Worth the investment?

86 Rialto Court, Rialto, Dublin 8

Agent: Gunne

Apartment type: Two-bedroom 41 sq m (441 sq ft) unit for €225,000.

What do you get? The apartment has a livingroom and kitchen with breakfast counter, fully tiled shower room and separate small storage area. The kitchen has a range of built-in wall and floor units and is piped for a gas cooker and plumbed for a washing machine. The double room has a fitted wardrobe and the single has storage presses. The apartment has gas-fired central heating and high ceilings. There is no designated car-parking. The apartment is in walk-in condition but new owners may prefer to do some interior decoration.

Where? Number 85 is in a handsome redbrick apartment building dating from the 1900s. There are six units in this section of the complex.

Rialto Court is located just off the South Circular Road on a quiet road in the heart of Rialto village. The city centre is a 30-minute walk and the Rialto Luas stop is two minutes away, getting you into town in less than 15 minutes.

How much for investor? After stamp duty at 4 per cent €11,250) and legal fees of 0.5 per cent (€1,361) are taken into account, the acquisition cost is €237,611.

On a 90 per cent mortgage at a tracker rate of 3.1 per cent over 20 years, the annual repayments would be €13,599. This represents a shortfall of €4,599 a year when rental income of €9,000 per annum (at €900 per month and allowing for one month's void and one month's costs) is taken into account. The annual repayments on an interest-only mortgage would be €6,278, giving a surplus of €2,723 and a yield of 4 per cent.

An investor requiring payments equal to rental income on an annuity mortgage would require a 60 per cent mortgage at 3.1 per cent over 20 years.

How much to buy? With acquisition costs of €237,611, a residential buyer with a 60 per cent mortgage on a tracker rate of 2.95 per cent over 20 years will have annual repayments of €8.944 and interest-only repayments of €3,983. On an 92 per cent mortgage at a tracker rate of 3.1 per cent, the annual repayments will be €13,901, while on an interest-only mortgage they will be €6,417.

Service charge: Maintenance fees in Rialto Court is €350.

Potential: There is a potential rental return of €900 per month, according to the agent and capital appreciation has been reasonable in the area rising from €200,000 when a similar apartment in the complex was sold in 2003 to €225,000 now.

Verdict: The arrival of the Luas in Rialto has really opened up the area in terms of rentability. However, there will be stiffer competition to lure tenants than before with a spate of new apartment developments under construction in the area, such as a new apartment scheme on the site of the old ice-skating rink in Dolphin's Barn and Camac Walk and the Chocolate Factory in Kilmainham.

Calculations by Simply Mortgages

Fiona Tyrrell