Saw this thread on Irish Landlord.com,I thought I was relatively unique in wanting to get out of the landlording business but find across the board that many others are also throwing the hat at it.
My reasons were straightforward,no certainty as to what taxes will be introduced next,the level of taxation,uncertainty and concern around knee jerk reactions to rent controls and the insistence of successive Govts that Landlords have to pay to run useless quangos,its a mugs game but I hope that by end of next year there will be one less mug in the game,mine.
interesting; met somebody at a meeting yesterday, amateur landlord trying to sell his properties – taxes the main reason…
as I think I’ve said before on here, tax implications mean private individual can not compete with a fund – typical QIF is tax free gross roll up for 7 years; and for non-Irish investors has no tax liability … You can’t compete with that!
Is that the real reason though? QIF is a pass through so equity holders are liable for the tax all the same. Difference though is a non-resident equity holder isn’t liable for tax here.
Are the main difference between QIFs & REITs and private landlords not the following?
More equity in capital structure so lower interest costs,
Better debt terms - limited repayments provided compliance with specific LTV so cash flow available for taxes,
Most unintended landlords, ourselves included, are impacted by the fact the home loan is a fully amortizing loan.
However, while people say they’ve cash flow negative on their BTL, from an equity position they’re not really. Their annual debt payments (payments excluding interest) are actually increasing their equity in the property. The problem is a REIT has the option to maintain their equity position at a certain maximum threshold (the inverse of the LTV) so doesn’t have the same drain on cash.
I have inspected multiple investment properties over the years and I have been outbid on most of them since I couldn’t buy them at what I considered to be a “reasonable” price that I felt money could be made from. In hindsight I regret some of the places I passed on in 2012/13 but I (and my partners) are quite conservative and we demand that property will “wash it’s face”… a lot of other, newer(?) entrants to the property game seem to feel that it’s ok to subsidize your rental property which I can’t really understand, particularly when interest rates are so low and rents are rather high.
I don’t think that it’s the taxes/requirements etc that will cause the likes of “Jimmy Connors” to sell off his/her property portfolio in Ireland, particularly if any of the property is in Dublin. Guys who overextended (and who might have finally done a calculation on the net yield they are getting) are likely to need/want to sell, but then I have expected that for the last few years and there is no tsunami of properties hitting the market… however if JC wants to sell I will get my cheque book out!
As an aside anecdote, I did see a property that I passed on last year appear back on the market a few weeks ago… I phoned up about it and was told that the owner couldn’t afford to sell for less than 60k above the sale agreed price so they have pulled out of the sale and put it back onto the market to get the price that they need… (crazy since I felt that the SA price was about 50k more than the place was worth!)
Rimbaud, I’m kinda surprised you’re getting out as I thought you had it sussed. I think you generally advised a high yielder in finglas or something which would make sense from a cash flow point of view?
What % would you aim for to make it worth your while?
Residential only from my perspective/interest… one of the guys in the group has invested heavily in commercial (warehouses) on his own behalf and has done very well… maybe residential only was a mistake but that is what the group was set up for!
PRTB registration fees,
daft ad fees,
dustbin fees for multi-unit places,
fire alarm servicing,
legal fees (if/when it goes to it…contracts and/or evictions),
tenants not paying,
I think I typed in a full post before summarising a spreadsheet that I use to evaluate places… whilst it depends upon the exact location I would say steer clear if you are not getting at least 10% gross… 15/18% gross was possible in 2012/13 for some properties.
There was a brief moment in 2012 when Irish property made sense from an investment pov,a decent well fitted well finished 2 bedder apt could be bought in Finglas for 95k with a rent of €1050.
I expected property to remain at that price for a considerable time given the magnitude of the crash,foolish Rimbaud.
The reason I am finishing up with Irish property is the whole uncertainty of the tax treatment Landlords receive,it can change dramatically from budget to budget,the appealing treatment those who invested in sec 23 received form Fianna Fail and the knee jerk reaction from the Labour element in Govt regarding rent control saw me finally throwing the hat at it.
If I were looking at net yield I would want 12 to 15% to make the whole thing worth getting off my arse for given the nature of this rigged game.
We have recently gone sale agreed on our investment property and hopefully the sale goes through. The reasons we decided to get out are increased taxes and difficult taxes. We realized the hassle and stress was not worth any return. The rental market is a mess in Ireland and the PRTB are no help you have bad landlords and bad tenants and really no protection for the party at the other end. We has a tenant stop paying rent then when we served notice report is to the PRTB for substandard accommodation. She made false claims the house was falling down around her it is 10 years old I had replaced the kitchen and all the wooden floors only the year before. She claimed the roof was leaking and she was nearly electrocuted as a result. She would not let any repairmen in when we would send them out. The roof company were able to go up and check the roof and there was no leak. She was so difficult the lady from the PRTB said to use any means necessary to get rid off her even if it meant paying her off. The husband was adamant she wasn’t getting another penny so we kept on calling out and made her life difficult and she left owing us 1000s but at least she was gone. The house was filthy and wrecked and we had no come back or protection. I wouldn’t mind but she was in the property for 6 years and was paying only 950 for a 3 bed semi in north Dublin city we increased the rent to 1050 and gave her 6 months notice in writing and this is when the problems arised even though next door was rented out for 1400. So Fingerscrossed our sale goes through and it will be one less stress in our lives.