Advice on wheather or not to invest in Irish property

Jeasus

I'm looking for some advise from people who have been involved in the property buisness either small or large scale.

I've managed over the past decade to save a sum of money which would allow me to invest in some buisness, lately i've been thinking of buying property to let.


I'm living abroad and don't really see any situation which would draw me home, but still if i were to invest like this I would like to do so in Ireland as I would have family etc. to help with any landlord responsibilities.

Im not a very buisness minded person, I've looked at the rental on some apartments and the return doesn't seem so great, 7% per annum on investment, of course tis likely that there would be a property price increase from current value in the next decade but this is something
I don't want to 'bank' on as I really want to avoid any risk.

With the intoduction of a property tax and the possibility of an increase of this in the future I want to hear from people on here if it would be a stupit idea to consider making a move like this.

Hope to hear some constructive advise:)

sunnysoutheast

Jeasus wrote: »

I'm looking for some advise from people who have been involved in the property buisness either small or large scale.

I've managed over the past decade to save a sum of money which would allow me to invest in some buisness, lately i've been thinking of buying property to let.


I'm living abroad and don't really see any situation which would draw me home, but still if i were to invest like this I would like to do so in Ireland as I would have family etc. to help with any landlord responsibilities.

Im not a very buisness minded person, I've looked at the rental on some apartments and the return doesn't seem so great, 7% per annum on investment, of course tis likely that there would be a property price increase from current value in the next decade but this is something
I don't want to 'bank' on as I really want to avoid any risk.

With the intoduction of a property tax and the possibility of an increase of this in the future I want to hear from people on here if it would be a stupit idea to consider making a move like this.

Hope to hear some constructive advise:)

The only real way to work out whether it is right for you is to run some financial simulations taking everything - financing, taxation, voids, delapidations, exit strategy - into consideration. It may also help if you can pin down the rental sector you'll be looking at - 1 bed apts in Dublin, family houses in commuter towns, holiday lets, social landlord, etc. etc.

From the post you have made two things would really strike me as concerning, the first is that you live abroad and want to rely on your family to help you with landlord responsibilities (this is almost guaranteed not to end well) and the second is that you are expecting property prices to increase, some may but the vast majority will bump along the floor for a while yet.

Personally, I just can not see any logic in investing in the Irish residential property market, given the large returns available on equities at present. I am, however, an investor in the UK BtL market.

Scortho

Jeasus wrote: »

I'm looking for some advise from people who have been involved in the property buisness either small or large scale.

I've managed over the past decade to save a sum of money which would allow me to invest in some buisness, lately i've been thinking of buying property to let.


I'm living abroad and don't really see any situation which would draw me home, but still if i were to invest like this I would like to do so in Ireland as I would have family etc. to help with any landlord responsibilities.

Im not a very buisness minded person, I've looked at the rental on some apartments and the return doesn't seem so great, 7% per annum on investment, of course tis likely that there would be a property price increase from current value in the next decade but this is something
I don't want to 'bank' on as I really want to avoid any risk.

With the intoduction of a property tax and the possibility of an increase of this in the future I want to hear from people on here if it would be a stupit idea to consider making a move like this.

Hope to hear some constructive advise:)

If you want to get into btl is strongly recommend doing so in the country you are primarily resident. This reminds me of people investing in Bulgaria but in reverse. It doesn't really work out well.
A yield of 7% for btls in Ireland isn't bad. You will find higher yields in commercial property and one bed apartments.
Remember if you're an absentee landlord the tenant has to hold 20% of the rent back on behalf of revenue.
Sorry to be harsh but if your not business minded and your not even living in Ireland, then this isn't the game for you. You mentioned capital appreciation. Property investment isn't about capital appreciation. It's all about the return on capital invested.

murphaph

Jeasus wrote: »

I'm looking for some advise from people who have been involved in the property buisness either small or large scale.

I've managed over the past decade to save a sum of money which would allow me to invest in some buisness, lately i've been thinking of buying property to let.


I'm living abroad and don't really see any situation which would draw me home, but still if i were to invest like this I would like to do so in Ireland as I would have family etc. to help with any landlord responsibilities.

Im not a very buisness minded person, I've looked at the rental on some apartments and the return doesn't seem so great, 7% per annum on investment, of course tis likely that there would be a property price increase from current value in the next decade but this is something
I don't want to 'bank' on as I really want to avoid any risk.

With the intoduction of a property tax and the possibility of an increase of this in the future I want to hear from people on here if it would be a stupit idea to consider making a move like this.

Hope to hear some constructive advise:)

Being a landlord is far from low risk. Non-paying tenants can easily ruin your figures for years and destroy and return you hoped for. It is high risk given the current legal framework in Ireland wrt getting vacant possession. If you want low risk invest your money elsewhere.

MMAGirl

Thinking about pulling the trigger myself.
Have investments and am really well diversified already and pension well funded.
I want to diversify even more and property seems better than having too much money just sitting in the bank.

I thought this was great.

http://www.boards.ie/vbulletin/showthread.php?p=79604340

Wish he would update it though.

Marcusm

Scortho wrote: »

A yield of 7% for btls in Ireland isn't bad. You will find higher yields in commercial property and one bed apartments.
.

A 7% yield (gross) on Irish residential property should only be acceptable to a mug, to be frank. On multi units in Dublin, 10% should easily be achievable - even without a need for substnatial redevelopment or further investment, Anyone buying at a lower yield (other than in anticipation of capital appreciation for which there will be limited opportunities) is heading for disappointment.

Scortho

Marcusm wrote: »

A 7% yield (gross) on Irish residential property should only be acceptable to a mug, to be frank. On multi units in Dublin, 10% should easily be achievable - even without a need for substnatial redevelopment or further investment, Anyone buying at a lower yield (other than in anticipation of capital appreciation for which there will be limited opportunities) is heading for disappointment.

7% aint bad if you run it through a company. That way you avoid the income tax swallowing up half of the rent and so can clear the mortgage faster.

Marcusm

Scortho wrote: »

7% aint bad if you run it through a company. That way you avoid the income tax swallowing up half of the rent and so can clear the mortgage faster.

Corporation tax on rental income is 25% plus there is also the close company surcharge of 20% for the undistributed investment income of companies held by 5 or fewer shareholders (an unlimited number where they are related). This will kick the tax rate back up into the same level as holding directly. A foreign resident company will not attract the close company surcharge but will be much more expensive to operate. In this field, not so much is to be gained by using a company as compared to personal services.

Irrespective, always best to target the best nominal return, why accept 7% when higher returns are available. Not sure why clearing the mortgage comes into it either as there is so little bank funding available for investment properties. Fine if you have a farm and borrow to "invest" but actually put it into rental property. Otherwise, not clear that such money is widely available. I'm certainly not relying on its availability when looking at deals.

Scortho

Marcusm wrote: »

Corporation tax on rental income is 25% plus there is also the close company surcharge of 20% for the undistributed investment income of companies held by 5 or fewer shareholders (an unlimited number where they are related). This will kick the tax rate back up into the same level as holding directly. A foreign resident company will not attract the close company surcharge but will be much more expensive to operate. In this field, not so much is to be gained by using a company as compared to personal services.

Cheers for that. have been looking at this for a while but obivously not close enough. Corporation tax on rental income, is that 25 % on the company profit derived from rental income, or 25% on the company turnover derived from rental income?

Marcusm

Scortho wrote: »

Cheers for that. have been looking at this for a while but obviously not close enough. Corporation tax on rental income, is that 25 % on the company profit derived from rental income, or 25% on the company turnover derived from rental income?

Profits are split across different headings

Sch D Case I - trading income (say from buying paper, making toilet rolls and selling them)

Sch D Case III - interest income, certain types of foreign income, discounts etc

Sch D Case IV - income which has had tax deducted at source (used to apply to interest), miscellaneous other income

Sch D Case V - income from Irish property (rents, deemed rents, easements income etc)

Only Sch D Case I is taxed at 12.5%; the others at 25%. The 20% surcharge will generally apply to all except the SchD Case I. I can't remember if it is 20% of 75% or 20% of 100% but it's much more tax than you were planning on in either instance!

riclad

If you pay an agent ,Tenant does,nt hold on to 20 per cent of rent,

Agent collects rent,or maybe rent is paid into a bank account.
Agent checks if repairs are needed,hires plumber,etc

Marcusm

riclad wrote: »

If you pay an agent ,Tenant does,nt hold on to 20 per cent of rent,

Agent collects rent,or maybe rent is paid into a bank account.
Agent checks if repairs are needed,hires plumber,etc

Agent also has to pay the relevant tax over to Revenue, make a return (under a separate PPS no) etc. Appointing an agent (whether an estate agent or simply someone to receive the rent) does not eliminate the Irish tax liability - simply shifts the payment point.

riclad

MY friend pays,an agent ,and accountant,
i think she claims tax credits for paying both.
She lives abroad, her accountant fills in her irish tax return,pays whatever tax is due,including 200 euro to local council.
rental income,about 7k per year.
I,M not trying to suggest you avoid paying tax .
HAS the same tenant since 2009.
i Don,t think its practical to ask a tenant to be holding onto 20 per cent tax,
unless its a relative of your,s.
she has an accountant,i presume he pays her taxes to revenue.

MMAGirl

Who do revenue go after if the tenant holds 20% and doesnt pay it over?

murphaph

MMAGirl wrote: »

Who do revenue go after if the tenant holds 20% and doesnt pay it over?

The tenant. Landlord has no liability in this case.