Buying apartment v terraced house

grover_green

if people could set aside the perhaps ( questionable logic ) of buying property at all right now , i would like to ask the question if an appartment is always a worse buy than a house from an investment POV

im presently trying to decide whether to buy a one bed 500 sqr ft appartment in dublin 7 or a 780 sqr ft two up - two down terraced house , also in dublin 7

the appartment should fetch a monthly rent of around 700 to 750 while houses of this kind in the area generally pull in around 1050 to 1100 , appartment can be bought for 100 k which gives you a yield of in or around 8% , house for around 215 which delivers a return of 6%

an appartment has fewer doors , windows etc to maintain and repair , a house has a garden , both in this instance have their own front door

here are both properties

http://www.myhome.ie/residential/brochure/26-ard-righ-road-stoneybatter-dublin-7/2066911


http://www.myhome.ie/residential/brochure/3-norseman-court-stoneybatter-dublin-7/1613398


im ( a cash buyer ) buying to let but also to try and strengthen my possition from a collateral POV when dealing with banks down the road , based on grim forecasts about the medium to long term appartment market , i have concerns as to whether a bank would see much security in an appartment compared to a house

athtrasna

No question, the house. An apartment brings management fees which have no boundary, they can keep increasing. You also are a hostage to the financial situation of the management company. I would never recommend people buy in a managed development, speaking as an owner who does.

grover_green

athtrasna wrote: »

No question, the house. An apartment brings management fees which have no boundary, they can keep increasing. You also are a hostage to the financial situation of the management company. I would never recommend people buy in a managed development, speaking as an owner who does.

a hostage ? , in what sense , i would have thought if the managment company runs into problems , another managment company simply takes over , what other downfalls are there for the owner of an apt in this regard ?

athtrasna

No - you're thinking management agent. The MC is the legal entity made up of all owners in the development, the MC owns the buildings and all common areas. Lots of MCs are in financial difficulties due to people not paying their fees and having large expenses such as painting, maintenance etc. These holes in the budget have to be plugged and the money has to come from somewhere ie the owners.

If the MC is in financial difficulty you would find it next to impossible to sell your apartment should you want to move up.

StillWaters

House. Not only because of fees issue, but they will always hold their value better and be more saleable. That's a nice apartment, but doesn't trump the house.

Marcusm

I wouldn't buy that apartment - you will share in the management costs but as you don't use the common areas, you will only benefit from the insurance aspect.

The house is in beautiful shape and would benefit an owner occupier more than an investor as there seem to be lots of opportunities for minor damage which could involve significant cost or diminution of value. Does it share a boundary wall with Arbour Hill prison?

There seem to be similar houses with lower quality finishes in the area fr significantly less money. These will offer a very similar rent but a much higher yield and future refurb opportunities to improve the property if the market normalises.

I too am lucky at purchasing in inner city/near suburbs and would not consider anything under a 10 yield in current market. Rents have retained reasonably solId and will not rise dramatically as the economy improves.

grover_green

athtrasna wrote: »

No - you're thinking management agent. The MC is the legal entity made up of all owners in the development, the MC owns the buildings and all common areas. Lots of MCs are in financial difficulties due to people not paying their fees and having large expenses such as painting, maintenance etc. These holes in the budget have to be plugged and the money has to come from somewhere ie the owners.

If the MC is in financial difficulty you would find it next to impossible to sell your apartment should you want to move up.

actually i wasnt thinking managment agent , so what your saying is that every owner of an appartment is at the mercy of the rest of their neighbours financial wellbeing , i would have thought that at all times , their are some appartment owners in a complex who are not meeting their commitments , what happens if you simply dont pay your managment fees btw ?

grover_green

StillWaters wrote: »

House. Not only because of fees issue, but they will always hold their value better and be more saleable. That's a nice apartment, but doesn't trump the house.

that appartment can be accessed in an unconventional way , you can enter through the complex per normal but also through the front door , to the rear , the appartment is set along an area of traditional cottage and two up - two down houses , you could avoid the complex forever if you wished

grover_green

Marcusm wrote: »

I wouldn't buy that apartment - you will share in the management costs but as you don't use the common areas, you will only benefit from the insurance aspect.

The house is in beautiful shape and would benefit an owner occupier more than an investor as there seem to be lots of opportunities for minor damage which could involve significant cost or diminution of value. Does it share a boundary wall with Arbour Hill prison?

There seem to be similar houses with lower quality finishes in the area fr significantly less money. These will offer a very similar rent but a much higher yield and future refurb opportunities to improve the property if the market normalises.

I too am lucky at purchasing in inner city/near suburbs and would not consider anything under a 10 yield in current market. Rents have retained reasonably solId and will not rise dramatically as the economy improves.

the house does not share a boundary with arbour hill prison , every house around there is within a stonesthrow of arbour hill though

your right in saying that their are other houses around there ( broadly speaking ) which would fetch a higher yield but none of them will command 10 % and those which even command 8% are up the top end of oxmantown road , near o devaney gardens and ross st , areas which most people might not want to rent , again , nowhere near 10 %

you might be right however in saying that the house is more suited to an owner occupier , a person buying to let doesnt need to like a house , which is why i was leaning towards the appartment , though i would not pay anything close to what they are asking , im not sure this whole thing of managment company status carries as much risk as some here suggest , surely a sick managment company cannot doom every single appartments prospects

looked at an appartment in ranelagh yesterday ( no charechter at all ) and got chatting to an asian couple who were in the market for several months , they didnt like the noise from the train almost overhead around dublin 6 so were not going to buy , they reckoned for a buy to let , dublin 8 was a good choice , im considering checking out a few places around christchurch or perhaps even smithfield in dublin 7 , i dont mind buying in an area which isnt remotley affluent but its no use buying an appartment for 50 k in a crime infested blackspot where no one only mice rent

Marcusm

grover_green wrote: »

actually i wasnt thinking managment agent , so what your saying is that every owner of an appartment is at the mercy of the rest of their neighbours financial wellbeing , i would have thought that at all times , their are some appartment owners in a complex who are not meeting their commitments , what happens if you simply dont pay your managment fees btw ?

If a large number of tenants fail to pay fees, either the services degrade, cease or are paid for out of debt or the fees of others are used to pay for the ASIC services. Ultimately it's important that planned preventative maintenance is undertaken, that insurances are maintained etc. Over time developments with serious arrears will become known and will be avoided by buyers as they will ecome ticking time bombs marketability wise.

Marcusm

grover_green wrote: »

the house does not share a boundary with arbour hill prison , every house around there is within a stonesthrow of arbour hill though

your right in saying that their are other houses around there ( broadly speaking ) which would fetch a higher yield but none of them will command 10 % and those which even command 8% are up the top end of oxmantown road , near o devaney gardens and ross st , areas which most people might not want to rent , again , nowhere near 10 %

you might be right however in saying that the house is more suited to an owner occupier , a person buying to let doesnt need to like a house , which is why i was leaning towards the appartment , though i would not pay anything close to what they are asking , im not sure this whole thing of managment company status carries as much risk as some here suggest , surely a sick managment company cannot doom every single appartments prospects

looked at an appartment in ranelagh yesterday ( no charechter at all ) and got chatting to an asian couple who were in the market for several months , they didnt like the noise from the train almost overhead around dublin 6 so were not going to buy , they reckoned for a buy to let , dublin 8 was a good choice , im considering checking out a few places around christchurch or perhaps even smithfield in dublin 7 , i dont mind buying in an area which isnt remotley affluent but its no use buying an appartment for 50 k in a crime infested blackspot where no one only mice rent

I did a quick myhome search excluding any properties I've looked at before so this is not te most attactive prospect I've seen.....

Put 5 people into this at €400 per month and you'll get 10% even at the asking price. There are lots of properties like this in the north inner city and along SCR. Some larger, some smaller.

http://www.myhome.ie/residential/brochure/513-north-circular-road-north-city-centre-dublin-1/2021575

grover_green

Marcusm wrote: »

If a large number of tenants fail to pay fees, either the services degrade, cease or are paid for out of debt or the fees of others are used to pay for the ASIC services. Ultimately it's important that planned preventative maintenance is undertaken, that insurances are maintained etc. Over time developments with serious arrears will become known and will be avoided by buyers as they will ecome ticking time bombs marketability wise.

and how do you anticipate which particular complexes encounter future problems , simply avoiding appartments outright seems pretty extreme

besides , couldnt an appartment owner always engage in a bit of DIY

grover_green

Marcusm wrote: »

I did a quick myhome search excluding any properties I've looked at before so this is not te most attactive prospect I've seen.....

Put 5 people into this at €400 per month and you'll get 10% even at the asking price. There are lots of properties like this in the north inner city and along SCR. Some larger, some smaller.

http://www.myhome.ie/residential/brochure/513-north-circular-road-north-city-centre-dublin-1/2021575

ive seen three beds which are larger than that 1100 sqr foot house , even you managed to get five people to live together in one house ( and you would be lucky to have three on a permanent basis in a house like that ) , they would not be paying anywhere near 400 euro per week , four professionals sharing a four bed somewhere like drumcondra would not be paying 1600 per month , a bunch of professionals would not live in a house like that so close to gardner st , with its horribley designed kitchen to boot with no room to swing a cat , the only way you could fill that place is with five eastern europeans paying about fifty quid a week each

Marcusm

grover_green wrote: »

and how do you anticipate which particular complexes encounter future problems , simply avoiding appartments outright seems pretty extreme

besides , couldnt an appartment owner always engage in a bit of DIY

If things look a bit ropey, get a copy of the management company accounts to assess the arrears position. DIY won't help pay for insurances or to maintain a fire control system.

I'm not advocating apartments completely but with the one you tagged the owner does not benefit from many ofthe features which add up to the management charge hence why I would not be willing to buy it except for a large discount versus other apartments. A good example of this is the apartments in the Dalkey island hotel. One with its own door was recently put up for sale or a assume discount (think 300k purchase price) with a 6k management charge and ongoing litigation over management.

grover_green

Marcusm wrote: »

If things look a bit ropey, get a copy of the management company accounts to assess the arrears position. DIY won't help pay for insurances or to maintain a fire control system.

I'm not advocating apartments completely but with the one you tagged the owner does not benefit from many ofthe features which add up to the management charge hence why I would not be willing to buy it except for a large discount versus other apartments. A good example of this is the apartments in the Dalkey island hotel. One with its own door was recently put up for sale or a assume discount (think 300k purchase price) with a 6k management charge and ongoing litigation over management.

how does one get hold of such accounts ? , id have thought the appartment i tagged had added benefits , like independant access and proximity to a whole other neighbourhood from one end

StillWaters

grover_green wrote: »

StillWaters wrote: »

House. Not only because of fees issue, but they will always hold their value better and be more saleable. That's a nice apartment, but doesn't trump the house.

that appartment can be accessed in an unconventional way , you can enter through the complex per normal but also through the front door , to the rear , the appartment is set along an area of traditional cottage and two up - two down houses , you could avoid the complex forever if you wished

Like I said, a nice apartment, but houses hold their value more as they appeal to a broader range of people, investors, couples, small families. Is there no own outdoor space with the apartment, no balcony or patio. That would rule it out for me and many others.

grover_green

StillWaters wrote: »

Like I said, a nice apartment, but houses hold their value more as they appeal to a broader range of people, investors, couples, small families. Is there no own outdoor space with the apartment, no balcony or patio. That would rule it out for me and many others.

all the above is true but from a buy to let POV , yield is what counts , or so im told , that appartment while costing less than half of what an average two bed terrace house is to buy , only generates 45 to 50 % less rent per month

the_syco

House for the following reasons;
You can sound-proof the walls easier than the walls, floor and ceiling if your neighbours are noisy in an apartment.
You have a garden. if you have a child/intend to have kids, a garden is very handy.
Able to dry clothes in the garden.
Most likely have your own driveway, so less hassle finding a parking space.

Marcusm

grover_green wrote: »

ive seen three beds which are larger than that 1100 sqr foot house , even you managed to get five people to live together in one house ( and you would be lucky to have three on a permanent basis in a house like that ) , they would not be paying anywhere near 400 euro per week , four professionals sharing a four bed somewhere like drumcondra would not be paying 1600 per month , a bunch of professionals would not live in a house like that so close to gardner st , with its horribley designed kitchen to boot with no room to swing a cat , the only way you could fill that place is with five eastern europeans paying about fifty quid a week each

I agree it's small - I have a 2 bed almost twice the size. However, it has 5 bedrooms, 2 reasonable reception rooms and a small kitchen - look at the dining room. It's well located between the Mater and Temple Street and could attract a good few junior docs or nurses (likely foreign people who prize closeness to work rather than any particular area). 10-15k on a spruce up, storage and furniture would get it well let.

Marcusm

grover_green wrote: »

how does one get hold of such accounts ? , id have thought the appartment i tagged had added benefits , like independant access and proximity to a whole other neighbourhood from one end

The accounts woud be available from the seller, the companies regstration office etc but I'd go via the seller and seek management company correspondence.

What you see as added benefits I think make the management charge a joke - why have two accesses when one will do. If you like the front door, buy one f te two up two downs as you'll have more freedom to manage your wn property. Also some (admittedly a sall number) will be put off by the own door aspects if they see an apartment block as offering more security.

In summary, I see that property as having some of the disadvantages of apartment living but few of the advantages. It's quirky and will attract some but repel others.

StillWaters

grover_green wrote: »

StillWaters wrote: »

Like I said, a nice apartment, but houses hold their value more as they appeal to a broader range of people, investors, couples, small families. Is there no own outdoor space with the apartment, no balcony or patio. That would rule it out for me and many others.

all the above is true but from a buy to let POV , yield is what counts , or so im told , that appartment while costing less than half of what an average two bed terrace house is to buy , only generates 45 to 50 % less rent per month

Yes, yield is king, but you cannot ignore potential capital appreciation, or certainly the ease of liquidating the asset if needs be. Now that is priced in to some extent to the price of the apartment, but not enough in my view.

grover_green

the_syco wrote: »

House for the following reasons;
You can sound-proof the walls easier than the walls, floor and ceiling if your neighbours are noisy in an apartment.
You have a garden. if you have a child/intend to have kids, a garden is very handy.
Able to dry clothes in the garden.
Most likely have your own driveway, so less hassle finding a parking space.

all true from an owner occupier POV , my focus is buy to let , a childless couple could live in that appartment for a year or two and that appartment has the same kind of parking spot as the two bed terraced house , two properties are less than 200 metres appart

grover_green

Marcusm wrote: »

I agree it's small - I have a 2 bed almost twice the size. However, it has 5 bedrooms, 2 reasonable reception rooms and a small kitchen - look at the dining room. It's well located between the Mater and Temple Street and could attract a good few junior docs or nurses (likely foreign people who prize closeness to work rather than any particular area). 10-15k on a spruce up, storage and furniture would get it well let.

even their was no money to be spent on it , you would be unlikely to have five tennants on an ongoing basis and even you did , you would not be getting 400 euro each from them , very few people ( with means like docs or nurses ) want to live with four other people in a small ( for five bed ) house

whatever way you stock it , it would not make more than 1300 per month IMO

grover_green

StillWaters wrote: »

Yes, yield is king, but you cannot ignore potential capital appreciation, or certainly the ease of liquidating the asset if needs be. Now that is priced in to some extent to the price of the apartment, but not enough in my view.

ignore your preferance for a house for a minute , what value would you put on that 500 sqr ft one bed appartment which can command a minimum of 700 euro per month rental income

obviously its not worth anywhere near 119500 , its not worth anymore than 100 k tops

christmas2012

a house is a long term investment,but apartments are easy to sell too,people want them as young working professionals to their mid thirites etc,but if you want less hassle with management companies a house is a better option,but having said that you pay less on property valuation for your apartment..

athtrasna

grover_green wrote: »

actually i wasnt thinking managment agent , so what your saying is that every owner of an appartment is at the mercy of the rest of their neighbours financial wellbeing , i would have thought that at all times , their are some appartment owners in a complex who are not meeting their commitments , what happens if you simply dont pay your managment fees btw ?

Like I said, the management company is a legal entity made up of all owners. This has to be registered with the CRO and must comply with company law. It's one company, you can't "just get another one"

Any of us in managed developments have to rely on everyone to pay their fees, our Management agent follows up on this and we do take legal action if necessary. You sign legal documents at purchase to commit to paying these fees, by not complying with this, you face sanctions with the final options being a judgement mortgage on the property or forfeiture of the property (as you would be in breach of the lease).

My SIL has an apartment in a development with financial issues. She has tried to sell but can't. Refuse services have been withdrawn because the bills weren't being paid and grounds and building maintenance stopped 12 months ago for the same reason. What buyer would want to buy there?

grover_green

christmas2012 wrote: »

a house is a long term investment,but apartments are easy to sell too,people want them as young working professionals to their mid thirites etc,but if you want less hassle with management companies a house is a better option,but having said that you pay less on property valuation for your apartment..

im not buying to flip , i would hope to keep either for more than twenty years at the very least , my attitude is if i can get over 6% on a property , im doing twice as well as with money in the bank , im really not that bothered about capital appreciation , might sound strange but there you go

btw , are you sure a 500 sqr ft appartment would cost that much less to tax than an 800 sqr ft two bed terraced house

grover_green

athtrasna wrote: »

Like I said, the management company is a legal entity made up of all owners. This has to be registered with the CRO and must comply with company law. It's one company, you can't "just get another one"

Any of us in managed developments have to rely on everyone to pay their fees, our Management agent follows up on this and we do take legal action if necessary. You sign legal documents at purchase to commit to paying these fees, by not complying with this, you face sanctions with the final options being a judgement mortgage on the property or forfeiture of the property (as you would be in breach of the lease).

My SIL has an apartment in a development with financial issues. She has tried to sell but can't. Refuse services have been withdrawn because the bills weren't being paid and grounds and building maintenance stopped 12 months ago for the same reason. What buyer would want to buy there?

with the current state of the appartment market , id have thought any real penalty for owners in arrears is a rarity , id also have thought that a very sizeable percentage of appartment blocks have at least one owner who is not pulling their weight , if its a case of the integrity of an apparment only being as strong as its weakest link in the entire building , im surprised the entire appartment market is not in complete paralysis

athtrasna

grover_green wrote: »

with the current state of the appartment market , id have thought any real penalty for owners in arrears is a rarity , id also have thought that a very sizeable percentage of appartment blocks have at least one owner who is not pulling their weight , if its a case of the integrity of an apparment only being as strong as its weakest link in the entire building , im surprised the entire appartment market is not in complete paralysis

The penalty is that a judge can (and has) order the non-paying unit to pay fees. In some development the management company withdraws insurance cover/parking rights/refuse collection from non paying members and that can encourage people to pay up. Why should the rest of us pay while non-payers benefit from the services?

grover_green

athtrasna wrote: »

The penalty is that a judge can (and has) order the non-paying unit to pay fees. In some development the management company withdraws insurance cover/parking rights/refuse collection from non paying members and that can encourage people to pay up. Why should the rest of us pay while non-payers benefit from the services?

it was hinted earlier that if one or more apt owners stop paying their fees , everyone suffers , services get withdrawn across the board and all the properties in the complex become unsaleable

if only those not paying their bills see a withdrawl of services , i see little problem

athtrasna

grover_green wrote: »

it was hinted earlier that if one or more apt owners stop paying their fees , everyone suffers , services get withdrawn across the board and all the properties in the complex become unsaleable

if only those not paying their bills see a withdrawl of services , i see little problem

Everyone does lose out. What I was saying is that in some cases MC withdraw services as "an encouragement" to pay fees. For example, parking permit withdrawn, owner has rented unit, tenant gets clamped. Owner either pays fees or loses tenants very quickly. Or if there is a mortgage on the property and insurance is withdrawn, the owner is in breach of their mortgage conditions and the bank will act pretty quickly if notified.

If these tactics (used by some MCs not all) and/or legal action do not work, the hole left in the budget means all owners suffer. Bills have to be paid, if the money isn't there they can't be.