What annual running costs should an overseas investor consider when investing in a 2 bedroom apartment in Dublin city?
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What annual running costs should an overseas investor consider when investing in a 2 bedroom apartment in Dublin city?
What annual running costs should an overseas investor consider when investing in a 2 bedroom apartment in Dublin city?
Conor Fitzpatrick
Author: Colin O'Regan
Read Time: 5 mins
What annual running costs should an overseas investor consider when investing in a 2 bedroom apartment in Dublin city?
To ensure there are no nasty surprises in the first year, allowances should be made for operational running costs, using the most relevant information. Having a direct insight in particular developments in Dublin means highly accurate cash-flows models.
Local property tax:
The annual local property tax (LPT) is annual self-assessed tax charged on the market value of all residential properties in Ireland. The tax due is calculated via a system of market bands.
Tenant Registration Fee:
It is a legal requirement that landlords must register tenancies with the Residential Tenancies Board (RTB). €90 per tenancy provided the completed application to register is received by the RTB within one month from the tenancy commencement date.
House insurance:
Apartment insurance will vary from property to property but we have budgeted €300pa (€25/month) for this type of property. The tenant will usually have their own contents insurance and the landlord will have a special ‘buy-to-let landlord insurance policy’ covering any accidental damage inside the apartment. Structural damages to the apartment and the common areas are usually covered by the buildings insurance which is included in the separate building service charge.
Building Service Charge:
The service charge is paid to the Management Company which is set up specifically to manage the apartment blocks. Each year the Management Company decides the budget for the year and agrees what services it intends to provide during that year. We have budgeted €2000 (€166/month) for this property but building services charges can range from €2000 – €4000 per annum depending on the standard of luxury and the services required. Depending on your development, your management fees may pay for:
Repair and maintenance of common areas, car parks, footpaths, roads. Cleaning common areas, windows, carpets/mats, gutters and drains
Lift repairs and inspections
Electricity and lighting for common areas
Landscaping and gardening, pest control
Security – internal locks and doors, intercoms, external doors and gates
Safety – smoke alarms, fire extinguishers, health and safety inspections
Refuse collection and recycling
Professional charges (for example block/building insurance, public liability insurance, the OMC’s legal/auditor fees)
Management Fees:
Included in this fee is 10% of the monthly rent for property management and tenant management which is usually provided by an outsourced PRSA approved property management company.
Spire will charge a monthly investment management fee of €150 + vat which includes:
Manage the appointed local property management company
Review maintenance requests & quotes
Manage monthly cash-flows receivables and payable. Ensure all rents are maximised at market level where legally possible.
Manage the accountancy firm and ensure local property, VAT and company taxes are paid
Ensure compliance with all local regulatory authorities e.g. RTB (Residential Tenancies Board).
Prepare Bi-annual Investment Reports & manage regular pay-outs to investor (subject to liquidity)
Act as first point of contact for: Letting agents and property managers, Maintenance Companies, Renovation and construction companies, Investors, Irish Companies Registration Office, Irish Revenue office (tax authorities), Legal advisor, Company accountants & tax advisors
Annual Company Tax returns:
If you receive income from rental properties in Ireland, then you must file a tax return. We have estimated a cost of €1500pa plus vat (€125/month plus vat) for accounting and annual tax returns.
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
“Why is a multi-family home a better buy to let investment than a single-family home”
If you're looking to actively invest in residential property, most investors will consider two types: single-family home or multi-family home. With single-family, you'd be buying traditional homes built for one family or household. On the multi-family side, you’d be buying apartment buildings. Both are very attractive and popular but investors need to consider there are significant differences in terms of cashflow, risks, maintenance and returns on investment. We have explored some of these points below.
In single-family homes there is not a strong cash flow (unless you own several properties). Fewer units means less cash. You're only getting a handful of rent payments per month, and a large chunk of those are going toward your mortgage, maintenance costs, and admin fees. However in multi-family homes you have a better cash flow and a bigger financial cushion. The extra cash that comes with multi-family real estate can help safeguard you from loss. There's more room for error, and you may have more capital to further grow your investing business if you do it right.
“Buying a multi-family home means an instant real estate portfolio”
If you’re looking to build a big real estate portfolio single-family homes are not the way to go. A portfolio of 10 units would mean 10 negotiations, 10 mortgage applications, and 10 closings, and it would take much more time compared to multi-family properties which let you scale up with just one purchase. Buying a multi-family home means an instant real estate portfolio. You'll have at least several units on your hands, and having the cash flow and profits that come with it isn’t such a bad thing either!
“If a tenant moves out of a single-family rental, it is 100% vacant”
Yes single-family homes are a lot easier to acquire but when it comes to growth this would be slower than the multi-family homes. Also one of the disadvantages of a single-family homes is that if the property is vacant you would have zero income until the management company replaces the tenants whereas with a multi-family home they can lose a tenant but can still produce an income with the other occupied units. It is rare to see a multi-family home totally vacant. Multi-family rental owners are also far less likely to have zero rental income. If a tenant moves out of a single-family rental, it is 100% vacant. On the other hand, if a multi-family rental owner loses a tenant, its only 10% vacant. Even after that reduction in cash flow, you’ll still have 90% of your regular monthly rental income to cover the property’s mortgage and operating costs.
In single-family homes, if you want to make repairs or improvements to the building it only increases the value of that one property as opposed to many in a multi-family property. Financing the purchase of multi-family homes is much easier than of single-family investment properties. The return on investment received by investing in single-family rentals tends to be higher than from other rental types; however, banks are more easily persuaded to give a mortgage to real estate investors for multi-family properties due to the risks being lower.
When you base it on a per-unit basis, the cost of constructing a multifamily property is more affordable than other types of real estate properties. It is, therefore, a more cost-efficient investment and relatively risk-free for first-time investors. If you choose to apply for a mortgage loan to build or purchase this type of property, you can expect lower mortgage financing rates.
The foreclosure rate on apartment buildings or other types of multifamily properties is lower as compared to a single-family unit. This explains why mortgage lenders can offer competitive rates for investors of this type of property. This reduces operating costs which will bring more revenue in the long run.
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
Author: Deirbhile Finn-Healy
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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