Value = Rent per month x 200

I saw this real estate rule on a blog from the States,
Poster writes never pay more than 200 times monthly rent
for a property, “if the surrounding area can’t support a rent of
(purchase price divided by 200) then keep walking.”
He also points out this is the absolute most to pay.
This works out at around (yearly rent x 17) and I feel this could
be a good place to start with the Irish market, it’s a bit more
than the 14 times but the extra takes in to account that unique
Irish condition of being Delusionnial! (Delusional Denial Disorder)
To Rent: 3 Bed, 2 Bath €1150 daft.ie/2852037
To Buy: 3 Bed, 2 Bath 420k daft.ie/1498824
Using the rule this house should be 230,000 or is it me who’s Delusionnial!
There may be a lot of things that Americans are not from a European perspective
but when it comes down to it they are a very pragmatic people.

Hmmm, whilst the concept is something I agree with (I go by yield - same thing), never take your figures directly from the states.
There are very different cost criteria over there e.g. much higher interest rates, in addition to serious property taxes etc).

This is true, but I think it’s only a matter of time (2,3 years) before Irish banks
are charging 5,6% interest rates regardless of the ECB and we may have a
property tax too €400-800. In wealthy US suburbs it’s 10-20k but most home
owners pay between $1500-3000 articles.moneycentral.msn.com/Taxes/Advice/PropertyTaxesWhereDoesYourStateRank.aspx

200 times monthy rent is a 6% gross yield. Hardly value given the risks of residential investment here.

And the main risk for the next few years is going to be the government and council search for income. Particularly income that lets the country remain nominally ‘low tax’ ( :laughing: as if), so tax that affects owners directly and not occupiers (i.e. renters).

I think you have to shove rental income uncertainty up there too. A sole 1% increase in asking prices does not a recovery make.

But then again, surely the landlords will simply increase the rents to cover the increased costs :stuck_out_tongue:

There are a few differences.
Population density and available land.
Road infrastructure
Replacement value of structure

The first 2 make it difficult for sellers to raise prices in the US. A buyer has too many options. They can use a different highway to work and live in an indentikit neighbourhood 20 miles away. Here there are less alternative negotiating positions for a buyer. Either live on the dart or take your chances on the 1,248 red lights you meet while driving.

It is very cheap to rebuild a house in most states. They are usually on their own plot. In the southern states a dwelling only has a lifetime of a decade or two.
So your dream home can be built on a plot down the road.

So the 200 might be too low for here. But then again it is a max.

What would be an acceptable gross yield “given the risks” for this middle of the road semi-d in D.18 and what would be the resulting target purchase price?
3 Bed, 1 Bath 420k daft.ie/1498824

Tradtionallty gross yields on resdential where in excess of 8%. That implies another 25% to go on property if that is the level.

That 25 year paint is a bit of a waste of time then :unamused: :unamused:
Where the hell did you hear that?

:open_mouth:

There are buildings here in Chicago that survived the great fire.

Water Tower place? Two buildings! :laughing:

Duh!!!
Everyone knows it was the Sears Tower ya egit :mrgreen:

It’s a bit worse than that. Long term:
150 is considered good value. 8% yield
200 is considered bad value. 6% yield
Property in Ireland is currently circa 350. 3.5% yield So it’s still outrageously bad value.

So no your not delusional; Sellers and EAs are the delusional ones.

A lot done, more to do (to quote Irishrail). 50% drop still required.