Tuesday 17 January 2017

Investors beware: don't let the yields fool you

Published 26/02/2010 | 05:00

INVESTORS should be wary of basing their property purchases on gross yield calculations which do not allow for the hidden costs of buying property and the recurring costs of renting.

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This is the view of estate agent John Craddock: "If we are to encourage investors back in to the market we must ensure that the information we provide is honest and accurate."

A property bought for €180,000 and rented for €1050 per month may produce a gross yield of around 7pc, but the net yield would be less than 5pc after adding €12,600 for stamp duty, €1,000 for legal fees and €4,000 on furnishing -- as well as recurring costs including letting and registration fees, insurance, repairs and the second home levy.

"To achieve a net yield of 7pc at a rent of €1,050 per month the property would have to be acquired at €125,000," he adds.

Irish Independent

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