On the way to their first million . . .
Frances O'Rourke looks at the new breed of property investors - teachers, journalists, civil servants, farmers, shopkeepers and taxi drivers
Seán bought his first investment property in 1989, before the property boom took off. He cashed in an insurance policy for £3,000 (€3,800), and using his family home as collateral, got a 75 per cent mortgage (at 11 per cent interest) to buy a studio apartment off James's Street in Dublin's inner city for €23,000 (£18,000).
Within a year, a one-bedroom apartment in the same block came up for sale for €25,400 (£20,000). He went back to the building society, which somewhat to his surprise, offered to lend him 75 per cent of £40,000, the joint valuation of property A and property B, less what he'd already paid.
He had discovered how, with very little cash up front, he could buy one property on the back of another. Over the next 15 years, he bought an average of one property a year, adding a property in London in the 1990s.
Sean, who still works at his office day job, is one of a new breed of Irish property investors who are buying multiple properties; they are not wealthy business people, members of any "gilded circle", but typically teachers, journalists, civil servants, farmers, shopkeepers and taxi drivers.
"I came across one couple who were building up a portfolio where one person was unemployed, the other worked in a nail salon," says Ian Mitchell, managing director of Deloitte Pensions and Investments.
Typically, investors are either middle-aged people who have a now-valuable family home they can borrow against to raise money for another property, people who've inherited a property, or couples who each have a property before marrying, leaving them one to use to start a portfolio.
Ideally rents will cover repayments, but often buyers may have to bridge the difference. Obviously schemes that offered tax relief on all rental income have been very popular. Many buyers, like Seán, will be hands-on landlords, doing all the letting and maintenance themselves. One alternative, paying an agent, costs about 10 per cent of rental income.
Most won't have an appetite for more than six properties. "It's a lot to handle," says Mitchell. Most buyers have bought too recently to see the kind of returns that would enable them to stop work. "The next step up for the seriously rich is buying office blocks and car parks, sometimes as part of a syndicate."