Is the end of the road for landlords coming ?

_Jamie_

Graham wrote: »

Most investments would be made on the basis of income and preservation of capital.

If you invested €200,000 stocks/bonds you would reasonably expect to receive income in the form of dividends and your capital (hopefully increased) back whenever you decided to sell.

And as I've already said, profits are not something that can always be got in rentals, unless you expect tenants to subsidise you in a tenant's market. You might want to profit but you can't expect that you always will. Even with bouyant times, overall you may not have profited from the rental. Some will, some won't, that's the reality. Just because you want something, doesn't mean you will get it. I really have no idea why I this keeps needing to be repeated. It seems so straightforward to me. And if I was looking at buying investment property, that's how pragmatic I would be. I cannot fathom why anyone investing in property would be foolhardy enough to expect to overall profit from the endeavour in addition to having the asset at the end. It's most bizarre. You keep mentioning other businesses. They're irrelevant. THIS is the reality for property. But if you think profit should be a certainty for property rental then...OK?

Graham

_Jamie_ wrote: »

And as I've already said, profits are not something that can always be got in rentals, unless you expect tenants to subsidise you in a tenant's market. You might want to profit but you can't expect that you always will. Even with bouyant times, overall you may not have profited from the rental. Some will, some won't, that's the reality. Just because you want something, doesn't mean you will get it. I really have no idea why I this keeps needing to be repeated. It seems so straightforward to me. And if I was looking at buying investment property, that's how pragmatic I would be. I cannot fathom why anyone investing in property would be foolhardy enough to expect to overall profit from the endeavour in addition to having the asset at the end. It's most bizarre. You keep mentioning other businesses. They're irrelevant. THIS is the reality for property. But if you think profit should be a certainty for property rental then...OK?

It's not at all unusual for investments to return capital + income.

Most residential property investors invest on the basis of income and return of capital, maybe even some capital appreciation if they're lucky. Not unreasonable when you consider the upfront investment and the ongoing risks.

That's it.

Easy.

As a tenant you might not like it when it comes to residential property investments but that's the reality.

Browney7

Graham wrote: »

Most investments would be made on the basis of income and preservation of capital.

If you invested €200,000 stocks/bonds you would reasonably expect to receive income in the form of dividends and your capital (hopefully increased) back whenever you decided to sell.

Yes you get dividends, but if you took your deposit example above 60k of your own money and 140k mortgage. Coca cola has a dividend yield of 3.3℅ish at the moment so let's say 7k dividends on your investment (3500 after income tax which you should be paying). If you borrowed 140k over 20 years you'd be looking at a 900 per month repayment which is over 10k per year (year one would be about 6k in interest which can't be offset against dividend income unlike 80% with property and 4k capital).

No bank would lend money like above because it's bananas.

The current rents V asset values on some apartments are an anamoly (18k per annum rent for two beds in d15 and santry for instance with a purchase price less than 250k)

Graham

Browney7 wrote: »

Yes you get dividends, but if you took your deposit example above 60k of your own money and 140k mortgage. Coca cola has a dividend yield of 3.3℅ish at the moment

No sane property investor is going to move on a property investment with a 3.3% yield.

_Jamie_

Graham wrote: »

Most residential property investors invest on the basis of income and return of capital, maybe even some capital appreciation if they're lucky. Not unreasonable when you consider the upfront investment and the ongoing risks.

I'm sure they do. But that might not work out for them. The market sets the rent and sometimes that will not be in the landlord's favour and the rent they can charge will not meet their costs. In a landlord's market, they should profit. But nobody investing can plan for when and if either of these scenarios plays out. So, again, someone might invest on the basis of income and return of capital but they can't expect that they will always get income from it. A tenant doesn't care about the landlord's upfront investment and the risks involved. They want their rent to be the lowest they can get it for and if that doesn't meet the landlord's costs then onto the next place if the market is in their favour. Why would any tenant subsidise a landlord if they can get a similar property for cheaper? Much like a landlord wouldn't subsidise a tenant if he can get more rent.

Browney7

Graham wrote: »

No sane property investor is going to move on a property investment with a 3.3% yield.

I'm not advocating they should chief. You were making the point if you borrowed money to invest in shares you'd expect to not have to subsidise with your own money which is a nonsense.

This debate is going round in circles. At the moment investors who borrow the cash (that they don't have) don't have to subsidise any borrowings with their own cash if they buy the right property which is an anamoly. All they have to pony up is the 30% deposit which if the asset value doesn't decline is untouched. Make hay!

Yourself isit

Graham wrote: »

It's not at all unusual for investments to return capital + income.

Most residential property investors invest on the basis of income and return of capital, maybe even some capital appreciation if they're lucky. Not unreasonable when you consider the upfront investment and the ongoing risks.

That's it.

Easy.

As a tenant you might not like it when it comes to residential property investments but that's the reality.

I don't particularly get your argument here anyway. I think that landlords can make capital gains and income losses. But if they want income profits they can go ahead and put more capital in.

Graham

Yourself isit wrote: »

I think that landlords can make capital gains and income losses.

They can BUT (and this appears to upset several posters) they don't have to.

_Jamie_

Graham wrote: »

They can BUT (and this appears to upset several posters) they don't have to.

But it's not in their control whether they do or don't. They are the mercy of the market. Hoping to profit from investing in property is a gamble. It's not always within a landlord's control. Maybe that upsets you?

Graham

_Jamie_ wrote: »

It's just you're framing it like this is something a landlord can control at all times when that's simply not true.

I think you'll find I suggested landlords should currently be charging sufficient to cover their mortgages plus a healthy margin in the current buoyant market to be able to offset during the almost inevitable downtimes.

_Jamie_

Graham wrote: »

I think you'll find I suggested landlords should currently be charging sufficient to cover their mortgages plus a healthy margin in the current buoyant market to be able to offset during the almost inevitable downtimes.

Even that might not be enough. Landlords can charge a lot at the moment but there is still a ceiling. It is still is not guaranteed to cover the times when rents go low. That's my point. There is still a lot of chance involved and no guarantees. And in the lifetime of the property the market might never get as overheated as it is now. So there is still no way to be definite that you will end up overall profiting from the property. Many landlords will but some won't. This is just all so obvious to me and I am no economics whizz.

daithi7

These new tenancy laws aren't a great development for landlords (I.e property owners who provide housing for others).

Why?
Longer lease break notices for difficult tenants
Limited grounds for ending a lease (with no such obligations on tenants!?! Why? Surely contracts should be two way!!!)
Limited ability to charge market rents
Alongside getting no relief from property taxes , crazy
High taxes, prsi on rental income
And private owner landlords having to effectively compete with tax favoured reits, etc to try offer the same product.

Most existing private property owners have had to weather the biggest financial/property crash in the history of the state, yet the government seem to be'rewarding' this perseverance, thrift and efficiency in providing rental properties by loading the sector with increased regulation, restrictions, taxes, costs and hassle.

The net effect of these changes is that private owner landlords are being actively discouraged from continuing in the business. This inevitably means that these property owners will sell more 2nd hand properties back into the market which will further disincentivise builders & developers from increasing supply sufficiently which is actually the root source of any short term rental spike in Dublin and a few cities and iwhich s where the government should be actually be addressing issues imho. I.e. they're trying to address a lack of supply issue, by regulating& further disincentivising rental property suppliers - that's dumb, go figure hey!!

Instead of addressing supply, they're heavily penalizing the very sector that are and have been efficiently providing people's rental housing needs for generations. DUMB!!!

Graham

_Jamie_ wrote: »

It is still is not guaranteed to cover the times when rents go low.

Who suggested otherwise? Of course there are no guarantees, it's a risk, you price in the risk accordingly and a sensible investor doesn't jump in feet-first on a low yielding property.

(granted, there are some spectacularly stupid landlords/investors)

murphaph

_Jamie_ wrote: »

Even that might not be enough. Landlords can charge a lot at the moment but there is still a ceiling. It is still is not guaranteed to cover the times when rents go low. That's my point. There is still a lot of chance involved and no guarantees. And in the lifetime of the property the market might never get as overheated as it is now. So there is still no way to be definite that you will end up overall profiting from the property. Many landlords will but some won't. This is just all so obvious to me and I am no economics whizz.

Where the ceiling lies will truly be tested as LLs leave the sector and supply becomes further constricted. A 3 bed semi can sleep a dozen people if they're desperate enough. I've seen 1 bed flats in Berlin house 5 lads. Immigrants are especially likely to bunk up. In this unpleasant scenario rents can go up significantly.

Yourself isit

daithi7 wrote: »

These new tenancy laws aren't a great development for landlords (I.e property owners who provide housing for others).

Why?
Longer lease break notices for difficult tenants
Limited grounds for ending a lease (with no such obligations on tenants!?! Why? Surely contracts should be two way!!!)
Limited ability to charge market rents
Alongside getting no relief from property taxes , crazy
High taxes, prsi on rental income
And private owner landlords having to effectively compete with tax favoured reits, etc to try offer the same product.

Most existing private property owners have had to weather the biggest financial/property crash in the history of the state, yet the government seem to be'rewarding' this perseverance, thrift and efficiency in providing rental properties by loading the sector with increased regulation, restrictions, taxes, costs and hassle.

The net effect of these changes is that private owner landlords are being actively discouraged from continuing in the business. This inevitably means that these property owners will sell more 2nd hand properties back into the market which will further disincentivise builders & developers from increasing supply sufficiently which is actually the root source of any short term rental spike in Dublin and a few cities and iwhich s where the government should be actually be addressing issues imho. I.e. they're trying to address a lack of supply issue, by regulating& further disincentivising rental property suppliers - that's dumb, go figure hey!!

Instead of addressing supply, they're heavily penalizing the very sector that are and have been efficiently providing people's rental housing needs for generations. DUMB!!!

And yet theres a net increase in landlords.

Yourself isit

murphaph wrote: »

Where the ceiling lies will truly be tested as LLs leave the sector and supply becomes further constricted. A 3 bed semi can sleep a dozen people if they're desperate enough. I've seen 1 bed flats in Berlin house 5 lads. Immigrants are especially likely to bunk up. In this unpleasant scenario rents can go up significantly.

Bug clearly they can't. Not above 4%.

murphaph

Yourself isit wrote: »

Bug clearly they can't. Not above 4%.

Every year. That's still well above average pay increases. In 5 years even playing by the rules rents could be 20% higher than today. The point was made that we're nearly at the limit of what tenants can afford and I rebutted the point with the argument that we could enter a new era of 3 or 4 bunk beds to a room.

I wouldn't allow it in my property but it would be naïve to think it's not already happening.

daithi7

Yourself isit wrote: »

And yet theres a net increase in landlords.

Really, according to who?

Also, it's actually the percentage of housing stock held by private landlords that needs to be watched, as this is effectively the rental property supply, and this is what needs to increase (in% and absolute terms) to increase supply, which is the issue.

mirrorwall14

Yourself isit wrote: »

And yet theres a net increase in landlords.

Really? Its only an anecdote but I bought a house this year and the number of ex rentals coming on that were being viewed by families rather than landlords was enormous. I'm living in what was a rental property but is now a PPR.

Carawaystick

Roger_007 wrote: »

I let it out to a young family for €600 per month.
When I paid all the overheads such as property tax, maintenance costs, insurance etc and then paid the income tax, PRSI, USC, I am left with a net income of about €50 per week.
.

So from 7200 gross per annum, you're making 2600 net? 5200 pretax
with 2000 non tax deductible costs?

How much are your lpt,maintenance and insurance going to be with no tenants?

Barely Hedged

Barely Hedged wrote: »

Everybody on my desk has property(ies).

.....Who do you suggest would be a better indicator for rates and equities?

If property is the major investment choice of your peers I'd think anyone investing a few times a year in diversified, non leveraged ETFs will wipe the floor with your peers long-term from an ROI perspective alone.

Augeo

Augeo wrote: »

The celtic tiger says hello.

€200k ish properties were €850 ish / month to rent.

Even now you'd require a mortgage of less than €100k over 25 years to break even with €1200/month rental income, do the sums, it ain't happening without some additional money being thrown in.

I'd advise you reassess how the world works. You can easily make profit paying back a 200k mortgage in today's rent and interest rates if you buy in the right place. Trust me I've done the sums.

The_Conductor

Ethan Rough Saber wrote: »

in today's rent and interest rates

That's the knux of the issue though- we have inflated rental levels- which *are* going to fall- alongside historically low interest rates- which are going to rise......... I.e. anyone who doesn't have their feet inside the door already- should seriously assess the situation using reasonable assumptions- and anyone with a foot inside the door- may like to see whether it makes sense to continue in the sector- particularly in light of the incredibly hostile regulatory and tax environment we find ourselves in. Its going to be one hell of a bumpy ride- no matter how you look at it.

antoinolachtnai

That is the problem. No one is going to invest in new units because of the concerns and the supply is going to contract, not expand.

The idea that someone would invest in property in the hope of capital gains from a rising market is ridiculous.

Maybe someone will invest from abroad and it will make sense for them. If they do, good luck to them I suppose.

Ethan Rough Saber

Ethan Rough Saber wrote: »

I'd advise you reassess how the world works. You can easily make profit paying back a 200k mortgage in today's rent and interest rates if you buy in the right place. Trust me I've done the sums.

Show us the sums

A 200k mortgage BTL is over 20/25 years.
Looking at north of 1500/month mortgage.
No doubt you have some daft plan to avail of rent a room allowance etc though & ppr mortgage.

Your sums will show all though.

And of course one doesn't invest for decades only considering today's rent and interest rates.

I think it is you who needs to RE assess old boy

You are analogous to the golfer with the perfect "practise swing"....:)

ooompie5

The only thing keeping me in is the capital gains tax I would have to pay on selling (approx 25% of the sale price, having bought the property in the 1980s).

DrPhilG

Maybe I'm the only one thinking of investing in more property then...

I live in the rural west. With the right vetting and checks you reduce your chances of a problem tenant greatly and in my experience tenants around here tend to be more long term. I can buy a €100k house with €50k deposit, have a mortgage of about €400 a month and take in rent at €600 a month.

Minus tax, insurance etc I'd bring in a very small income, around €1k. I'm not expecting big money from it at this stage, but those mortgage figures are over 15 years so by that time (within sight of retirement) I'd have a fully paid property with around €5k annual income to supplement my pension, or sell later on to free up cash. I currently have 1 rental property that is basically running at break even but will also be fully clear in 15 years.

antoinolachtnai

DrPhilG wrote: »

Maybe I'm the only one thinking of investing in more property then...

I live in the rural west. With the right vetting and checks you reduce your chances of a problem tenant greatly and in my experience tenants around here tend to be more long term. I can buy a €100k house with €50k deposit, have a mortgage of about €400 a month and take in rent at €600 a month.

Minus tax, insurance etc I'd bring in a very small income, around €1k. I'm not expecting big money from it at this stage, but those mortgage figures are over 15 years so by that time (within sight of retirement) I'd have a fully paid property with around €5k annual income to supplement my pension, or sell later on to free up cash. I currently have 1 rental property that is basically running at break even but will also be fully clear in 15 years.

But you still have to get your original 50k deposit back. You won't have that for another six or seven years (and maybe double that if you take into account the time value of money).

Within the 28 years you will probably have to do a refurb.

I am not knocking it at all, there are many benefits to it as an investment but it does depend a lot on patience and skill to get the eventual return.

DrPhilG

DrPhilG wrote: »

....... I can buy a €100k house with €50k deposit, have a mortgage of about €400 a month and take in rent at €600 a month.

Minus tax, insurance etc I'd bring in a very small income, around €1k. I'm not expecting big money from it at this stage, but those mortgage figures are over 15 years so by that time (within sight of retirement) I'd have a fully paid property with around €5k annual income to supplement my pension, or sell later on to free up cash. .............

Seems as you already have one property why would you go for a 2nd inv property ? With €50k and 15 year term the stockmarket would appeal far more to me.

DrPhilG

Augeo wrote: »

Seems as you already have one property why would you go for a 2nd inv property ? With €50k and 15 year term the stockmarket would appeal far more to me.

To paraphrase Abraham from Walking Dead, stocks make my ass itch!

The potential for your investment to collapse and simply disappear worries me. At least with property, certainly if you're buying now, you will always have the value in the property itself as it is unlikely to reduce very much in value.

Obviously there are risks with any investment. But bricks and mortar feel a lot less risky (and of course less potentially rewarding) than stocks.