It’s that time again, another AllsopSpace auction has been announced and they catalogue released for all us property-obsessives to paw over.
And yet again they seem to be getting bigger, more professional stock. As the Independent neatly pointed out this week, the amateur farmer-with-some-cash investor is gone and we are seeing a new breed of professional investors and major landlords.
However the main drawn will be some good-sized residential blocks that will be solid investments as the rental market continues to be fever-pitched:
12 Tiny Flats in Dundrum
Sweetmount House is certainly not a looker. This two-storey, 1960s block consists of twelve 1-bedroom apartments each extending to a pityful 413 sq feet. One-bed apartments are not the pick of the litter, however these seem to be averaging a rent of €650 per month each. Total annual rent roll is currently €78,960 with two apartments currently vacant. That’s not bad for a decaying block of one-beds. Quoting a reserve of between €950,00 and €1,050,000 that’s a gross yield of over 7% at the higher end of the reserve.
A well-let block in good condition would attract that but here there is a laundry list of things that could go wrong with the ageing building. Flat roof, crumbling walls, dated woodframed windows. And the internal condition of these apartments could be atrocious. The refurbishment work to put a vacant flat back onto the market could wipe out much of the return.
So what’s the angle? Well location first of all is superb. A short walk into the shops of Churchtown and Dundrum town centre. Allsop allude to “Potential for re-development subject to obtaining all the necessary planning consents”. I.E. start dreaming what you would do to this place. The council can’t have much of an aesthetic attachment to the place so you would help a well-laid plan would be better than the existing and get green-lit.
The site is only a third of an acre so you don’t have much to play with. Height will be the key first, before density. But even turning 12 one-beds into a handful of two-bed townhouses would probably be profitable in the long run. The sought-after location should draw a lot of interest here.
27 Apartments in Lucan
Jumping up a level here, this block of 27 apartments would be an instant portfolio in one manageable block, or a solid addition to an existing professional portfolio. At a reserve range of €3.5 – €4 million this is certainly for the bigger players.
Twenty seven apartments with a good spread of unit types: 2 one-bed houses, 9 one-bed apartments, 9 three-bed duplexes and 7 three-bed townhouses. All are currently let, bringing in a total rent roll of €331,632 per annum. This is a strong 8% gross yield, for what seems a well-built and established rental block.
The location is a positive too. Lucan is popular for rentals, easy commute into central or west Dublin. As a contained, 100% single ownership scheme this is an attractive buy – you can maintain control of the scheme and run it right.
I’d be weary that the sale was because the current or previous owner couldn’t rectify some problem that would allow individual units to be sold off separately. Perhaps physical due to a quirk in construction or something legal – he or his bank have obviously decided the only way is to sell it lock-stock. That might be something an investor has mind to do later – sort out a management company and flip units off individually – but for now this serves as a profitable investment.
23 Apartments in Malahide
The jewel in the crown of the residential investment blocks, this lot consists of 23 units in a 24 unit scheme (That missing one is going to haunt the new owner like not having the last address in Monopoly to complete a whole side of the board!). The final one is held separately under a long lease.
The development could not be in a better location for a rental community. Yards from Malahide train station, a key commuter route from the beautiful coastal town down into the city.
There is a range of units: 1 one-bed, 15 two-beds and 7 three-beds. The buildings themselves look rather utilitarian but jazzed up with some colourful doors. They are well let however, all income producing to secure a total of €289,200 per annum.
Allsop are guiding a reserve range of €4 – €4.5 million. This is a far worse return than the Lucan property, and although the address is technically better, both are solid rental areas and lettable apartments. So long as there is no skeletons in the title or planning, Lucan at 8% looks like a bargain compared to Malahide at 6%.
The Allsop materials claim there is a potential reversion, i.e. the units are under-rented. Yes it could be said, as some of the two-beds are renting at less than €900 per month. But assuming the condition and specification of these apartments are fairly basic, you won’t be pushing them up far passed €1,000 per month. Some returns to be made but it this attracts a lot of interest, be prepared to see that yield dwindle.