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Investors beware: don't let the yields fool you

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.

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.

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