Saturday, 9 April 2011

Rents Rise as House Prices Fall.


Rents in Ireland have fallen 27% over 4 years as underlying house prices have fallen 40 - 70% (depending on region).

Lets put that into context for those with the mathematical acumen that saw them being head cutlery polisher at David Jones Fountaingate prior to their stellar career as a Real Estate Agent selling off-the-plan at Noosa Heads.

Seamus O'Flaherty's investment property in Waterford was valued at  €1,000,000 and whilst he was waiting for it to double every 5 years (like all normal markets *snigger* ) he was renting it out for €3500pm. In 2011 he has it valued at €600,000 and his rent he is charging to get a tenant has fallent to €2550pm.

Now a good Aussie real estate spruiker will argue that Seamus' yield has improved from 4.2% to 5.1%. It does look more attractive if you ignore the fact that Seamus has lost €400,000 in equity and lost €11,400 in income.

They say you can take a pile of dog shit and in the right hands mould it into a cup cake shape and top it with cream, and a cherry and you can't tell the difference.

I don't give advice, I just comment. But I will give advice in this case. Sniff your cupcake before you take a bite.

PS If you've exhausted your Stephen King collection and want to sample some Celtic horror (hot tip: read it on an empty stomach, especially if you are a leveraged property investor):

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