Like other financial advisers, Seamus Kane is shifting more of his clients into property. "Most are self-employed business people. The impulse to go into property really came from them."
Running he calls a "small accountancy practice" in south Dublin, he built his client base over 23 years and has seen individuals growing their own business. "Usually a family-run or small enterprise - say a catering concern or a garage - they were too busy with day-to-day affairs to get a grip on the property boom, so they asked me. It began as an enquiry and now it's part of my business."
In the past few years, Kane has sourced, purchased and managed tenancies of small portfolios for his clients. "Some of them might never see the apartment. I do the lot - draw down the funds from the mortgage company, arrange the outfitting of the apartment, collect the rents and make the returns to the Revenue.
"In many cases it's a hedge for their children - in some cases, even the children don't know about it. It's their parents way of getting them on the property ladder when the time comes."
He cites a businesswoman with four daughters, who went with his advice and, using the first property purchase as security for the second, ended-up with a property for each of her daughters. "I think she has in mind to gift them when they marry. Maybe, too, there is a bit of insurance here. She built up her own business without a husband, so I think she has an eye to the daughters' economic independence if anything goes wrong with their marriages."
Kane has previously brokered traditional pensions for his clients and believes they are still worth long-term investment.
"But with the fall over the past few years - last year's funds plummeted about 20 per cent - I had to find other ways of protecting my clients monies. Many were not impressed with pension fund managers' abilities to invest - they felt they could have done better.
"As small business people, they knew how to make one pound into two or three - so they came to me with the idea of investing in property.
"What evolved was a system of buying a property a year for five years. Then valuing the portfolio and deciding to sell some - or all."
Such has been his clients' uptake on investment in residential property portfolios that Kane has brought in his wife and father, a retired tradesman, to manage the letting and upkeep side of the business, while he puts in place the seed capital.
Funding is not a problem. Knowing his clients' financial state intimately, he can professionally vouch for them with the lending institutions.
"I can put a human shape on what might not always appear conventional on paper. Banks tend to be rigid about borrowing requirements. Knowing my customers means I know where they have money."
He instances a couple who, responding to the panic about property and getting their adult children "a start" on the ladder wanted to sell their substantial Dublin home and move to a cheaper house.
"I gleaned they didn't really want to move - but were prepared to make the sacrifice for their children. When I looked into their financial situa1tion, we were able to release enough equity from their home to get a loan to buy small properties in their children's names. The repayments are done by their working children, the new owners, who are all in jobs and can easily afford the repayment at current interest rates... so the parents didn't have to move."
Interest rates, the lowest in 60 years, make his work easier, as do demographic projections for Dublin over the next decade. Simply put, there are not enough new homes, either as apartments or town houses. He finds himself putting clients' names to builders' plans, which means he can buy to mount individual portfolios at a discount.
"Every case is different. I design the portfolio to meet the pension needs of my client. How much do they want to be able to lay their hands on in five, 10 or 15 years? Once we agree on that, my team here takes over and does all the sourcing, purchasing and letting. I give the client a folder with everything accounted for - down to the Revenue returns which is how many of them came to me in the first place."
He is adamant that early letting is the key to good management. "The property has to pay for itself from day one, to 'wash its face' as they say. I have to see a revenue stream straightaway, because the client has borrowed a hefty amount and though interest rates are low, the repayments have to be covered from day one."
He has personal experience of property problems: there is not enough of it to satisfy demand. Shortly after moving to his current location, a south-side business park, he lost a chunk of his staff.
"They were excellent: young married women, on flexi-hours, but had to live in the suburbs where they had affordable, decent housing. It was taking three hours out of their day, from home to here and back."
He predicts that Dublin will become more like other European cities, with apartment living the norm.
"Which means the value of property portfolios will maintain their rate of increase. In spite of the nay-sayers, I see the prosperity continuing, though not at the same hectic pace."
So where does that leave the pensions v property contest? As a professional adviser, he kicks to touch and doesn't rule out conventional pensions. "On current trends, property gives a much better return. But it might not suit everybody - some people are scared of owning investment property. If you are already in a contributory pension, hang in for the long haul. I believe pensions based on equities will come back in value and show returns. But if you want real capital increase, enough to make you modestly wealthy, investment in residential property is probably the way to go. My advice is a mix of both."
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