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Best town / city for residential investment

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  • 10-08-2013 9:27pm
    #1
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭


    It looks as if the property price drop is slowing or stopped in the case of Dublin. What towns cities areas are now giving the best return on investment.


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    #2
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    handlemaster wrote: »
    It looks as if the property price drop is slowing or stopped in the case of Dublin. What towns cities areas are now giving the best return on investment.

    Very difficult to say- especially as rent allowance is apparently going to be significantly further reduced in the budget (this was setting a floor on the rental market pretty much every where- regardless of the fact that a lot of landlords refused to have anything to do with the scheme).

    What would you consider a reasonable return on investment to be?
    Traditionally in the property sector- you'd be looking at an ROI of between 6 and 8%

    In the current climate- you'd be very hard pressed to get a reasonable ROI pretty much anywhere- and given the state of flux of the market in general- it would be foolish to point to Galway and suggest it would be a good idea to invest there (or anywhere else in particular). Sure it may be- but randomly flinging a dart at a list of our major towns and cities- is pretty much as good as it gets.

    Avoid the midlands- and places like Carrick-on-Shannon, where property may be dirt cheap- because there is so much of it- however, it has high vacancy rates, and low demand.

    Places like Lucan and other Dublin suburbs- may offer value- reasonable occupancy rates, however any recovery in prices has been modest (if at all), and demand remains reasonable (for the most part).

    Unfortunately- you have some work to do here- no-one is going to hand you over a magic formula for making your first million.........


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    #3
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    good reply. I did wonder about places like Longford. Always has been a good trading town. Property looking cheap especially the apartments. The social welfare client would be what I was thinking of going for. Apartment could be bought for 25k or less rented perhaps for 300 -325 per month. Dublin 4 times the price but not 4 times the rent. I personally always believed that investors should have stuck to Dublin but just like to think of all options.


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    #4
    StillWaters
    Closed Accounts Posts: 1,799 ✭✭✭StillWaters


    handlemaster wrote: »
    good reply. I did wonder about places like Longford. Always has been a good trading town. Property looking cheap especially the apartments. The social welfare client would be what I was thinking of going for. Apartment could be bought for 25k or less rented perhaps for 300 -325 per month. Dublin 4 times the price but not 4 times the rent. I personally always believed that investors should have stuck to Dublin but just like to think of all options.

    Not mortgeable as a BTL, so no interest to offset against tax. I think it would be a lot of work for very little return.


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    #5
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    StillWaters wrote: »
    Not mortgeable as a BTL, so no interest to offset against tax. I think it would be a lot of work for very little return.

    Even for the cash buyer there wouldnt be much meat on the bone. I guess it would be a numbers game buying a few to get the rental income up


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    #6
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,712 Mod ✭✭✭✭Henry Ford III


    The market is still non functional. Rent allowance is due to be cut.

    Avoid.


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    #7
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    Henry Ford III wrote: »
    The market is still non functional. Rent allowance is due to be cut.

    Avoid.

    yep i thought so... but at what price does the tide turn even for the smaller towns locations. at the end of the day people will want to live in these places even if I personally wouldnt


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    #8
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    handlemaster wrote: »
    yep i thought so... but at what price does the tide turn even for the smaller towns locations. at the end of the day people will want to live in these places even if I personally wouldnt

    Smaller town locations- will be the very last places to recover- because demand will be limited there to begin with (on top of the fact that most small town locations were massively over-developed to begin with and are sitting on vast quantities of empty and/or partially complete developments).

    Recovery (insofar as it happens) will be in the major cities to begin with - Dublin/Cork/Galway and limited in other locations (depending on employment opportunities etc).

    What is far more likely to happen before a property recovery in 'smaller town locations'- is a massive spike in people giving up, throwing in the towel and emigrating.


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    #9
    OMD
    Registered Users Posts: 2,458 ✭✭✭OMD


    The_Conductor wrote: »

    What would you consider a reasonable return on investment to be?
    Traditionally in the property sector- you'd be looking at an ROI of between 6 and 8%

    What are you basing this on. Seems very high.


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    #10
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    OMD wrote: »
    What are you basing this on. Seems very high.


    for the cities outside id say youd want alot more for the risk etc


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    #11
    OMD
    Registered Users Posts: 2,458 ✭✭✭OMD


    handlemaster wrote: »
    for the cities outside id say youd want alot more for the risk etc

    Maybe so but the yield on the initial investment increases with inflation (usually). So if you buy a property for 100k and rent it out for 7k, after 10 years at 2.5% inflation you are getting rent of about 9k a year which is a yearly return on your investment of 9% (before expenses). Not to mention your initial investment will be worth almost 130k. After 20, 30 or more years the return becomes far more impressive.


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    #12
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    OMD wrote: »
    Maybe so but the yield on the initial investment increases with inflation (usually). So if you buy a property for 100k and rent it out for 7k, after 10 years at 2.5% inflation you are getting rent of about 9k a year which is a yearly return on your investment of 9% (before expenses). Not to mention your initial investment will be worth almost 130k. After 20, 30 or more years the return becomes far more impressive.

    Is it not more the initial purchase and the oportunity cost i.e what else could be bought around the same time that is of concern. As over time if your looking at the same country the inflatuon effect should be more or less the same


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    #13
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    OMD wrote: »
    What are you basing this on. Seems very high.

    House of Cards and other commentaries on global residential property investments- from The Economist. They have a new related commentary every 2-3 months, and will normally address this on their periodic surveys of particular countries. Its really interesting. If you log onto their website- you can read the commentaries back to 1997.


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    #14
    aaabbbb
    Registered Users Posts: 1,674 ✭✭✭aaabbbb


    What about somewhere like maynooth ? Where theres a university with an ever increasing accommodation /housing need along with nearby hp and intel or would I be mad thinking this ?


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    #15
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    aaabbbb wrote: »
    What about somewhere like maynooth ? Where theres a university with an ever increasing accommodation /housing need along with nearby hp and intel or would I be mad thinking this ?

    just had a look at daft... the prices for apartments in maynooth are similar to dublin . on that basis alone why would you ? Dublin all the way in comparison


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    #16
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    handlemaster wrote: »
    just had a look at daft... the prices for apartments in maynooth are similar to dublin . on that basis alone why would you ? Dublin all the way in comparison

    Providing you didn't rent to students- there are good stable employers based in the area- you shouldn't have any issue having a very high occupancy rate- thats why. Maynooth is a lovely student town- with an atmosphere not dissimilar to Galway- it has a lot going for it.

    If you found somewhere nice (and I mean abnormally nice- walk-in condition, fibre optic broadband and close by to transport links (within walking distance))- then go for it. You'd have to make sure you got a good price though- and Maynooth is expensive.

    Another thought- if you're looking for longterm tenants- what are the schools and other facilities like? Maynooth is very hard to get people on school registers- demand is very high.

    Price is the critical issue with Maynooth- that and for high occupancy you will want somewhere very convenient, walking distance to all facilities/amenities- yet far enough off the beaten track to not be bothered by the high jinks of students.


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