Calling all Landlords!!!

b4bmm

Who better to pose this question to than people who have been there and done that. What are the true costs of being a landlord in Ireland on top of the mortgage repayments?

I would like to get a clear picture before jumping into anything as there seems to be a lot of negative sentiment about investing in property in Ireland right now. Some people saying that it's not worthwhile betweens costs, stress and other reasons like lack of landlord rights.

These are the costs that I could find online that property owners willl face in Ireland. Please correct me if I'm wrong and add to what I have said if there is more or if I'm off the mark a bit. It would be great if some could provide a "case study" of their costs from their own experience/examples. In no particular order;


1: Stamp duty is 1% below €1M and 2% above that.

2: Legal fees can vary, anywhere from 1-2% of purchase price.

3- VAT, only applicable to new build homes

4- Property Tax (LPT), dependant on value of land?

5- Property Surveyor costs ~€400

6- I think mortgage insurance is applicable for deposits of less than 20% of purchase price and amounts to maybe €250 p/a for €140k mortgage if over 20% deposit no mortgage insurance needed?

7- Home insurance, ~ €500 p/a?

8- Ongoing maintenance, €1000 p/a estimate, 3 bed two bath small semi-detached?

9- Universal Service Charge p/a is dependant on landlords overall gross income? At these rates

Standard rate of USC (2017)
Rate Income band
0.5% Up to €12,012
2.5% From €12,012.01 to €18,772
5% From €18,772.01 to €70,044
8% From €70,044.01 to €100,000
8% PAYE income over €100,000
11% Self-employed income over €100,000

After this you have all your claims/expenses what can I claim for these?

Then when you deduct your claims from your gross income you then deduct your taxes?

Then after taxes are deducted you can finally look at paying off your mortgage. How far off the mark am I?

Cheers......

Moonbeam

Paying income tax at the higher rate on the rent is what makes it not worth while.

Here is the Revenues guide -
http://www.revenue.ie/en/tax/it/leaflets/it70.html

PRTB registration
Annual boiler service
The insurance should be les then 500/

Samuel T. Cogley

Voids are also a big issue although they can be offset against tax. You need to plan for a situation where you get no rent for 18 months, have legal fees in the 10-20K range and the place is destroyed. If 'investing' and you've only considered one angle you need to take a step back and ask yourself if you've done enough research. What options have you explored with a FA in terms of investments, how does the return compare, what is the level of risk?

antoinolachtnai

Work. The other issue is you have to do work, to set up the property, set up the let and manage the let and the tenant. You or someone you trust have to be available if there is a problem.

Some months it is easy, some months it is very demanding.

If you want to get top rent and keep the voids short it is quite skilled work. You need a lot of different skills.

You can get an agent to do a lot of this for around 10 percent of the rent which is a significant cost. But there will still be decisions left to the owner to make. This all takes time. It is not 'passive' income.

It is unrealistic to expect to only spend 1000 a year on maintenance for such a house. it will absorb 2000 or 3000 euros a year over the long run in maintenance and replacements. You can make it less than this if you do some of the work, such as the project management, yourself, but it is still a real cost. Ultimatately the asset has a lifetime. Houses cannot be expected to last forever, even if they are well maintained.

The maintenance and replacement is also 'bumpy', i.e. Some years it is less and some years it is much much more. This cost also needs to be financed.

There is also risk. If you have skills you are less likely to have problems with an overholding tenant. If you have a lower level of skill then it is more likely. But it can happen to anyone. If this happens you will have a big loss.

There is also market risk. Interest rates are lowish and rents are highish at the moment but nobody knows what the future holds. The landlord carries this risk.

filbert the fox

And a very sour taste in your mouth when you hear that the Government wants to interfere in the free market by restricting your rental take. :mad:

Don't forget that you need to pay the property tax (which funds local services) for the tenant. You get nothing for this and cannot claim as expense.

The Water Tax scenario.........

The barrage of reminders to pay PRELIMINARY TAX on income you have yet to earn.

That call or text that shows you your tenant wants something....on New years' eve.

The absence of financial acknowledgement off your tax bill for your time.

The non claiming of expenses before or between lettings.

Come back after this short break......

Hellywelly

Hi Moonbeam

Is the rental income always taxed at the higher rate? Itag doesn't seem to state that in the revenue information on that site or perhaps I missed it?
Thanks

Grolschevik

Hellywelly wrote:

Is the rental income always taxed at the higher rate? Itag doesn't seem to state that in the revenue information on that site or perhaps I missed it? Thanks

It's added to your other income, so it depends what you earn overall, including rental income.

antoinolachtnai

That depends on your income. In general you have another job, so most or all of the additional income (the rent) ends up getting taxed at the higher rate. If you own a second rental property, this is almost certainly the case.

allibastor

Its a load of rubbish, unless you own 20+ houses its really not worth it.

Tax is in the high rate, so unless you are getting 10-15% yield on the rent vs selling the place it really isnt worth it.

handlemaster

http://www.irishtimes.com/business/personal-finance/property-or-a-pension-where-can-you-get-a-better-return-1.2945443

This article says alot. Better off with a pension .for certainty anyhow

b4bmm

Is anybody willing to do a case study so I can get it into my head in black and white their annual summary of income, expenses taxes etc?
Going by all the responses, all landlords regret buying property. I have yet to see someone mention any advantages to owning an investment property yet thousands of people buy them every year. What am I missing Are they all wrong.......

b4bmm

Libertarian Kant wrote: »

Voids are also a big issue although they can be offset against tax. You need to plan for a situation where you get no rent for 18 months, have legal fees in the 10-20K range and the place is destroyed. If 'investing' and you've only considered one angle you need to take a step back and ask yourself if you've done enough research. What options have you explored with a FA in terms of investments, how does the return compare, what is the level of risk?

I would be hoping to keep voids to a minimum, although need to be factored in to any stress test. I would be looking at I guess prime property which may be hard to define. Property that are in high demand areas, whether a downturn or not occurs again, which it inevitably will, all properties are not equal. Chances are properties close to hospitals should continue to gain tenants as public healthcare will always be required and Nurse/doctors/surgeons etc. Not that I want to go down the student route but near universities will always be in demand. High employment areas in Dublin city centre where there are lots of tech companies should have demand for the foreseeable future.

Im not sure how people end up getting their places trashed, do you not do any due diligence or the incoming tenants. Get reliable references from previous landlords, work references and really investigate them properly and not just accept a phone call on face value. I guess many just want people in fast to get some income but thats a false economy. I dont expect any place I have to get trashed but if it does isnt that what insurance is for? Yes there would be downtime and it would be very stressful but I would be hoping to avoid it and have been renting for over 10 years and have yet to trash any place or anybody I know that has trashed a place.

Why would I need legal fees in the 10-20k range and would this not be covered by insurance?
I dont really do F.A, but will be going to see a tax accountant next month. This is the whole reason for posting here to gain more insight into property investment in Ireland, the positives and negatives, but all I have seen so far is negative investment sentiment.  I am exploring this option so that I can compare it to other options out there and why I am hoping I can get some case studies from a variety of landlords from small time investors 0-100k to mid size 100-500k to larger investors of 500k plus that might own multi family units etc which is where I see the best options. I am going right now on returns before costs mainly and trying to figure out after taxes and all costs what the true return will end up being, then I can make an informed decision taking the returns into account along with the stresses involved etc whether it makes sense.

 
Commercial also I would be very interested to hear more about as you often have long term leases locked in with prime tenants, on a full FRI basis meaning costs are cut substantially leading to greater returns. Right now commercial and multi family are really the only things I am looking at as returns often can be 10% before costs. I have still yet to see anybody mention what their returns are from their investment, which I find strange? 

For example there is a AIB bank with over 10 years lease remaining for auction soon, this would be less than 10% return probably after the bidding has been completed but its an example

http://allsopireland.ie/auctionlot/onlinelotdetails/19722

Thanks for the responses

76544567

b4bmm wrote: »

Is anybody willing to do a case study so I can get it into my head in black and white their annual summary of income, expenses taxes etc?
Going by all the responses, all landlords regret buying property. I have yet to see someone mention any advantages to owning an investment property yet thousands of people buy them every year. What am I missing Are they all wrong.......

They won't be buying them anymore after the last rule changes. That's for sure.
On the plus side if you really want to invest I reckon the next 6 months will see a lot of former rentals on the market as landlords use up notice periods and get out.
And remember most of those getting out have already gone through a major recession and stayed. The new changes have changed the landscape totally. Even if you have all these experiences landlords who survived the recession and kept going, take note of how many of them are going to just bail out.
The straw that broke the camel's back was placed just in the last few weeks.

athtrasna

b4bmm wrote: »

Is anybody willing to do a case study so I can get it into my head in black and white their annual summary of income, expenses taxes etc.

Mod note

This is a discussion forum not somewhere to get people to do your research for you. Asking people for such private information is unacceptable.

Samuel T. Cogley

b4bmm wrote: »

I would be hoping to keep voids to a minimum, although need to be factored in to any stress test. I would be looking at I guess prime property which may be hard to define. Property that are in high demand areas, whether a downturn or not occurs again, which it inevitably will, all properties are not equal. Chances are properties close to hospitals should continue to gain tenants as public healthcare will always be required and Nurse/doctors/surgeons etc. Not that I want to go down the student route but near universities will always be in demand. High employment areas in Dublin city centre where there are lots of tech companies should have demand for the foreseeable future.

Im not sure how people end up getting their places trashed, do you not do any due diligence or the incoming tenants. Get reliable references from previous landlords, work references and really investigate them properly and not just accept a phone call on face value. I guess many just want people in fast to get some income but thats a false economy. I dont expect any place I have to get trashed but if it does isnt that what insurance is for? Yes there would be downtime and it would be very stressful but I would be hoping to avoid it and have been renting for over 10 years and have yet to trash any place or anybody I know that has trashed a place.

Why would I need legal fees in the 10-20k range and would this not be covered by insurance?
I dont really do F.A, but will be going to see a tax accountant next month. This is the whole reason for posting here to gain more insight into property investment in Ireland, the positives and negatives, but all I have seen so far is negative investment sentiment.  I am exploring this option so that I can compare it to other options out there and why I am hoping I can get some case studies from a variety of landlords from small time investors 0-100k to mid size 100-500k to larger investors of 500k plus that might own multi family units etc which is where I see the best options. I am going right now on returns before costs mainly and trying to figure out after taxes and all costs what the true return will end up being, then I can make an informed decision taking the returns into account along with the stresses involved etc whether it makes sense.

 
Commercial also I would be very interested to hear more about as you often have long term leases locked in with prime tenants, on a full FRI basis meaning costs are cut substantially leading to greater returns. Right now commercial and multi family are really the only things I am looking at as returns often can be 10% before costs. I have still yet to see anybody mention what their returns are from their investment, which I find strange? 

For example there is a AIB bank with over 10 years lease remaining for auction soon, this would be less than 10% return probably after the bidding has been completed but its an example

http://allsopireland.ie/auctionlot/onlinelotdetails/19722

Thanks for the responses

I had to have a chuckle. You might be right on the insurance front but I'm pretty sure it's excluded on most LL policies, hopefully someone else will be able to give you the right steer there, however you're falling into the same trap many wannabe property investors fall into. Purely on the hospital front, have you spent much time in D8 around James'?

The reason you're not getting much info on returns is in the main very few people are getting returns. The ones that are will be unlikely to broadcast it on this forum. There was one professional landlord here, he had some great advice and had been doing it years, buying carefully at the bottom of the market. IIRC some of the responses he got would probably make me think twice about continuing to post.

I believe that until recently the majority of Landlords owned one or two properties and made most of their money by renting properties to keep them in a holding pattern to sell them when they increased in value. Then there are people like me who have bad decision on PPRs we're holding on to with a combination of offsetting our losses against the property being rented vs. hoping it gets to a level we can sell before the next downturn - which will as you rightly predict happen.

I actually don't mind giving you some of my financial info and I hope athtrasna doesn't mind me doing so. Please snip this if it's out of order.

I'm retraining (seemingly forever at this stage) so work PT(ish), the wife is the main bread winner so although we used to earn a bit more we're middle income. Note you have to be on such a low income to avoid the higher rate of tax you'd never get a mortgage.

We rent a property at 1050 per month so gross €12,600. Mortgage repayments are around €550-600 per month, very low interest rate, which means we don't write off much interest. Management fee is around €1300, place was very well maintained so we i) have capital allowances for work we did getting the place ready ii) don't have a huge amount of maintenance. Probably c.500 a year if that. Property tax ect. all paid, fully tax compliant. Do we engage in the practice of not being entirely sure whether that can of paint was for the apartment or the house, of course... not.

The property just about breaks even, our prelim tax due is €4500, I forget what the actual tax liability was for the previous year and I would be uncomfortable posting that anyway.

Before I started retraining I earned a fair bit more so we have savings to fall back on should things go wrong on the apartment side. Losses can then be offset against tax so it's not quite as bad as some make out. You need a buffer there, and quite a large one.

As for the FA, I'm sorry to be harsh but if your research is being done on boards you need to see a proper FA or Wealth manager not an accountant. If your aim is to run a small business managing a portfolio of property, that's fair enough - it's akin to wanting to be an Alpaca farmer but far be it for me to step on anyone's dream. If your goal is investment get all the info, are there investments which carry smaller risk for better returns.

I've given you quite a bit of info there, perhaps you'd update us on the last point, or perhaps you'll start a thread over in investments and get some advice there. It's not a subject that we really see a side by side done one. I've seen a few of the investment boffins absolutely demolish property as an investment but maybe you'll have different info.

DubCount

b4bmm wrote: »

I would be hoping to keep voids to a minimum

LOL - I have yet to meet a landlord who doesn't have that hope !!

Don't underestimate how easy it is to end up with a bad tenant. Even with careful due diligence, it is possible to get duped by false documents and references. Its also possible for circumstances of a family to change - e.g. a tenant loses his/her job.

If it does happen, expect a long engagement with the RTB, followed by a visit to the courts, followed by eviction costs. After a long period of no rent (but still paying your mortgage), and the costs of the legal process, there may be damage to the property as well.

Insurance may not cover damage that is not accidental, there will be an excess if they do, and they are unlikely to cover the loss of earnings or your legal/eviction costs.

handlemaster

DubCount wrote: »

LOL - I have yet to meet a landlord who doesn't have that hope !!

Don't underestimate how easy it is to end up with a bad tenant. Even with careful due diligence, it is possible to get duped by false documents and references. Its also possible for circumstances of a family to change - e.g. a tenant loses his/her job.

If it does happen, expect a long engagement with the RTB, followed by a visit to the courts, followed by eviction costs. After a long period of no rent (but still paying your mortgage), and the costs of the legal process, there may be damage to the property as well.

Insurance may not cover damage that is not accidental, there will be an excess if they do, and they are unlikely to cover the loss of earnings or your legal/eviction costs.

Insurance is most definately not cover damage done by tenants on purpose

76544567

Well I got news just now that a troublesome tenant (who was the best tenant I ever had at one point, but turned nasty) has decided to leave next week, so I'll have an apartment on the market in a few weeks.
Want to make me an offer op.
It's locked below market rent though, so you'll have to deal with that. Never had a void period longer than a week in about 20 years, so if you can make renting it more profitable than the current risk work for you you are on a winner.
You should buy it.

Samuel T. Cogley

76544567 wrote: »

Well I got news just now that a troublesome tenant (who was the best tenant I ever had at one point, but turned nasty) has decided to leave next week, so I'll have an apartment on the market in a few weeks.
Want to make me an offer op.
It's locked below market rent though, so you'll have to deal with that. Never had a void period longer than a week in about 20 years, so if you can make renting it more profitable than the current risk work for you you are on a winner.
You should buy it.

Why I keep trying to put people off when I'd be delighted to sell mine too escapes me.

endacl

I know if I was entering the market renting property, I'd be retaining a room in the house for my own use. I know I'd deal fairly with tenants. Having them as licensees would be insurance against them not dealing fairly with me...

Samuel T. Cogley

endacl wrote: »

I know if I was entering the market renting property, I'd be retaining a room in the house for my own use. I know I'd deal fairly with tenants. Having them as licensees would be insurance against them not dealing fairly with me...

That's all well and good, but leases are a matter of fact not form. Absent it being your PPR you'd have some job convincing the RTB or a court that you were genuinely using the property and not simply trying to defeat the RTA.

76544567

endacl wrote: »

I know if I was entering the market renting property, I'd be retaining a room in the house for my own use. I know I'd deal fairly with tenants. Having them as licensees would be insurance against them not dealing fairly with me...

Well being nice to the tenants counts for nothing. In fact it counts against you now.
And even getting a date wrong by a date on a letter can fvuk you up and cost you money.
Just not worth the effort anymore.

LionelNashe

Libertarian Kant wrote: »

.......

We rent a property at 1050 per month so gross €12,600. Mortgage repayments are around €550-600 per month, very low interest rate, which means we don't write off much interest. Management fee is around €1300, place was very well maintained so we i) have capital allowances for work we did getting the place ready ii) don't have a huge amount of maintenance. Probably c.500 a year if that. Property tax ect. all paid, fully tax compliant. Do we engage in the practice of not being entirely sure whether that can of paint was for the apartment or the house, of course... not.

The property just about breaks even, our prelim tax due is €4500, I forget what the actual tax liability was for the previous year and I would be uncomfortable posting that anyway.

.......

When you say that the property just about breaks even, are you considering the change in your equity during the year? I'm more interested in how landlords view this in general, really, rather than your own personal situation, but to take your figures as an example, if the property held its exact value for the year, and most of the 550 to 600 per month is not interest, then your equity share has increased by €11k or €12k. Even if you're in negative equity, it should be less negative by €11 or €12k than it was a year ago.

Edit: My maths was way off, I guess I meant 5 or 6k, not 11 or 12.

Samuel T. Cogley

LionelNashe wrote: »

When you say that the property just about breaks even, are you considering the change in your equity during the year? I'm more interested in how landlords view this in general, really, rather than your own personal situation, but to take your figures as an example, if the property held its exact value for the year, and most of the 550 to 600 per month is not interest, then your equity share has increased by €11k or €12k. Even if you're in negative equity, it should be less negative by €11 or €12k than it was a year ago.

Indeed, and there is certainly a return on investment here. As an accidental LL who purchased in the boom I'm also conscious that I have the lowest interest rate loan possible, being paid for by other mortgage payers and the taxpayer.

My equity probably increases by 3 - 4 thousand a year at this point IIRC, that obviously accelerates as I pay back the mortgage but the interest I can claim back decreases. The relief is at 80% now which is going in the right direction, but bear in mind any other business would be able to avail of 100% relief.

The point I'm making though is, if one had €300K would purchasing a portfolio of property be the right thing to do, or would you be better off investing it somewhere else. I'm not for one second suggesting - poor me, I took the decision to spend the guts of €300K, at the height of the boom on a one bed apartment, I will also have an asset at the end of it but from a purely profit motivated position I suspect other options are less risk and better reward.

I think the problem with property investing is it's about the only game in town if you need to borrow to make the investment. It surely can't be a good idea to let people borrow to invest? Running a business fair enough, but property is out and out speculation.

76544567

I don't have a mortgage so not bothered about mortgage payments or interest at all.
My big problem now is that the rug is being pulled out from under me.
And continues to be pulled.
I fear that eventually there will be souch interference with my business (there already is actually) that my property effectively does not belong to me to make decisions about anymore.
That's why I must take my leave if the property game.
I am getting out while I still can, and even now it has been made extremely difficult to get out of the business.
So even though there is profit in it for me, the profit is not enough to justify the regulation or the risk.

b4bmm

athtrasna wrote: »

b4bmm wrote: »

Is anybody willing to do a case study so I can get it into my head in black and white their annual summary of income, expenses taxes etc.

Mod note

This is a discussion forum not somewhere to get people to do your research for you. Asking people for such private information is unacceptable.

Case study might be the wrong choice of words.

This being a forum I'm asking
Landlords who have all the details on hand relating to investment property ownership costs would be kind enough to detail what's involved cost wise and tax wise. The figures don't have to Be their exact figures but it would be a very good resource for people to refer to to take into account all the costs applicable for IP ownership and then each person who reads it, can go away and work out what figures would be relevant to them.

I don't see what's private about it myself and think it's exactly what forums are for.....

76544567

b4bmm wrote: »

Case study might be the wrong choice of words.

This being a forum I'm asking
Landlords who have all the details on hand relating to investment property ownership costs would be kind enough to detail what's involved cost wise and tax wise. The figures don't have to Be their exact figures but it would be a very good resource for people to refer to to take into account all the costs applicable for IP ownership and then each person who reads it, can go away and work out what figures would be relevant to them.

I don't see what's private about it myself and think it's exactly what forums are for.....

There was a very good thread on here called Darren's property portfolio that has all the info you are looking for. Except that the risk has gone up so much since that thread was written that it's not worth it nowadays.
If you really want in I'll sell you a choice of a house or o e of two apartments in Dublin with a tenant who is on notice. And you can keep them or continue with the notice after you purchase
The rent is decent but it can't be increased now if there is a big cost outgoing all of a sudden. And if the tenant wants to stay but not pay rent you have to swallow that for a year or two as well. Oh, and if you need to sell in six months you may not be allowed to sell ever again.
But make me a serious offer and you are in

handlemaster

b4bmm wrote: »

Case study might be the wrong choice of words.

This being a forum I'm asking
Landlords who have all the details on hand relating to investment property ownership costs would be kind enough to detail what's involved cost wise and tax wise. The figures don't have to Be their exact figures but it would be a very good resource for people to refer to to take into account all the costs applicable for IP ownership and then each person who reads it, can go away and work out what figures would be relevant to them.

I don't see what's private about it myself and think it's exactly what forums are for.....

Put up your figures when you buy your investment property see how you get on.

Lumen

It's easy to make a profit on mortgaged rentals. You just need to be the bank.

4.5% in ZIRP environment = mega NIM

b4bmm

Hi Samuel, for some reason the website wouldn't let me reply to your message. I had a long reply written out mainly in response to your post and then it wouldn't let me send it and I lost it. I got in touch with mods but supposedly that just happens sometimes and cant be fixed. Great!!! Im hoping this way will work as I have since been able to post on another thread. If it doesn't I won't be trying to reply again but I think it should. I 

I had to have a chuckle. You might be right on the insurance front but I'm pretty sure it's excluded on most LL policies, hopefully someone else will be able to give you the right steer there, however you're falling into the same trap many wannabe property investors fall into. Purely on the hospital front, have you spent much time in D8 around James'?

I dont know that area why?

The reason you're not getting much info on returns is in the main very few people are getting returns. The ones that are will be unlikely to broadcast it on this forum. There was one professional landlord here, he had some great advice and had been doing it years, buying carefully at the bottom of the market. IIRC some of the responses he got would probably make me think twice about continuing to post.

[font=Open Sans, Arial, Helvetica, sans-serif]Sounds like nothing has changed in that regard then because all that seems to be portrayed on here is negativity. Why is everyone invested in property if they are not getting any returns? Has everybody gotten it that wrong, was no research done before purchase and if it was has the government changed things that much and are to blame for it all?[/font]

I believe that until recently the majority of Landlords owned one or two properties and made most of their money by renting properties to keep them in a holding pattern to sell them when they increased in value. Then there are people like me who have bad decision on PPRs we're holding on to with a combination of offsetting our losses against the property being rented vs. hoping it gets to a level we can sell before the next downturn - which will as you rightly predict happen.
Im not too bothered about the increasing of property [font=Open Sans, Arial, Helvetica, sans-serif]value, although it would be great I'm after a annual return. I dont expect to be needing to sell in a downturn or a forced sell in anyway so I could wait out a downturn if needed. Looking at 10%+ gross or else I wouldn't even consider it and then even that may not be enough, I should know more after I go to see the accountant in the coming weeks, hopefully she can outline all the costs involved and possible write offs and whether it is worthwhile setting up a company to do the whole thing. Maybe setting up a property management company to run the whole operation would be a good tax write off I'm not sure but I need to figure out the net return as close as possible in a number of different scenarios.[/font]

As for the FA, I'm sorry to be harsh but if your research is being done on boards you need to see a proper FA or Wealth manager not an accountant. If your aim is to run a small business managing a portfolio of property, that's fair enough - it's akin to wanting to be an Alpaca farmer but far be it for me to step on anyone's dream. If your goal is investment get all the info, are there investments which carry smaller risk for better returns.

I've given you quite a bit of info there, perhaps you'd update us on the last point, or perhaps you'll start a thread over in investments and get some advice there. It's not a subject that we really see a side by side done one. I've seen a few of the investment boffins absolutely demolish property as an investment but maybe you'll have different info.

[font=Open Sans, Arial, Helvetica, sans-serif]I went to a F.A before a few years ago and came away with very little info that I didnt already know. I am mostly invested in the stockmarket at the moment and am happy with my current holdings but also was looking to get into property for a bit of diversity if the returns are right. At the moment, from the responses on here I am leaning towards investing in a number of funds in the future after I decide to sell out of current holdings which would be considered more high risk but ones I am quite confident in for now, but still I want to crunch the figures first with property investments and see where that leads me to have all angles covered. [/font]

[font=Open Sans, Arial, Helvetica, sans-serif]Im not a rushed buyer or eager to buy. Im eager for a good deal so if it was a case I saw something that I liked I would low-ball it and see what reply I get, I can then choose to step it up a bit or move on. Plenty of property out there and for the higher priced properties maybe not so many buyers. As I said I am invested in shares so this is mainly an investigation of whether I should put any profits from that into property or whether to continue to invest in the sharemarket but at a lower level of risk. Not sure if that answers what you were asking........[/font]

DubCount

OP. I'm sure your FA would tell you that diversity in an investment portfolio is a good thing. You could increase your exposure to residential property by investing in a REIT. If you choose a direct investment in a property, this comes with some issues to consider......

1) Bank interest rates on Buy2Let property is very expensive in the Irish market. 5%+ is not unusual. Although there are good yields to found which is great if you are a cash buyer. If you are taking out a mortgage, any yield below 5.5% (as only 80% of interest is allowable for tax) means you are making a loss on the portion of the money that you have borrowed.

2) Irish banks don't seem to go for interest only loans. They expect you to make capital repayments. Although this goes towards increasing your equity, it usually means that your cash flow is negative (income less costs and capital repayments), even when you make a profit (income less costs).

3) Tax on profits on any profit (if you have other income) is going to be over 50%.

4) Investment directly in property takes time and effort in sourcing tenants, managing tenants, dealing with complaints etc.. You can have an agent manage this for you, but that adds cost and reduces cash flow further.

5) Voids between lettings is pretty minimal in most of the major cities. The risk of a 2 years with no rent and significant legal fees and repair costs if you get a rogue tenant means you need pretty deep pockets. To add to the problems this causes, any losses you make if this happens are ring-fenced against other rental income (current or future). If you have only 1 property, this makes the cash flow effect of this type of event much worse. If you have multiple properties, you can use the tax losses much quicker.

6) Capital appreciation of your property is great if it happens. For a long term investment, its just not possible to know how this will go. I dont factor any capital growth into property investments, and concentrate only on income/yield/cash flow.

7) Entry and exit costs (Legal Fees, Stamp duty, Estate agent Fees etc.) are quite large relative to the size of your investment, and so it is usually only a long term and not a liquid investment

As noted in previous posts. This type of investment requires professional advise from a qualified advisor, and not the ramblings of a post or 2 on a forum.

Good luck !!