WORTH THE INVESTMENT?

Belfast Terrace: Guide Price €292,952

Address: 103 Malone Road, Belfast BT9 6SP

Agent: Gerry O'Connor

House Type: Four-bed terrace house with a guide price of £205,000 (€292,952).

What do you get? Around 1,7000 sq ft of house built in the early 1900s. It has an entrance hall with cornicing and ceiling rose, living room with original marble fireplace, marble inset and matching hearth.

The kitchen has a range of high and low units, integrated oven and hob and leads on to a separate utility room.

There are four bedrooms, two of which have cast-iron fireplaces.

The bathroom has an electric shower over bath and part tiled walls.

The property has a small front garden, a small, enclosed rear yard and oil-fired central heating.

Where? Located within a five-minute walk from Queen's University and a short drive from Stranmillis and Lisburn Road, this property is in the heart of south Belfast. As well as its proximity to the university, the area is well served by a plentiful supply of shops and restaurants.

How much for investor? A Stamp duty at 1 per cent and legal fees of .5 per cent will bring acquisition costs up to £208,290 (€297,665).

An investor requiring a maximum mortgage of 90 per cent at rate of 6.25 per cent variable over 20 years will have payments of £16,185 (€23,130) per annum. Repayments are on an annuity mortgage.

If rental income is around £8,000 (€11,429), allowing for one month's void period and one month's costs, this will leave an annual shortfall of £8,183 (€11,691).

Payments on an interest-only mortgage would be £11,531 (€16,474) giving a shortfall of £3,531 (€5,045).

If an investor required that mortgage payments are equal to rental income, a 44 per cent mortgage at a rate of 6.25 per cent variable over 20 years would involve an annual repayment of around £8,000 (€11,429) so the investor would break even.

On an interest-only mortgage the repayment would be £5,701 (€8,146) giving an annual surplus of £2,229 (€3,185). There would be a yield of 4 per cent.

How much to buy? A residential buyer on a 60 per cent mortgage on a 5.57 variable mortgage will pay £10,363 (€14,814) per annum on an annuity mortgage and £7,073 (€10,111) on an interest-only mortgage.

A residential buyer on an 80 per cent mortgage on a 5.75 per cent mortgage will pay £14,039 (€20,068) per annum and £9,581 (€13,696) on an interest-only mortgage.

Stamp Duty: £2,050 (€2,929)

Legal Fees: £1,240 (€1,772)

Potential: Located so close to Queen's University, 103 Malone Road is in an ideal rental area.

Capital appreciation has also been reasonable in the area in recent years, with auctioneers from Gerry O'Connor estimating that property has appreciated by 10 per cent in the last few years.

Verdict: Large terraced houses in sought-after areas of Belfast offer investors good capital appreciation and have been attracting interest from southern investors encouraged by lower property prices.

However they will not find rental returns as strong as in Dublin and with just a 4 per cent yield investors could well find a better return elsewhere.

Calculations by Simply Mortgages