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Time right for investment?

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  • 19-04-2013 3:32pm
    #1
    musgravedk
    Registered Users Posts: 53 ✭✭


    Hi all,
    asked for advice here a few years back on if it would be a good idea to make a small property investment, at the time the general feeling was to wait and so i have, well i have been away and returned home as i wanted to build my own home, luckily i have managed to do this without any borrowing from the bank,which has meant i have managed to put away some money , and have been looking at houses in drumcondra that contain 3-4 apartments, there about 280-300k assuming no mortgage would be involved in the purchase iam just wondering if this would be a good investment iam 32, no debt and a cash buyer, basically just want a relatively safe rentable property


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    #2
    Pawwed Rig
    Moderators, Category Moderators, Home & Garden Moderators, Recreation & Hobbies Moderators Posts: 22,379 CMod ✭✭✭✭Pawwed Rig


    Alot of bedsit properties are currently being dumped on the market for what look like good prices. However these properties are below the new regulations standards so would need extensive work. If you're buying make sure the properties meet at least the minimum standard


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    #3
    ladysarah
    Banned (with Prison Access) Posts: 155 ✭✭ladysarah


    my general rule when i buy property to let is would i live in it myself? also i only ever buy a 3 bed. semi as it is easier to sell on. you also have a wider range of tenants seeking houses over apartments.


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    #4
    leinsterdude
    Registered Users Posts: 523 ✭✭✭leinsterdude


    I have to say I have an own home and a rented property, you could buy the rented one for 90k now and I owe way more, and the own home for 140k and I also owe way more, therefore I really believe it is a good time before we all become like sheep again and start buying...it will happen sooner than later


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    #5
    PhilMcGee
    Registered Users Posts: 191 ✭✭PhilMcGee


    OP. I've been "collecting" investment properties in Dublin for the past year.
    Yields of about 10% are easily achievable right now.
    When I get home i can post up the details of the last one i bought (mortgage, rent etc) from my spreadsheet. It might be of help to you.


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    #6
    PhilMcGee
    Registered Users Posts: 191 ✭✭PhilMcGee


    I hope this is of help to you.
    I cant copy the spreadsheet in so im going to just type it in here.
    Ive rounded numbers roughly too.
    Dont be too hard on me if there are typos.
    This is from one property bought last year.
    The others bought in the last year arent very different at all. Just different prices and rents etc.

    Location : Dublin
    Advertised price : >100000
    Purchase price : 88000
    Deposit : 20000
    Mortgage : 68000
    Monthly mortgage payments : 390
    Total outlay : 21500 ( 1500 for solicitor and other small costs before letting)
    Rent received per year : 9360 - Rented 5 days after purchase through when it was cleaned up and ready

    Yield : >10%

    ==================================

    Projected rent and costs

    Rent : 9360

    Est Various Property taxes : 300

    Management Fee : 600
    Est Maintenance costs : 1000 (Experience with other properties puts this at about 500 - 600 per year but picking 1000 to be sure)
    Agent : 700 (rent collection, letting, management, etc)
    Interest paid on mortgage : 3300
    Interest Allowable : .75 x 3300 = 2475

    Profit taxable : 9360 - (1000 + 600 + 700 + 2475) = 4585

    Income Taxes at approx 50% on 4635 : 2292

    ==================================

    After 21500 outlay.
    9360 rent received annually.
    All of mortgage and expenses are paid.
    Profit after that is 2292 according to the revenues calculation of profit, but its really a bit less than that because you cant take off all of the interest and property taxes for this year. Property taxes can be deducted next year and there will be no NPPR tax.

    Not even including the fact that the mortgage will be paid off without further injection within 25 years, theres an excellent return on that 21500.
    What will you get with that on deposit and DIRT to be taken out too.

    Good luck.


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    #7
    srsly78
    Registered Users Posts: 7,157 ✭✭✭srsly78


    You have left out some important stuff in that analysis. Place will not be occupied 100% of the time. Cost of insurance etc.

    Basically you have left any notion of risk out.


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    #8
    PhilMcGee
    Registered Users Posts: 191 ✭✭PhilMcGee


    srsly78 wrote: »
    You have left out some important stuff in that analysis. Place will not be occupied 100% of the time. Cost of insurance etc.

    Basically you have left any notion of risk out.

    Thats true. I have left insurance out. It will be different for everyone so you can get a quote yourself on it. its not very much. tiny actually. Probably could be as little as €50 a year depending onyour age, smoker and so on. I have a different life policy anyway and work policy. The building insurance is already included in the block policy.

    I am assuming close to 100% occupancy as that is my experience in over a decade of letting properties.

    As I said in another thread "I already had 3 investment properties from years ago.
    I only just started buying again last year.

    From experience though, total vacant time between the 3 is about 4 months in 14 years ." The only time you cant get a new tenant lined up has been if someone move out christmas week or so.

    Its too hard answering questions in 2 threads, so you'll just have to figure out any other questions you have yourself.


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    #9
    ladysarah
    Banned (with Prison Access) Posts: 155 ✭✭ladysarah


    hey phil great investment and return. well done


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    #10
    murphaph
    Registered Users Posts: 19,022 ✭✭✭✭murphaph


    PhilMcGee wrote: »
    Thats true. I have left insurance out. It will be different for everyone so you can get a quote yourself on it. its not very much. tiny actually. Probably could be as little as €50 a year depending onyour age, smoker and so on. I have a different life policy anyway and work policy.
    You aren't required to have life cover (mortgage protection) in place on an investment mortgage (unless the lender insists of course). It is a legal requirement only for owner occupied mortgaged properties.

    I actually have mortgage protection on my one outstanding mortgage even though it's rented out because it's (as you say) cheap insurance for what it is and if I get hit by a bus my family won't have to worry for a second about it, the insurance will clear the bit of mortgage that's outstanding.


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    #11
    PhilMcGee
    Registered Users Posts: 191 ✭✭PhilMcGee


    murphaph wrote: »
    You aren't required to have life cover (mortgage protection) in place on an investment mortgage (unless the lender insists of course). It is a legal requirement only for owner occupied mortgaged properties.

    I actually have mortgage protection on my one outstanding mortgage even though it's rented out because it's (as you say) cheap insurance for what it is and if I get hit by a bus my family won't have to worry for a second about it, the insurance will clear the bit of mortgage that's outstanding.

    I dont have mortgage protection policies at all.
    I have life policies already that are enough to cover any of my investments so my family have enough to pay off the debts and some spare cash and dont get landed with huge mortgages if i kick it.
    As you say mortgage protection insurance only covers the mortgage. Not good enough for me. I want the family to have more security than that.


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    #12
    musgravedk
    Registered Users Posts: 53 ✭✭musgravedk


    Thanks Phil, was just wondering would you recommend drumcondra as good rental area, also the new regs as regards apartments, am i right in thinking that it refers to separate heating system , fire alarm system etc ?


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    #13
    K.Flyer
    Registered Users Posts: 8,565 ✭✭✭K.Flyer


    musgravedk wrote: »
    Thanks Phil, was just wondering would you recommend drumcondra as good rental area, also the new regs as regards apartments, am i right in thinking that it refers to separate heating system , fire alarm system etc ?

    It also refers to each apt having its own private bathroom / toilet etc, doing away with shared facilities.


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    #14
    foleypio
    Banned (with Prison Access) Posts: 138 ✭✭foleypio


    Pawwed Rig wrote: »
    Alot of bedsit properties are currently being dumped on the market for what look like good prices. However these properties are below the new regulations standards so would need extensive work. If you're buying make sure the properties meet at least the minimum standard

    Could you outline some of those minimum standards please?


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    #15
    Pawwed Rig
    Moderators, Category Moderators, Home & Garden Moderators, Recreation & Hobbies Moderators Posts: 22,379 CMod ✭✭✭✭Pawwed Rig


    The landlord must:
    • Ensure that the rental property is in a proper state of structural repair. This means that it must be essentially sound with roof, floors, ceilings, walls and stairs in good repair and not subject to serious dampness or rotting. This requirement was strengthened with effect from 1 December 2009 (see below)
    • Provide a sink with hot and cold water
    • Provide a separate ventilated room with a bath or shower and toilet
    • Provide heating appliances for every room lived in
    • Provide facilities for cooking and for the hygienic storage of food, for example, a 4-ring hob with oven and grill, fridge-freezer and microwave oven
    • Provide clothes-washing facilities
    • Provide clothes-drying facilities if there isn’t a garden or a yard
    • Ensure that electricity or gas supplies are in good repair and safe
    • Ensure that every room has adequate ventilation and both natural and artificial lighting
    • Provide a fire blanket and fire alarms
    • Provide access to vermin-proof and pest-proof refuse storage facilities.
    See here for more details
    http://www.citizensinformation.ie/en/housing/renting_a_home/repairs_maintenance_and_minimum_physical_standards.html


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    #16
    QBE
    Banned (with Prison Access) Posts: 225 ✭✭QBE


    PhilMcGee wrote: »
    I dont have mortgage protection policies at all.
    I have life policies already that are enough to cover any of my investments so my family have enough to pay off the debts and some spare cash and dont get landed with huge mortgages if i kick it.
    As you say mortgage protection insurance only covers the mortgage. Not good enough for me. I want the family to have more security than that.

    great advice. I am 36 and a smoker. I have life cover ( 1 million) for 160e per mount. Ill agree with you Much better idea than mortgage protection policy.


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