120k to invest in rental property ? Am i mad ?

Pkiernan

I wont stray again - the OP asked if he was being mad by investing in property. I expressed my opinion that he can make more money elsewhere with less hassle. The OP was asking for advice after all
I was then taken to task that my opinion was dangerous and gave data to show that it is not.

Stealthfins

If I had 120 k I'd stay away from property,there's still people I know on antidepressants due to the stupid decisions they made with cash.

Keep your money as cash no high risk or low risk investments, you could loose the lot.

I'm 41 now and I'd never invest lump sums of cash again on shares or property.

120,000 k today could be 12,000 k tomorrow....

goz83

Stealthfins wrote: »

If I had 120 k I'd stay away from property,there's still people I know on antidepressants due to the stupid decisions they made with cash.

Keep your money as cash no high risk or low risk investments, you could loose the lot.

I'm 41 now and I'd never invest lump sums of cash again on shares or property.

120,000 k today could be 12,000 k tomorrow....

TBF, the same is true if it's kept in cash. Currencies have devalued to nothing overnight before. Ours isn't exactly rock solid stable. Best case scenario is an erosion of the value through inflation.

The advice about buying and taking on licensees I think is what I would be following in the OP scenario, but I would be looking for somewhere I would like to live, rather than somewhere cheap, if I could afford it.

ligerdub

Pkiernan wrote:

It's not dangerous advice. Getting 7% a year is not difficult at all. I own 10 different mutual funds. Worst is averaging 5% since 1994. Best is averaging 12% since 1994. A 7% return doubles your investment every 10 years. How many houses have doubled in value since 2007? Risk is spread across about 2500 different stocks. There is massive risk in tying up 120k and leveraging 90 more in one asset that is subject to the whims of populist politicians.

It absolutely is. I'll say no more.

The_Conductor

OP- two things really-

Where in Dublin can you get a 3 bed for 220k that people actually want to live?

I can't emphasise highly enough how risky it is for new landlords now- the regulatory regime is stacked entirely against you- and politicians are actively pandering to the lowest common denominator. The RTB- the agency allegedly tasked with regulating the industry- is now viewed by landlords as wholly concerned solely with the needs of tenants, and antagonistic towards landlords (at best, at worst- discriminatory).

If you're not involved in letting property thus far- seriously- don't do it- people seem to have an irrational idea that its some sort of a road to riches- seriously- its not- its more a motorway to antidepressants and serious headaches.

maryishere

Truthseeker31 wrote: »

Hello Boardies,

I'll keep this short and sweet, i am thinking of investing in a rental property in Dublin.

My plan is to purchase a 3 bed in Dublin for 210k with a 120k deposit ...

If you want to invest 120k on property, it is imho the wrong place to invest. Property in Dublin is not going to appreciate much more. You could buy two 2 bed apartments in a place like Carrick-on-Shannon for 60k each and rent them out for 550 per month each, and not have the worry or cost of a mortgage. There is more scope for capital appreciation there. You should buy where property costs much less than the cost of building it, and where it offers a good return. You would be mad to borrow 90k to invest in property in Dublin on a apartment now worth 210k.

the_syco

Truthseeker31 wrote: »

My plan is to purchase a 3 bed in Dublin for 210k with a 120k deposit and rent it out for the next 5 years before moving into it. I am 31 years old, currently live in a house share, income 42k, rent 400e per month, 1 child ( no longer see but pay for, 200e per month)

210k minus 120k = 90k

5 years = 11*5 = 55 months (can't assume full rental)

90,000 divided by 55 months = 1636

Multiple by two (cos you'll only get 50% after tax?) = 3272

Where could you get a 3 bed in Dublin for 220k, and get them to pay 3272 a month?

And then you are hoping they don't decide to not pay rent for a year or so!

IMO, buy the house, and go the rent-a-room route.

handlemaster

maryishere wrote: »

Truthseeker31 wrote: »

Hello Boardies,

I'll keep this short and sweet, i am thinking of investing in a rental property in Dublin.

My plan is to purchase a 3 bed in Dublin for 210k with a 120k deposit ...

If you want to invest 120k on property, it is imho the wrong place to invest.  Property in Dublin is not going to appreciate much more. You could buy two 2 bed apartments in a place like Carrick-on-Shannon for 60k each and rent them out for 550 per month each, and not have the worry or cost of a mortgage.  There is more scope for capital appreciation there.  You should buy where property costs much less than the cost of building it, and where it offers a good return.  You would be mad to borrow 90k to invest in property in Dublin on a apartment now worth 210k.

isnt there a problem with flooding in Carrick on shannon

Denny_Crane

While I completely agree it's not going to be high end, and certainly have to agree with the_syco no one is going to pay 3K+ for a 3 bed in an area where you'd get one for 210K there are loads of options for 3 beds at 210K (ish).

Finglas
Dublin 1 (although you'd be taking a huge risk)
Clonee, Mulhudart - in fact loads of Dublin 15
Some of the Northside burbs although you'll be looking at Darndale and surrounding areas.
One in Cabra
One in D8
and plenty of stuff in Balbriggan and alike.

goz83

handlemaster wrote: »

isnt there a problem with flooding in Carrick on shannon

Not in 1st floor apartments

antoinolachtnai

It is really hard to get and sustain three grand for a 3-bed even in a fancy suburb of Dublin. The level of service and the quality of finish you need to provide to get that is pretty high. It is not all easy money.

benjamin d

I don't think anyone is saying he'll get 3k, they're just saying he has a large deposit, he's renting in a house share, and he's ready and able to buy himself while making a chunk of the mortgage through renting rooms.

Truthseeker31

Sorry for the late response, i'll really appreciate the informative response guys.

I've thought about it and it seems a no brainer to go down the rent a room scheme as opposed to renting the whole place out, I can't believe it skipped my mind before.

Is it as simple as eventually purchasing the property, registering with the PRTB and then rent out the rooms ? Or is there any other steps i must follow first? Any articles & guidelines are very much appreciated.

In regards to the mutual funds comment, i have thought about it but i'm reluclant to place all my savings into them as i feel the market is already too propped up at the moment and i'm looking for long term gains so i'm investing small amounts ( 400e) per month into Index funds in the hopes that over the long term Euro cost averaging works in my favour as i know nothing about active trading, i would lose my ar$e on it.

Thank you

Sleeper12

Truthseeker31 wrote:

Is it as simple as eventually purchasing the property, registering with the PRTB and then rent out the rooms ? Or is there any other steps i must follow first? Any articles & guidelines are very much appreciated.

I'm open to correction here but if you are renting under the rent a room scheme I don't think you register with anyone. You need to declare the income from the rent a room scheme even though it's tax free up to 14k

Denny_Crane

No need to register, the tenants have almost no rights but you are obliged not to discrimiante on the enumerated grounds.

Needs to be declared but tax free upto 14K (inc bills etc.)

ligerdub

Truthseeker31 wrote: »

Sorry for the late response, i'll really appreciate the informative response guys.

I've thought about it and it seems a no brainer to go down the rent a room scheme as opposed to renting the whole place out, I can't believe it skipped my mind before.

Is it as simple as eventually purchasing the property, registering with the PRTB and then rent out the rooms ? Or is there any other steps i must follow first? Any articles & guidelines are very much appreciated.

In regards to the mutual funds comment, i have thought about it but i'm reluclant to place all my savings into them as i feel the market is already too propped up at the moment and i'm looking for long term gains so i'm investing small amounts ( 400e) per month into Index funds in the hopes that over the long term Euro cost averaging works in my favour as i know nothing about active trading, i would lose my ar$e on it.

Thank you

You seem to have a wise head, and you're in a very good position. Fair play.

76544567

I wouldn't go buying on the assumption that rent a room will remain tax free. What will you do if it is fully taxed from next year or even just a few years into your purchase. You need to be ready for that scenario.

TimeToShine

Pkiernan wrote: »

Far better to put the money is a reasonably conservative mutual fund. You'll get 7% per year no problem, and will only pay 33% Capital Gains on that. No property tax, no call outs, no RTB bullsiit, no damage to your property....

My investments year to date (after fees but before CGT) in the London and Australian Stock Exchanges have returned 37% ytd, though about half of that was made from Brexit.
Next 4 years, the markets are only going up thanks to Trump.

I don't know where to start with this.

On topic I can imagine that BTL with roommates might not appeal to the OP as he'll then be forced to live in the property (and by extension Dublin) for the next few years. Probably not the most tempting for a 31 year old in the prime of his career. His current situation seems very flexible and I think he could do better with six figures in cash.

Truthseeker31

Truthseeker31 wrote: »

Is it as simple as eventually purchasing the property, registering with the PRTB and then rent out the rooms ? Or is there any other steps i must follow first? Any articles & guidelines are very much appreciated.


Thank you

It's as simple as putting a free ad in the sharing section of daft about a room available, that's it. The people renting the rooms are not tenants and have no rights so the RTB have nothing to do with it.

The only formal thing you need to do is submit a tax return showing the income you have received but once it's under 14k you won't pay any tax on it.

76544567 wrote: »

I wouldn't go buying on the assumption that rent a room will remain tax free. What will you do if it is fully taxed from next year or even just a few years into your purchase. You need to be ready for that scenario.

Not a chance of this happening. For one they have just increased the threashold to 14k which had only recently been increased before. If anything they might increase the threashold further rather than tax it.

Trying to tax rent a room is a total waste of time and revenue know it. It will just be all off the books and no one will pay tax on it if they did try to introduce it.

ligerdub

76544567 wrote: »

I wouldn't go buying on the assumption that rent a room will remain tax free. What will you do if it is fully taxed from next year or even just a few years into your purchase. You need to be ready for that scenario.

You're correct of course, but that is an unknown, and even taking that into the consideration it still makes it about as attractive as renting it out entirely, probably more so in truth.

It's unlikely to happen anyway so long as there are supply issues in terms of available housing in Ireland, and that isn't going away any time soon.

benjamin d

ligerdub wrote: »

You're correct of course, but that is an unknown, and even taking that into the consideration it still makes it about as attractive as renting it out entirely, probably more so in truth.

It's unlikely to happen anyway so long as there are supply issues in terms of available housing in Ireland, and that isn't going away any time soon.

I'd even speculate that it's more likely some form of bedroom tax like the UK could be brought in to try and ease rental pressure.

TresGats

The 'bedroom tax' in the UK was brought in for Council properties considered under-occupied.

Do you really envisage a scenario where the old dears living in 3-4 bed private houses could be taxed for having spare rooms? Do you think the electorate would stand for it? Look at the OAP 'medical card march' a few years ago. Not a hope.

benjamin d

TresGats wrote: »

The 'bedroom tax' in the UK was brought in for Council properties considered under-occupied.

Do you really envisage a scenario where the old dears living in 3-4 bed private houses could be taxed for having spare rooms? Do you think the electorate would stand for it? Look at the OAP 'medical card march' a few years ago. Not a hope.

I said it's more likely than cutting the rent a room relief, not that it would happen.

newacc2015

Denny_Crane wrote: »

but you are obliged not to discrimiante on the enumerated grounds.

This is not correct. You are allowed to discriminate on who you chose to reside with you if the premises is your PPR. You are free to discriminate on they want to reside with you

https://www.ihrec.ie/your-rights/i-have-an-issue-with-a-service/i-have-an-issue-about-accommodation/

A person’s home: If the accommodation is in a private home, the lodger is not covered by the ESA.

Denny_Crane

Woot sexy girls in their twenties from here on in.

Joking aside thanks for the correction. Rather sensible even to ths blledin' heart liberal.

almostbroke

Truthseeker31 wrote: »

Sorry for the late response, i'll really appreciate the informative response guys.

I've thought about it and it seems a no brainer to go down the rent a room scheme as opposed to renting the whole place out, I can't believe it skipped my mind before.

Is it as simple as eventually purchasing the property, registering with the PRTB and then rent out the rooms ? Or is there any other steps i must follow first? Any articles & guidelines are very much appreciated.

In regards to the mutual funds comment, i have thought about it but i'm reluclant to place all my savings into them as i feel the market is already too propped up at the moment and i'm looking for long term gains so i'm investing small amounts ( 400e) per month into Index funds in the hopes that over the long term Euro cost averaging works in my favour as i know nothing about active trading, i would lose my ar$e on it.

Thank you

Heres a link to Rent a Room which might be useful...
http://www.revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-corporation-tax/part-07/07-01-32.pdf

Fian

Truthseeker31 wrote: »

Sorry for the late response, i'll really appreciate the informative response guys.

I've thought about it and it seems a no brainer to go down the rent a room scheme as opposed to renting the whole place out, I can't believe it skipped my mind before.

Is it as simple as eventually purchasing the property, registering with the PRTB and then rent out the rooms ? Or is there any other steps i must follow first? Any articles & guidelines are very much appreciated.

In regards to the mutual funds comment, i have thought about it but i'm reluclant to place all my savings into them as i feel the market is already too propped up at the moment and i'm looking for long term gains so i'm investing small amounts ( 400e) per month into Index funds in the hopes that over the long term Euro cost averaging works in my favour as i know nothing about active trading, i would lose my ar$e on it.

Thank you

Even apart from the rent a room relief benefits, the alternative is that you would be funding your own rent from after tax income while paying 52% of your rental income as tax.

marsbar1

Heres another idea of what to do with your 120K. Buy outside Dublin in the commuter towns eg Longford. You could buy the house cash and still have change, no worry about mortage rates or interest. Get a lot more house for your money too!

marsbar1

TresGats wrote: »

The 'bedroom tax' in the UK was brought in for Council properties considered under-occupied.

Do you really envisage a scenario where the old dears living in 3-4 bed private houses could be taxed for having spare rooms? Do you think the electorate would stand for it? Look at the OAP 'medical card march' a few years ago. Not a hope.

The UK 'bedroom tax' is not a tax. That is a label put on it by the lefty press. For it to be a tax one would have had to earned something - it is a reduction in the benefits recieved that pay for the council house.  The only voters kicking off about it are the unemployed of incapacitated.

davindub

marsbar1 wrote: »

Heres another idea of what to do with your 120K. Buy outside Dublin in the commuter towns eg Longford. You could buy the house cash and still have change, no worry about mortage rates or interest. Get a lot more house for your money too!

Longford a commuter town -- Joke?