Property Investments Guide 2021

Robert Whelan from Rockwell Financial shares his savvy guide to help you find your own property investment strategy.

  • Contracting info
  • Expenses

Investing in property for beginners is an exciting journey, but full of pitfalls that even the most experienced can fall in to if they aren't careful. Don't worry if the thought of tax issues and terrible tenants fills you with dread because buy-to let is not the only way to get involved.

This guide will help you find your own property investment strategy.

1. Why invest in property?

There are a number of reasons why people choose to invest in property.

  1. Rental income – especially useful for the self-employed or retired to have predictable income
  2. Capital growth – property prices often rise
  3. Diversification – one of the key components of a well structured investing portfolio
  4. Easy to understand – property is tangible

Irish property prices have risen by 49% in the last 6 years and yields are currently averaging 5.3% nationwide (

We are in an era where interest rates on bank accounts are turning negative and other “safer” investments such as corporate bonds are very low.

As a result, many see property as an alternative that can give them the returns they want while being something you can feel and understand.

Follow our steps to become a property investor

2. Property investment: caveat emptor

While there are many plus points to property investment there can be downsides too.

  • Property can be very illiquid, meaning it can be hard to get your money back in a hurry. Property therefore needs to be a long-term investment rather than a short-term project.
  • Tax changes have made property a less attractive investment. You’ll pay higher stamp duty and won’t be able to claim back as many expenses as landlords in the past.
  • Property prices don’t always rise. In fact, political uncertainty in recent years has depressed the property market in certain areas, including London.
  • Property investment can be hard work, particularly if you’re investing directly. You might not want to take on renovations or repairs yourself, but getting someone else to do it can be costly.

3. Getting started with buy-to-let

Becoming a landlord is a head rather than a heart decision. You need to spend time researching:

  • best areas to buy
  • types of rental properties
  • mortgage deals

Getting a buy-to-let mortgage

Most people borrow to finance their buy-to-let investments, but it can be tough to get a buy-to-let mortgage.

  • You will usually require a substantial deposit
  • Your credit record will be scrutinised
  • The lender will look at the amount of rent you’re likely to get compared with the price you are paying, i.e. the yield

The yield is the return you make on your investment. It is calculated by dividing the annual rent, minus expenses, by the property price, then multiplying it by 100 to give a percentage.

EXAMPLE: You buy a €200,000 property. Your rental income is €800 a month, with annual costs of €1,000. Your yield will look like this:

  • €800 x 12 = €9,600
  • €9,600 – expenses of €1,000 = €8,600
  • €8,600/by purchase price of €200,000 = 0.043
  • 0.043 X 100 = 4.3% rental yield

Rental yields are different across Ireland, depending on the:

  • type of property
  • strength of the rental market
  • local house prices

What to think about before you buy

  • The type of property suitable for the area you are considering. In student areas, for example, houses with many rooms might be easy to rent. In areas popular with young professionals, one-bed flats may be more sought after.
  • Understand the different expenses. Stamp Duty and Solicitors fees cannot be part of the mortgage so make sure to factor them into your budget.
  • Basic property development costs, such as fitting out the buy-to-let property with furniture, and perhaps renovation work.
  • Necessary certificates such as gas safety checks, which are mandatory to rent out a home. You will also need landlords’ insurance.
  • Your available time. Buy-to-let can be very time-consuming, so many people choose to pay estate agents to carry out tasks such as marketing, collecting rent and carrying out maintenance. This costs extra, although these costs are tax deductible as explained below.

4. Buy-to-let tax and recent changes

Buy-to-let investment comes with various expenses. It was possible to offset many of them against the tax you pay on your monthly rental income but there are limitations such as:

  • The  amount of mortgage interest you can expense depending on whether your tenant is a social welfare recipient or not
  • Refurbishment costs (although this has been recently amended in the most recent budget)

Capital Gains Tax CGT

CGT is what you may have to pay if you make a profit when you sell an asset, such as a second home, shares or a piece of artwork. The tax isn’t based on the price you sell an asset for but the profit made on it.

5. How to invest in the market without becoming a landlord

If buy-to-let sounds like too much hassle or you don’t have the money for the hefty deposit and other upfront costs, there is another way of investing in the property market.

What are property funds?

Property funds rely on expert fund managers to buy up properties, and then pass on the income and capital growth to the investors who put their money into those funds.

While most property funds invest in commercial property, such as retail parks and office blocks, there are some that are more focused on the residential sector.

Whichever you choose, ensure that it is authorised and regulated by the Central Bank of Ireland, which is Ireland’s financial regulator.

Types of property funds

Some property funds are known as closed-ended funds.

  • listed on the stock market
  • known as REITs (real estate investment trusts)
  • you buy and sell these like any other share, such as a share in Ryanair or Google

Other property funds are open ended

  • they issue new units when more people want to invest
  • price of these funds move up and down depending on:

               (a)popularity of the fund

               (b)underlying value of the properties it is invested in

What are the benefits of investing in a property fund?

  • Easier to buy and sell than it is to market and sell a buy-to-let when you need some extra cash
  • More diversity. Your money is typically invested in a more diverse set of property types in different areas.
  • You can check the performance of a fund or REIT by using a factsheet, available from the fund’s own website, or from services like Morningstar. Also look at the fees, as these will eat into any return.

The performance will reflect the wider property market, but also the skills of the fund manager in making the right decisions at the right time about when to buy and sell the properties.

Why is diversification important?

If you are investing in property, ensure that you do so as part of a portfolio of different types of investment. This better protects you if the market enters a rocky patch or prices slump.

Diversifying is also important because property funds can suspend trading and freeze their assets, meaning investors will not be able to withdraw their money.

This occurs when a surge of investors try and sell their holdings and the fund is unable to sell properties quickly enough to repay them.

You can hold property funds in a pension which means you can benefit from tax breaks on your investments. You cannot do the same with your own portfolio of buy-to-let properties, which is also something to bear in mind.

6. Next steps

If you’ve decided property investing is for you, the next thing to do is to decide which type of investment will suit you best – and take some time to consider the pros and cons.

Direct property investment

  • PRO: can be very rewarding, both financially and in terms of providing a satisfying hobby
  • CON: is time consuming and you may not be able to get your money back quickly

Property funds

  • PRO: worthwhile addition to a balanced portfolio of investments and less time consuming than buy to let
  • CON: you need to understand the underlying holdings of the fund you are buying, as well as how it fits in to your investment strategy. Consider the fees too.


Should you have any further queries relating to investing in property please contact us at 01-2966120 or email


Robert Whelan

Rockwell Financial Management

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