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Is being a landlord only profitable if you charge rent well above the mortgage cost?

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    #62
    Old diesel
    Registered Users Posts: 5,809 ✭✭✭Old diesel


    Cyclepath wrote: »
    JJJackal wrote: »
    Regarding your uncle, he is probably not charging market rent? At 1900 per month repayments his interest rate is close to 2% which is high enough for a tracker from 2007.

    Re 350k sub as an investor he hopes the rent increases over the next 15 years and in 15 years time his mortgage will be clear and he will earn circ 2500 (assuming he is currently not charging marker and rents increase) per month

    Arguably the rent has never covered the mortgage on this property even in 2007? If we had better banks he would not have been allowed or advised against borrowing this money imo

    Yeah he could probably get more rent, but he's always favoured good tenants that stay on over rent increases. Now he's in a Rent controlled zone so he's kinda stuck.

    Regardless the eventual rent he might be able to charge, he'll have had 25 years of misery! He's been subsidising the property at significant cost to his lifestyle, and he's suffered the huge downturn in values with the prospect of the same happening again in the future.

    I suppose my point was, and still is: Is it worth an ulcer?!

    I'd only advise getting into the property business if you can spin up a REIT and do it at scale.

    It would be many years of misery for a tenant to pay a profitable rent every month for a house with a 1900 a month mortgage.

    Even at lower tax rates.

    So the model is flawed


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    #63
    Old diesel
    Registered Users Posts: 5,809 ✭✭✭Old diesel


    When Hugh Brennan delivered his 170/180 k co op homes the claimed mortgage costs was around 850 a month.

    An 1150 a month difference.

    Over a 40 year working life the 1900 a month is 912 k.

    At 850 a month we are looking at 408 k.

    That's a serious sum of money as a difference.

    And I'm looking at this from the point of view of imagine if a 170 k to deliver home was able to be rented out at a rent that was based on a cost structure where loan repayments for landlord was 850 and not 1900 euros a month.


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