Landlord Maths

DubCount

erudec wrote: »

What percentage of the rent income does the taxman let you keep if you're making over 35K a year?

That depends on how much more than 35k you are earning, are you married/single, the level of interest expense you have as a proportion of rental income. Assuming you are a high rate tax payer, you will be paying 40% income tax, 4.75% USC (maybe 8%) and 4% PRSI. On a leveraged property investment, the effective rate of tax may be as high as 60% given that some expenses are disallowed for tax.

Consult an accountant to get exact details for your circumstances.

Subtle

Right, here's another example or two for what it's worth just to put some balance on things .

Situation 1: Landlord bought second property for 160k several years ago via mortgage. Property now valued at 300k and monthly rent currently at €1400 pm. No bad tenants ever - landlord is very careful. Not bad going methinks! Obviously good timing helped but this landlord along with others who bought at a similar time are laughing...

Situation 2: Business invested in property back in boom days via cash. Property now valued only marginally higher than what it was bought for but has been rented the last 10 years or so. Nothing really to complain about here either...

My points:
1) Not all landlords bought to let at the wrong time and some had a much shorter mortgage term than 30 years etc.
2) Not all landlords/businesses had to get mortgages. Some bought with cash and so there is no loan interest to pay off.

Victor

DubCount wrote: »

There have been several posts recently expressing the view that small landlords are leaving the market. It can be hard to understand why this is happening when rents are at an all time high.

Buy low, sell high. Buy 2012 for €100,000, sell 2018 for €200,000.

Saying rents are at an all time high is only one side of the discussion and doesn't consider the cost of buying the property. "Are yields at an all time high?" is a more important issue.

DubCount wrote: »

So a landlord ... has more cash outflow than cash inflow every year.

Until it is paid off.

DubCount

Subtle wrote: »

My points:
1) Not all landlords bought to let at the wrong time and some had a much shorter mortgage term than 30 years etc.
2) Not all landlords/businesses had to get mortgages. Some bought with cash and so there is no loan interest to pay off.

For those who bought at the top of the market, they may still be in negative equity. For those that bought at the bottom, they are sitting on significant gains. However, what has past has past. Starting from today, property prices may go up or down. It would be unwise in my view to look at an investment justified by capital gains. The purpose of the thread was not to say whether Landlording has been a good business in the past. The purpose was to outline that as an investment decision today, its not exactly creaming it. A landlord sitting on a big capital gain still has a decision to make - keep going and accept the current risk and return, or cash in and invest in something else.

Property investing without a mortgage does provide much better returns. I think that gets worked through in the thread. Not everyone has a spare couple of hundred thousand "resting in their account" to make a cash investment though, and the risk/return must still be viewed against other possible investments.

All the headlines are about record high rents. I just wanted to show that even with record rents and significant excess demand from prospective tenants, making the maths work to make an investment in residential property is not easy.

erudec

handlemaster wrote: »

thats what we what all rental property controlled by a few big property management companies. nothing could go wrong with that plan !

Do these companies buy up ghost estates or will they purchase private dwellings?

erudec

Askthe EA wrote: »

Oh no theyre not!!!!

Certainly public service pensions should be heavily discounted. When the next depression comes along in, say, 2045 (being insanely optimistic in assuming, against all indications of history, that there will be no serious recessions in the 2020s and 30s) and the government is faced with a Greek-style predicament, slashing public sector pensions across the board by 60% will be a popular measure amongst the private sector majority.

A wave of broke ex-public servants will commit suicide, thus seriously relieving pressure on the health services.

Peregrinus

erudec wrote: »

Certainly public service pensions should be heavily discounted. When the next depression comes along in, say, 2045 (being insanely optimistic in assuming, against all indications of history, that there will be no serious recessions in the 2020s and 30s) and the government is faced with a Greek-style predicament, slashing public sector pensions across the board by 60% will be a popular measure amongst the private sector majority . . .

. . . who have no family members in the public sector.

Would you rather pay an extra 0.5% social insurance, or have Great Aunt Bessie and her cats come live with you?

ted1

Subtle wrote: »

Right, here's another example or two for what it's worth just to put some balance on things .

Situation 1: Landlord bought second property for 160k several years ago via mortgage. Property now valued at 300k and monthly rent currently at €1400 pm. No bad tenants ever - landlord is very careful. Not bad going methinks! Obviously good timing helped but this landlord along with others who bought at a similar time are laughing...

Situation 2: Business invested in property back in boom days via cash. Property now valued only marginally higher than what it was bought for but has been rented the last 10 years or so. Nothing really to complain about here either...

My points:
1) Not all landlords bought to let at the wrong time and some had a much shorter mortgage term than 30 years etc.
2) Not all landlords/businesses had to get mortgages. Some bought with cash and so there is no loan interest to pay off.

Landlord pay capital gains tax of 46,200 if he sells for 300k

beauf

A lot of people are Landlords to provide a pension. If that's gone, private and public pensions are gone, and healthcare is un-affordable. This is going to be one awful place to grow old in.

Askthe EA

erudec wrote: »

Do these companies buy up ghost estates or will they purchase private dwellings?

They have no interest in houses. Too expensive to manage. Apt blocks only.

beauf

Askthe EA wrote: »

They have no interest in houses. Too expensive to manage. Apt blocks only.

There been plenty of stories and articles of them buying homes and even farms.

Also the 'Tyrrelstown Amendment'.

http://www.thejournal.ie/farmers-vulture-funds-3329461-Apr2017/

So how can you say apt only?

Askthe EA

beauf wrote: »

There been plenty of stories and articles of them buying homes and even farms.

Also the 'Tyrrelstown Amendment'.

http://www.thejournal.ie/farmers-vulture-funds-3329461-Apr2017/

So how can you say apt only?

Dont confuse vulture funds with professional landlord companies

Professional landlords only have an interest in high volume blocks. Id be interested to see where they have bought houses.

beauf

Multinational property asset companies, funds, vulture funds, professional landlord companies.

I'll agree to disagree with you.

I'm not convinced the term professional landlord means what people think it means.