Buying a holiday home
Discussion
Hello all.
For several years my OH has wanted to buy a holiday home in her home town (NW Scotland) that we can use when we're up there and make some £ from the rest of the time/bit of an investment. The particular place we're looking at is a 2 bed chalet type set up (we've stayed in one several times). They're are a number of chalets so I'm assuming (but will need to confirm) that a cleaning/management service is available-although this makes me wonder why the owners of the site are selling one off. Alternatively we could possibly draft in family up there to keep an eye on things.
I know pretty much nothing on the ins and outs, hidden/unconsidered costs so looking for a bit of advice so we can go into it as well informed as possible. I've looked over the past few months and the other seem to have been 100% occupancy through June, July, and August at a weekly rate of £700 so based on 700 x 4.1 x 3 £8610.00 for the peak months. The seller claims potential income of 15-20k, but keen to know what ballpark of % would be taken on management/maintenance, tax liability etc.
We'd have around 20% deposit and mortgage the rest over 10 years, wouldn't be doing this to make an income so providing it made any profit we would pay this towards overpaying the mortgage. Would be great to have a crash pad when we go up there rather than shelling out on hotels, sleeping on sofas and floors of family. It's in a beautiful spot has fishing rights for a loch within spitting distance.
Before this I was thinking of buying a plot of land and either sitting on it or sticking a static caravan on the land-not for holiday rental just somewhere to stay.
Would appreciate advice from anyone who owns holiday lets in the UK and operate them from a distance (we're ~4.5 hours away).
For several years my OH has wanted to buy a holiday home in her home town (NW Scotland) that we can use when we're up there and make some £ from the rest of the time/bit of an investment. The particular place we're looking at is a 2 bed chalet type set up (we've stayed in one several times). They're are a number of chalets so I'm assuming (but will need to confirm) that a cleaning/management service is available-although this makes me wonder why the owners of the site are selling one off. Alternatively we could possibly draft in family up there to keep an eye on things.
I know pretty much nothing on the ins and outs, hidden/unconsidered costs so looking for a bit of advice so we can go into it as well informed as possible. I've looked over the past few months and the other seem to have been 100% occupancy through June, July, and August at a weekly rate of £700 so based on 700 x 4.1 x 3 £8610.00 for the peak months. The seller claims potential income of 15-20k, but keen to know what ballpark of % would be taken on management/maintenance, tax liability etc.
We'd have around 20% deposit and mortgage the rest over 10 years, wouldn't be doing this to make an income so providing it made any profit we would pay this towards overpaying the mortgage. Would be great to have a crash pad when we go up there rather than shelling out on hotels, sleeping on sofas and floors of family. It's in a beautiful spot has fishing rights for a loch within spitting distance.
Before this I was thinking of buying a plot of land and either sitting on it or sticking a static caravan on the land-not for holiday rental just somewhere to stay.
Would appreciate advice from anyone who owns holiday lets in the UK and operate them from a distance (we're ~4.5 hours away).
Yes it's wooden construction again something to ask, i.e. how old it is and figure out how long such chalets can reasonably expect to last without a full rebuild.
My niece does some cleaning at weekends for holiday lets and the BIL has a some BTL properties so could rely on him in an emergency. Although I suspect a management set up will be offered from the site owners.
Mortgage is something I'll look in to do today.
Elster thanks for the PM going to have a read now cheers!
My niece does some cleaning at weekends for holiday lets and the BIL has a some BTL properties so could rely on him in an emergency. Although I suspect a management set up will be offered from the site owners.
Mortgage is something I'll look in to do today.
Elster thanks for the PM going to have a read now cheers!
s2kjock said:
Management of holiday lets can be a lot of hassle, and it can be difficult to get reliable staff to deal with handovers, especially in remoter areas. Might explain why the current owners want to sell.
I'm hoping it will becoem a lot more clearer this weekend when we can take a look. You can also (for a cut obviosuly) have them be the key holders and do the cleaning etc. The current owners own a pub on the site, and other lets (converted farm) so perhaps tehy looking to raise some equity whilst still making an income if they sell they're lodges but magage them. There's a £65 a month service charge assume for water, roads etc. It will be a non-strater if you don't own the land it sits on outright, you can do similar with park homes in England but it's a lease of the plot. The info states freehold though so I'm expecting you own the land with certian conditions.a311 said:
I've looked over the past few months and the other seem to have been 100% occupancy through June, July, and August at a weekly rate of £700 so based on 700 x 4.1 x 3 £8610.00 for the peak months.
If you're just looking at online availability that often doesn't paint the full picture. For example if they've given weeks away to family because they couldn't get a paying customer then, or going to use it for themselves for a month, there wasn't any income generated but you're counting it as revenue in your quick calculations. Also if someone has multiple properties in one location then its a common trick to mark down some of them as booked for that week - if I have 3 chalets and I mark 2 down as rented 7-14th august and you want to come then, the pressure is now on - only one available so you're risking losing it. Also it helps affirm the thought its value for money if you can see other people are paying that price. Then once you book I'll just still leave 1 as available. Its unlikely, but if you query it I'll just say one of the earlier bookings cancelled...
I looked at this and the realer was the charges the rental co wanted to let the place and the cost of a complete clean for changeover.
The couple of co I spoke to wanted around 20% of the weeks rental fee and the change over could easily cost £100 for cleaning to a good standard, laundry, bed changing and minor maintenance.
It added a lot to the no of weeks a year it needed to be let to cover the outgoings.
The couple of co I spoke to wanted around 20% of the weeks rental fee and the change over could easily cost £100 for cleaning to a good standard, laundry, bed changing and minor maintenance.
It added a lot to the no of weeks a year it needed to be let to cover the outgoings.
The thing about holiday rentals is that generally speaking, unless you buy very well and in the right tourist location then a single property isn't likely to turn a profit. What you are just looking to do is for the net rental income to reduce the running cost.
The issue with a chalet, in addition, is that it is very similar to a short dated lease property in terms of how you should commercially value it but the problem is that Martha and Arther who have just retired and have always dreamt of being eaten alive by midges will bid the market up.
The reality about holiday let's is that if people were totally honest with themselves and ran a proper set of calculations then it does on most occasions (especially as your asset will decay to zero value and not appreciate over the longer term) work out better to stay in a nice hotel when you go there.
The issue with a chalet, in addition, is that it is very similar to a short dated lease property in terms of how you should commercially value it but the problem is that Martha and Arther who have just retired and have always dreamt of being eaten alive by midges will bid the market up.
The reality about holiday let's is that if people were totally honest with themselves and ran a proper set of calculations then it does on most occasions (especially as your asset will decay to zero value and not appreciate over the longer term) work out better to stay in a nice hotel when you go there.
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