Buying an Investment property

Designator · 15-03-2018 3:07pm #1

Hi, Im planning on buying my first property in the next few months, I have my mortgage deposit and all ready to go. My plan is to buy a small property for roughly 70-80k or so and rent it out to people. My mortgage repayments on the property would be 250-300 a month and the rental income I could make off it would easily be 8-900 a month. Im just wondering seeing as this would be my first property and I wouldnt be living in it myself , would the bank loan me money in a year or so to buy a property myself to live in? Or would I basically have to wait to pay off the first property?

srsly78 · 15-03-2018 3:12pm

And you know all about the tax implications of this right?

Designator · 15-03-2018 3:13pm

srsly78 wrote: »

And you know all about the tax implications of this right?

Do explain, I dont know 100% of it

cruizer101 · 15-03-2018 3:32pm

You also have to get a different kind of mortgage which you may well not get.
Most mortgages people get are for living in themselves where as you are looking for a commercial mortgage as it is an investment property.

You may be better to buy and sublet a room under the rent a room scheme, it means you don't have to pay tax up to 14,000 of rental income and is residential mortgage also.

Cuddlesworth · 15-03-2018 3:34pm

Designator wrote: »

Do explain, I dont know 100% of it

You already know the upside of renting property, in which you get a return for your money.

Lets go through the downsides.

As a private landlord, you appear to get the short end of the stick in terms of legislation. From rent controls, to arbitration systems designed to primary help the tenants, to taxation, to equality acts, you have to be very careful what you say and do in all interactions.

In the event you encounter problems, the system is very much against you.

The rent is taxed as income, usually 52% for most people. You can deduct 75% of mortgage interest from this, but in your case it will won't be much.

Your responsible for all maintenance to the property. It tends to be higher on rental property's, things gets damaged or wear out more then a "normal" home.

Your have to be available to show the property, arrange for services(plumbers/electricians), do monthly/bi-monthly visits, ensure rent is being paid. This can take significant amounts of time sometimes or close to none other times.

There is a small risk of long term cash flow loss, from the property being empty or tenants not paying.

There is a small risk of significant damage from tenants and no ability to recover funds after the fact.

I would suggest reading up on tenancy registration, working out costs like RTB, insurance, cheap furniture with a 5 year lifespan, 5 year refurbish costs(painting, gutters, drains etc), what you will get in terms of rent, what you can charge for, exspense against, etc.

What you would have to do in the event of a family of a lower calibre moving into your accommodation and not paying rent and not leaving.

Once you are aware of those things, go into the situation with a open mind.

Designator · 15-03-2018 3:34pm

cruizer101 wrote: »

You also have to get a different kind of mortgage which you may well not get.
Most mortgages people get are for living in themselves where as you are looking for a commercial mortgage as it is an investment property.

You may be better to buy and sublet a room under the rent a room scheme, it means you don't have to pay tax up to 14,000 of rental income and is residential mortgage also.

I see what you mean. In this climate would I be better off buying a house and refurbishing it and selling it on again to make money from it rather than using it as a rental property ?

caviardreams · 15-03-2018 4:39pm

Designator wrote: »

Hi, Im planning on buying my first property in the next few months, I have my mortgage deposit and all ready to go. My plan is to buy a small property for roughly 70-80k or so and rent it out to people. My mortgage repayments on the property would be 250-300 a month and the rental income I could make off it would easily be 8-900 a month. Im just wondering seeing as this would be my first property and I wouldnt be living in it myself , would the bank loan me money in a year or so to buy a property myself to live in? Or would I basically have to wait to pay off the first property?

Where can you buy a property for 80k that rents for 900 a month in Ireland? Are you sure about those figures?

Designator · 15-03-2018 4:41pm

caviardreams wrote: »

Where can you buy a property for 80k that rents for 900 a month in Ireland? Are you sure about those figures?

Any Cork commuter town, theres property here that has sold for 55k last year and is now renting for 800 a month

LirW · 15-03-2018 4:44pm

Please, when you're not aware of the tax implications talk to an accountant before you start looking. It's going to be the the best thing you'll spend your money on.

CHealy · 15-03-2018 4:45pm

Designator wrote: »

Any Cork commuter town, theres property here that has sold for 55k last year and is now renting for 800 a month

What Cork commuter towns and show examples please, I keep a close eye on the property market in Cork and I am going to call you out on this, either you are making it up, buying the house cheap from a relative, or living in the rainbows.

Designator · 15-03-2018 4:47pm

CHealy wrote: »

What Cork commuter towns and show examples please, I keep a close eye on the property market in Cork and I am going to call you out on this, either you are making it up, buying the house cheap from a relative, or living in the rainbows.

Mallow, I was looking at a small 2 bedroom property here last year which sold for 55k and was fully furnished. It is now renting for 800 a month and thats fact.

Designator · 15-03-2018 4:48pm

LirW wrote: »

Please, when you're not aware of the tax implications talk to an accountant before you start looking. It's going to be the the best thing you'll spend your money on.

Well I was just enquiring about what the procss would be with renting out a property and if it would be worth my while. My other option is to buy a property and refurbish it and sell it on in a year or so, which I am also looking at doing and appears to probably be the best option as the housing prices go up.

LirW · 15-03-2018 4:51pm

It depends on the circumstances, it could definitely be worth the while if you're fully aware of the costs it definitely brings with it and what could happen in the worst case. That's why you want to go to an accountant and talk about both scenarios and you'll have a better understanding of things. Afaik Mallow isn't an RPZ, so the rules are different than they would be in Cork City for example.

CHealy · 15-03-2018 4:51pm

Designator wrote: »

Mallow, I was looking at a small 2 bedroom property here last year which sold for 55k and was fully furnished. It is now renting for 800 a month and thats fact.

Fair enough, I still think its a bit mad but if you say its the case then all the best with it.

Fol20 · 15-03-2018 10:16pm

Your doing it the wrong way around. I would recommend getting your family home first and then look at investments. It would also be more financially efficient to use the rent a room scheme and let out 2 beds in your PPR as they would be tax free. For example if I’m earning 1150 on a 2 bed apartment and I get 600 from letting out one room in my house I would be neting more and a lot less hassle if they are problematic. Banks will look for experience and knowledge with letting before they will hand over the money. Something which it seems you don’t have right now. I would do more research before doing anything yet.

Buying an Investment property

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