The most difficult part of getting started in property investment is choosing your first property, and making sure it pays off for you. Let’s look at some of the basics and how to work out your ROI. 

What type of property should you invest in?

Potential rental properties can include anything from simple studio apartments to larger 3 and 4 bedroom family homes and more. The main benefit being a monthly cash flow from rent payments. Remember whatever the property that you are always in control and can issue a short-term or long-term rental, both of which have different pros and cons depending on your goals. 

What property you choose for your first investment would depend largely on your budget. While it may seem like the bigger the property, the bigger the return. While this may be true in some cases, it isn’t guaranteed and in fact, a shrewd investor would find a smaller property in the right location, and in the right condition, to make a bigger return. 

Other factors to include are whether you choose to invest in a new property or purchase a home in need of repair or Refurbishment as it’s called in the industry. The right fixer-upper can turn a tidy profit and can be a great way of finding your feet in the market without having to go all-in on something brand new. 

Calculate your ROI

Return On Investment (ROI) measures the profitability of an investment. Here are the basics of what you’ll need to calculate your ROI for your new property:

Details, details, details:

All property details available to you including property value, mortgage details, rental income, monthly expenses including any maintenance and annual expenses like property taxes. 

Once you have all of the information you need, you can begin to work out just how much you could potentially yield on your investment. Below are some examples of what you can now begin to work out. 

• Net Operating Income (NOI): The net operating income or NOI, which represents how profitable your investment will be, can be calculated by subtracting the gross income minus your operating expenses.

• Cap Rate: This is also known as the capitalization rate and represents the rate of your return. It can be calculated by dividing your NOI by the price of the property.

• Cash-On-Cash Return: The return that is expected from your investment. Divide the after-tax annual cash flow by what you paid to purchase the property.

• Annual Gross Rent Multiplier (GRM): This helps measure the value of the rental investment. It can help you see if the asking price is reasonable. To calculate this you need to divide the total sales price by the annual gross rental income.

• Annual Cash Flow: This is calculated by the net operating income minus any debt. This is how much you will profit (or lose) from your rental annually after all expenses and mortgage repayments are covered.

A strong ROI for a rental property is usually above 10%, but 5% to 10% is also a perfectly acceptable range. Different investors will take different levels of risk, which is why knowing your budget and analyzing the potential return is crucial to success.

As usual, if there is anything at all KPM Group can help you with on your investment journey, please don’t hesitate to get in touch today and a member of staff will be happy to help in any way we can.

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Sourcing good tenants

73% of landlords surveyed have said that finding good and reliable tenants was the most difficult challenge they face. This is particularly true for first time landlords or those under pressure to find tenants in a hurry. 

We have discussed in previous articles some tips on how to attract the right tenants including property upgrades like painting, new carpets/flooring, heating upgrades etc. But let’s not forget the basics either. 

The first thing to get right is your property advertisement. If your listing doesn’t do your property justice, you’re already fighting an uphill battle. Professional photos, an honest and clear description and a competitive rental price will all help attract the right tenants. Don’t forget to clearly state whether or not you will accept Pets, Smokers etc. This will help narrow down the field considerably. 

Other more modern sales tools include 360 Virtual Tours which enable potential tenants to see the property in its entirety without having to visit. Particularly in the current Covid-19 climate, Virtual Tours have become indispensable in helping to reach the right tenants.

Choosing your tenants

Deciding who you are going to let live in your property for at least the next 12 months is a big decision. Everyone puts forward their best selves in an interview, but will they look after the property? Will they pay rent on time? Will they stay for the duration or will you arrive one day to an empty property and no answer from any contact numbers? Understandably, this can all be quite stressful to try and predict based off of brief phone calls and meetings.  

Again, go back to the basics. Always make sure to attain up to date references from both the potential tenants’ previous landlords and also their current employer. An employer’s reference can help determine whether or not the tenant will be able to afford rent going forward and also confirm their current income. Previous landlords references will show the tenant has looked after properties and paid rent etc on time. 

Maintenance Issues

Of the 20,000 Landlords surveyed up to 59% found managing maintenance issues to be stressful. Keeping the property up to standard and safe for your tenants is a landlord’s responsibility but can become tricky particularly in emergency situations like burst pipes or broken boilers. 

The best approach to negate these situations is to prepare a list of reliable tradespeople. Best to always have at least two dependable professionals for each area of expertise like plumbing or electrical work. Relying on just one professional is risky as odds are they are good at their job and may not always be available in a hurry. 

Always make sure your insurance is up to date and covers you for any emergency situations that may arise. 

Legal Responsibilities

All landlords will be aware of the legal responsibilities undertaken when choosing to rent your property. However up to 58% of those surveyed said it was difficult or stressful to keep up to date with constantly changing or updated rules. 

Obviously you are not expected to know and understand every piece of legislation but there are various ways a landlord can keep up to date like joining landlord groups on social media, subscribing to newsletters and working with property management companies. The latter can handle every aspect of your rental for a fee, allowing you to relax and enjoy your income without any of the stress.

Solutions

The most common route experienced landlords will take – particularly those in possession of several properties or large scale developments – is hiring a reliable property management company to oversee the day-to-day operations. This includes everything from rent collection to tenant screening and maintenance issues.
At KPM Group we have over 25 years experience and have grown to one of Ireland’s largest property management companies. If there is anything at all we can help you with please don’t hesitate to get in touch and a member of staff will be happy to help.

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House Price Rises

As sure as the sun will rise tomorrow, house prices will most certainly gain again this year. 2021 saw prices surge by an average of 12.8% nationally with Dublin seeing a 9% average increase. Swords in North County Dublin saw an increase of 27% for 3 bedroom semi-detached homes in the final quarter. 

Further afield in commuter belts and communities, prices have risen 15% on average across the country with more and more people being offered remote working opportunities due to the pandemic. This trend is expected to calm over the next 12 months as the initial rush is over and a more modest rise of 5% is predicted. 

Supply is still the main contributor to the current housing situation in Ireland. Despite the government’s efforts, we are still a long, long way from where we need to be, meaning that demand will continue to far outweigh supply over the next few years. This will inevitably continue to increase house prices nationally. 

Construction

Supply is obviously a major factor in house prices, but last year saw another major blow to the construction industry thanks to the pandemic, in the form of site closures and staff shortages, compounded by increases in raw materials such as timber which saw an increase of up to 30% due to global supply chain issues. This increase wasn’t limited to timber and as a result, new builds, in particular, saw large increases in costs. 

These supply chain issues are expected to be resolved over the coming months as supply chains get back to normal. It is hoped that prices will come down if not revert to original prices completely. 

Commercial Property

The commercial sector saw a strong recovery last year with investment doubled from €1.8 billion in Q1-Q3 2020 to €3.5 billion for the same period in 2021. Nearly €800 million in property assets traded in Q3 alone, which is a 14% increase and 12% above the five-year average. The sector is poised to enjoy another strong year of growth as the pandemic subsides.

Outlook

Overall there are a lot of positive signs for the year ahead. Although there is always the possibility of unforeseen further lockdowns and other pandemic related issues, markets look strong and opportunities are there. 

As usual, if there is anything we here at KPM group can help you with, please don’t hesitate to contact us and a member of staff will be happy to help in any way we can. Happy New Year again and we wish you all the best for the year to come.

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Service Charge Collection

When surveyed by KPM, one of the main reasons our communities say they don’t pay service charges on time is because they don’t understand where their money goes.

The most important thing is to have clear communication with your residents. They should be fully aware of the charges they are responsible for, what it will be used towards and when they will be expected to pay. Our advice is to make everything about your service charge demands straightforward and easy to understand. 

You should provide a clear summary of any outstanding charges, including a plain English explanation for any increases in fees, details of how residents can make payments and a clear deadline for payment. You should also provide a clear route for residents with any queries to follow, including helplines or email addresses. A summary of potential penalties for late or non-payment of fees should also be included. 

Hire a Property Management Company

At KPM Group we have an in-house team of fully qualified ACCA accountants and we pride ourselves in the quality and responsiveness of our financial management and reporting. Our integrated property management and financial management IT system allows us to report in detail to clients on any agreed basis relating to the collection of service charges.

Ensuring financial liquidity is vital for any apartment development and KPM’s in-house credit control division ensures a high rate of service charge collections with minimum debtors in each financial year. A robust process of steps to be undertaken for the collection of outstanding service charges outside of the relevant financial year is adapted by credit control when and if the position arises.

If you have any questions or need advice regarding service charge fee collection for your property, then contact us here at KPM Group today and a member of staff will be happy to help in any way we can.

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One of the main reasons to inspect your properties is to find any maintenance issues that have not been reported by the tenant. Unfortunately, more often than not, the tenant will only report bigger issues and fail to report on any smaller issues which if not dealt with, may end up being much bigger problems than they needed to be. 

The main things to look out for in your property inspection include dampness or mould, signs of any leaks, fixtures & fittings, condition of any furniture provided, utilities like washing machines and dryers are in good working order and any damages done to the property. When determining what constitutes damage, remember to be fair as general wear and tear cannot be classed as damage. 

If your property has a garden, make sure it is kept in reasonable order (we can’t expect every tenant to love gardening) and kept free of any rubbish/waste to avoid attracting any pests. If you are in a position where you know a neighbour or two, you could perhaps ask if they have had any issues with your tenants. 

Inspections can sometimes be uncomfortable for both parties. Perhaps you don’t have a great relationship with your tenants, or your tenants are just uncomfortable with someone coming into their home. It is important to arrange your inspection in advance at a time convenient to your tenants. If you face a situation where you are denied access to your property by the tenant, you can take your case to the Residential Tenancies Board.

Many landlords choose not to inspect their properties themselves. In this case, letting agents or property management companies are used. A good property management company can provide many services which allow landlords to avoid many of the stressful elements of being a property investor. Property inspections, rent collection, tenant screening, maintenance and much more can all be provided by a reliable property management company like KPM Group. 

If you are a landlord in need of any advice, please don’t hesitate to get in touch with KPM Group today and a member of staff will be happy to help you in any way we can.

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Details

Since the 9th of September this year, Section 7 of the Planning and Development (Amendment) Act 2021 came into effect providing developers with the chance to further extend planning permissions until the end of 2023. After initially agreeing upon a 1-year extension term in May of this year, further deliberation found that 2 years was more appropriate considering the raft of delays the industry has suffered from supply chain to staffing issues. 

Eligibility

In order to qualify for an extension, there are several prerequisites including the ability to demonstrate that the development cannot be completed within the relevant period, that no further environmental assessments will be required as a result of the extension, that the application for said extension is still compliant with planning regulations and that substantial works have already been carried out on the development before the end of the relevant period. 

Applications

You can find full details of the application on your relevant planning authority website or read more at the following link: https://www.irishstatutebook.ie/eli/2021/act/18/enacted/en/html

Applications relevant to planning permission which has expired between the 8th of January 2021 and the 9th of September 2021 must be made within 6 months of the 9th of September 2021. Alternatively, if your planning permission has not yet expired on the 9th of September 2021 then the application must be made no earlier than one year before its expiry.

Contact us

At KPM Group we have over 25 years of experience in property management in Ireland. Please don’t hesitate to get in touch and a member of staff will be happy to help in any way we can.

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Initial planning

There are several things you should tend to straight away when your property becomes vacant. These include things like notifying your insurer, reviewing their requirements and facilitating any inspections they request. You should also make sure the building and any associated grounds are safe and secure. Security systems should be up to date and functioning well. Any waste or food should be removed so as not to attract pests and all unessential power should be disconnected. 

Ongoing Maintenance

One thing you cannot do is just lock the doors and walk away. Maintenance needs to be continued with a focus on critical elements such as fire risk, health & safety, water risk and regular checks on electricity and gas where applicable. Flushing toilets and running water through the system regularly will help prevent any issues or unwanted odours from stagnating water. 

Management

You should contact your utility provider and discuss your options such as arranging new contracts or you could consider removing the meters until the property is used again. You should also notify the local authority and discuss any outstanding rates and how best to proceed with any fees you may be liable for during a vacant period.

Property management company

Our experienced team here at KPM Group can assist you in any or all of the areas we’ve covered. Please don’t hesitate to get in touch and we’ll be happy to help in any way we can. 

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Locks

Locks play a major role in securing our homes and offices as they secure doors and windows from unwanted access and intrusion. Making sure your properties locks are all in working order is a good start. Front and rear doors can always benefit from Mortice locks where possible. Newer PVC doors and windows should have multi-point locks installed if not already in place. This basic step should never be overlooked when securing your property. 

Lighting

There are many security lighting options on the market, but the most common is motion-activated lighting. When installing this feature, be sure to place it in areas where other sources of light are scarce, i.e. street lights or neighbouring light sources. Also, try and place the light above 2m in height, making it more difficult to tamper with.

Natural Barriers

If you live in a rural property or a detached property with hedging, then you may consider what natural barriers you can take advantage of to secure your property. Simple things like thorny bushes can be a deterrent to intruders. One tip though, try not to completely enclose your property in hedging/trees as this would only help those looking to sneak in. 

Alarm Systems

There is an abundance of alarm systems on the market today to suit all budgets. From remote monitoring to automated locking systems, every property can be secured. Consider your budget and the threat of intrusion in your area before investing in any heavy alarm systems. 

Keys

We all have a certain hiding spot for our house keys if needs be, but this can be a gift for intruders. Particularly in a rental situation, you should always ask tenants not to leave keys under doormats or any other obvious hiding spots. Where possible, provide your tenants with an alternative spot of your choosing.

Holidays & Social media

Over the last decade, a worrying trend emerged whereby people would advertise the fact that they will not be home for a couple of weeks on social media. To more nefarious characters this was an invitation to break in and help themselves, safe in the knowledge they would not be disturbed. Where possible, you should always advise your tenants against this practice and if they do leave the property for holidays to let you know, so you can keep an eye on the property while they’re gone. 

As usual, if you are a landlord seeking advice on any of the topics we have covered, please don’t hesitate to get in touch with us here at KPM Group today. We have over 25 years of experience in property management in Ireland and would be happy to help in any way we can.

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There is quite a bit to cover so we’ll jump straight into some main points.

Tenant Screening

A common mistake among Commercial and Residential first-time landlords alike is being too eager to get the property filled and making money. However, this may not always be the most profitable route as a troublesome tenant can cost more in the long run. You should ensure that your tenants can meet their financial obligations and are prepared to meet minimum upkeep standards as set out in your lease. 

Deposits & Guarantees

There are ways to mitigate your risk as a first time commercial landlord. You could consider requiring a Guarantor to the lease or request a larger deposit than the usual 1-2 months rent. It can be tricky though, as the last thing you want to do is scare off a potentially perfect tenant with too many conditions. 

Rent

Before settling on a figure for your commercial property, you should seek professional advice on the matter, as pricing your property appropriately will help attract the right tenants. When establishing your rental price, also think about rent reviews and how often you should have them. With the current market in Ireland skyrocketing, this aspect of your lease agreement should not be neglected. 

Term & Break clauses

Obviously the longer the term of the lease agreement, the more security for the landlord. However, in today’s market landlord’s are finding it harder and harder to get companies to commit to a longer lease. Most companies want a shorter lease with an option to extend if conditions are favourable. Another option for the tenant is a Break clause, which enables the tenant to end the agreement early if their circumstances change. This is not ideal for any landlord and more often than not, if a break clause is included, it is used and should be factored into any costs from the start. 

Repairs & Maintenance

A lot of this comes down to the state of the property itself. If you are letting a new commercial property then repair and maintenance – once you stay on top of them – should never be a big problem. Therefore once you have a minimum repairs agreement with your tenants and you fulfil your duties as a landlord then there should be no problems. However, if your property is an older one and your tenants are only on a relatively short lease, it is unrealistic to expect the client to have to carry out major repairs. This is particularly common in multi-unit lets. 

Intended Use

Another important factor to consider is what the tenants intend on using the property for. It should also be clear that the agreed-upon purpose cannot be unilaterally changed as this can affect the future state of the premises and potentially cause issues for neighbouring tenants. For example, you agree initially that your client is using the property for a car storage facility. You come back 6 months later and it’s a children’s play centre. Big problem. A good tenant will never do this but it should be made clear in the agreement what the purpose is. 

Alterations 

Commonly clients will want to carry out some work on the property to better reflect their company’s needs. Signage and branding are also included in this. It is up to the landlord, regardless of who carries out the works, to make sure it is completed to a high standard and meets health & safety regulations. One thing a first-time landlord should be aware of is making sure any alterations to the property can be easily undone at the end of the term so the building can be put back on the market.

As usual if you are a landlord in Ireland looking for advice or help in managing your property portfolio, then please don’t hesitate to give us a call any time. KPM Group have over 25 years experience in property management in Ireland and would be happy to help in any way we can.

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Why? 

It’s pretty simple really. Supply. Or lack thereof in this instance. The lowest numbers since 2006 are represented in Daft.ie’s latest findings with just 1,460 properties for rent at the start of November. That’s for the whole country. There were just 81 homes in total for rent in the 4 major cities outside of Dublin. 

Coupled with never-ending Covid restrictions and work from home orders, people have turned their focus to more rural settings with good Wi-Fi and public transport. This has seen Munster, Connaught & Ulster enjoy a substantially larger increase in rental yields than those in Dublin. Prices in Dublin have climbed 6.7% in the same period (Oct 20 – Oct 21). Currently, there are only 800 homes available in Dublin. 

Will prices keep rising? 

We’ve asked this question many times and as ever nothing can be guaranteed and if you do intend on investing, you should always seek professional advice. But in the current situation, it is hard to see prices stabilising for some time due to the shockingly low level of supply and by the looks of things that isn’t going to change any time soon. 

The Government is currently doing it’s best to rectify supply issues, but due to delays and supply chain challenges around the world due to the Covid-19 pandemic, the numbers will surely fall far short of targets set by the housing minister.

It doesn’t take much to figure out that prices may well indeed continue to rise.  

As usual, if there’s anything at all that we here at KPM Group can help you with, please don’t hesitate to get in touch and a member of staff will be happy to help you in any way we can.

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