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How to purchase a buy-to-let property in Ireland

Property, while not without its challenges as an investment class and high degree of management versus standard stock investing, does still remain a favourite of Irish investors. Although a buy-to-let property can be an excellent long-term investment and a reasonably steady source of monthly income, there are a few things to consider before jumping into a buy-to-let property investment.


What is a buy-to-let investment, and is it right for you?


Buy-to-let investments are properties that property investors purchase with the goal to rent them out to tenants. First-time buy-to-let investors need to face a steep up-front cost to purchase the property, but successful buy-to-let investments can generate healthy monthly returns.


In addition, buy-to-let properties could increase in value, allowing the investor to profit down the line if they decide to sell the property.


Buy-to-let investors need to consider the time and effort that are required to maintain their investment properties. This is a significant responsibility and landlords need to fulfil their obligations to comply with Irish law. If an investor isn’t ready to manage and maintain the property, they’ll usually hire a property management company to handle regular maintenance and find renters.


How to choose a buy-to-let property


A buy-to-let property is only profitable when someone is paying rent to live there, so it’s crucial that the property appeals to renters in the area.

Investors should only consider properties that are free of serious maintenance issues and conduct thorough research into the local rental market.


First-time landlords should also learn about Ireland’s rent controls, which experts consider to be a major reason why more than 2,000 landlords left the market in 2021, The Irish Independent reported.



Calculate your return on investment


To get a rough idea of rental yields, investors can total a property’s annual rental income, divide that amount by the amount they paid for the property and multiply that number to get the percentage. Lenders will need to see that a property will be profitable before issuing a buy-to-let mortgage.


Remember that investors cannot pocket all of their buy-to-rent proceeds. Other expenses need to be accounted for when determining your return on investment.

Regular expenses typically include:

  • Mortgage repayments

  • Property insurance

  • Property tax

  • Rental income tax

  • Property management agent fees

You can read more on how revenue taxes rental income here on their site. They explain what expenses are and aren't allowed and some of the available tax incentives.


Financing a buy-to-let investment


Buy-to-let mortgages typically require a 20% minimum deposit. Investors can use a portion of their monthly rental income to cover mortgage repayments and other costs, but they’ll need to pay the deposit upfront to qualify for a mortgage. The rates on Buy-to let mortgages tend to not be as competitive as owner occupier mortgages.


Mark Solon of Symmetry Financial will be speaking on buy to let mortgages and property in your pension on Tuesday 1st of March 6pm. You can register for this free webinar here.