Possible first time landlord, costs?

M

mmurph85

Registered User
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I have a house in Dublin that is currently sitting empty. I do not live or work in Ireland. I'm thinking of either selling or renting it. Can someone look over these figures and see if I'm correct or missing something? I really don't want the headache of being a landlord but the extra income could really be used.

Rental Income: €22,200.00

Expenses:
Insurance €1,000.00
Light/Heating €2,000.00
RTB Reg €90.00
Property Management €2,220.00
Repairs €1,500.00
Total: €6,810.00
Total taxable: €15,390.00

Tax @ 20% €3,078.00
PRSI @ 5% €769.50
USC @ 0.5% €76.95
Total Tax: €3,924.45
Net Income: €11,465.55
PRT €400.00
Accountant €750.00
Total: €1,150.00
Total Net Income: €10,315.55
 
You can also claim capital outlay at 12.5% over 8 years. This is money you spend on fitting out the house and purchase of white goods. If you are not living in Ireland you would be classed as a Non Resident Landlord and the tenants are supposed to deduct 20% from the rent and pay it to revenue. I think you could also appoint a collection agent and he would do the same. If you are not resident in Ireland I don't think you have to pay the PRSI.
 
No mortgage on the property?

Any idea what it is worth so you can calculate the yield and compare to paying off other loans or potentially investing the money in the stock market and getting headache free returns there?
 
Thanks for the info. There is no mortgage and value of the house would be around €300k. Looking at similar properties they are getting between €1700-€1900 rent a month. I am lucky that currently I don't have any outstanding loans and a very small amount of debt.
 
Personally i'd sell it. In my humble opinion people having a one off property to rent are going to find it difficult to make anything out of it and be trouble free, never mind the fact that you're not even in the country. You'll be using an agency to find a client, manage it and deal with what crops up along the way,. Be prepared for some late night phone calls, unless you get lucky. Then there's the money end of it, along with bills and rules and regs you'll have to abide by. Not everyone will agree but believe me, collect your €300,000.00, these are quare times.
 
mmurph85 said:
Thanks for the info. There is no mortgage and value of the house would be around €300k. Looking at similar properties they are getting between €1700-€1900 rent a month. I am lucky that currently I don't have any outstanding loans and a very small amount of debt.
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So your return from renting (before tax) is around 5%. A few years ago you could rely on seeing a decent chunk of capital appreciation on top of that, but depending on your view of the Irish property market and the location of the property, I wouldn’t be banking on it now.

5% is quite achievable by investing that money in funds (like Vanguard’s) or ETFs, assuming you are happy to buy and forget, not stress over the ups and downs. Maybe look into doing so via your pension as there could be healthy tax breaks for doing so depending on where you live.

Personally I would sell it.
 
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Zenith63 said:
So your return from renting (before tax) is around 5%. A few years ago you could rely on seeing a decent chunk of capital appreciation on top of that, but depending on your view of the Irish property market and the location of the property, I wouldn’t be banking on it now.
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The tax treatment of non-resident landlords is pretty generous though. It's unlikely that the OP would get the same tax treatment if it was invested in an ETF.

Long run, most people I know get tired of being a one-property landlord, especially in a property they don't wish to return to. There are much less stressful ways of investing, even if the return is good.
 
You problem isn't return its risk. If you get a bad tenant and they don't pay rent and do 10k damage to the house. There very little you can do. Is the return worth that risk.
 
Zenith63 said:
So your return from renting (before tax) is around 5%. A few years ago you could rely on seeing a decent chunk of capital appreciation on top of that, but depending on your view of the Irish property market and the location of the property, I wouldn’t be banking on it now.

5% is quite achievable by investing that money in funds (like Vanguard’s) or ETFs, assuming you are happy to buy and forget, not stress over the ups and downs. Maybe look into doing so via your pension as there could be healthy tax breaks for doing so depending on where you live.

Personally I would sell it.
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I feel this property has appreciated to the max and the only way for it to go is downward so around about now is to me the best point to sell if I'm going to do it. The idea of having a semi passive income coming in is very appealing, especially when the cost of living where I am is substantially lower than Dublin.

With these funds I assume you're talking about locking the money up for a long time? E.g 10/20 years? Right now I'm pretty risk averse.
 
Hi, first time poster and have a question that is related to this thread.

What would be reasonable and is the market average with regard to % of rent paid to a letting agent to manage a property in terms of initial placement of tenant and on going management?

Would both of these be deductible for tax or just the monthly management fee?
 
Risk Reversal said:
Hi, first time poster and have a question that is related to this thread.

What would be reasonable and is the market average with regard to % of rent paid to a letting agent to manage a property in terms of initial placement of tenant and on going management?

Would both of these be deductible for tax or just the monthly management fee?
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It's either a month's rent or 10%, they probably won't charge a fee for finding the tenant if they are managing going forward ?

Yes I'm pretty sure those expenses are tax deductible
 
Irish property investment is not for me and won't be until the tax burden is lessened, Govt needs to appreciate the risk investors take in order to offer accommodation to its citizens.

Reward is inadequate.

Bad tenants are there more than ever, they know the system is weighted towards them, in my view you rent at your peril, protect yourself as much as possible if you are certain this is for you, it just might work but if it doesn't work you will get a roasting.
 
Risk Reversal said:
Hi, first time poster and have a question that is related to this thread.

What would be reasonable and is the market average with regard to % of rent paid to a letting agent to manage a property in terms of initial placement of tenant and on going management?

Would both of these be deductible for tax or just the monthly management fee?
Click to expand...

I got a few quotes a couple of years ago and most of them were 4% for rent collection and 4% for management fee (so about 1 mont rent).
 
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