A Closer Look at my New Investment Property in Wicklow,...Read More
Buying an investment property in Ireland
Big news – I bought an investment property in Ireland. Well, sort of. I bought a second house. And I will either eventually convert it into a rental property or live in it and convert my current Dublin house into a rental.
This has been on the cards for a while and one of my long standing financial goals is “Save a deposit for an investment property“. Well, I can tick that one off! And, if you know what I mean by this; ambitiously un-tick again immediately.
My Criteria for an Investment Property
I set out my criteria for a property that could either be a rental or become my home while I rented out my place in Dublin.
- My budget is 125k
- It needs to be within a reasonable drive to Dublin to access my job or close proximity to another large city to ensure rentabilty.
- I want a house with a garden or outdoor space (although I did reluctantly start to consider apartments too)
- I want a “project” so I am interested in properties that need work. This will allow me to improve my DIY skills and understand more about the renovation process in terms of reimagining layouts and employing contractors.
Viewing Potential Investment Properties in Ireland
I actually applied for a mortgage in January 2020 with Bank of Ireland and got approval in principle then. My main search areas were Meath, Louth, Kildare and Wicklow because Dublin is just too expensive and I wasn’t interested in apartments. I started looking early on and did some viewings in Kells, Co. Meath.
I eventually started to include Limerick in my criteria as it ticks the boxes of being a large city with decent employment rates and affordable properties in a few up-coming areas. I have a friend who lives there and he was able to advise me on the areas to avoid.
I did three viewings in Limerick on the same day that the government announced the start of the corona virus restrictions.
I did one more viewing very close to Baltinglass, Wicklow before full lockdown hit. I kept an eye on daft and got on with living life in lockdown until I could turn my full attention back to my financial goal of buying an investment property.
Just as lockdown measures started to ease I got a notification of place that met my criteria.
Timeline and process for buying an investment property in Ireland
I decided to keep track of the steps of the process along the way from when I got a daft alert about the property to when I closed on the purchase.
Got daft alert for a 3 bed terraced house in Wicklow within my 125K budget. Hmm… I thought.. this ticks the boxes. I rang the estate agent to arrange a viewing for the following Monday.
I viewed the property in Wicklow. Arrived a bit early to scope out the town. Certainly enjoyed the very scenic drive up and noted that the place had won a few Tidy Towns Awards – it showed.
First impressions of the property were very positive, plenty of work and improvements needed but everything appeared to be fairly solid. The property itself is mid-terrace, ex-council house with oil fired central heating and a solid fuel fireplace. The estate agent said almost all of the properties on the small road were now owner-occupied and the area has a very good reputation.
This checked out with my friends from Wicklow who are more familiar with the county.
Two days after viewing the property, I put in a call to the estate agent to make an offer of €120,000. This was 5k below the asking price. I also contacted Bank of Ireland to start the process of a post-corona virus document review. I had been through the process in January 2020, as a result, I was super organised and had everything to hand.
The estate agent called me to say the vendor would split the difference on the asking price of 125K and my offer of 120K. So we agreed 122,500 pending a survey from an engineer. Ah sure grand yeah.
I received a renewed Approval in Principle letter. Same as the one I had obtained in January 2020 before the world fell apart. The approval in principle generally last three months and then you have to resubmit payslips. This time, the banks wanted to check through all my paperwork to make sure I didn’t receive any COVID payments. I was very fortunate tat my jobs remained steady through the first lockdown.
I transferred €5,000 to the estate agent as a booking deposit. The credit union called me within a few hours of making the online transfer in order to confirm before they processed it – good to know they are keeping an eye on things.
Engaged a solicitor to handle the legal side of things, Direct Law. Appointing them as my solicitor was a very handy automated process. I filled in a few forms online and sent copies of ID by email. Next step was to pass the details of my solicitor along to the estate agent.
Received letter from estate agent with recipient for booking deposit and copies of letter to both my solicitor and the vendor’s solicitors requesting documents. The legal process was under way!
A valuation of property was carried out by an approved valuer for BOI mortgage.
Getting a quote for a valuation in Wicklow was a surprise. I have been through this process before with buying my first home and also switching mortgages. On both of the previous occasions, I emailed every single estate agent listed on the bank’s approved valuers for Dublin to request a quote.
They all gave me the exact same answer €150 + VAT – there was no difference in price. Quality of service is not even a factor because they all show up at the house for 10 minutes, look around and then email you a form later.
I tried the same process in Wickow. I sent an email to everyone listed on the approved valuers for Bank of Ireland and I got a range of responses. Some gave insights to say that they cost would depend on the bank. This lead me to wonder if the approved bank forms they have to fill in require different levels of detail.
Some estate agents tacked on a €20 travel fee. I was not expecting that but, of course, it makes perfect sense. Some properties are just closer to the office and some would cost you half a tank of fuel to get to.
- One estate agent said “sorry too far”
- one quoted €184.50 inc. VAT
- Three quoted €150 inc. VAT
In the end, the best price I got was from a guy who described himself “as very local to the town” where the property was located – He quoted €130 inc. VAT – I do love getting the best price 🙂
I had a buildings survey carried out by engineer. I didn’t have to be there, he arranged with the estate agent to get access.
I met with engineer to go over his report. He actually lived nearby so he came to my house in Dublin. I have to say that the engineer did an absolutely fantastic job, I was blown away by the attention to detail in his report. He brought me through all of the aspects of what he looked at and his recommendations. He had thought of everything and the presentation of his report was outstanding – very easy to follow. He chatted with me and gave me his own opinions and advice. His name is Robert Kelly, I found him via tradesmen.ie – highly recommended.
Email from solicitor to say they have received contracts and they sent back pre-contract enquiries.
My solicitor sent me a copy of the letter they received in response to their pre-contract enquiries and a copy of their reply.
After reading through the engineers report again, I was reminded to do something about the recommendation that the engineer made about the oil fired boiler. I contacted my solicitor to ask the vendor for any details or paperwork they had relating to the boiler or any services that had been carried out on it.
The vendor’s solicitor replied to my solicitor with an email stating “As the property has been vacant for some time now the vendor cannot remember when it was last serviced but confirms it was at least two years ago now if not longer.”
My solicitor copied me on an email they sent to the vendor’s solicitor giving them a nudge to proceed. I was starting to wonder had things stalled somewhat and had resolved to call them when the email popped in. Everything was moving at a very fast pace at the start but the pre-contract communications between the solicitors had slowed a lot.
I decided to give my solicitor a call as I hadn’t heard anything for a while. It turns out that they had heard from the vendor’s solicitor that morning. They had forgotten to actually post a letter they had written to my solicitor. I got a copy of all of the communications and read through almost 30 pages of documents – a fascinating insight into the process that I hadn’t gotten before.
My solicitor asked if I have my mortgage approval in place because there was only one item outstanding for them before proceeding to contracts. I emailed Band of Ireland to advise them of this and ask what I needed to do next.
My mortgage adviser at Bank of Ireland emailed back to say that the loan offer hadn’t issued yet for some reason even though all of the conditions had been met. The mortgage adviser said she would investigate and get back to me. Later that day, she emailed to say the case had been referred case to the credit team for review due to COVID-19.
This really worried me and finding out about it at 3pm on a Friday afternoon wasn’t great. I knew I wouldn’t hear anything until Monday and spent the weekend trying not think what might happen if the credit department suddenly decided to implement some new rule because they just didn’t want to lend.
BOI emailed me to say that the loan offer had issued that morning (to the solicitors) pending a valuation and mortgage protection/house insurance. I already had the valuation done so I queried this with them. They said that there was something they needed to clarify on the valuation, however, they would contact the valuer directly. I also emailed the valuer to request a copy of the valuation for my records. Don’t know why I didn’t request that at the time.
I got a notification online to sign the letter of offer from BOI. They are accepting digital signatures so I read through the document, signed and clicked send. I then went hunting for competitive life assurance (mortgage protection) and house insurance quotes.
Got a message from the solicitor requesting that I contact the office to arrange a day to come and signed the contracts. Or alternatively they can do it online. They noted that there is currently a 3-5 day wait time to arrange a meeting. They also requested that I transfer the 10% deposit minus any booking fee I had already paid.
I finalised the purchase of home insurance and mortgage protection insurance, the details were sent to Bank of Ireland along with the sign SEPA Direct Debit mandate.
The house insurance cost €204 and the mortgage protection insurance costs €10 per calendar month.
I contacted my solicitor and arranged an appointment for early the following week, they asked me to bring a mask and my own pen.
I used the Credit Union online transfer system to send the outstanding contract deposit to the solicitors account. This was 10% of the purchase price minus the €5,000 which I had already paid in the booking deposit, so €7,250 in total. The credit union range me within an hour of making the transfer online to confirm that it was indeed me who had requested it.
Took a detour while visiting a friend in Wicklow and drove up to the house to make sure it was still standing. It was. Checked the front and back access points. All seemed fine.
One of the neighbours popped out to ask if there was something he could help with. He was keeping an eye on the place! Great to know that really.
I drove to my solicitor’s office with my mask and pen in hand. We went through all of the paperwork in an orderly manner. The solicitor pointed out that the issue with the folio had been satisfactorily resolved. He also brought my attention to two other items
A DEPOSIT CLAUSE
He agreed a clause in the contract with the vendor’s solicitor that if the bank refused to lend me the money for reasons beyond my control, that I could get my deposit back. The detail to pay attention to here is the “beyond my control” bit. This means that if the bank suddenly decided to change their lending rules and they pulled out (because of a pandemic for example), I could get my deposit back. If, however, the bank pulled out because I didn’t do something I’m supposed to do (like get adequate mortgage protection insurance), then my deposit is gone. I thought this was a great detail for my solicitor to add. Good job!
A DECLARTATION FROM WICKLOW COUNTY COUNCIL
The house is ex-council. Years ago, when people bought council houses one of the conditions was that they couldn’t sell it for 25 years. This was to prevent people buying a cheap council house and flipping it for a profit. The condition has long since expired but my solicitor wanted the vendor’s solicitor to request a letter from Wicklow County Council to state that they no longer have an right to impose this rule as it is expired. For some reason the vendor’s solicitor has been avoiding doing this but my solicitor said he is not going to close until he gets it. Hmm. ok.
I transferred almost all of my savings. So ahead of closing, which the solicitor said normally takes two weeks, I paid the outstanding monies which included:
- Legal costs of €3,467.85
Including solicitor’s professional fees + stamp duty/land registry fees etc.)
- The balance of the purchase price of €14,250.
So that’s the total purchase price of €122,500 minus €5,000 booking deposit minus €7,250 contract deposit and minus the €96,000 mortgage amount.
- Apportioned LPT €26.24.
The vendor was paying the property tax up until now but the purchaser has to pay it from the point of sale so this was the agreed amount for the rest of the year).
All in, I was transferring €17,744.09 – I of course checked the IBAN a few too many times and hoovered over the “transfer” button for a while imagining that I was transferring this to a scam account and I would never see it again. Thanks brain, you’re the best.
A chunk of time went by until I got a call from the estate agent. They told me that the vendor’s solicitor said that the sale was ready to close since 11th September. They were wondering why it hadn’t closed. I said I would ring my solicitor to follow up.
When I put in a call, I they told me that my solicitor had submitted the request for funds to the bank and they were still waiting on that to process. Nothing more I could do really. In all honesty, my life was so busy during these weeks that I was happy to let the process of closing on the house drag out for a few extra weeks. Time is a scarce resource and I am focused on my main job resuming.
I got an e-mail from the solicitor to say that Bank of Ireland hadn’t released the funds because of one outstanding document. I had to go back to my emails and resend the required document to BOI which I already sent to them on 2nd September 2020.
In that e-mail, I had asked them to check over the attached documents and confirm everything was in order. They clearly didn’t. Astounding that it takes them over a month to notify a customer about this.
As it happens, the estate agent rang me just as I was resolving the issue with my solicitor and BOI. I get the feeling they are probably waiting to get paid.
The guy from Bank of Ireland got in touch to say that they had confirmed that the document I sent was adequate and to apologise. He was on annual leave when I sent it in originally and it got dropped.
He confirmed that the money would be released the follow day and be with my solicitor by Monday morning.
I got an e-mail from my solicitor confirm that the remaining funds had been transferred from their account to the vendor’s solicitor’s account.
My solicitor called me while I was on my break at work to congratulate me on the closing of the purchase of my new property. I was completely distracted and didn’t react much or feel excited because I have never been so busy or stressed in work. I started thinking about how lockdown is going to affect everything and how little time I have on my hands right now.
I made arrangements the day before to meet the estate agent and collect the keys for the property. I was worried about breaking restrictions and being stopped by the Gardaí on the way down to Wicklow but technically I was driving home. I didn’t get stopped anyway. I met the estate agent and got the keys to my new place!
When I got to the house and was relieved to see that everything was in order. I met the neighbours on both sides and I have to say it was amazing. I have lived in Dublin for 8 years and I still don’t know my neighbours names. I was in Wicklow for 30 minutes and the neighbour said I was welcome to call over at x-mas for a drink and some food.
I am also delighted to see that both neighbours have lovely dogs too – young friendly and playful.
I haven’t mentioned anything about numbers or yield here and that is very purposeful. The reason for this is all the uncertainty that has seeped into our lives in the last few
- survive lockdown.
- trial living in between Dublin and Wicklow…maybe I will live full time in Wicklow if I like the lifestyle there.
- devise a budget for renovations and make a plan and a timeline for the work
- start renovation works (there will be blog posts!)
- decide which property I want to rent out fully or some other arrangement.
- move on to the next FIRE step!
You will get one email a month with a summary of posts from that month so you can keep up-to-date with my progress and failures. Grand job!