Opinions on buying to let 1 bed apartment in Tallaght

Ush1

RainyDay wrote: »

Without getting too specific, if this is based on an assumption that the fellas in Revenue won't hear about what's going on, you are on dodgy ground.

It isn't, there will be nothing illegal.

Eugene Norman

Having to get the loan in the first place proves that the op can't save a deposit. Ignoring everything else that's got to fail a stress test for two mortgages.

MarkAnthony

Ush1 wrote: »

It isn't, there will be nothing illegal.

Actually there will. You've already told us your friend is going to lie ref the loan. I make no moral judgement - just sayin'.

Ush1

MarkAnthony wrote: »

Actually there will. You've already told us your friend is going to lie ref the loan. I make no moral judgement - just sayin'.

Use another name for it then. The fact is there will be no issue with CAT. Where have I said they will lie? I will pay them back, from a moral standpoint, however I won't be legally obliged to.

Ush1

RainyDay wrote: »

The 'deposit from a friend' thing sounds like a potential disaster for me. Why mix friendships and money? If the investment goes bad, do you value your friendship, and will it withstand? Are you confident about the source of the funds, or is there a possibility that you are actually getting involved in criminal money laundering without your knowledge. And that's apart from CAT issues noted above.

It is hard to comment on whether this is a sensible investment for you without knowing your overall financial position. I see that you still have a mortgage in place on your home. Would you not be better off to clear this mortgage first before you go risking spare cash on investments?

It's honestly a red herring. What I would be seeking here is business and investment advice re the property and letting. Take the deposit as an aside if you wish, its not really an important aspect of what I'm asking.

Ush1

MarkAnthony wrote: »

I've an apartment smack bang in the CC. I get €1050 a month. I could have probably got more but you need to pick you tenants. There are a lot of myths about accommodation in Dublin. Lots of people at viewings does not equal lots of quality reliable tenants.

You may, if the apartment is a very nice one in a desirable part of tallaght get €1100 a month. The issue is this is a long term project, what has the market done there over the past 10-20 years? You need to look at that and see if it's sustainable over the mortgage term. What is your exit strategy?

I'm not sure I follow what you mean about the market? What did you speculate in terms of your investment properties? We all know nothing is guaranteed to stay as is.

Exit strategy would be to sell I suppose. Again, not sure I follow what you mean here.

MarkAnthony

Ush1 wrote: »

I'm not sure I follow what you mean about the market? What did you speculate in terms of your investment properties? We all know nothing is guaranteed to stay as is.

Exit strategy would be to sell I suppose. Again, not sure I follow what you mean here.

So, try and find out what rents have been like in the area for the last 10-20 years. AFAIK tallaght was all fields 20 years ago (I'm very likely wrong on that point but there's no point going back 20 years if it was Farmer Paddy and 6 sheep out there). Plot a graph and see where the highs and lows have been. Have rents always been €1100 for a one bed or have they been as low as say €700 for a one bed. 10+ years ago in the CC I was paying €800 for a one bed as an example. Is €1100 the peak or have people paid €2400 per month at any point. If this is the peak, where are prices going given your take on the property market?

Is €700 sustainable in terms of covering your costs, taking into account your voids? What occupancy rates are there, what's it like in terms of bad tenants in the area - if you can find out.

Exit strategy - do you see prices going up or down in the next X years. How long is X for you? Why are you doing this? Are you looking for X Return on Investment (RoI) in X years, do you just fancy being a LL (perfectly valid reason to do it). At what point is the interest relief on the mortgage at a point when it's time to flip the property and buy another or is this something you want 100% ownership of without bank involvement. Is this pension planning, if so has your FA (financial adviser) looked into where you've enough diversity in your plan?

That's probably about 10%, if that, of what there is to consider. As for my 'investment' in 2006 I rushed in despite people telling me to take a breath and think about things. Money was there, market could only go up, I could borrow €500K on our combined salaries of €35K and you never lose on property! Right? :pac:

Ush1

Ush1 wrote: »

I'm not sure I follow what you mean about the market? What did you speculate in terms of your investment properties? We all know nothing is guaranteed to stay as is.

Exit strategy would be to sell I suppose. Again, not sure I follow what you mean here.

Ok, look at his rationally, the seeming appeal to you is the €1100 a month rent for the purchase price.

If the rental demand falls and you can't rent it out your exit strategy is to sell, the sale price will quite likely be lower than your purchase price if the rent is low enough for you to comtemplate selling.

Your exit strategy is deeply flawed.

antoinolachtnai

If you are not going to be able to claim your interest on the 35k loan against tax it is unlikely to be worth doing even if the property side turns out quite well. The cost of borrowing will just be too high.

The problem with Tallaght is that whilst it is well located there is quite a lot of development land and rent will inevitably drop as new supply comes on stream over the next five years.

MarkAnthony

Augeo wrote: »

Ok, look at his rationally, the seeming appeal to you is the €1100 a month rent for the purchase price.

If the rental demand falls and you can't rent it out your exit strategy is to sell, the sale price will quite likely be lower than your purchase price if the rent is low enough for you to comtemplate selling.

Your exit strategy is deeply flawed.

Can't believe I'm taking the opposing view here... :pac:

IMHO (bear in mind last paragraph in my above post) 110K is probably as low as they can go. Maybe we might see a drop to €85-90K over the next few years. It's unlikely to drop lower than that people would just hold on to stock, at least initially. I get the solid impression that revenue and the OP shall never cross paths but lets say it's washing it's face in terms of mortgage repayments.

It's not a disaster in terms of worse possible exit scenarios.

RainyDay

MarkAnthony wrote: »

I get the solid impression that revenue and the OP shall never cross paths .

Until the first tenant registers their tenancy with the PRTB, you mean....

MarkAnthony

MarkAnthony wrote: »

..........

It's not a disaster in terms of worse possible exit scenarios.

Providing he can sell it.
Many properties were on the market for quite a while when things were quite bad.

jayjay2010

OP, having lived in many apartments in Tallaght for the last 6 years or so, I definitely agree that 1 bed apartments are going in the region of €1,000 - €1,100 per month currently.

However, back only 3 years ago I was renting a 2 bed apartment in Priorsgate (Tallaght village) for €800 a month. I know things were very different back then but the price could very well fluctuate. I remember going to a viewing for a 1 bed apt. that was €700 a month and thinking that it was way overpriced and there was not much demand for it.

Just be careful. I recently bought a 2 bed in Tallaght and I have spent the last year pricing around and I am very familiar with prices in Tallaght and a lot has changed even in the last 12 months.

As for the loan from your friend, I think if you are both mature enough to come to such agreement then I see no problem with him loaning the money. He obviously trusts you an awful lot and values your friendship - don't let him down :-)

Do you know which apartment block you are after? I have a lot of friends renting in different blocks at the moment and the prices do vary quite a bit.

Good luck, let us know how you get on!

The_Conductor

Have a look at DAFT.
There are very few one beds in Tallaght- the majority are 2-3 beds.
The only 1 beds hitting 1,000 a month- are luxury apartments, kitted to an incredibly high specification.
OP- you'll have no problem letting a 1 bed in Tallaght- but not at the price you're suggesting unless its quite a remarkable property. This one claims to be a 'luxury let'- perhaps my idea of luxury and theirs don't quite see eye to eye.

There are only 2 1 bed apartments listed for sale in Tallaght on Daft at the moment and these are both at 120k

Looking at the prices landlords are seeking- maybe your calculations are totally off the wall- how sustainable are they though? E.g. there is a 1 bed in Old Bawn that has a current list price of 1000 a month- that to me is plain bizarre- I can't see that being normal, or sustainable.........

Arbiter of Good Taste

The_Conductor wrote: »

Have a look at DAFT.
There are very few one beds in Tallaght- the majority are 2-3 beds.
The only 1 beds hitting 1,000 a month- are luxury apartments, kitted to an incredibly high specification.
OP- you'll have no problem letting a 1 bed in Tallaght- but not at the price you're suggesting unless its quite a remarkable property. This one claims to be a 'luxury let'- perhaps my idea of luxury and theirs don't quite see eye to eye.

Good God. It's a very depressing country we live in, if that's considered to be "luxury".

If people are seriously expecting that kind of money for one bedrooms - in Tallaght - then our tenants are definitely paying sinfully below market rents for two-bedroom city centre apartments....

NIMAN

I'd called that a standard apt, not a luxury one.

MarkAnthony

NIMAN wrote: »

I'd called that a standard apt, not a luxury one.

Says something about the actual 'standard spec' doesn't it!

My apartment would be a very similar spec to that one above but with a few more frills, garbage disposal, induction hob, good kitchen kit. Weaker bathroom and weaker bedroom (although I included a bloody headboard for peats sake :rolleyes:) and as above €1050 in the CC. Actually it's €1000 for the apartment and €50 for parking (different people). Now as I'm fond of saying, I could have got more but I picked my tenants very carefully.

Ush1

jayjay2010 wrote: »

OP, having lived in many apartments in Tallaght for the last 6 years or so, I definitely agree that 1 bed apartments are going in the region of €1,000 - €1,100 per month currently.

However, back only 3 years ago I was renting a 2 bed apartment in Priorsgate (Tallaght village) for €800 a month. I know things were very different back then but the price could very well fluctuate. I remember going to a viewing for a 1 bed apt. that was €700 a month and thinking that it was way overpriced and there was not much demand for it.

Just be careful. I recently bought a 2 bed in Tallaght and I have spent the last year pricing around and I am very familiar with prices in Tallaght and a lot has changed even in the last 12 months.

As for the loan from your friend, I think if you are both mature enough to come to such agreement then I see no problem with him loaning the money. He obviously trusts you an awful lot and values your friendship - don't let him down :-)

Do you know which apartment block you are after? I have a lot of friends renting in different blocks at the moment and the prices do vary quite a bit.

Good luck, let us know how you get on!

Cheers.

No block in particular but I'd imagine around the square. I think the mortgage would come to roughly 500 per month so I'm gonna work out the numbers tonight and go from there. I'll keep you posted.

Ush1

MarkAnthony wrote: »

Can't believe I'm taking the opposing view here... :pac:

IMHO (bear in mind last paragraph in my above post) 110K is probably as low as they can go. Maybe we might see a drop to €85-90K over the next few years. It's unlikely to drop lower than that people would just hold on to stock, at least initially. I get the solid impression that revenue and the OP shall never cross paths but lets say it's washing it's face in terms of mortgage repayments.

It's not a disaster in terms of worse possible exit scenarios.

I fully intend on paying tax from the income.

Ush1

Just a question for those who have apartments or would know, how much is your maintenance fees per year?

Does the maintenance fee also cover insurance for the apartment or would that be extra?

Just trying to work out all the outgoings per year, so far I have:

Mortgage
Loan payback to friend
Maintenance fees
Property tax
General repairs(how much would be a conservative figure for this?)

Also, the one off expenses when purchasing of a solicitor, stamp duty and survey.

Uno my Uno.

This is a little academic as I doubt any bank will want to loan on a btl property where the borrower essentially has no deposit. Whats more, I can't help but feel that the op here is not serious with little intention or likelihood of actually purchasing anything.

On the one hand he sets himself out as a savvy and well connected investor who can access cash from friends without difficulty and can cover payments "with ease". What's more Revenue is apparently not a concern for reasons indiscernible to the rest of us but which he is unwilling or unable to reveal.

However from his several posts it is clear that the op knows next to nothing about;
Tallaght
Apartments
Renting
Being a landlord
The property market
Investment strategy
The potential pitfalls of investing in property

I would consider it essential to be an expert in all these areas before undertaking the sort of investment outlined. As it stands it strikes me as a recipe for disaster.

Newoven

Management fees vary widely but are usually at least €1,000.00 and can escalate quickly where there are several lifts to maintain, or some form of security or concierge such as where the block is part of an larger estate of mixed uses (offices or shops for instance), or there are lots of common areas to maintain. For example in my block which has few lifts and very limited common areas one beds cost approximately €1,300 per year plus a couple of hundred for the car park space maintenance charge if they have a space. As far as I know the management charge is fully tax deductible as a business expense when renting out the apartment as is any insurance premium so this reduces the pain a fair bit.

When assessing the charge of a prospective purchase don't jump for the cheapest one - a properly managed block will be charging a sensible amount and contributing to its sinking fund. You can contact the Managing Agent of the block you're interested in to find out the current financials. Annual accounts of the Management Company should also be available from the Companies Office as they are all limited companies. If there's no sinking fund then I suggest you walk away from any purchase as the next significant issue anywhere in the building will cost you and every other owner. Similarly if there are significant arrears in the payment of the charges I'd be wary as it's hard to get this from owners in a depressed market as ultimately the only recourse of the Management Company is to wait until the apartment is sold to recover arrears and interest. If the money isn't in the bank the only way to pay for urgent repairs will be for the compliant owners to hand over the cash.

Maintenance charges cover a range of things including block insurance. This covers rebuilding the block if necessary, including windows, electrics, etc but it doesn't include your possessions or internal fixtures and fittings such as flooring, furniture, wardrobes and kitchen. You'll need your own contents insurance to cover them but this should be available for a couple of hundred a year.

SarahMollie

Ush1 wrote: »

Just a question for those who have apartments or would know, how much is your maintenance fees per year?

Does the maintenance fee also cover insurance for the apartment or would that be extra?

Maintenance fees vary wildly. I'd say €1500 per anum is average, maybe less for a 1 bed apt (i never looked at anything less than 2 bed properties). That said, they can radically vary, I've seen everything from €1k-€3k at the extreme. Quick rule of thumb is that if a block has electric gates and/lifts, then the management fees will be on the higher end.

The maintenance fees tend to include a block policy, which covers usually fire, storm damage etc but you'd still need landlords insurance (kind of like house contents but with landlord liability etc included) and also the bank will require mortgage protection and possible life insurance.

The_Conductor

My father-in-law has just bought a one bed apartment- with annual management charge of 2,500. My sister has a one bed with an annual management charge of 3,200. My own Management charge is 2,200.......

1000 to 1,500 would very much be on the low side of what you might expect to pay.

At very least I'd suggest- if there is a lift in the building- your management charge is unlikely to be under 2k..........

Ush1

Ush1 wrote: »

Just a question for those who have apartments or would know, how much is your maintenance fees per year?........

€850 ish. Two storey building, no lift. There is an electric gate.

jjwada

2 friends were over earlier that own their apartments where I am renting (Dublin).
I was showing them another thread on here and we got talking about this one.

Both own 1 bed apartments. They both just paid their charges for 2016.
€690, up €10 since last year.

MarkAnthony

€1234 I kid you not.

Lift and electric gates + parking space charge. We do a prompt payment discount - I can't remember of that comes off that.

How some complexes are justifying the charges they have, is beyond me! We have quite an expensive managing agent due to him being one of the best in the industry. That said 2K+ is very, very common.

RupertsHabit

Bit steep.

caviardreams

The_Conductor wrote: »

My father-in-law has just bought a one bed apartment- with annual management charge of 2,500. My sister has a one bed with an annual management charge of 3,200. My own Management charge is 2,200.......

1000 to 1,500 would very much be on the low side of what you might expect to pay.

At very least I'd suggest- if there is a lift in the building- your management charge is unlikely to be under 2k..........

Do you mind me asking what area roughly the properties are? I pay €1500 for a 2 bed in SCD and thought of it as steep enough! Glad to hear it's not the worst Highest I have ever viewed when apartment-hunting was a 2 bed in Ballsbridge for 3k.

Thanks for the info!

The_Conductor

caviardreams wrote: »

Do you mind me asking what area roughly the properties are? I pay €1500 for a 2 bed in SCD and thought of it as steep enough! Glad to hear it's not the worst Highest I have ever viewed when apartment-hunting was a 2 bed in Ballsbridge for 3k.

Thanks for the info!

The Orchard - Lucan Village
The Old Distillery - Cuckoo Lane, Smithfield
Sandymount Village (behind the tennis courts)
Cé na Mara - Galway city