Buying to let an apartment in Dublin Citywest - Carrigmore Crescent

John1648

Dear Board.ie contributors, here comes a kind request to you to critique such a small investment idea:

I am a cash buyer, looking at buying a property in Dublin for letting purposes. I am looking at the lower end of the budget properties, which seem to me to produce a better yield.

The calculation is like this: 1300 EUR monthly rent, purchase price - 180 000 EUR.

I am currently looking at an apartment in Citywest area (Carrigmore Crescent), 2 mins from LUAS, next to the shopping centre, 1-bedroom, 42 sqm, in pretty good shape, furnished.

Would such rents be realistic, for these apartments? Would it be easy to find tenants in the current market?

Would it too be risky, in the sense that these apartments risk to sit empty in the event of a recession?
I currently reside abroad, so would not pay the PRSI.

My calculations would go like this:

Apartment Rented for 1300 a month.

Rental Income per year 15600.

Expenses:

Mgmt Charges 1050
Letting and property management fees: 1550
Tax advisory costs: 250

Total allowed deductible expenses 2850.
Local property tax: 250
Income: 12750

Income Tax at 20pc (minus the allowance of 1650) is 900; PRSI 0 pc; , USC 0.5 pc is 80

Overall Profit: 15600-1050-250-1550-250-900-80 is 11770.

Does it make sense?

Many thanks!

John

John1648

John1648 wrote: »

Dear Board.ie contributors, here comes a kind request to you to critique such a small investment idea:

I am a cash buyer, looking at buying a property in Dublin for letting purposes. I am looking at the lower end of the budget properties, which seem to me to produce a better yield.

The calculation is like this: 1300 EUR monthly rent, purchase price - 180 000 EUR.

I am currently looking at an apartment in Citywest area (Carrigmore Crescent), 2 mins from LUAS, next to the shopping centre, 1-bedroom, 42 sqm, in pretty good shape, furnished.

Would such rents be realistic, for these apartments? Would it be easy to find tenants in the current market?

Would it too be risky, in the sense that these apartments risk to sit empty in the event of a recession?
I currently reside abroad, so would not pay the PRSI.

My calculations would go like this:

Apartment Rented for 1300 a month.

Rental Income per year 15600.

Expenses:

Mgmt Charges 1050
Letting and property management fees: 1550
Tax advisory costs: 250

Total allowed deductible expenses 2850.
Local property tax: 250
Income: 12750

Income Tax at 20pc (minus the allowance of 1650) is 900; PRSI 0 pc; , USC 0.5 pc is 80

Overall Profit: 15600-1050-250-1550-250-900-80 is 11770.

Does it make sense?

Many thanks!

John

Some tell me to wait a year, as a recession is coming, and prices will go down.

Same was the advice when covid started. Now price went up by 20 000, plus the net lost rent income was approx 12 000.

Can a small saver afford to lose 32 000???

That is the question!

Darc19

Income tax @20% would suggest that you have not much other income?

Most social welfare payments are taken into account for tax purposes.

A one bed is not the greatest investment. I'd look towards Naas and find a two bed which you'll get 1200-1300 and good tenants.

Citywest also has a lot of property in the pipeline, so rents could come under pressure.

John1648

Darc19 wrote: »

Income tax @20% would suggest that you have not much other income?

Most social welfare payments are taken into account for tax purposes.

A one bed is not the greatest investment. I'd look towards Naas and find a two bed which you'll get 1200-1300 and good tenants.

Citywest also has a lot of property in the pipeline, so rents could come under pressure.

For now I have other income but will rely on this rent later on.

I am a very small investor. I have been saving cash for 15 years for retirement.

Now that inflation is coming, I am looking at purchasing a small apartment, to shield myself from loss of USD and EUR purchasing power, inflation, further prices increases, and make a small profit.

Does it make sense to buy in Citywest? Does 1400 eur rent for 1 bedroom seem credible?

I wish I had more money or bought earlier.

Some tell me to wait a year, as a recession is coming, and prices will go down.

Same was the advice when covid started. Now price went up by 20 000, plus the net lost rent income was approx 12 000.

Can a small saver afford to lose 32 000???

That is the question!

Experience_day

Are you trying to convince us or yourself?

Pawwed Rig

Would you consider getting a retirement fund to purchase the property on your behalf and then you can draw an income at the right time.
Much better tax outcomes

Geuze

John1648 wrote: »

Some tell me to wait a year, as a recession is coming, and prices will go down.

There was a sharp COVID recession in 2020.

The recovery is underway now.

You expect another recession, so soon after the 2020 recession?

The US economy is recovering, output, wages and inflation are all rising.

Allinall

John1648 wrote: »

Dear Board.ie contributors, here comes a kind request to you to critique such a small investment idea:

I am a cash buyer, looking at buying a property in Dublin for letting purposes. I am looking at the lower end of the budget properties, which seem to me to produce a better yield.

The calculation is like this: 1300 EUR monthly rent, purchase price - 180 000 EUR.

I am currently looking at an apartment in Citywest area (Carrigmore Crescent), 2 mins from LUAS, next to the shopping centre, 1-bedroom, 42 sqm, in pretty good shape, furnished.

Would such rents be realistic, for these apartments? Would it be easy to find tenants in the current market?

Would it too be risky, in the sense that these apartments risk to sit empty in the event of a recession?
I currently reside abroad, so would not pay the PRSI.

My calculations would go like this:

Apartment Rented for 1300 a month.

Rental Income per year 15600.

Expenses:

Mgmt Charges 1050
Letting and property management fees: 1550
Tax advisory costs: 250

Total allowed deductible expenses 2850.
Local property tax: 250
Income: 12750

Income Tax at 20pc (minus the allowance of 1650) is 900; PRSI 0 pc; , USC 0.5 pc is 80

Overall Profit: 15600-1050-250-1550-250-900-80 is 11770.

Does it make sense?

Many thanks!

John

If you live abroad, you won't receive the tax credit of €1,650.

Also, your calculation of the 20% on €12,750 is €2,550.

You need to allow for vacant periods, so maybe calculate on the basis if 11 months occupancy in a year.

And you have no allowance for repairs- decoration, call-outs for plumbing issues, electrical issues, broken equipment etc.

Caranica

John1648 wrote: »

Does it make sense to buy in Citywest? Does 1400 eur rent for 1 bedroom seem credible?

That rent does absolutely not make sense and won't be sustainable long term. It could drop to closer to half that over time.

Baby01032012

None of above makes sense. Would you not be better off buying a 2 bed in say nearby clondalkin for 180k..rent of €1,300 would be more sustainable there. Im not sure about your tax calc. You would want to be earning 0 for those figures to work. If you have a job your rental income will be taxed on top of that possible at the higher 40% rate plus USC plus prsi. Management & letting fees seem low have you included VAT @23% on top of that, should be about 10% letting & mngt fee plus VAT. You've made no allowance for repairs etc. needed, new applicances etc. You've made no allowance for void periods where apartment empty between rentals or tenants not paying and overholding.

Allinall

OP isn’t living in Ireland.

JimmyVik

What will you do if the tenant decides not to pay the rent.
I know a few landlords who havent been paid rent in over 2 years.
And the worst part. they get fined if they dont maintain the place for the person who isnt paying the rent.

John1648

Allinall wrote: »

If you live abroad, you won't receive the tax credit of €1,650.

Also, your calculation of the 20% on €12,750 is €2,550.

You need to allow for vacant periods, so maybe calculate on the basis if 11 months occupancy in a year.

And you have no allowance for repairs- decoration, call-outs for plumbing issues, electrical issues, broken equipment etc.

In fact these are deductible for tax purposes. See https://www.revenue.ie/en/property/rental-income/irish-rental-income/what-expenses-are-allowed.aspx

Mgmt Charges 1050
Letting and property management fees: 1550
Tax advisory costs: 250

Total allowed deductible expenses 2850.

So the 20% tax is calculated based on 15600 EUR minus the allowed expenses, and minus the tax credit of 1650 EUR.

Also, the non resident landlords are entitled to tax credit of 1650 EUR, see here https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-45/45-01-04.pdf&ved=2ahUKEwinzpGZkdHwAhXbhv0HHURqB48QFjABegQIBhAG&usg=AOvVaw2E63HCDmETeldqg4UHpQr9&cshid=1621268946498

John1648

Experience_day wrote: »

Are you trying to convince us or yourself?

Well, I am looking for criticism of the idea, seeing if I had it wrong on calculations, and assumptions of getting 1400 eur for 1 bedroom apartment

John1648

Pawwed Rig wrote: »

Would you consider getting a retirement fund to purchase the property on your behalf and then you can draw an income at the right time.
Much better tax outcomes

Did not think of such an option actually. How would this work? Would they pass on the rent on monthly basis? Prior to my retirement?

John1648

Geuze wrote: »

There was a sharp COVID recession in 2020.

The recovery is underway now.

You expect another recession, so soon after the 2020 recession?

The US economy is recovering, output, wages and inflation are all rising.

Well, some analysis say that FED only delayed the problems, by issuing even more debt, and pumping liquidity, increasing the M1 monetary mass by 4 times in one year, potentially leading to either - 1. Hyperinflation or. 2 if they increase the funds rates to curtail the inflation - this will crash the markets. If 1 happens, prices for real estate will continue growing at very high rates. If 2 happens, a stock market crash will happen like in 2008, and a new recession, with real estate to tumbles. Odds are high 1 will happen

John1648

Allinall wrote: »

If you live abroad, you won't receive the tax credit of €1,650.

Also, your calculation of the 20% on €12,750 is €2,550.

You need to allow for vacant periods, so maybe calculate on the basis if 11 months occupancy in a year.

And you have no allowance for repairs- decoration, call-outs for plumbing issues, electrical issues, broken equipment etc.

Actually repairs are allowed for tax purposes, see here https://www.revenue.ie/en/property/rental-income/irish-rental-income/what-expenses-are-allowed.aspx

John1648

Allinall wrote: »

OP isn’t living in Ireland.

That is correct

John1648

Caranica wrote: »

That rent does absolutely not make sense and won't be sustainable long term. It could drop to closer to half that over time.

So your analysis is that in Dublin, rents will go down 50% over time?

I.e. not increase with the inflation, but on the opposite, will go down?

Would be interesting to hear other views on this.

John1648

Baby01032012 wrote: »

None of above makes sense. Would you not be better off buying a 2 bed in say nearby clondalkin for 180k..rent of €1,300 would be more sustainable there. Im not sure about your tax calc. You would want to be earning 0 for those figures to work. If you have a job your rental income will be taxed on top of that possible at the higher 40% rate plus USC plus prsi. Management & letting fees seem low have you included VAT @23% on top of that, should be about 10% letting & mngt fee plus VAT. You've made no allowance for repairs etc. needed, new applicances etc. You've made no allowance for void periods where apartment empty between rentals or tenants not paying and overholding.

These figures are all real quotes provided to me by service providers. Incl the Management & letting fees, the management costs for the estate too, which btw are not VAT liable.

Why would clondalkin be better?

I have checked the other adds, and all speak of 1300-1500 EUR for 1 bedroom in the region I refer too. Actually I have not found rents lower than 1300 for 1 bedroom aprts in Dublin, unless we speak of studios or granny houses ...

Sad story for tenants, I agree ...

Was a tenant myself for many years...

JimmyVik

John1648 wrote: »

So your analysis is that in Dublin, rents will go down 50% over time?

I.e. not increase with the inflation, but on the opposite, will go down?

Would be interesting to hear other views on this.

If you are investing and depending on what all of us strangers on the internet are saying to you, I think you need to think about your strategy.
Do your own research. Internet opinions are just that .. opinions.

You need to do hard research of your own. Its a lot of money to put on the line.

John1648

JimmyVik wrote: »

What will you do if the tenant decides not to pay the rent.
I know a few landlords who havent been paid rent in over 2 years.
And the worst part. they get fined if they dont maintain the place for the person who isnt paying the rent.

That is indeed an issue !

Thanks for pointing out to this!

I am afraid this can happen to anyone ... so it is important to chose a diligent, solvent, disciplined tenant, with good morale, and excellent references. I hear queues form of prospective tenants, so it would be possible to choose a good one, if not the best

JimmyVik

John1648 wrote: »

That is indeed an issue !

Thanks for pointing out to this!

I am afraid this can happen to anyone ... so it is important to chose a diligent, solvent, disciplined tenant, with good morale, and excellent references. I hear queues form of prospective tenants, so it would be possible to choose a good one, if not the best

You make it sound so easy

John1648

JimmyVik wrote: »

If you are investing and depending on what all of us strangers on the internet are saying to you, I think you need to think about your strategy.
Do your own research. Internet opinions are just that .. opinions.

You need to do hard research of your own. Its a lot of money to put on the line.

Thank you for this perspective! I am taking it seriously, have researched a lot of other options, looked at 10 different properties, have a solicitor, got tax advice already confirming the above figures.

I am only checking here whether indeed Dublin is such a market where 1 bedroom apt goes for 1400 eur. Nowhere else have I seen this, for apartments costing 160- 190 000 EUR. Yields tend to be very good in Dublin

John1648

P.s.

I have actually first looked at the matter 5 years ago, when I could have bought the same apartments for 80 000. Now they are 180 000.

Back then I was laughed at, being told that NEVER will the prices recover, nor the rents go up again. So that is then a total loss of 160 000 EUR, i.e. 100 000 price difference and 60 000 in lost rent.

Can a small investor allow to lose 160 000 ??!

Lots of regrets in fact ...

But what if prices indeed tumble in one year again like in 2013?

JimmyVik

John1648 wrote: »

Thank you for this perspective! I am taking it seriously, have researched a lot of other options, looked at 10 different properties, have a solicitor, got tax advice already confirming the above figures.

I am only checking here whether indeed Dublin is such a market where 1 bedroom apt goes for 1400 eur. Nowhere else have I seen this, for apartments costing 160- 190 000 EUR. Yields tend to be very good in Dublin

I researched it for 2 years and I live in Dublin. But I just couldnt make the risk/reward work for me.
I have lots of friends who were invested in property. The majority advised against it and are indeed all out of it now.
The risk to a single investor is significant.

Caranica

John1648 wrote: »

So your analysis is that in Dublin, rents will go down 50% over time?

I.e. not increase with the inflation, but on the opposite, will go down?

Would be interesting to hear other views on this.

It's not sustainable. With major pressure on this government to look after tenants and the likelihood that SF will be in government soon, landlords will be crucified.

John1648

Caranica wrote: »

It's not sustainable. With major pressure on this government to look after tenants and the likelihood that SF will be in government soon, landlords will be crucified.

SF in Government soon?

Thanks for the heads up, valid point perhaps ...

If so, prices for apartments will also drop dramatically...
However on other pages here, where landlords gather, the expectations are very different, compated with tenants perspective.

Whom to believe, that is the question ?!

Many tell me to wait a year, as a recession is coming, and prices will go down.

Same was the advice when covid started. Now price went up by 20 000, plus the net lost rent income was approx 12 000.

Can a small saver afford to lose 32 000???

That is the question!

circular flexing

You are taking the best case scenario. You have not accounted for

- repairs
- vacant periods
- over holdings
- non-payment of rent

and other things I have not considered. Also don't forget when you sell the apartment, the CGT will be 33% on any gain.

I was an overseas landlord and I would not recommend it to anyone, it's too stressful and the downside is huge. This is particularly true if you are investing your retirement funds.

circular flexing

John1648 wrote: »

Also, the non resident landlords are entitled to tax credit of 1650 EUR, see here https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-45/45-01-04.pdf&ved=2ahUKEwinzpGZkdHwAhXbhv0HHURqB48QFjABegQIBhAG&usg=AOvVaw2E63HCDmETeldqg4UHpQr9&cshid=1621268946498

You won't get the full 1650, you'll only get a proportion of it.

Pawwed Rig

John1648 wrote: »

Did not think of such an option actually. How would this work? Would they pass on the rent on monthly basis? Prior to my retirement?

The rent would build up within the fund