Is that proportion between value and rent normal?

CiniO

I was just looking at random property ads, and this took my attention.

http://www.daft.ie/sales/88-ardnacassa-avenue-longford-town-longford/934166/

Property advertised for €24,500 which is currently tenanted at €425 p/m.

Is this normal proportion between property value and rent in this area, or is it just lies in the ad, or I'm missing something?

Eldarion

CiniO wrote: »

I was just looking at random property ads, and this took my attention.

http://www.daft.ie/sales/88-ardnacassa-avenue-longford-town-longford/934166/

Property advertised for €24,500 which is currently tenanted at €425 p/m.

Is this normal proportion between property value and rent in this area, or is it just lies in the ad, or I'm missing something?

It's a potential gross annual ROI of ~21% which is insane. The problem would be of course whether or not you can guarantee full tenancy for 12 months of the year. It turns into a nice negative ROI with a vacant property on your hands.

iguana

I suspect the rent is over true market rate and is being propped up by the Rent Supplement which in Longford means a family house has a false floor of €350pm. The rent the landlord actually achieves will very possibly be slightly under the asking but by putting it up for rent at that asking, they are basically saying 'no rent allowance.'

Pawwed Rig

The problem with low return rentals like this is that a house repair can quickly wipe out your whole profit for the year. Say a boiler goes. You could well see 6 months income disappear. That said it does look ridiculously cheap and there is no way you could build a bouse for even close to that price. If it was an active rental market it seems like a steal.

My guess would be that it would be very hard to offload were it to become vacant. Any locals here who know the area?

Mrs OBumble

'Cmon lads. A property, anywhere, for 24k? Nah ... there's something seriously wrong with it, that's why the proportion is out.

Thargor

Pyrite prices?

Henry Ford III

Something is very wrong there.

iguana

Mrs OBumble wrote: »

'Cmon lads. A property, anywhere, for 24k? Nah ... there's something seriously wrong with it, that's why the proportion is out.

It's a dull semi-detached shoebox of a house in Longford with a very overlooked postage stamp of a garden. What do you think it's worth?

Ann Landers

iguana wrote: »

It's a dull semi-detached shoebox of a house in Longford with a very overlooked postage stamp of a garden. What do you think it's worth?

As it's in a town, much more than 24k.

Supercell

According to the property register the last house that sold on that street ( number 53) sold for 55k back in January 2013 so the price isn't beyond the bounds of possibility. I originally thought maybe a decimal place wrong but nothing near there is going for anything like that money.
The seller is desperate or there is something very wrong or both.

handlemaster

Anti social behaviour might be the place to start looking first

ABajaninCork

Not only might anti-social behaviour be a flag, but looking at the fence, there might be a lot of maintenance to do as well. The neighbours might also be an indicator...

That price, even for Longford is well cheap. Like others have said, something very fishy there.

Das Reich

Supercell wrote: »

According to the property register the last house that sold on that street ( number 53) sold for 55k back in January 2013 so the price isn't beyond the bounds of possibility. I originally thought maybe a decimal place wrong but nothing near there is going for anything like that money.
The seller is desperate or there is something very wrong or both.

There are many other similar properties for the same price or close to the same price:

http://www.daft.ie/searchsale.daft?search=1&s[cc_id]=c5&s[mnb]=3&s[search_type]=sale&s[refreshmap]=1&search_type=sale&s[sort_by]=price&s[sort_type]=a

So I guess there is nothing wrong with it, but if you look for houses to rent, the prices starts from 350 per month.

handlemaster

With so many places to rent in Longford and this been an undesirable area 10k would be more like it for the houses for investment purposes. Even with getting a rent of 425 as stated in the ad. Once you take tax and expenses away you would have very little left for the hassle and that's assuming you have the place rented 100% of the time. Basically you would be a caretaker of a building getting paid nothing with risks attached.

CiniO

handlemaster wrote: »

Even with getting a rent of 425 as stated in the ad. Once you take tax and expenses away you would have very little left for the hassle

How come this be?
What kind of expanses are we talking about?
As I don't own any property in Ireland, I have rather no clue what kind of expanses can be expected, but except from tax on rental (this is calculated as normal income tax if I'm right), property tax, optional house insurance (is it obligatory??), and maintenance cost, is there anything else?

At the moment I'm renting a 3 bed house for 440 in Mayo.
Does that mean that my landlord is hardly profiting on it from such rental?

handlemaster

CiniO wrote: »

How come this be?
What kind of expanses are we talking about?
As I don't own any property in Ireland, I have rather no clue what kind of expanses can be expected, but except from tax on rental (this is calculateid as normal income tax if I'm right), property tax, optional house insurance (is it obligatory??), and maintenance cost, is there anything else?

At the moment I'm renting a 3 bed house for 440 in Mayo.
Does that mean that my landlord is hardly profiting on it from such rental?

Insurance, income tax 20% minimum property tax, lease reg fee 90euro, repairs and up keep of house ( eg boiler breaks simple repairs can be 150 euro plus - boiler replacement main 1800.

The_Conductor

Similar properties on that street have all been valued in the 0 to 100,000 band for property tax purposes. A realistic price is probably in the 55-60k bracket- allowing for location alone.

The rent being quoted is out of kilter with that being achieved in the area for similar properties. In the area a 10-12% is probably achievable- which would indicate the price on this property is set at an artificially low level (for whatever reason).

handlemaster

The_Conductor wrote: »

Similar properties on that street have all been valued in the 0 to 100,000 band for property tax purposes. A realistic price is probably in the 55-60k bracket- allowing for location alone.

The rent being quoted is out of kiliter with that being achieved in the area for similar properties. In the area a 10-12% is probably achievable- which would indicate the price on this property is set at an artificially low level (for whatever reason).

Dont know how you know what tax band they are in but you said it 0 - 100k. Fact three/four houses are asking below 25k and haven't sold so that tells you something. Why Dont you buy them and you will double your money if you believe what you are saying to be true !!