Is buying an apartment to use as a holiday let a good idea?

I am thinking of purchasing a one bedroomed apartment to use as a holiday let. It will be located in Dublin within walking distance of St. Stephens Green. Maybe Leeson Street, Ranelagh, Baggot Street or Ballsbridge areas.
I would put a pull out bed in the sitting room to allow for a third person or children to use.
My investment would be a cash purchase of circa €200k. I would market this property through my own dedicated website plus advertising on sites such as OwnersDirect etc.
I have often rented apartments when travelling abroad rather than use hotels and I notice that in certain cities, well priced apartments let out throughout the year.
Like everything that I do when I got an idea in to my head I cannot see the wood for the trees.

Is this a stupid idea or an O.K. idea. Would I be better off just getting a long term tenant or go for the holiday let and charge a higher premium? I don't mind looking after the place myself, cleaning, linen changes etc

From several points of view I think it is a good idea, but you'll get posters disagreeing.

1) Decent apartments in GOOD LOCATIONS (as per your areas) are yielding 10% gross.there have been many posts on the yield aspect but generally after all costs and before income tax you could get 4% if unlucky and 7% if lucky. (the "luck" aspect being based on tenants payments and any unseen deterioration/repair problem.
4-7% is a very good yield.

I am talking about regular thru-the-year rentals. You are talking about holiday lets.
I have heard that you can get an even bigger yield from holiday-lets , but you must work at it. Advertising,cleaning,sheets,etc.

I have a few city-centre apts and am considering it myself except they are in slightly grottier area than those you listed.

2) We can't speculate on AAM about future property prices . I hope I don't break any rules by stating that ,regardless of big falls in the Dublin apt scene, these are for all apts across all Dublin. City-centre apts have recently stabilised and some have seen a small increase. People want to be in the centre -the better the location the more they want it.

A good investment in my opinion -though I don't know whether bank repossessions or NAMA overhang will impinge on future prices.

Have a look at similar apartments already available on ownersdirect, www.airbnb.com www.vrbo.com and see what their availability is over the next few months.

That should give you some idea of occupancy rates. I would think that Dublin is generally a weekend visit type of place so generally speaking you're then looking at a 50% occupancy at best, you can command a premium for a weekend letting but the downside would be the type of people coming for a weekend might not treat the place as well as someone over for a week, this is totally based on a gut feeling rather than any experience I hasten to add.

With all the hassle involved it all depends on how risk averse you are, I'd think your money might be better off sitting somewhere earning a few quid rather than the hyper-involved scenario you are looking to get into.

Thanks Nick. I was thinking that I might get €60 per night in the winter months, €70 per night in the shoulder months and €80 per night in the summer months. Are these reasonable prices?
The idea being to pitch the prices below the room only prices in the local hotels. So about €6500 over 4 winter months November to February. €6000 for months October, March & April and €11000 over 5 months of summer = €23,500 per annum. I would probably include a once off cleaning fee of €30 per week adding an extra €1500 per annum.
I would also probably do the Ryaniar trick of increasing prices for events, concerts, football matches, Christmas/New Year etc. An approximate yield of 11.5% to 12.5%.
I do not know what the outgoings would be though on heat, electricity, management fees, advertising etc. Stuff I have to learn about.
I realise that no one can get a 52 week rental but by being flexible and taking half a loaf rather than a full loaf a person might get close to it.
As previously mentioned I regularly rent abroad and am happy to pay these kind of prices, sometimes even for a studio apartment, let alone a one bed apartment.

The apartments would need to be on the Aircoach route from the airport and car parking would be a bonus for those people wanting to take a day trip out of Dublin.

It appears that I have missed the boat on a few one beds in the areas mentioned. These were selling below €200k but appear to be creeping over the €200k now.

The Cyprus thing scared me a bit. I don't want to be a fool jumping back in to property though but I don't want to be an idiot either.

Thanks dereko1969. I fully take on board what you are saying and I also agree with your points made. As a regular contributor to Tripadvisor I am often asked about the availability of holiday rentals in Dublin. I think there is room for a few more.
I could ask for a refundable deposit in the event of breakages, lost keys etc. but when I rent abroad I usually try and avoid these "extra" costs. I am even known to look for a waiver of the cleaning fee. So I do not want to put people off by asking for these extras but at the same time I don't want to have those types of people that you mention. Hard to know from an email enquiry the type of person that is going to rent from you.
It might turn out to be a hyper-involved scenario and do I need this at this stage in my life but I have lots of spare time on my hands. Money is presently sitting in An Post savings Bonds/Certs earning me less than 3%.
I don't know.

FWIW,you're going to have to put a huge amount of time and effort into renting out a property by the night or even a few days throughout the year and it's certainly not something you should consider if you have a full-time job doing something else.

You will also rent it out far less often than you think you will. People primarily travel on holiday in the summer months and even in the winter months only at weekends ( how many of those concerts you hope to take advantage of happen on a wet Wednesday in January ? )

And never confuse what you like to do when travelling with what you think the majority of other people like to do.

If I'm going to Dublin or anywhere else as a special occasion I want to include a decent hotel in the mix and anyway, even if it wasn't a special occasion, the 60 to 80 yoyos you're expecting would still find me somewhere reasonable.I can pick up a decent central Dublin 4 star hotel for not much more than that.

So then you're appealing to the cheapo, independent traveller - often a backpacker - and do you really need the hassle of renting out the place for the occasional night for 60 euros before you've cleaned the place and washed the sheets ?

Personally, for a prime location that you're thinking of you'd be much better off with a long-term rental. Why would a family with children want to rent a one-bed in Baggot Street ? What is there to do for a family with children in Baggot Street or the surrounding area ?

And frankly if you've got 200K in cash lying around I'd be more inclined to invest it in upsizing your primary residence to take advantge of low prices and a tax free capital gain.

Or buy a villa somewhere sunny to have a bit of fun.

Is it possible to find out what the management fees are on various blocks of apartments? Is there such a thing as a register or website?

There is another market apart from holiday lets. It applies in most major cities. And that is the short term serviced apartment market. For execs who need a place for a week, a month or two etc. I rented one myself when I sold a property and had a month in between before moving into the newly purchased property. No idea what this market is like in Dublin.

Renting by the night is very tricky and a lot of work, I wouldn't recomment it. (I've experience in the B&B, holiday let and normal letting market).

Tintagel said:

Is it possible to find out what the management fees are on various blocks of apartments? Is there such a thing as a register or website?

Click to expand...

Nothing available, that I know of; and most estate agents selling apartments don't seem to be too bothered about having this, what I consider to be very important information, to hand.

I am looking for an apartment (and have been for the last year) and last Thursday morning, I emailed 8 advertisers on Daft using the Daft "email advertiser" option - to date (now 6 days later) I have had two responses - one EA phone me several hours after the email and one responded on the Friday afternoon. On each occasion I had to ask for the Service charges and in most instances I also had to request the BER rating.

Wahaay said:

FWIW,you're going to have to put a huge amount of time and effort into renting out a property by the night or even a few days throughout the year ?

Click to expand...

A lot of apartments have a minimum weekly rental. I would imagine that you could advertise it as a minimum 3 night let. Anywhere that I have rented usually don't just divide the 7 day rate by 7 to get a nightly rate. They charge almost the same rate for a 5 or 6 night stay as a 7 night stay.

facetious said:

Nothing available, that I know of; and most estate agents selling apartments don't seem to be too bothered about having this, what I consider to be very important information, to hand.

I am looking for an apartment (and have been for the last year) and last Thursday morning, I emailed 8 advertisers on Daft using the Daft "email advertiser" option - to date (now 6 days later) I have had two responses - one EA phone me several hours after the email and one responded on the Friday afternoon. On each occasion I had to ask for the Service charges and in most instances I also had to request the BER rating.

Click to expand...

It would be pretty useless to have a register of management fees as fees are not static, they vary year on year and there isn't necessarily a progression year on year either as sometimes capital projects have to be undertaken and there may not be sufficient money in the sinking fund. Fees could be one thing when the property is advertised and another when sold/let

shesells said:

It would be pretty useless to have a register of management fees as fees are not static, they vary year on year and there isn't necessarily a progression year on year either as sometimes capital projects have to be undertaken and there may not be sufficient money in the sinking fund. Fees could be one thing when the property is advertised and another when sold/let

Click to expand...

.

If one were purchasing it would be nice to have a set of the accounts for say the previous 5 years and also confirmation of the sinking fund and what it is planned to be used for. Is this information not given to prospective purchasers?

Any purchaser (or their solicitor) can download accounts (which include sinking fund balance at the end of the financial year) from the CRO website for a small fee. It would be part of the research you would do before making an offer. I would never trust a vendor to give accurate information, too easy to falsify.

That's really good information Sheshells. (handy for me too as I'm looking at a property currently that has management fees).

Not sure if what you've posted is in the property section of AAM under management fees but it should be to the key post there on purchasing.