Profit : €433

Notes : Rent was late this month. Ulsterbanks fault.

Darren197001

Just a quick update.
I'll answer a couple of questions from the previous posts just before I go off on my hols.

lawnmower_man wrote: »

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 transport

I used to live in Santry. Santry is a place you can sleep in. Not really a place to live in. Just my opinion. You couldn't spend a couple of weeks in Santry without having to go into the city center. There are other places where you could.

bear_hunter wrote: »

interesting project OP

was wondering , was stoneybatter ever on your radar for investing ?

I did look befiore, but I didn't come across anything there to give me the yield I want at the time.

kkelliher wrote: »

Just to be carful on this issue as alot of people get caught out.

The building in an apartment complex situation is covered by the management fee. Landlord contents and liability as an owner of a rented property is not covered by the management fee and therefore you should have a separate policy for this.

Contents are not a concern for me. I always look at the block policy to see if public liability is covered. I've never seen it not covered. If I did find one where it wasn't covered, i won't invest in it. Sloppy management.

eclectichoney wrote: »

Nice thread OP. Just wondering where you are getting 4%+ AER on your savings?

Thanks

Lots of places will do this.

jmayo wrote: »

Can I ask one thing ?
If your partners relationship hadn't broken up circa 2005, do you think you would have still sold off your investments or would you have held on ?

An interesting one. We had decided that if we saw any shock to the US or UK economies that we were going to get out straight away because they would be sure to ripple through to Ireland. Everything does, from doughnut shops to coffee shops. Increasing in the US -> Increasing in Ireland and so on.

At the time we got out we had not seen these shocks yet, but we would have seen them coming before they hit Ireland. If they hit Ireland first - well that would have been a disaster for us wit that plan because we would have been too late then.

Now part of our exit strategy is that if we ever make 30% capital gain on any property we sell it regardless of whether we think it will get better or not. It will be a long time before that happens though

Duggys Housemate wrote: »

He did say he would put a figure for expenses on furniture on an already furnished apt. Anyway, small beans.

My question is the length of the mortgage. Darren seems to be 50 ish. Is the 30 year mortgage just because he already has money?

I hope I have a long way to go before I'm 50
But I see a lot of posts on the internet of people asking will they get a mortgage. There is only one entity that can answer that question. The one you are asking for the mortgage.
My niece asked everyone would she get a mortgage before Christmas and I just told her to ask the bank. She got it. She is a secretary in a logistics company and her boyfriend is a driver. I didn't think they would get it, but there you go.

Now off to get some sun on my bones for a few weeks.

People have asked why I am doing this.
My reasons for doing this is to diversify my current portfolio and to make some money from a maximum of 4 hours work per month.

kkelliher

Darren197001 wrote: »

Contents are not a concern for me. I always look at the block policy to see if public liability is covered. I've never seen it not covered. If I did find one where it wasn't covered, i won't invest in it. Sloppy management.

Yur liability to your tenant as a result of injury caused by your property to the tenant is not covered by the block policy.

poker--addict

Darren may I ask, you come across as fairly well clued in and have educated yourself and understand the risk/yield of what your are doing. The price of the property you are looking are relatively low figures, is there a reason you didn't want to do this alone and got a partner?

Could you also give us your point of view on the yield you require and what influences it for you in swords?

Darren197001

kkelliher wrote: »

Yur liability to your tenant as a result of injury caused by your property to the tenant is not covered by the block policy.

It is.

Darren197001

poker--addict wrote: »

Darren may I ask, you come across as fairly well clued in and have educated yourself and understand the risk/yield of what your are doing. The price of the property you are looking are relatively low figures, is there a reason you didn't want to do this alone and got a partner?

Could you also give us your point of view on the yield you require and what influences it for you in swords?

Just came back to update the post, but i'll answer this one before I go.

A partner softens the risk by a long way should anything go wrong. Obviously a partner you trust with your life is very important.

Low figures are giving the best yield for me.

I've already went into detail about Swords earlier, but the same applies to anywhere. I just picked Swords there because it is where this apartment is. It could have been anywhere. The same analysis would have to be done wherever it was going to be.

Zamboni

Darren, obviously the monthly focus here is very much profit & loss related - if you do a balance sheet at the end of the year how would you consider the value of the asset?
Avoiding going into property price increase/decrease speculation etc - but obviously any change will impact the 'business value' and put the profit/loss into a better context.
What would you base a valuation on?

poker--addict

I guess it is easy to value such a property in the city when there is lots to compare?

Zamboni

poker--addict wrote: »

I guess it is easy to value such a property in the city when there is lots to compare?

(Prudent) asset valaution in relation to property is a difficult game due to a lack of accurate complete data on actual prices achieved.
Taking a small asset such as an apartment, an imprudent valuation (even by a few percent) can result in inaccurate financial statements - a primary tool for making future decisions.
Guessing ain't gonna cut it
Hence my interest in the method.

kkelliher

Darren197001 wrote: »

It is.

Darren it simply cannot be the case.

The management company and their agent cannot insure against liability arising from a tenant suing you because of injury as a result of your contents. They have no legal interest in your contents and therefore cannot insure against this on your behalf. They will have liability in respect to the building but not your contents.

poker--addict

Darren197001 wrote: »

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.

disregard, i went back and read the post correctly!

bear_hunter

Darren197001 wrote: »

Just came back to update the post, but i'll answer this one before I go.

A partner softens the risk by a long way should anything go wrong. Obviously a partner you trust with your life is very important.

Low figures are giving the best yield for me.

I've already went into detail about Swords earlier, but the same applies to anywhere. I just picked Swords there because it is where this apartment is. It could have been anywhere. The same analysis would have to be done wherever it was going to be.

i mentioned swords to someone in the estate agency industry the other day , they said it was some what of a transient population which lives there

housetypeb

[QUOTE=Darren197001

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.[/QUOTE]

Shouldn't you halve your profit figure on the sample apartment seeing as you're partners with your brother?
Or show all three apartments as a whole and halve the profit for a more realistic general overview of the investment.
Well done on it anyway.

TheTurk1972

housetypeb wrote: »

Shouldn't you halve your profit figure on the sample apartment seeing as you're partners with your brother?
Or show all three apartments as a whole and halve the profit for a more realistic general overview of the investment.
Well done on it anyway.

Reading his posts it looks to me that that is what he is doing, but for clarity and ease is just adjusting it to one apartment.
My reading of it is that they each invested 12,500 each to make 216.50 per month each.
Or alternatively as one entity : invested 25000 to make 433 per month.

Then you can triple that for the three apartments if the figures are similar.

Even after tax I wouldn't say no to that.