Rental deal in Dublin: €736,000 purchase, €2,236/month — sanity check - second opinion?

W

woodworksAndPorch

Real estate agent
The practical constraint is that the rent leaves little room for costs to be wrong. The property is a 2-bed villa in Dublin priced at €736,000, with projected rent of €2,236 a month and a gross yield near 3.6%.

The building looks sound, although purchase costs could noticeably weaken the return. My model allows for empty periods, management, normal upkeep and a separate major-repair buffer, and it assumes no capital growth. I still need firmer figures for insurance, property tax and the cost of replacing a tenant. Which Dublin expense tends to be missed in an initial model, and how would you judge whether the resulting net return compensates for the risk?
 
Annual rent is €26,832, so there isn’t much room between the 3.6% gross figure and a weak net result. Acquisition costs should be included in your total capital even though they aren’t annual expenses. I’d also want actual figures for insurance and property tax rather than estimates. On income alone, I would struggle with this unless the net yield stayed comfortably above 2.5% after recurring costs.
 
Is this being assessed as an all-cash purchase or with financing? That could completely change the answer. Also, is “villa” a standalone property, or does it sit within a managed development with shared charges? Finally, is €2,236 supported by an existing tenancy or only an asking-rent comparison?
 
Tenant turnover may be the underestimated item. It isn’t just vacancy: there can also be cleaning, repainting, minor repairs and management work before the next tenancy. Those costs arrive together rather than evenly each month.

I’d verify the insurance basis and the actual property-tax amount as well. Dublin tenancy and rent circumstances can vary by property, so the current tenancy status matters more than a general citywide rent estimate.
 
I’m not convinced turnover is the main issue if ravi has already allowed conservatively for vacancy, management and maintenance. The larger risk may be financing sensitivity. A modest change in borrowing cost could consume a large part of an already thin yield.

I’d model it both unlevered and with the proposed debt, then spread transaction and eventual selling costs across the intended holding period.
 
Run a combined stress case, not just separate best-and-worst assumptions: rent 10% below expectation, a full vacant month, higher maintenance in the same year, and a major repair. If borrowing, add a higher-rate scenario too. The useful result is the cash left after all of those happen together. If that turns negative and you cannot comfortably fund it, the headline yield is beside the point.
 
Keeping appreciation out of the base case is sensible, but define “net yield” consistently. I would use annual rent less vacancy and recurring operating costs, divided by the full acquisition cost including transaction fees, before financing and personal tax. Otherwise cash buyers and leveraged buyers end up comparing different measures.

At only 3.6% gross, a required 3% net return would leave very little expense capacity. That may answer the question before trying to identify one missing Dublin cost.
 
Maja’s combined stress case and mila’s yield definition are the right next steps. Before deciding, get the actual property-tax figure, an insurance quote, a management-cost breakdown, evidence supporting €2,236 rent, and a survey-based repair schedule. Also clarify whether any shared charges apply.

I’d set two pass/fail tests: acceptable unlevered net yield on the all-in purchase cost, and positive cash flow under the financing stress case. If it fails either without appreciation, the price is doing too much work.
 
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