Residential Property is Still a Great Investment
There has been a lot of media coverage in recent years regarding the number of private landlords that are leaving the residential rental market. Figures from the Residential Tenancies Board has shown a steady decline in the number of tenancies registered, from almost 320,000 in 2016 to 276,000 tenancies at the end of 2021. There are numerous reasons for this exodus.
One of the main reasons is that many small landlords who bought an investment property in the years 2000 -2008 found that property was in negative equity after the collapse of house prices in 2009/10. Only in recent years did values rise enough which put them in a position where they could sell. l. Secondly, for many the market has become over regulated, and many small landlords just don’t want the hassle of this type of investment.
Thirdly, for many landlords who may have sizeable mortgages on their investment property they find that they still need to contribute towards the mortgage repayment because their after-tax rental income doesn’t cover the repayment.
Despite these issues acquiring a property for rental purposes is still a very attractive investment particularly if you can acquire one for cash or with a relatively small mortgage. For example, if we take a typical small two-bedroom house or apartment which can be purchased for €190,000, this type of property will generally rent now for around €1,200 per month or €14,400 per annum. That is a gross return of 7.5%. Now of course there are costs involved. The purchase price for the house might be €190,000 but after stamp duty (1%), survey and solicitor fees then your actual purchase price would be around €197,000. From the rental income you will have to pay property tax (€90), insurance or management fees plus some annual maintenance such as repairs or replacement of an appliance then your net rental income could be closer to €12,500p.a. This is still a net return before tax of 6.34% which compares very favourably for example to a yield of 2.9% from a 10 Year Irish Government Bond. There is also the added attractiveness of potential price increases over the long term. As we know all too well in this country property prices go up and down but over the long-term property prices have always trended upwards which is the potential bonus when you eventually sell.
If you like the idea of having an investment property but don’t want the hassle this is where we can help you.
Not only can you avail of our expertise to acquire property that will provide an attractive return on investment we can also manage the letting for you.
We will market the property, vet the tenant, deal with the RTB and manage the property going forward, you won’t have any contact with the tenant.
If this service maybe of interest to you, please feel free to give us a call on 051-330465 or email me directly at barryherterich@propertypartners.ie