Investing in property again ?

Update.....
Investment property bought for cash Jan 2014 (on the no CGT scheme) for 120,000, or 125,000 after costs, currently worth 230,000. Rent 1,700 p/month (HAP). Complete fluke, but I think I timed that purchase very well in terms of the recent property boom.
Plan to sell at the end of the 7 year period (2021) to avoid CGT.
Brendan's concerns about governments future tax treatment of landlords proved to be relevant.....RPZ etc....
I have been using my excess rental income on the rentals to pay down my home loan which has a slightly higher tracker rate, whilst also maintaining the mortgage capital on the rentals to reduce my tax exposure.
Due to the comments on this post I have overcome my fears and started diversifying into equities and bitcoin investments.
 
Thanks for the update. Well done on the successful purchase.

It was not really a fluke, you knew that the rental income justified the cost of the investment. The potential for the capital appreciation was there and the strong rent meant that you could afford to wait. Putting yourself in a position to benefit from an upturn while insulating yourself from a possible downturn, (through the strong rent) is hardly luck.

As a wise poster said.

But this poster knows property and knows Swords, this is his area of expertise, better to invest in yourself than hand your money over to someone else.

It is interesting to note that interest rates have not gone up in the 4 years since the original thread.

Having said all that, Bitcoin ? seriously ?
 
Thanks for the words of encouragement my wise creamed egg. Yeh the rental yield was always looking strong, but as for capital appreciation that was never certain.
As for bitcoin.....I am trying to diversify out of Fiat currencies and slowly accumulating gold, silver and bitcoin.
 
Thanks for the words of encouragement my wise creamed egg. Yeh the rental yield was always looking strong, but as for capital appreciation that was never certain.
As for bitcoin.....I am trying to diversify out of Fiat currencies and slowly accumulating gold, silver and bitcoin.

have you ever owned a BTL which was a distance away from where you live , i.e , two hours drive ?
 
ive come across a dirt cheap terraced house in limerick , the estate agent who sold my old apartment in limerick ( sale price 165 k ) contacted me about it , they had it sale agreed to a guy who turned out to have no money and messed them all around , 75 k for 60 sqr metre two up two down , the catch is , the area flooded in 2014 though this one escaped

tempting but its ninety minutes away ( vacant possession ) , the RAS scheme does appeal to me for these kind of houses in traditionally social housing locations , would still allow me a significant equity portfolio and no debt
 
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Hi Galway_Blow_In....

location, location, location I believe the old adage goes. If the area close by flooded in 2014, it may be located close to O'Callaghan or Clancy Strand (north of the river) or near Lee Estate / St. Mary's park (south of the river). There will typically be a significant price differential between these two areas despite the close geographic proximity. I can confirm based on recent experience that there is significant demand for rentals both in and close to the city centre.

Again, based on experience, managing BTLs remotely presents all kinds of challenges. However, the main gripe I have is should you self-manage this unit, your travel time and costs are not currently recognised as deducible expenses by revenue. Would you consider appointing a local management agent, depending on your prospective catchment tenant.
 
Hi Galway_Blow_In....

location, location, location I believe the old adage goes. If the area close by flooded in 2014, it may be located close to O'Callaghan Strand (north of the river) or near Lee Estate / St. Mary's park (south of the river). There will typically be a significant price differential between these two areas despite the close geographic proximity. I can confirm based on recent experience that there is significant demand for rentals both in and close to the city centre.

Again, based on experience, managing BTLs remotely presents all kinds of challenges. However, the main gripe I have is should you self-manage this unit, your travel time and costs are not currently recognised as deducible expenses by revenue. Would you consider appointing a local management agent, depending on your prospective catchment tenant.

were i to buy , i would go the RAS route and enter into a ten year lease with the local authority , at a cost of 80 k including solicitors fees and stamp duty , id settle for 600 euro per month

the property is in none of those areas you outline but not far from any of them , its not an estate but a street close to king johns castle , the property needs nothing much spent on it , no furniture in it mind you
 
I would agree with Alistair regarding the loacation.....there is a reason why it's such a bargain!!!! The locals won't go near it. I am not too familiar with the RAS scheme. Will they manage it for the 10 years? If not you have to REALLY TRUST an agent. I personally am a control freak to be honest and could never allow anyone else to manage my properties. Selecting the right tenants in the first place is even more important. What was the previous rent? Is it in a RPZ? Can you get insurance on it if it had flooding issues previously.
 
I would agree with Alistair regarding the loacation.....there is a reason why it's such a bargain!!!! The locals won't go near it. I am not too familiar with the RAS scheme. Will they manage it for the 10 years? If not you have to REALLY TRUST an agent. I personally am a control freak to be honest and could never allow anyone else to manage my properties. Selecting the right tenants in the first place is even more important. What was the previous rent? Is it in a RPZ? Can you get insurance on it if it had flooding issues previously.

yes i have gotten an insurance quote

i dont mind signing up to a lease with the local authority for a below market rate as it eliminates the hassle of managing a place ninety minutes away

remedial work - flood prevention work has been carried out in the area , i realise there are no guarentees in this regard , the price is what it is due to the flood risk

my attitude would be that entering into a long term lease with the local authority would be similar to owning a commercial property where the sitting tenant has a long term lease , i would have very little dealings with the house , the way the state has become so iterferring in matters housing , i really dot see that big of an issue with them being in control of a house belonging to me , its a relatively small capital spend with no borrowings

i might not go through with it at all but i am seriously considering it
 
Sorry still unclear. Will RAS both manage and pay for all repairs for the 10 years?
 
Sorry still unclear. Will RAS both manage and pay for all repairs for the 10 years?

if i were to buy it and if i were to enter into a lease agreement with the local authority , i understand they cover maintainence for the ten year period but a contract would have to be drawn between the council and house owner so as this is underlined in writing , not sure if the house owner must pay home insurance

can you appreciate the point of view that a location with a history ( flooding ) or reputation ( its close to problematic estates ) can present an opportunity to create better than average returns due to the low entry point ? , you dont have to love every house you own
 
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just to be clear , what im talking about is not the RAS scheme as i incorrectly stated earlier , its a relatively new scheme where the local authority lease houses from private owners over the long term ( 10 t0 20 years ) , i would still have to pay the home insurance and cover "structural " repair however from reading further on the local government site , like i said earlier , on a purchase price of 75 k for a 65 sqr metre house , id be content with 600 per month into my pocket if thats what it came to
 
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Do you have a link for that scheme. Sounds interesting.

let me dig one out if i can , ive emailed them to see if structural maintainence doesnt include internal painting or replacement of furniture , its one thing having to do replace slates on the roof which wouldnt be often but replacing fridges or sofas is another

rent is 80% of market rate but its possible the local authority gauge market rate by the cheapest in the area rather than the average , all these issues would be important when signing up to a lease
 
Landlords paying 73% tax are selling up , - homeless situation to get much worse unless major changes in the budget. Brilliant article by Robert Lawson.

Tackle the rent crisis? Stop overtaxing and over-regulating landlords

Ahead of next week’s budget Government should see private landlords as part of the housing solution, not the problem

Robert Lawson

Record low: currently there are only 1,062 units available to rent in Dublin city, the lowest level on record.


In recent years the topic of rents and the housing crisis has come to the fore, with many people holding strong views on the subject. The one thing that is evident is that Government policy is not working. That can be seen in the increase in Dublin rents by 22 per cent in just three years.

It is however also worth noting that compared to 10 years ago, rents are just 10 per cent higher today. While over the same period, electricity prices have increased by about 22per cent and car insurance by 61per cent.

It may seem strange to say, but fixing the rental crisis is actually rather straightforward. The level of rent, like any other commodity, is predominately determined by supply and demand.

Private investors

Currently there are only 1,062 units available to rent in Dublin city. This is the lowest level on record; the number of properties available to rent has fallen every year since 2009. Simultaneously, the total stock of rented properties has been falling. According to the census, the number of private rented dwellings in Dublin in 2011 was 116,935, while in 2016 it was 114,462, a decline of more than 2 per cent. This has been reflected in our figures with 32 per cent of our sales disposals of investment properties, while only 10 per cent of purchasers buying property from us are investors. Private investors are leaving the Dublin market.

In understanding the solution to the crisis, it is important to first understand that private landlords supply 69 per cent of the rental stock in the country. Given that private landlords are by far the largest supplier of rental property in the State they hold the key to solving the crisis.

Why have landlords been exiting the market in such large numbers since 2009? The answer is Government policy. In recent years the Government has introduced the following measures:

- Household charge (now called property tax)

- NPPR tax (now called property tax)

- Property tax

- Water charges (currently on hold)

- USC and PRSI on rental income

- Reduction of mortgage interest relief from 100 per cent to 80 per cent

- 4 per cent rent cap denies landlords the right to charge market rent. When rents fell by 26 per cent between the end of 2007 and 2011 no one was suggesting capping falling rents at 4 per cent annually – another example of a one-sided system

- Penal tax rates – the effective income tax rate is 73per cent

- Lack of control over your most valuable asset, such as Part 4 leases, giving the tenant the right to stay in the property for six years

- Proposals to not allow landlords to hold their own deposits

So in short, landlords are over-regulated, overtaxed with an ever-reducing level of control over their most valuable asset.

It is also worth pointing out that the Government only built 247 social housing units nationwide in 2016 and only bought 1,397 units in the same period. It appears that rather than invest in social housing, the Government’s solution is to try and take over private landlords’ property by stealth.

Landlords are now saying enough is enough; they are selling up. Remember it is the landlord’s name on the title deeds, their name on the 20-30-year mortgage; it is they that the banks will pursue should the mortgage not be paid. In short, they are taking all the risk. And if the risk versus return is not acceptable, people will invest their money elsewhere, such as in property reits.

All of the above adds up to an assault on the largest supplier of rental property in the State, the private landlord.

It would seem that the Government is reluctant to be seen to encourage landlords back into the market, rather than understanding that landlords are part of the solution, not the problem.

Next week’s budget provides the Government with an opportunity to introduce the following policies:

Reduce the tax/income burden

- Reintroduce 100 per cent mortgage interest relief in this budget, rather than phasing it in over the next four years (this alone will bring the effective income tax rate to just under 60 per cent).

Remove USC and PRSI on rent.

- Allow the market to find its own level. Remove the 4 per cent rent cap.

Stop eroding landlords’ control of their properties

- Roll back on policies and proposals that seek to prevent landlords accessing their properties.

The market reacts very quickly to new policy incentives as we saw most recently with the capital gains tax exemption introduced in December 2011. If these polices were introduced, significantly more landlords would be enticed to enter the market, supply would increase and as a result within six months we would have made significant inroads into solving the rental crisis.
 
Great article.... unfortunately a landlord could only dream of getting half of those policies put in place.
 
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