What key numbers should considering when investing in a 2 bedroom apartment in Dublin city?
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What key numbers should considering when investing in a 2 bedroom apartment in Dublin city?
What key numbers should considering when investing in a 2 bedroom apartment in Dublin city?
Conor Fitzpatrick
Author: Colin O'Regan
Read Time: 6 mins
What key numbers should considering when investing in a 2 bedroom apartment in Dublin city?
We’ve done the research on the best locations in Dublin and highlighted the important developments that have successfully worked in the past. All that is required is analyse the key numbers to ensure the returns meet requirements.
For example, lets say we wanted to buy a 2 bedroom apartment in the IFSC, Dublin for a purchase price of €350,000. The acquisition costs would be as follows:
Acquisition Costs
Government Stamp duty:
For residential property, it is calculated at 1% of the purchase price up to €1m.
Legal & Ownership Registration fees:
Some solicitors will charge a flat fee while others will charge a percentage of the house price, usually around 1% or 2%. We have budgeted 1.5% plus vat. This would include the solicitors fees and any extra small land registration charges. Note, we do not use a notary in Ireland. The buyer will have a solicitor and the seller will have their own solicitor.
Independent Building Surveyor:
Surveyor’s fees associated with this type of property are typically based on the time it takes to provide the service. Chartered building surveyors do not typically estimate their fee as a percentage of the property value. They factor in travel time to and from the property, the number of hours spent on the site, and the time spent drafting and finalising the report. It is not unreasonable therefore to estimate €1,500 plus vat for a 2 bedroom apartment.
NOTE- Fit-out:
No fit-out budget or capex is included in the property purchase above. Tenants will typically rent an apartment fully furnished. The apartment will always include kitchens, bathrooms and laminate hardwood floors but investors will need to budget approx. between €5,000 – €10,000 for furniture and some fittings
Broker & Professional Fee’s:
6% of the purchase price plus VAT. Included in this amount is the Spire Fee.
Irish Property Company (“PropCo”) set-up including a PropCo bank account set-up
Appointment of a resident legal representative (General Manager) of PropCo in Ireland.
Transfer shares in PropCo. to the new shareholder (the investor)
Preparing a short-list of previewed & qualified property offers to suit investor criteria
Tailored Investment Analysis of each property opportunity
Negotiate purchase price and terms and prepare 5yr investment ROI forecast.
Co-ordination and review of a technical building report/survey.
Point of contact for all independent professionals including: Planning and regulations, Property & tenant, Technical property survey, Legal conveyancing, Financial and tax advisors
Liaise with Prop Co lawyers to ensure legal takeover of the property.
All local 3rd party property agent fees
Ensure all Irish Government Stamp Duty and other third-party costs and fees are paid
VAT
Charged at a rate of 23% but is not payable on stamp duty.
If you are thinking of investing in property as a source of alternative income,
why not contact us today to discuss your requirements in more detail?
Phone: +353 86 325 0048 I Email:info@spirecapital.ie
Prices from: €495,000 Rental yields: 6% – 8%
Spencer Dock is an exciting development of 1, 2 and 3 bedroom apartments, penthouses and offices setting new standards in urban living and working. Designed by the famous Architects Scott Tallon Walker, it is hailed as the new city quarter
What to expect from the Dublin Property market – Interview with Colin O’Regan, Head of Asset Management
Why is Dublin witnessing a large increase in investment in the Private Rented Sector?
When you combine high rents with low purchase prices, the ideal conditions are created for investing in property. In Dublin today, you can achieve the highest yield compared to all the other major cities in Europe with the security of knowing that you are investing in an expanding market that will continue to see an increase rents and prices.
What is the typical price of a 2 bedroom apartment in Dublin city centre and how much could it rent for?
Like any major capital city, the price of a property varies according to its quality, size, potential and location. In Dublin city centre, the average price of a 2-bedroom apartment is nearly €330,000 according to the latest data from the Property Price Register.
As there is a huge undersupply of all housing in Dublin, especially city centre apartments, it would be possible to achieve rent of at least €2,000 per month with growth over time. This means investors could get an average initial rent of nearly 7% in a major European capital city.
Which are the best areas in Dublin city to invest in for income?
Location, location, location! Spire Capital has identified three expanding areas in the city centre that are delivering the best income returns. These are:
Silicon Docks (Hi-Tech Quarter)
IFSC (Finance and Banking Quarter)
Smithfield and Stoneybatter (Legal Quater)
What are the main factors increasing rental income each year?
Whilst there are many factors affecting rental income the two most important in any functioning property market are Supply and Demand.
Following the global financial crisis, the number of new properties added to the Irish housing stock reduced by over 90%. This means that today we do not have enough units to meeting natural demand.
Ireland remains one of the few developed countries with a growing indigenous population. When added to this is the large influx of international workers, and their families, needed for the expanding hi-tech and financial services sectors, this has created more and more demand.
As a result of this chronic under-supply and massive over-demand, rents will continue to increase in Dublin city centre.
Recent data shows that over 60% of under 35’s are now renting in Dublin. Why has there has been a move away from home ownership to the Private Rental Sector?
Traditionally Irish people rented an apartment in the city then saved up to buy a house in the suburbs. Due to high rents it is not possible to rent and save even if they are highly paid. As a result people have decided to rent in high quality city centre locations close to their workplace.
How does Dublin compare with other European capital cities regarding PRS market fundamentals?
There is no doubt that Dublin is expanding economically resulting in a steep increase in rents. However, the rate of increase of property prices is relatively slower.
When compared to other European major capital cities, Dublin is in the top 5 of rental costs but is the lowest to buy. This makes it the best PRS market in all major European capital cities.
Apartment prices in Dublin have almost doubled since the bottom of the market in 2012. Is this trend expected to continue for the next 5 years?
Due to the low number of apartments being built in Dublin city centre, the trend for increasing prices is set to continue for the foreseeable future, especially from investors looking for income as a result of high rents.
Are apartments typically rented furnished or unfurnished?
When renting an apartment in Dublin city centre, the apartment is usually rented by the landlord complete with good quality furnishing, in line with market expectations.
What is the average time it takes to rent an apartment in Dublin city?
When a tenant cancels a rental contract, they must provide the landlord with a minimum notice period. This means that the unit can then be re-advertised for a new tenant with a move-in date to coincide with the departure of the existing tenant. Due to the huge built-up demand, the time to rent is measured in days not weeks or months.
What asset management services does Spire Capital provide for foreign investors?
Providing international investors with complete Entry-to-Exit asset management services is the cornerstone of our successful business. This leaves the investors in control whilst we maximise their investment return.
A important part of our asset management service is tax optimisation, which has always been a very important topic with our existing international investors. Working closely with expert Irish international tax consultants, Spire Capital can ensure that a tailored Irish tax structure is used to reduce Irish tax leakage.
If you are thinking of investing in property as a source of alternative income,
why not contact us today to discuss your requirements in more detail?
Phone: +353 86 325 0048 I Email: info@spirecapital.ie
Prices from: €280,000€ Rental yields: 6% – 8%
Custom House Square is a luxurious mix use development overlooking Mayor Square in the heart of the IFSC. Custom House Square is an exceptional 8 storey development with superb views over the Dublin Docklands.
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