Buying Investment Property in Ireland - The Basics:
Investment Property Mortgage / Finance:
- Borrow between 75% - 90% of the purchase price
- Or borrow 100% + costs by freeing up equity in your existing property
- Some lenders (but not all) charge higher rates for investors, so make sure you are quote 'investor rates'.
Pro's of Irish Property Investment:
- Alternative to the under-performing stock market
- Property has historically been a 'safe' investment.
- Negative Gearing - Property is one of the few investments where you can use finance to buy an asset which is worth 5 - 10 times your cash input
- Your rental income should service part or all of your mortgage
- Historically, rents and property values increase in value, adding to your investment & reducing the cost of servicing that investment.
Con's of Property Investment in Ireland:
- Property is not a liquid asset like shares - it can't be sold as quickly or easily
- Involves more management of the investment - consideration such as finding tenants, running costs such as maintenance etc must be factored in
Establish your Investment Goals:
- How long are you planning on keeping the property
- Are you looking for capital appreciation or an income from the property (or both)?
- Will the rental income service the loan? It's always good to research the likely rent you would get from the property you are considering buying (don't take the selling agent's word for it). Visit Daft.ie, which should give you a good indication of rents in the area.
Factors Affecting Potential Growth:
- Macro Influences - The state of the economy, number of properties coming on the market,
- employment levels & pay levels, demographics (such as age profiles, movements of population etc)
- Micro Influences - These are influences at the local level which you should research - e.g. Is the LUAS being built in the area, or are there other transport links being developed (new bypasses, dual carraigeways etc)? Is there scope for further development in the area? Has planning permission been granted for vast developments? Are there plans for local authority housing in the area?
- Is the general area undergoing Urban Development? (which should result in the local property market increasing as a whole)
Factors to consider when deciding on a potential property / area:
- Who will rent the property - decide on your preferred tenant type - professionals, families, students, tenants with local authority subsidies?
- Cost of property
- Ease of renting (are there local hospitals, industrial estates or business parks etc where your targeted tenants work?
- Will the rent service the mortgage (or at least a significant portion of it)?
Upfront Costs:
- Deposit of 10% minimum (unless you release equity from your existing property)
- Stamp Duty
- Legal Fees
- Surveyors Report
- Refurbishment costs / furniture etc
Ongoing Costs:
- Mortgage Payments
- Insurance costs (house insurance & mortgage protection)
- Management fee (apartment complexes)
- Rental / Management fee (if you use an agent).
- 'Downtime' - allow up to 2 months per year when the property is not rented
- Tax
- Maintenance
What's Required for Mortgage Approval:
- Income Details - P60, pay slips, Salary Cert (or accounts for self employed)
- Banking Details - Mortgage, Loan & current account statements
- I.D. - Passport / Driving License, Original Utility Bill
The Next Step:
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