New business finance - guessing impossible at these figures

New business finance - guessing impossible at these figures

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sidekickdmr

Original Poster:

5,065 posts

205 months

Wednesday 26th August 2015
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Yes I noticed that too and realised that may make this one unsuitable, however we won't be in a postision to buy this one anyway and that was just an expample.

CaptainSlow

13,179 posts

211 months

Wednesday 26th August 2015
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sidekickdmr said:
Back of fag packet calcs work out as

£140,000 income from the main house

£130,000 income from the cottages

£40,000 income from weddings on land

£20,000 from unsold packages and add ons.

Total £230,000 income based on a worst case low occupancy, no week time bookings.

I think your calculator is broken.


sidekickdmr

Original Poster:

5,065 posts

205 months

Wednesday 26th August 2015
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CaptainSlow said:
I think your calculator is broken.
Seems to be my keyboard, not my calc, figs were correct in my head

Must be more careful type

jammy_basturd

29,776 posts

211 months

Wednesday 26th August 2015
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sidekickdmr said:
But yes, all of your points are correct, and I knew it was un realistic to hit the ground running with 4.5 mill in my pocket to make it work.

So, something like this may be a good starting point

Martin Street, Baltonsborough, Glastonbury, Somerset
http://www.rightmove.co.uk/property-for-sale/prope...

£375,000, needs about 200k spent on it, including converting the outbuildings to games rooms, plant rooms and landscaping the land etc.

We could possibly just about get this mortgage personally.

Rent a little cottage around the corner, and give it a go.

Once done, (in a very funky farmhouse farrow and ball style) with hot tub, perhaps small outside pool etc, I reckon we could get £3,000 a weekend, £4,500 a week in the summer.

Pretty decent starting point and would be a great project!
I think you need to research prices a bit more, then take a worst case figure.
https://www.airbnb.com/rooms/1117501?checkin=07%2F...

Also research just how much these large places do get used. There's a huge choice on AirBNB and it seems a lot of houses available on a lot of dates.

sidekickdmr

Original Poster:

5,065 posts

205 months

Wednesday 26th August 2015
quotequote all
Something like this could work as a half way house (ticks most of the boxes of the first property, but cheaper and scope to add value, like the 2nd property.)

http://www.rightmove.co.uk/property-for-sale/prope...

1.2 Million, plus I guess another 300k to finish refurbishing upstairs and furnish (hard to say without seeing it)

It's not listed, which gives you much more freedom and less hassle. It needs a bit of interior design and landscaping to give it that WOW factor.

Once finished run this property on its own as a Mansion holiday let, due to the number of bedrooms and pool you could get quite serious money, perhaps 4.5k a weekend - 6.5k a week?

And then, once it is turning a profit, one by one, apply for finance and planning and build smaller holiday cottages in the outskirts of the land.

Slowly grow the business, organically (profit and experience wise)

Plus it's in a great location, in Dartmoor national park. A great tourist area.

sidekickdmr

Original Poster:

5,065 posts

205 months

Wednesday 26th August 2015
quotequote all
jammy_basturd said:
I think you need to research prices a bit more, then take a worst case figure.
https://www.airbnb.com/rooms/1117501?checkin=07%2F...

Also research just how much these large places do get used. There's a huge choice on AirBNB and it seems a lot of houses available on a lot of dates.
I know it sounds silly, but it all comes down to the style/feel/decor of the place!

The kind of people that will be wanting to spend ££££ on a weekend away with the family, are Londoners, and successful business people. These people don't want to stay in grandma's tea doily.

We are a key example of this, I would never stay in the place you just posted, amazing house, but doesn't do it for me.

When vie looked for a big mansion to stay in, all the old fashioned places (which is about 90% of them), like the one you linked to, are dead, nobody books them at all.

The more "young and fun" places, still with the character, but a modern, fun and quirky twist are the booked up ones.






I may as well stop beating around the bush and just say, this business model is what I am aiming for, just all on the one big estate.

http://www.woodlandsretreats.co.uk/

Take a look at the online diary, summer is now archived, but that was fully fully booked, every week.

The main house, woodlands farmhouse, only has 2 weeks currently not booked between now and Xmas.

Edited by sidekickdmr on Wednesday 26th August 14:09

jammy_basturd

29,776 posts

211 months

Wednesday 26th August 2015
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I think you need to speak to a couple of banks before getting carried away with yourself. If you've only got £200k to put in yourself, I'm not sure how you'd hope to get another £1m as a loan/mortgage.

sidekickdmr

Original Poster:

5,065 posts

205 months

Wednesday 26th August 2015
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jammy_basturd said:
I think you need to speak to a couple of banks before getting carried away with yourself. If you've only got £200k to put in yourself, I'm not sure how you'd hope to get another £1m as a loan/mortgage.
Thats kind of the whole point of this thread

Asking if getting any kind of finance for a large project like this is possible, with the bigger income and potential this brings.


If not we will start at the bottom with our own money/mortgage and work our way up.

TwistingMyMelon

6,385 posts

204 months

Wednesday 26th August 2015
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Could work with lots of grit/brains and luck but...

The bank wont want to know, far to high risk for them, the first two questions will be :

1. How much are you putting in?
2. What experience do you have in this sector?

OP what experience do you have in this sector? Dealing with people at any level is a complete pita, nothing will go to plan . Never presume the guests will treat the place and be like you and your partner! If you think you will get endless London folk visiting granny for a quiet weekend think again!

Also do you have any experience with older buildings or construction? Your biggest factor will be finding someone decent to do any work and then the time it takes to complete it, the time it takes will be time you can't be earning from it, yet paying builders. For example any decent builders will be fully booked quite a way in advance, then you have to presume they do a good job, finally the weather will piss up any plans and slow it down. A friend of mine is a property developer and developing some land to holiday lets, he says the end product will be great, but building them in the UK climate and workforce is a complete pain. He is experienced, doing some work himself, has a slush fund and loads of contacts, if he says its tough I pity any first timers.

I think you will stretch yourself so much with all the jobs you and your partner intend to do, its all great on paper, but there are so many issues you haven't forseen , which will eat into time. Stuff like H&S regulation and waiting around when people don't show for handovers is a complete pita!

Have you looked into AirBnB as a platform to market such a place? My mate swears by it and some of the properties on there are nice little earners, although you only every here the success stories ..not the people who are struggling

Don't want to sound harsh, but its a big ask OP !

sidekickdmr

Original Poster:

5,065 posts

205 months

Wednesday 26th August 2015
quotequote all
Thanks for the helpful post, ill have a go at answering some of the Q's below!

OP what experience do you have in this sector? Dealing with people at any level is a complete pita, nothing will go to plan . Never presume the guests will treat the place and be like you and your partner!

I've never worked in a hotel/B&B but have worked with the general public lots, and don't get me wrong, things will go wrong, get broken and people will wind me up, but I'm expecting it, and would be building my business model around worse case scenario (insurance, large security deposits etc.

Re: London folk coming to visit granny, that's not the business at all. This mansion is booked out for birthdays, hen parties, family events, weddings, xmas etc. The house IS the main event, not just accommodation for a weekend away.

As an example, without ever knowing I've been to one, let alone thinking of doing one, my Aunte said to me just last week, Its my 50th soon, Im going to hire a huge house in the country, get some caterers and a band in and have all friends and family together for the weekend. This must happen all the time, country wide.

Ive mentioned it before but regardless of doing this or not, next summer
I'll be spending (well me and my mates) £3,500 on a mansion for a weekend to get together and have a laugh, that will be the 3rd year in a row then


Also do you have any experience with older buildings or construction?

Yes, we fully refurbished our last house, bare brick referb. New ceilings, walls, electrics, kitchens, bathrooms etc. On top of this we currently live in and maintain a 1880's cottage and large garden. My dads a builder, my granddad a double glazer, so i have family/friends to help out/advise

I think you will stretch yourself so much with all the jobs you and your partner intend to do, its all great on paper, but there are so many issues you haven't foreseen , which will eat into time. Stuff like H&S regulation and waiting around when people don't show for handovers is a complete pita!

Agreed, there will be lots I've not thought of, however im not adverse to getting someone to help if we really need it, but this will again grow organically with the busier we get and more turnover, so at the point we need help, we should be able to afford it.

Have you looked into AirBnB as a platform to market such a place? My mate swears by it and some of the properties on there are nice little earners, although you only every here the success stories ..not the people who are struggling

All of the mansions ive tried to book, but had no luck as they are fully booked in the past, have been almost self promoting, listing themselves on sites like "Big Domain" but bookings taken direct. However im one of those people that would try anything to make it work, face book, adverts in Metro, you name it id try it (providing i thought it was worth it of course).

Don't want to sound harsh, but its a big ask OP !
No its great, this is exactly what i need to gather peoples thoughts and feedback, Thank you


Edited by sidekickdmr on Wednesday 26th August 15:23

TwistingMyMelon

6,385 posts

204 months

Wednesday 26th August 2015
quotequote all
sidekickdmr said:
Thanks for the helpful post, ill have a go at answering some of the Q's below!

OP what experience do you have in this sector? Dealing with people at any level is a complete pita, nothing will go to plan . Never presume the guests will treat the place and be like you and your partner!

I've never worked in a hotel/B&B but have worked with the general public lots, and don't get me wrong, things will go wrong, get broken and people will wind me up, but I'm expecting it, and would be building my business model around worse case scenario (insurance, large security deposits etc.

Re: London folk coming to visit granny, that's not the business at all. This mansion is booked out for birthdays, hen parties, family events, weddings, xmas etc. The house IS the main event, not just accommodation for a weekend away.

Also do you have any experience with older buildings or construction?

Yes, we fully refurbished our last house, bare brick referb. New ceilings, walls, electrics, kitchens, bathrooms etc. on top of this we currently live in and maintain a 1880's cottage and large garden. My dads a builder, my granddad a double glazer, so i have family/friends to help out/advise

I think you will stretch yourself so much with all the jobs you and your partner intend to do, its all great on paper, but there are so many issues you haven't foreseen , which will eat into time. Stuff like H&S regulation and waiting around when people don't show for handovers is a complete pita!

Agreed, there will be lots I've not thought of, however im not adverse to getting someone to help if we really need it, but this will again grow organically with the busier we get and more turnover, so at the point we need help, we should be able to afford it.

Have you looked into AirBnB as a platform to market such a place? My mate swears by it and some of the properties on there are nice little earners, although you only every here the success stories ..not the people who are struggling

All of the mansions ive tried to book, but had no luck as they are fully booked in the past, have been almost self promoting, listing themselves on sites like "Big Domain" but bookings taken direct. However im one of those people that would try anything to make it work, face book, adverts in Metro, you name it id try it (providing i thought it was worth it of course).

Don't want to sound harsh, but its a big ask OP !
No its great, this is exactly what i need to gather peoples thoughts and feedback, Thank you
Sounds like you are on the ball, I would start smaller and view it to expand (as already stated) , then you can build experience and a business rather than biting off more than you can chew

The link (of the business that inspired you) that you posted looks really good, I would want to stay there , but its taken them 13 years to get that far and a lot of hard lessons I bet . From the site it looks like they started off by developing old buildings they already had so they had an advantage, in that they could develop what they had whilst being subsidised by a farming business.

I think marketing would take time, using just a domain direct and Google results is a big ask. 5-10 years ago internet marketing was quite straightforward, but there is so much content and rivals on the internet now its a bloody tough marketplace and very hard to get your site seen. I have no idea how much an ad costs in Metro, but I bet it wont be cheap. Building repeat trade is ace, but it takes time , that's time you might not have.

By comparing yourselves to established businesses is a tough one, as they have had time to establish themselves and generate word of mouth booking , its difficult to say they are booked "90% ok the time, so in worst case I will be booked 60% of the time" . Looking at established businesses to reaffirm your thoughts doesn't take into account all the ones that failed and aren't online any more!

Trouble with me would be, if I sat down and worked out the costs , efforts and predictions involved I would probably come to the conclusion that my money, risk and time would be better spent in an industry/sector that required less initial investment, had higher rewards and was more aligned to what I was used to.

On a similar note I went to a wonderful wedding at an "all in one" period home with cottages near Yeovil. The wedding venue was brilliant, a real marvel , I did think it must have cost 20-50K to rent out, even being in October. It turns out it was only circa 5k!! The venue used to trade on its amazing surroundings and charge 20-25k a wedding, but they were only being booked peak season and business was really stop start with big gaps. They changed their policy, dropped their prices considerably so they are fully booked most days of the year, instead of charging more but being booked up far less.

sidekickdmr

Original Poster:

5,065 posts

205 months

Wednesday 26th August 2015
quotequote all
Thank you so much for your help TMM, really appreciate it and you raise some great points.

The company I linked to as being my inspiration, Ive stayed with them 3 times now, in two of their properties. So I know first hand how they run, booking process, little touches that make it feel special etc. But I also spotted lots of things that could be done to improve the experiance, and at the same time profit.

Its clearly working for them, they seem to be adding a new property every year!

First thing we need to do is get our house sold, we can then have the money in the bank and keep en eye out for properites and potentially investers.

Starting small-medium seems to be the way, but its hard as the top of the market (house size and style wise) is the "in demand" section, so it seems like its all or nothing.

Thanks smile

TwistingMyMelon

6,385 posts

204 months

Wednesday 26th August 2015
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No worries, good luck!

Herdwick

150 posts

237 months

Wednesday 26th August 2015
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This is what we have been doing for the last 10 years, although renting as 3 or 4 separate properties rather than as one big unit. Currently on a smaller scale (Having been down the route of the expansion for the 'big' house).

Many of our guests think exactly as you do - its a nice earner for what appears to be 'little' work. As said above, there is always ongoing maintenance, and the costs you have never dreamed of will eat into your takings so fast that you can quickly be left with no profit at all.

Location is key, as well as marketing, but the cost of a £4 mil mortgage, plus insurance, business rates (No such thing as council tax), so private waste contractors are needed, dont forget that you would have to pay VAT with very little you could reclaim etc....

Good luck, but probably much easier and profitable to buy something already setup and operating that trying to establish from new without a HUGE reserve of cash.

R11ysf

1,931 posts

181 months

Wednesday 26th August 2015
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OP can you answer 2 questions that makes this easier to answer.

1. How much are you putting in?
2. What are the well paying jobs you are giving up?

Thanks.

akirk

5,376 posts

113 months

Wednesday 26th August 2015
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As a suggestion / to try the market - start by finding a current home owner who will let you manage / rent out their house (qutie common with this size of house) - do a couple of years trial run to see how it goes... I have a client who does what you want to do on a reasonably large scale - there is a lot of work behind the scenes, a lot of capital in setting it up...

If you start with someone else's house you won't need to find the capital investment...

edc

9,231 posts

250 months

Wednesday 26th August 2015
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£330k sales less maintenance, taxes, business costs etc doesn't sound like that much money, relatively, for 2 people giving up very well paid jobs.

I would say your income and profitability has limited growth but at 28 you have significant headroom for salary growth.

sidekickdmr

Original Poster:

5,065 posts

205 months

Thursday 27th August 2015
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R11ysf said:
OP can you answer 2 questions that makes this easier to answer.

1. How much are you putting in?
2. What are the well paying jobs you are giving up?

Thanks.
1. Everything we have, which is about 200k once we have sold our house.
2. Nobody said "very" ;-), but we both contract within financial services.

akirk said:
As a suggestion / to try the market - start by finding a current home owner who will let you manage / rent out their house (qutie common with this size of house) - do a couple of years trial run to see how it goes... I have a client who does what you want to do on a reasonably large scale - there is a lot of work behind the scenes, a lot of capital in setting it up...

If you start with someone else's house you won't need to find the capital investment...
Yes I did look into this before, and it would certainly be a great idea, the only issues I can see are:

1. Insurance, it was hard to find a policy to take out as a business, to protect other peoples property/contents, for short term renters.

2. If it works, but the owner wants it back/we decide to buy our own place, we loose all word of mouth and repeat custom that has built up.

3. Finding someone willing to do it!

Certainly worth looking into again though!

edc said:
£330k sales less maintenance, taxes, business costs etc doesn't sound like that much money, relatively, for 2 people giving up very well paid jobs.

I would say your income and profitability has limited growth but at 28 you have significant headroom for salary growth.
Yes I do agree in part, however, I dont want a career, I want a business that gives me and the wife the lifestyle and flexability we want. The wife will be quitting work in about 3 years regardless to have sprogs, so the income would half at the point anyway, I guess we are working towards that day.

I enjoy working hard, I enjoy business, and I want out of the rat race. Im ready for a challange.


Zoon

6,654 posts

120 months

Thursday 27th August 2015
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sidekickdmr said:
Yes I do agree in part, however, I dont want a career, I want a business that gives me and the wife the lifestyle and flexability we want. The wife will be quitting work in about 3 years regardless to have sprogs, so the income would half at the point anyway, I guess we are working towards that day.

I enjoy working hard, I enjoy business, and I want out of the rat race. Im ready for a challange.
Looking at your proposal their isn't going to be too much flexibility.
What happens when you want a holiday? Do you just close up for a week or two?


sidekickdmr

Original Poster:

5,065 posts

205 months

Thursday 27th August 2015
quotequote all
Zoon said:
Looking at your proposal their isn't going to be too much flexibility.
What happens when you want a holiday? Do you just close up for a week or two?
Both my, and my OH parents are already taking quite an interest in assisting with the business, we have a large close knit family, getting cover/assistance wouldn't be an issue.

Saying that, we are not really holiday people, not been away for 4 years!