At present in Waterford you can pick up a good investment property for under €100,000 and these will generally generate a gross return of between 8 and 10% depending on the area, type of building etc. This has brought a lot of investors to the Waterford market. Waterford is regarded as a good value location to purchase property, hence the 17% rise in property prices in the last year according to the latest Daft report. I am getting a lot of calls from prospective landlords from other counties where properties are currently more expensive.
So if you are a new landlord then what other expenses and outgoings can you expect? and what will the net return be?
Well, the first thing to consider is that your rent is taken as an income, similar to your salary, therefore depending on your circumstances you’ll either be paying 20% or 40% tax on this.
What other expenses will I have?
So is there any good news? Yes, there is, all of the above are tax deductible and can reduce the amount of tax you actually pay. However please be advised that repairs, improvements and investments made prior to your tenant moving in are actually not tax deductible. This is a common trap fallen into by first time landlords.
By calculating the above expenses, you should be able to come up with a net figure for the return on your new investment and it is prudent to work this out before proceeding with any purchase.
With the banks giving next to nothing in interest, anyone with savings is more likely to increase the value of their cash by buying the right property with a good return in today’s market. It’s reasonable to expect capital appreciation over a 5-10 year period.