Property Investment in Dublin

RIAD_BSC said:
. If, as it sounds, you are buying it purely in the hope that its capital value will rise in future, then that's not investment at all, it is speculation, pure and simple.

An investment is something that gives you a regular income. Speculation (which many people mistook for investment during the boom) is about rising and falling capital values.
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Hi RIAD_BSC.

I understand the points you are making and agree with your definitions. However, without the potential for capital appreciation, is purchasing investment properties a waste of time for the small-time investor/speculator? The reason I am asking is that I spoke to my father-in-law about this over the weekend. He had a number of properties that he sold circa 2004/2005 and said to me that apart from the capital appreciation he enjoyed, he was hard pushed to make any money at all from property given the work involved. Tenants leaving a house in a state, non-payment of rent, furniture being replaced etc etc. I would be interested from seasoned property inverstors such as Oldnick to reply here if they could.....if you ruled out any potential capital appreciation, all things considered, is property investment worth it for a small time investor (ie someone who still works at something else and does not benefit from economies of scale as someone owning say 50 properties)

Thanks,
Firefly.
 
Firefly - I envy your dad-in-law who sold at peak prices. Actually I hate and curse him and anyone else who has done better than me in the property business-in fact ,anyone who has done better than me. I confess that by 2005 I was speculating rather than investing. Now I am concentrating purely on obtaining a renatl living and am trying to ignore the property price.
(well, my wife tells me to ignore property prices but I can't I can't)


RIAD's comment about property purchasing in order to make money is speculating rather than investing is pretty accurate- but only in hindsight. Until the last decade property was better or as good as any investment -shares, gold, paintings etc.
By RIAD's definition there is no such thing as an investment - bank interest rates go up and down, govnt bonds are liable to political upheavals.

(Incidentally - almost any investment/speculation profit is subject to CGT except property for the next seven yrs)

But you asked about whether there is money to be made from renting ...

Yes and No. YES -if you buy an newish apt in city-centre-ish. (an even better yield if you buy a few together) .
Getting good references or knowing the tenant helps enormously.
If your property is new there shouldn't be problems with things falling apart and tenants complaining, so you can work full-time and you don't need a mngt company"to look after it".

NO - If you buy something that needs repairs/upkeep, whether an apt or house. Even a house in top condition usually has a garden that tenants neglect and needs a lot of painting and refurbishing periodically.(so does an apt but that's easy-peasy).
A house rarely yields more than 5%. Don't buy a house as a rental investment unless you have spare time and/or like DIY -or you buy several and have a couple of guys to look after them - or are an ex-builder a few of whom with money left are buying rental proeprties as an income - source-cum-job )

Rental yields are good based on the present value of property. When your dad-in-law sold at the crazy high prices of six yrs ago the yield was obviously much lower than now, so he did the right thing for two reasons - good selling prices and lousy rental yield.

Today, Dublin apts prices are nearly 60% down but rents only 20% lower and slowly increasing. You've probably read that there's a good number of cash buyers buying properties now for their rental yield.
Are they right? Who knows ? And I do mean who knows ?


Last note - thepropertypin.ie posters are addicted with the property market and I'm convinced that their morbid fascination with property price falls is combined with a desire to find a good deal.
 
Thanks for that Oldnick. FIL did well alright....not much to do with feel for the market...was up enough as it was and was planning on retiring anyway.

A newish city centre apt is what I would be looking at alright...probably sometime next year. A concern I would have though is that a property tax plus a maintenance fee might make it difficult to sell at a profit in the future...
 
Yes -I confess the uncertainty is a drag, though this is true nowadays of anything -shares, gold, overseas proeprty,currency trading- the future of Europe. It is all so uncertain.

Property taxes on small properties worry me less than potential anti-landlord actions by government due to this never ending perception that landlordsd are bad,greedy and undeserving of anything . Thus, there may be more burdens (like PRTB,NPPR, BES etc) down the line, interest relief may diminish. Those are my worries.

If you do go ahead ask yourself - could you live in the apt,.If you have kids would they be comfy there if they wanted a city-centre pad. It's like any product and sales appeal - if it appeals at first sight it really does help rental. Central, new, -no noise from road and a balcony helps.

Good luck

P.S. I do hope you understood my comments on your FIL were a self-deprecating parody of me and so many others who became ,and still are, a bit too obsessive about property.
Oh, it's Thursday -better dash to get the I.Times today; love that property supplement)
 
Thanks for that Oldnick. The apt would be primarliy for investment purposes. We would have romantic notions of using it ourselves in the future as the best shows/plays etc are in Dublin. If any of our kids wanted to go to 3rd level in Dublin it would fit that bill too. Primary objective though would be to provide a pension in the form of rental income but also the ability to sell should the money be required for expensive, emergency situations (God forbid).

The FIL didn't get it 100% right you'll be glad to know...held onto some sites he had....the power of the "land" :p
 
oldnick said:
Yes -I confess the uncertainty is a drag, though this is true nowadays of anything -shares, gold, overseas proeprty,currency trading- the future of Europe. It is all so uncertain.
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Very true. But almost any type of investment carries risk. It's very hard to know what will happen. Surely if things get bad enough someone will start WW3 in order to kickstart the global economy again :)

oldnick said:
Property taxes on small properties worry me less than potential anti-landlord actions by government due to this never ending perception that landlordsd are bad,greedy and undeserving of anything.
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I kind of feel the same way too. While increasing property taxes are certainly a concern I do wonder what's going to happen there in the longer term. Because the property tax applies to virtually all private property I suspect that they will simply push up the general cost of living in Ireland and rents will rise in line with the taxes over time as landlords attempt to pass on this extra tax. Obviously, market conditions will dictate how successful landlords will be at doing this but you can be damn sure everyone is going to try it.

The targeted landlord taxes are a bigger concern. Landlords probably are greedy though, lets be honest. The perception that landlords are all "rich" is probably less true. I have no doubts that many boomtime landlords these days may have collective debt that is significantly larger than the combined value of their properties.
 
oldnick said:
Property taxes on small properties worry me less than potential anti-landlord actions by government due to this never ending perception that landlordsd are bad,greedy and undeserving of anything . Thus, there may be more burdens (like PRTB,NPPR, BES etc) down the line, interest relief may diminish. Those are my worries.
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That's what I worry about too. Also agree with all your other comments if that's of help to Firefly. In addition I too bought in 2005 but the rent is good so even though it's in negative equity (I presume) it doesn't matter. Other half asked me the other day should we have sold, and in hindsight yes but hindsight is great and what would we do with the money? Bank shares, gold ! My long term aim is an income when employment income has ceased.

One thing to watch out for, I don't think Oldnick mentioned it, the newer apartments make sure you check that it was well built, I have a feeling that Priory hall is only the tip of the iceberg. Don't be relying on old certificates, good money should be spent on the best engineer with insurance, make sure you have come back. And check how well the management of the building is conducted.
 
-Excellent point ,Bronte, about checking new build which I had not mentioned. I don't know what Irish TV programmes you watch in your foreign exile, but there was a Prime Time programme the other day which shocked me. Maybe tens of thousands of new properties could be affected.
 
Thanks Oldnick, very interested in that, my OH is good at getting downloads from the RTE website.

In relation to your own experience of Dublin apartments, do you avoid those with management companies and sinking funds? I'd be interested in your experience of those.

Referring to property supplements, I saw last weeks Independant, my goodness the prices for Allsopps but also new homes just outside Athlone and some fine properties in Dublin were surprising, very strong yields in Dublin as you mentioned, and meanwhile headline pieces with mention of property prices stablising etc. Things are very tough out there. I was down a City High street recently and it's shocking.
 
I have a small building in city centre with four apts and a shop. Due to the fact i live in Dublin and am bored I decided that I'd do mngt and basic maintenance myself.

It saves money but it does mean I get bothered a few times a year.("heating not working" "water pressure is v.low" ) These are small things and I pop down and attend to them or if I can't I ring my plumber or sparks friends.

I've good relations with tenants -only one change of tenants in five years - and we've reached the stage where they'll fix small things themselves now and knock it off the rent.( "shower head/microwave broken", "door jammed", ).

I know that few people like to get so involved whetehr it's painting, cleaning the common area - perhaps the worst thing is when sewage drains are blocked. But rather than pay dynorod several hundred euro it's satisfying to unblock them oneself (strangley, my wife doesn't share my enthusiasm for unblocking sewers).

The point I'm making ,I suppose, is that my income is maximised by not using a mgt company who may not care too much about the costs of getting things repaired. Plus I am occupied -useful for an active older chap.

I have a couple of houses miles away ;big mistake -low yield. I'm hoping to sell them and get at least one more city centre apt.

So, my experience of Dublin city centre apts is not usual -most of my friends have one,two or three apts in large blocks with mngt companies deducting large fees. On the other hand my friends do no work and don't get involved.
 
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