Deal Analysis for Apartment in Ireland

[Isaac Tabor]

Hi guys!

This is my first post on the forum. Ive been listening to the podcasts and reading the books and articles for almost a year now so Im definitely ready to take the jump. My situation is probably a little different than most on this forum though --- I live in Abu Dhabi with my family and will probably settle back in Ireland (where we were previously based) in a few years. 

An acquaintance in Ireland wants to sell his apartment because he is looking to invest in Spain instead. The apartment building is about 15 years old. He has had the same tenant for the past 12 years who has never been late on a rent cheque and has never even asked for any maintenance to be done. Part of the reason for that is probably because the landlord never raised the rent and he didnt want to draw attention to himself. The landlord recently raised the rent (marginally) to which the tenant happily agreed. The tenant seems to be there to stay. He's even shown interest in buying the apartment himself. 

The building owner filed for bankruptcy a few years ago and the property management company has just been given legal ownership of the building. There have been reports of roof leakages but we spoke to the property management company who said that, because they are now owners, they are finally in a position to do something about it. Before, their hands were tied (apparently). 

Here are the most basic numbers:

Purchase price - 175,000

INCOMING:

Monthly rent - 1100

OUTGOING:

Monthly building maintenance fees - 120

Monthly mortgage cost:   980

It seems the apartment won't cash flow but just about break even. My thoughts are that having such a reliable tenant makes this quite a passive investment which is appealing because we are not in the country to oversee the investment. My concern is that if any unforeseen costs occur (ie. if the roof becomes a problem), we will be losing money (rather than breaking even). 

I would love to hear from you guys if you have any thoughts on this one. As its my first, Im new to the game so Im sure there's lots Im missing. 

Thanks!

Isaac