Possible property investment

S

sull08

Guest
Dear All,
I’ve been looking at the property market over the previous few months and in particular the distressed auctions of which there’ll be plenty more. As far as I can see for certain types of real estate in certain areas the rental yields are getting up to and over 8%.
I recently bought an apartment for cash and am benefiting from a 9% rental yield and have enough cash to buy another one now. Ideally I’d like to put a 20% deposit down on a further 5 and use the rental income on 6 apartments to pay off the mortgage on 5. I know about ‘putting all your eggs in one basket’ and the doom and gloom merchants however I think the idea is workable. Alternatively I could increase the deposit on each property and reduce the number of apartments purchased.
The only issue is getting the finance for this – I can put the current apartment up as collateral however can anyone advise where to get such finance if at all? From a financial point of view I have a well paying and secure job overseas.
Thanks
Eoghan
 
As you are a first time poster, I have moved this thread into the correct forum.

Please read the Posting Guidelines and the Forum titles before posting again.

Brendan
 
I'm a regular poster and cannot see where this has been moved to Brendan.
 
Thing to note if thinking of buying property as an investment to rent out.

There are a few rumours out there on the net about rental allowance for social welfare recipients being reduced in the next Budget. If this was to happen, it is likely to drive down rental prices.

Also some talk of maybe mortgage interest relief for landlords being reduced further in future, with even total scrapping of in the future. This sort of stuff would greatly affect your returns.

Something to bear in mind.
 
Yes there are a few items that could easily reduce the returns. However I think the main difficulty is finding someone to give you the finance for it - a few years ago they were hounding you!
 
Hi Sull08

I don't think your idea is a good one.

You are making the classic mistake made by so many in the 'boom' years ie buying lots of property and using the rent to pay the loans and using the ones bought earlier as collatoral for further apartment purchases.
Yes the yield is very good on the one you have - well done on that. But if you buy so many you are increasing the risk, what happens if 3 of them are empty at the same time for 2 or 3 months? What happens if one of them is flooded and is out of action for 3 months and then needs expensive renovations? What happens if the govt. changes the tax laws to increase your tax liability - the Labour party included such an idea in their pre-election manifesto.
In that case your plan could fail ie you could end up not being able to pay your 5 mortgages from your rental income / salary.

Ultimately I am saying that you are being too ambitious - you are taking too much risk by buying so many.
I was in your position ie had an apt. mortgage free that I rented out and got good money for. I then bought a second and have all sorts of problems with it for the last 3 years - I hugely regret taking that second one.
 
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