Darren's Property Portfolio Diary

poker--addict

Darren I note your management fee is 600 for the year?

In the small amount of research i have being doing i think this is where you are finding the value?

Plenty of 1 and 2 bedroom apts for sale but management fees of 1800-2000-2200 seem to be normal? This kills the yield/roi

TheTurk1972

poker--addict wrote: »

Darren I note your management fee is 600 for the year?

In the small amount of research i have being doing i think this is where you are finding the value?

Plenty of 1 and 2 bedroom apts for sale but management fees of 1800-2000-2200 seem to be normal? This kills the yield/roi

I dont think 600 per year for a 1 bed apt is unusual. I think he is paying about average for fees for a 1 bed apt in Dublin there. Maybe he takes that fee into account when buying too. For the prices you are seeing I would expect at least a swimming pool, lifts, electric gates and a security guard.
I think the problem is that if most of the directors of a complex are in bigger apartments they will increase the charge of the smaller apartments to make their own charges less. I know this from experience of been involved in a complex before where this was the case. I know of other examples too.
My advice would be dont buy an apartment if the fees are too high. There is a thread here somewhere about what people are paying in yearly charges. It makes interesting reading.

Any more updates Darren? Things seem to not change much for you month to month, but an update would be nice evey now and then even if nothing has changed, to keep the diary current.

RATM

I think I remember Darren saying he doesn't come on here that often. But I hope he keeps updating this as I'm following with interest, as are others.

IMO Darren has about one of the few property investment strategies that can make a profit in the current market- one bed apartment, low mgmt fees, good location with plenty of employment (Swords).

I'll be interested to see how this pans out with water and property charges on the way too and to see how much it might affect his bottom line, something I am sure he has already factored in but just keen to see the figures when he gets a chance to update

Snakeblood

poker--addict wrote: »

Darren I note your management fee is 600 for the year?

In the small amount of research i have being doing i think this is where you are finding the value?

Plenty of 1 and 2 bedroom apts for sale but management fees of 1800-2000-2200 seem to be normal? This kills the yield/roi

I had an apartment in Citywest with management of 574. It really depends on where you are looking.

The_Conductor

Snakeblood wrote: »

I had an apartment in Citywest with management of 574. It really depends on where you are looking.

You were quite lucky there- the buildings and separate public liability insurance associated with apartments, alone, aside from any other expenditure, would normally be in excess of this.

Darren197001

Just back quickly to post the last two months.
Nothing has changed really. Steady as she goes.

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


Profit : €433

Notes : Have sent letters to all tenants stating that rent now includes any extra charges and taxes added on by the govt or anyone else. eg rent stays the same but now we can claim any charges or taxes as an expenses when doing returns.


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


Profit : €433



The reason I have got the agent to send the letters is that I refuse to pay taxes on taxes. My accountant has advised that I can legitimately state that the rent paid now includes those charges and that any extra charges can be added to the rent as the rent in all of our properties can now sustain increases in the current market.

Basically If the rent is 775 and PRTB, NPPR and all other hidden property taxes are knocked off the rent but passed on to the tenant, there is no change to the rent that the tenant pays. But there is a change to the amount of rent I get paid.
I had to pay taxes on top of the rent and could not claim these taxes as expenses (well they are expenses)

eg
previously 775 was rent and i had to pay taxes on top.

Now rent is €775 incl €25 (for example. It will be total yearly taxes and charges divided by 12) per month govt taxes and charges.
So rent is €750 and €25 is collected for the govt, like Ryanair.

No change to the tenant. But a change to my bottom line.

There are threads about this on irishlandlord that tell it a bit clearer than I am here as I'm in a hurry.

Also I checked out the new property register today. At first glance, there is a lot of money to be made on investment properties now. I must analyse it some more when I get time, but I see plenty of money there to be made letting. The only spanner in the works is that the govt are so anti-landlord its disgusting, so you never know whats around the corner. If there was a bit of certainty I would be in there like a shot, but not yet. Some sums need to be done. I have a lot of research already done and this property database now gives me a massive tool to make a lot of money.

See you in the next month or two.

The_Conductor

Darren- any chance you could post a link to the discussion you're referring to?

You are not collecting a government imposed tax on tenants btw- your analogy to Ryanair and government departure tax, is erroneous. Nice try, whoever came up with that one.

Thanks,

Shane

jobucks

Hi Darren,

Do you realistically think Dublin is the only city worth doing this at the moment? What are your thoughts on the rest of the Country? (i.e. Cork

Catweasel

Just read this thread for the first time. Strikes me that the strategy that you follow in post 1 has set you up well to succeed. Refreshing to see a proper business model being applied to propery investment and a lesson (too late) for the amateurs who get sucked in during the boom.

P.S. What is your hurdle yield rate, if you don't mind me asking?

edanto

Just found this thread today. Fair play Darren, and hope things are still going well for you and partner.

Great to have someone come on and show how they're making a few quid from being smart while there's an air of doom n gloom. It's inspirational.

riclad

He has the right approach,hes stating profit per month, year,
ie not relying on unit increasing in value.IN the boom blt investors were buying houses for 200k, renting the out for 1100 per month,
They never made a profit ,they were expecting house to worth 300k
in ten years ,now house is probably worth 120k on average.
WE had stupid investors, plus reckless banks, and the taxpayer will be left
to sort out this situation.
A professional investor expects at least 6 per cent profit per year ,after taxes ,and expenses.
And those foolish btl investors pushed the price up ,for people who just wanted to buy a house to live in.
ITS easier to look at dublin,say if i buy a 1bed on area x, ill get x amount rent per month ,than other areas.

qwertypop

I presume your mortgage is an interest only mortgage and that your paying noting off the principle

MMAGirl

edanto wrote: »

Just found this thread today. Fair play Darren, and hope things are still going well for you and partner.

Great to have someone come on and show how they're making a few quid from being smart while there's an air of doom n gloom. It's inspirational.

I only looked in here the other day too. Havent seen it in a while. Id say he got bored updating the same thing every month. Hes answered pretty much any question i could ever think of already.

tara73

MMAGirl wrote: »

I only looked in here the other day too. Havent seen it in a while. Id say he got bored updating the same thing every month. Hes answered pretty much any question i could ever think of already.

yes, but it still would be interesting to follow up on it because it would be really surprising everything stays as it is.
normally there are at least some more or less expensive repairs/replacements for the apartment. maybe not.

darren, where are you, all hols again in the sun from the hard work..??:D

MMAGirl

Any chance of an Update Darren. Was thinking about this thread today while listening to someone say that you cant make money in property on the news.

handlemaster

would be good to get an update on this .

RATM

I'd say it is 'as is' for Darren.

All that has really changed in the last few months is that the govt are letting landlords write off the Local Property Tax against their gross rental income.

We don't yet know the lay of the land on water charges but should do by the end of the summer.

http://www.independent.ie/business/irish/buytolet-investors-will-be-allowed-to-file-property-tax-as-expense-28960614.html

cardwizzard

Any chance of an update Darren? Cracking thread.

kkelliher

RATM wrote: »

I'd say it is 'as is' for Darren.

All that has really changed in the last few months is that the govt are letting landlords write off the Local Property Tax against their gross rental income.

We don't yet know the lay of the land on water charges but should do by the end of the summer.

http://www.independent.ie/business/irish/buytolet-investors-will-be-allowed-to-file-property-tax-as-expense-28960614.html

does anyone have any information in respect to this actually having happened, I know it will only be applicable from 2014 onwards but I could not locate it in the finance bill?

sunnysoutheast

kkelliher wrote: »

does anyone have any information in respect to this actually having happened, I know it will only be applicable from 2014 onwards but I could not locate it in the finance bill?

None that I can find. Search AAM and you get the usual confusion over introduction on a phased basis, etc.

Very difficult for landlords to set an appropriate rent not knowing whether they have to increase for a non-deductible charge or not.

The_Conductor

sunnysoutheast wrote: »

None that I can find. Search AAM and you get the usual confusion over introduction on a phased basis, etc.

Very difficult for landlords to set an appropriate rent not knowing whether they have to increase for a non-deductible charge or not.

If its a non-deductible charge- obviously they'd have to charge double the rate of the tax just to break even (presuming with tax and PRSI- they'd be paying a gross 48% tax on the LPT itself). So...... if its non deductible- and costs 325 a year (band 3- between 150k and 200k) then they'd have to up the rent by 650 annually, just to stand still.........

sunnysoutheast

The_Conductor wrote: »

If its a non-deductible charge- obviously they'd have to charge double the rate of the tax just to break even (presuming with tax and PRSI- they'd be paying a gross 48% tax on the LPT itself). So...... if its non deductible- and costs 325 a year (band 3- between 150k and 200k) then they'd have to up the rent by 650 annually, just to stand still.........

Exactly. On another forum somebody mentioned that it "isn't an issue until October 2014" as that's when 2013 tax returns are due, forgetting that these input costs will be passed on to tenants in yearly rent reviews where the local market conditions will bear it.

Scortho

sunnysoutheast wrote: »

Exactly. On another forum somebody mentioned that it "isn't an issue until October 2014" as that's when 2013 tax returns are due, forgetting that these input costs will be passed on to tenants in yearly rent reviews where the local market conditions will bear it.

Would the rent not go up to the max that the market allows anyway?

kkelliher

sunnysoutheast wrote: »

Exactly. On another forum somebody mentioned that it "isn't an issue until October 2014" as that's when 2013 tax returns are due, forgetting that these input costs will be passed on to tenants in yearly rent reviews where the local market conditions will bear it.

given the governing of rent reviews under the 2004 Act its hard to see how this will ever be picked up by landlords generally as there is no correlation between costs and rent in the "going rent" equation.

marathonic

I'd imagine that, with increasing mortgage rates for BTL, coupled with the increase in DIRT tax, borrowing to invest whilst having money on deposit makes a lot less sense going forward than it would have in 2012.

marathonic

D3PO wrote: »

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

This isn't correct is it?

The 75% of interest is similar to any other expense - so you deduct 75% of 4%, or 3%, from your rental income before calculating tax.

Therefore, if you pay 41% tax, 7% USC and 4% PRSI, you save an amount equal to 3% * 52%, or 1.56%, on your tax bill.

This would mean 4% costs an effective 2.44%.

marathonic

I just came back to this thread and noticed, what I believe to be, an error in my calculations.

Correct me if I'm wrong but I believe tax and PRSI is calculated on profit but USC is calculated based on rental income - so mortgage interest will have no impact on total USC due.

Therefore, if you pay 41% tax and 4% PRSI, you save an amount equal to 3% * 45%, or 1.35%, on your tax bill.

This would mean that an interest rate of 4% costs an effective 2.65%.

murphaph

USC is calculated on net profit after expenses just like income tax and PRSI (source: my own tax returns using ROS). To calculate it on gross rent would be a step too far even for Ireland.

USC is calculated before capital allowances however (which is different to income tax and PRSI), but mortgage interest relief is not a capital allowance.

beertons

Any portfolio update from Darren?

The_Conductor

murphaph wrote: »

USC is calculated on net profit after expenses just like income tax and PRSI (source: my own tax returns using ROS). To calculate it on gross rent would be a step too far even for Ireland.

USC is calculated before capital allowances however (which is different to income tax and PRSI), but mortgage interest relief is not a capital allowance.

However- and very pertinently- USC is calculated at a person's marginal rate for USC- i.e. if a person is letting a property (or multiple properties) and is employed elsewhere- their gross income will determine the rate of USC and PRSI payable to Revenue- not just their rental income.

It doesn't apply for Philip- as he lives in Germany.