Commercial.ie Information Center

2005 is proving to be a booming year for commercial property in Ireland with market turnover projected to surpass EUR 1 billion by year end; a figure that was only previously reached in 1999 when the Irish economy was at its peak.

In fact the entire property market in Ireland is strong and in the first three months of the year the market sector outstripped returns from all other investment market sectors according to industry analysis out recently.

To June month end the commercial property market segment in Ireland is projected to turnover around EUR 600 million, and history shows us that turnover is generally even stronger in the second half of a year meaning that the projected EUR 1 billion could be significantly surpassed making for a record year for Irish commercial property.

If you compare Irish commercial property value and returns for 2005 to the 2004 figures you can see growth and strength. In 2004 returns for the first quarter were 2%; in 2005 these figures grew substantially to 4.5%. In 2004 the value of property rose by just 0.3% in the first three months of the year, this year however the growth rate was a strong yet sustainable 3%. And when you compare property returns to stock market returns, again the results are positive, last year saw minus equity ‘returns’ and very low bond returns for example.

A great deal of the strength and stability in commercial property is derived from the office sector which enjoys steady yields of up to 5%. It is this sector which will be the one to watch for the next twelve months as well according to experts in the commercial property industry in Ireland. It is thought that rental yields will grow as demand for prime located developments increases.

Investors in Ireland are particularly keen on the retail sector at the moment as well which has seen steady rental increases since the millennium. With low interest rates, high property values and a strong economy encouraging the general public to spend, retail outlets are doing well and demanding prime locations for which they are prepared to pay!

When you compare the popularity and strength of commercial property in Ireland with that of commercial property in UK and the European mainland there is a pattern of strength and growth emerging. Irish and international investors are more likely to invest in commercial property in any of the main or emerging European countries than they are in straight equities it seems!

Source : Shelter Offshore Publishing Network

You can get a significant amount of information about where rents are heading, how long properties stay on the market, what areas are renting the best, and what kinds of things are attracting applicants.

First of all, what do you hope to accomplish by taking a rent survey? Obviously the first thing is to find out where your rents are in relation to the market. But there’s more. You can get a significant amount of information about where rents are heading, how long properties stay on the market, what areas are renting the best, and what kinds of things are attracting applicants.

All of that information can help you get your property rented more quickly and for the highest amount of money.

Doing a rent survey is easy, but can be time consuming. Doing it properly could require several weeks, unless you save newspapers.

STEP ONE:

Create a spreadsheet to calculate the data you are going to get. If you have a computer spreadsheet, it’s easy enough to create it there. If you don’t have a computer, either buy a 14-column accounting pad at a stationery store, or use a piece of note book paper to create columns.

Now create a column for each of the following: Phone number, Address, 1 Bedroom, 2 Bedrooms, 3 Bedrooms, 4 Bedrooms, Square feet, rent per square foot.

Get out the Sunday rentals section of the classified ads for the past three or four weeks. You will only be checking the rents around the area of your rental property. Get a city map and mark off the areas that you are going to check. Survey only the properties in that area. You are not going to check any rents except those that are in neighbourhoods comparable to yours.

You are also only checking properties of the same type as yours. If you property is a fourplex, you won’t compare that with single-family homes or apartments, the rents will be different. So, if your newspaper divides rentals into single-family, plexes and apartments, look at the appropriate section.

Go through each of the ads that is comparable to your property. If possible, use only the ads where there is an address in the ad. If you want to use properties with no address, you’ll have to call the landlord to get it.

STEP TWO:

There are two ways to accomplish the next step. You want to sort the ads by phone number. This is important, because you don’t want to list the same property twice. Since you have several weeks of newspapers, there’s a good chance of that happening unless you have some way to cull duplicates. The reason you sort by phone number is that the landlord can change the ad, but will not change the phone number.

But even the duplicates can provide useful information. You can see how they change the ad, how long it has been running, and if the rent is the same.

You can either cut out each of the ads and glue them to a three by five card, or write them on a three by five card. If you don’t put them on a card, you have no way of sorting them. If you are using a spreadsheet on a computer, simply create a column for the phone number, enter all the information, then have it sort by the phone number column.

STEP THREE:

Short Version

If you are doing this manually, discard the duplicates, and enter all the information you have left in the spreadsheet. You won’t have the square-foot figures, but you can get them. Give the addresses to your friendly neighbourhood Realtor, the one who mails you all the stuff or leaves it on your door. Tell him or her what you are doing and ask if he or she will look up the square foot figures in the county tax records. It only takes a few minutes and chances are he or she will be eager to do it.

Those figures will not be available for apartments, and may have to be approximated but it’s a useful piece of information to have.

Once all the figures are entered, average the rents for the one-bedroom, two-bedroom, etc. units. You can also get a median figure (half above, half below). That accounts for high or low aberrations in rent amounts. A computer spreadsheet will do it for you instantly, if you tell it to. Manually, you will have to write each rent amount down in ascending order and see which amount is in the middle.

Now you have a figure you can compare to your rent. Is your rent high, low or right on?

Long Version

Once you have all the information from the short version, you get on the phone. Call each landlord, tell him or her what you are doing and ask the following questions:

1. Is the property rented?
2. Did it rent for the advertised amount?
3. How long did it take to rent?
4. Square feet of the unit
5. Special features or services the landlord offered
6. Did you have to adjust the rent or make concessions to get it rented?

Now drive by your property, and then drive by each of the properties on your list and see how they compare to yours. Be objective. You won’t do yourself any favours by making yours seem better than the others in your mind. Judge on the following bases:

1. Condition of the property
2. Condition of the properties in the surrounding area
3. On a busy street or quiet street

That’s it. Now you have figures and a real data to determine what the rent for your property should be. Save the survey and do it again in six months. See where the rents are going in different areas or all over town. See how long properties are staying vacant. This information is money in the bank.

Source:
Robert Cain, publisher of the Rental Property Reporter, has been providing solutions for the rental property industry for seventeen years. He is author of the landlord manuals Profitable Tenant Selection, Can Section 8 Work for You?, Using the Gross Monthly Rent Multiplier, the tape series “Avoiding the Tenant from Hell,” and several other booklets and manuals for landlords and property managers. In addition, he writes and produces newsletters for other companies that serve the rental property industry. He is a highly sought-after speaker, seminar leader and consultant on property management and real estate topics.

Many landlords believe that they cannot reject any applicant for any reason, that they have to accept the first one to come along with the money or risk the grief of a lawsuit or Fair Housing complaint. Not so. There are numerous legitimate, businesslike reasons to reject a prospective tenant because of past or present behaviour.

1. Unsatisfactory references from landlords, employers and / or personal references. These could include reports of repeated disturbance of their neighbours' peaceful enjoyment of their homes; reports of drug dealing / taking or drug manufacturing; damage to the property beyond normal wear and tear; reports of violence or threats to landlords or neighbours; allowing people not listed on the lease or rental agreement to live in the property; failure to give proper notice when vacating the property; or a landlord who would not rent to them again.

2. Evictions.

3. Frequent moves. You have to decide what constitutes frequent moves and apply the same criteria to every applicant.

4. Bad credit report. If a report shows they are not current with any bill, have been turned over to a collection agency, have been sued for a debt, or have a judgment for a debt, that is grounds to reject. These do not have to be debts connected in any way with housing.

5. Too short a time on the job. As with frequent moves, you have to decide what too short a time is and apply the same criteria to every applicant.

6. Too new to the area. There is nothing to say you have to rent to people who have just moved to town. Be careful, though, many times these would be excellent tenants and the time and long distance call expense of checking them out could pay big dividends.

7. No verifiable source of income.

8. Too many vehicles. Lots of cars can be a real source of irritation to neighbors and make the entire neighborhood look bad. Chances are, if they have more than one vehicle for every adult they spend a lot of time broken and being fixed. That means they could be in pieces in the front yard.

9. Too many people for the property. Be extremely careful with this.

10. Drug users.

11. Pets.

12. Any evidence of illegal activity. You must be able to come up with some kind of satisfactory evidence. I don't know what that would be, every case would be different. Certainly a letter from the local Garda station warning a previous landlord of their illegal activity and threatening to close the property is considered sufficient evidence.

13. History of late rental payments.

14. Insufficient income. You must set up objective criteria applied equally to each applicant. Insufficient income could reasonably be if the scheduled rent exceeded 35% of their gross monthly income. For example, if the rent is €600, their gross monthly income must be at least €1714.29. The formula is:

Acceptable income = scheduled rent / income ratio

15. Too many debts. Even if their gross income is sufficient, they may have so many other debts that they would be hard pressed to make all the payments. A rule of thumb might be that all contracted debts, including rent, cannot exceed 50% of their gross income. Contracted debts would be such things as credit card payments, car payments, loans, etc. Those would not be cable TV, water and garbage, telephone, or other utilities.

16. Conviction of a crime which was a threat to property in the past five years. Included in this could be drunk driving convictions, burglary convictions, robbery convictions, and other such misbehaviors.

Laws change constantly, and what you don't know can and will hurt you.

Source:
Robert Cain, publisher of the Rental Property Reporter, has been providing solutions for the rental property industry for seventeen years. He is author of the landlord manuals Profitable Tenant Selection, Can Section 8 Work for You?, Using the Gross Monthly Rent Multiplier, the tape series “Avoiding the Tenant from Hell,” and several other booklets and manuals for landlords and property managers. In addition, he writes and produces newsletters for other companies that serve the rental property industry. He is a highly sought-after speaker, seminar leader and consultant on property management and real estate topics.