KeenToLearn
Registered User
- Messages
- 9
Hello,
I am trying to understand the maths behind deciding if a property, an apartment in particular can provide a ROI. I will present some fictional figures below as an example to show my understanding or lack of it.
Id appreciate comments on my approach and understanding of the method.
I realise it may not be possible to get a BLT mortgage with a 10% deposit from any bank now, and that there is alot of risk attached to a highly geared approach to property investment.
CAPITAL COSTS
Property Cost €100,000
Stamp Duty 1% €1,000
Legal Fees €2,500
Building Survey €500
BER Survey €700
Furniture €2,500
Investment Total €107,200
Gross Rent/month €950
Gross Rent/Year - 11 months occupancy €10,450
Gross Yield 9.75%
ANNUAL TAX DEDUCTIBLE COSTS
PRTB (Private Residential Tenancies Board) €90
NPPR (Non Principal Private Residence) €200
Insurance Costs €500
Development Service Costs €750
Property Management Company Fees €950
Household Charges €500
Repairs €500
Total Annual Costs €3,490
Net Annual Income pre Mortgage €6,960 Net Yield 6.49%
TAX DUE
Net Annual Income pre Mortgage €6,960
Interest Relief for first 10 years (75% of 4,000) €3,000
Taxable Income €3,960
Tax Due 42% of Taxable Income €1,663.20
USC 7% of Gross Income €732
PRSI 4% of Taxable Income €158.40
Local Property Tax (100-150k Range) €225
Total Tax Due €2,778.10
CASH FLOW
Net Annual Income pre Mortgage +€6,960
Annual Mortgage on €90,000 @€570 month -€6,840
Tax Due -€2,778.10
NET CASH FLOW -€2,658
Fixed Cost if vacant for a year €9,830
I am trying to understand the maths behind deciding if a property, an apartment in particular can provide a ROI. I will present some fictional figures below as an example to show my understanding or lack of it.
Id appreciate comments on my approach and understanding of the method.
I realise it may not be possible to get a BLT mortgage with a 10% deposit from any bank now, and that there is alot of risk attached to a highly geared approach to property investment.
CAPITAL COSTS
Property Cost €100,000
Stamp Duty 1% €1,000
Legal Fees €2,500
Building Survey €500
BER Survey €700
Furniture €2,500
Investment Total €107,200
Gross Rent/month €950
Gross Rent/Year - 11 months occupancy €10,450
Gross Yield 9.75%
ANNUAL TAX DEDUCTIBLE COSTS
PRTB (Private Residential Tenancies Board) €90
NPPR (Non Principal Private Residence) €200
Insurance Costs €500
Development Service Costs €750
Property Management Company Fees €950
Household Charges €500
Repairs €500
Total Annual Costs €3,490
Net Annual Income pre Mortgage €6,960 Net Yield 6.49%
TAX DUE
Net Annual Income pre Mortgage €6,960
Interest Relief for first 10 years (75% of 4,000) €3,000
Taxable Income €3,960
Tax Due 42% of Taxable Income €1,663.20
USC 7% of Gross Income €732
PRSI 4% of Taxable Income €158.40
Local Property Tax (100-150k Range) €225
Total Tax Due €2,778.10
CASH FLOW
Net Annual Income pre Mortgage +€6,960
Annual Mortgage on €90,000 @€570 month -€6,840
Tax Due -€2,778.10
NET CASH FLOW -€2,658
Fixed Cost if vacant for a year €9,830