New business finance - guessing impossible at these figures
Discussion
sidekickdmr said:
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!
That should be OK. Saying that, we are not really holiday people, not been away for 4 years!
I'd suggest trying to get a place whilst living there and doing as much of the renovation work yourself.
It's the only way realistically you are going to afford it with the given budget.
Good luck however, and remember it will be twice as hard as you imagine.
Ok so I've found somewhere amazing that is for rent and for sale, so I'm thinking I could rent it for perhaps 2 years and ensure the business model works, and then purchase it and expand from there.
The rent is just under 4k a month, the purchase is 1.8 mil.
My concerns are, after renting it for 2 years, and showing it makes a viable business:
1. What's to stop the owner turning around, having me as a captive audience, and saying I want 3 million?
2. Going back to the finance, if I have 2 years accounts showing the money it can make, am I likely to get funding on it then? As there is next to no risk, the funding is secured against an asset, and the accounts prove the income.
Good plan?
The rent is just under 4k a month, the purchase is 1.8 mil.
My concerns are, after renting it for 2 years, and showing it makes a viable business:
1. What's to stop the owner turning around, having me as a captive audience, and saying I want 3 million?
2. Going back to the finance, if I have 2 years accounts showing the money it can make, am I likely to get funding on it then? As there is next to no risk, the funding is secured against an asset, and the accounts prove the income.
Good plan?
sidekickdmr said:
Ok so I've found somewhere amazing that is for rent and for sale, so I'm thinking I could rent it for perhaps 2 years and ensure the business model works, and then purchase it and expand from there.
The rent is just under 4k a month, the purchase is 1.8 mil.
My concerns are, after renting it for 2 years, and showing it makes a viable business:
1. What's to stop the owner turning around, having me as a captive audience, and saying I want 3 million?
2. Going back to the finance, if I have 2 years accounts showing the money it can make, am I likely to get funding on it then? As there is next to no risk, the funding is secured against an asset, and the accounts prove the income.
Good plan?
I'll keep it simple as there are lots of words floating round in this thread meaning that the basics are being missedThe rent is just under 4k a month, the purchase is 1.8 mil.
My concerns are, after renting it for 2 years, and showing it makes a viable business:
1. What's to stop the owner turning around, having me as a captive audience, and saying I want 3 million?
2. Going back to the finance, if I have 2 years accounts showing the money it can make, am I likely to get funding on it then? As there is next to no risk, the funding is secured against an asset, and the accounts prove the income.
Good plan?
You want to buy something for £1.8m
You have £200k to put in + whatever profit/loss you incur over 2 years
No bank will lend at 89% loan to value/purchase price for a business proposition like this.
Have you looked at other areas of the country? For instance a quick search on rightmove gives me these two properties. http://www.rightmove.co.uk/property-for-sale/prope... and http://www.rightmove.co.uk/property-for-sale/prope... which tick most of your boxes.
The reason I suggest them is that as they're in Wales you can get government funding such as http://www.financewales.co.uk/what-we-do/finance-f... and also the dear old EU Who are both keen to improve employment prospects in Wales and are willing to grant and loan to achieve it. So with a slight modification of your plan in that you would employ more staff rather than doing it yourself you may be able to get the funding or at least a larger part of it than going down the traditional bank route, and with more staff running the day to day leaves you and your partner more time for the sales and marketing side of things which will be most important for your success.
The reason I suggest them is that as they're in Wales you can get government funding such as http://www.financewales.co.uk/what-we-do/finance-f... and also the dear old EU Who are both keen to improve employment prospects in Wales and are willing to grant and loan to achieve it. So with a slight modification of your plan in that you would employ more staff rather than doing it yourself you may be able to get the funding or at least a larger part of it than going down the traditional bank route, and with more staff running the day to day leaves you and your partner more time for the sales and marketing side of things which will be most important for your success.
951TSE said:
Have you looked at other areas of the country? For instance a quick search on rightmove gives me these two properties. http://www.rightmove.co.uk/property-for-sale/prope... and http://www.rightmove.co.uk/property-for-sale/prope... which tick most of your boxes.
The reason I suggest them is that as they're in Wales you can get government funding such as http://www.financewales.co.uk/what-we-do/finance-f... and also the dear old EU Who are both keen to improve employment prospects in Wales and are willing to grant and loan to achieve it. So with a slight modification of your plan in that you would employ more staff rather than doing it yourself you may be able to get the funding or at least a larger part of it than going down the traditional bank route, and with more staff running the day to day leaves you and your partner more time for the sales and marketing side of things which will be most important for your success.
The reason I suggest them is that as they're in Wales you can get government funding such as http://www.financewales.co.uk/what-we-do/finance-f... and also the dear old EU Who are both keen to improve employment prospects in Wales and are willing to grant and loan to achieve it. So with a slight modification of your plan in that you would employ more staff rather than doing it yourself you may be able to get the funding or at least a larger part of it than going down the traditional bank route, and with more staff running the day to day leaves you and your partner more time for the sales and marketing side of things which will be most important for your success.
The folley you have linked to is the exact property im looking at now, I remember seeing it on Grand Designs and loving it, great mix of old and new, and certainly has the wow factor, just a shame its only a 6 bed. Lots of outbuildings to convert in the future and land though.
http://www.rightmove.co.uk/property-to-rent/proper...
So yes, that could be a possibility, ill have a look into it!
Thanks
hajaba123 said:
sidekickdmr said:
Ok so I've found somewhere amazing that is for rent and for sale, so I'm thinking I could rent it for perhaps 2 years and ensure the business model works, and then purchase it and expand from there.
The rent is just under 4k a month, the purchase is 1.8 mil.
My concerns are, after renting it for 2 years, and showing it makes a viable business:
1. What's to stop the owner turning around, having me as a captive audience, and saying I want 3 million?
2. Going back to the finance, if I have 2 years accounts showing the money it can make, am I likely to get funding on it then? As there is next to no risk, the funding is secured against an asset, and the accounts prove the income.
Good plan?
I'll keep it simple as there are lots of words floating round in this thread meaning that the basics are being missedThe rent is just under 4k a month, the purchase is 1.8 mil.
My concerns are, after renting it for 2 years, and showing it makes a viable business:
1. What's to stop the owner turning around, having me as a captive audience, and saying I want 3 million?
2. Going back to the finance, if I have 2 years accounts showing the money it can make, am I likely to get funding on it then? As there is next to no risk, the funding is secured against an asset, and the accounts prove the income.
Good plan?
You want to buy something for £1.8m
You have £200k to put in + whatever profit/loss you incur over 2 years
No bank will lend at 89% loan to value/purchase price for a business proposition like this.
Edited by Frio3535 on Thursday 27th August 14:09
Frio3535 said:
hajaba123 said:
sidekickdmr said:
Ok so I've found somewhere amazing that is for rent and for sale, so I'm thinking I could rent it for perhaps 2 years and ensure the business model works, and then purchase it and expand from there.
The rent is just under 4k a month, the purchase is 1.8 mil.
My concerns are, after renting it for 2 years, and showing it makes a viable business:
1. What's to stop the owner turning around, having me as a captive audience, and saying I want 3 million?
2. Going back to the finance, if I have 2 years accounts showing the money it can make, am I likely to get funding on it then? As there is next to no risk, the funding is secured against an asset, and the accounts prove the income.
Good plan?
I'll keep it simple as there are lots of words floating round in this thread meaning that the basics are being missedThe rent is just under 4k a month, the purchase is 1.8 mil.
My concerns are, after renting it for 2 years, and showing it makes a viable business:
1. What's to stop the owner turning around, having me as a captive audience, and saying I want 3 million?
2. Going back to the finance, if I have 2 years accounts showing the money it can make, am I likely to get funding on it then? As there is next to no risk, the funding is secured against an asset, and the accounts prove the income.
Good plan?
You want to buy something for £1.8m
You have £200k to put in + whatever profit/loss you incur over 2 years
No bank will lend at 89% loan to value/purchase price for a business proposition like this.
Edited by Frio3535 on Thursday 27th August 14:09
However, if I can build a business on the basis of sub letting, then great, or if I can get funding, then even better.
Basically I have a few different options to explore before I put the idea of a huge place to bed prematurely.
sidekickdmr said:
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.
All else aside, surely that's a bargain at £1.25m? That's Scotland prices surely, but in the South? Must be something wrong with it...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.
Frio3535 said:
Plus all the associated costs - stamp duty/land tax, legal fees, hoops to jumps through from the bank (Something to factor in regardless of what you buy)...
Quite right, I left all those out to keep it ridiculously simple as the OP doesn't seem to be responding to any posts other than 'it's a great idea' or 'try this property'Edited by Frio3535 on Thursday 27th August 14:09
wisbech said:
The Dartmoor house is "undergoing restoration" plus is in the middle of no-where.
As for the Folley. Normally rental contracts don't allow subletting
Oh trust me, as an ex estate agent I know that!As for the Folley. Normally rental contracts don't allow subletting
It would be a very comprehensive, custom contract drawn up by a solicitor.
Not only would I insist on that but I imagine the owner would too, a big risk at the end of the day.
sgrimshaw said:
Chances of you passing the checks that the landlord(s agent) will carry out is pretty slim, especially if you want to rent it out as a buiness by chucking in your jobs.
They will take a lot of convincing that you can actually afford the rent.
Could pay up front for the whole year/2 years if need be, sure it wouldn't be a problem!They will take a lot of convincing that you can actually afford the rent.
There seems to be a lot of enthusiasm but not a lot of understanding / respecting the detail.
very simple...
- high risk
- no previous experience of doing this
- low % deposit
- lack of sound business plan
you are going to find it tough to borrow the money commercially
your expectation of 70% weekend rental is very high, certainly initially - few properties manage that and you have a business / brand / property to promote and grow, it doesn't start at your maximum overnight... it could take a number of years...
there are so many flaws in this business that it is difficult to summarise them all - if you want to do it, start small and work up from there - you will gain a lot of experience... those in this business already either own the house through inheriting it, or have been in the business a long time, or have a big pot of money they spend... you have none of those...
but not a lot of understanding / respecting the detail.very simple...
- high risk
- no previous experience of doing this
- low % deposit
- lack of sound business plan
you are going to find it tough to borrow the money commercially
your expectation of 70% weekend rental is very high, certainly initially - few properties manage that and you have a business / brand / property to promote and grow, it doesn't start at your maximum overnight... it could take a number of years...
there are so many flaws in this business that it is difficult to summarise them all - if you want to do it, start small and work up from there - you will gain a lot of experience... those in this business already either own the house through inheriting it, or have been in the business a long time, or have a big pot of money they spend... you have none of those...
sidekickdmr said:
Hello,
Is like to come out straight away and say I'm expecting you all to say "no chance in hell" but on the off chance I'll ask anyway.
Me and my OH are really ready to start a new business, we both are willing to stop our well paid jobs, and work our arses off to make this business to work, it's the lifestyle and income we dream of.
We just need 3.5 million pound to make it work
But hear me out.
Every year, sometimes twice a year me and my friends all get together and rent a huge mansion, we're talking 9 bedrooms, swimming pools, games rooms, acres of land, home cinemas etc etc.
For just 3 nights we pay about £4,000 and trust me, all of the ones that are only half decent get booked up months and months in advance.
On top of this, me and my wife, with the dogs try and go away once a year (not a holiday, just a quiet weekend) we always look for a 1-2 bed modern but characterful cottage, but again looking at £600 for 3 nights and can't find anywhere decent as they are all fully booked.
Finally, we got married last weekend, we ended up having an outside style wedding
In an amazing farm, which was just the grounds of a (very impressive) private house. We paid a total of about £5,000 for a patch of grass (and a power supply) for just one night, again, only had 2 weekends free when we enquires over a year ago.
So, this brings me onto my idea.
In Cornwall/Devon, in a nice and picturesque location, we would love to buy a very grand and very impressive 8 bed mansion, for say 2.5 million pound, this would
Come with say 70 acres of land.
The home alone, based on a 70% occupancy rate would bring in £135,000 annually, this is based on weekends only and no peak rates for summer/Xmas.
We would then need an additional 2 million to build/convert 4 2-3 bed cottages on the land, each bringing in £600-800 a weekend, more for a whole week.
Finally, a spa centre would be built central to all 5 properties, bookable exclusively (3 hour slots, each house at a time). This would have pool, treatment rooms, hot tubs, gym, sauna, steam room etc.
We would live in the gate house, and be on hand to keep a bit of an eye on things and sort out any issues.
There are also lots and lots of opportunities to up sell, offer things like local produce breakfast hampers delivered to your door, cocktail making classes, chef hire etc etc
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.
Now, considering the banks money is all secured against the asserts, which would (should) actually be worth more than the total lent, it's relatively low risk, easy to show its already a proven business model, and great returns.
Any possibility at all of this being a remote possibility t o finance?
I can handle the disappointment, I've prepared myself for it!
Thanks
I don't want to take the wind out of your sails, your enthusiasm is commendable.Is like to come out straight away and say I'm expecting you all to say "no chance in hell" but on the off chance I'll ask anyway.
Me and my OH are really ready to start a new business, we both are willing to stop our well paid jobs, and work our arses off to make this business to work, it's the lifestyle and income we dream of.
We just need 3.5 million pound to make it work
But hear me out.
Every year, sometimes twice a year me and my friends all get together and rent a huge mansion, we're talking 9 bedrooms, swimming pools, games rooms, acres of land, home cinemas etc etc.
For just 3 nights we pay about £4,000 and trust me, all of the ones that are only half decent get booked up months and months in advance.
On top of this, me and my wife, with the dogs try and go away once a year (not a holiday, just a quiet weekend) we always look for a 1-2 bed modern but characterful cottage, but again looking at £600 for 3 nights and can't find anywhere decent as they are all fully booked.
Finally, we got married last weekend, we ended up having an outside style wedding
In an amazing farm, which was just the grounds of a (very impressive) private house. We paid a total of about £5,000 for a patch of grass (and a power supply) for just one night, again, only had 2 weekends free when we enquires over a year ago.
So, this brings me onto my idea.
In Cornwall/Devon, in a nice and picturesque location, we would love to buy a very grand and very impressive 8 bed mansion, for say 2.5 million pound, this would
Come with say 70 acres of land.
The home alone, based on a 70% occupancy rate would bring in £135,000 annually, this is based on weekends only and no peak rates for summer/Xmas.
We would then need an additional 2 million to build/convert 4 2-3 bed cottages on the land, each bringing in £600-800 a weekend, more for a whole week.
Finally, a spa centre would be built central to all 5 properties, bookable exclusively (3 hour slots, each house at a time). This would have pool, treatment rooms, hot tubs, gym, sauna, steam room etc.
We would live in the gate house, and be on hand to keep a bit of an eye on things and sort out any issues.
There are also lots and lots of opportunities to up sell, offer things like local produce breakfast hampers delivered to your door, cocktail making classes, chef hire etc etc
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.
Now, considering the banks money is all secured against the asserts, which would (should) actually be worth more than the total lent, it's relatively low risk, easy to show its already a proven business model, and great returns.
Any possibility at all of this being a remote possibility t o finance?
I can handle the disappointment, I've prepared myself for it!
Thanks
The income figure doesn't total £230k, it's £330. That's good but you need to be able to add up (unless I'm missing something)
Your rental rates are crazy, there's no way you will hit those occupancy levels and the rate is a massive deterrent.
The wedding market goes to established venues who know exactly what they're doing.
The costs to set up and market a place are huge.
Even if you hit £330k turnover (not profit) that's a poor return for a 3 or 4 £million investment.
How about looking at taking on a B and B, a boutique one and cost that out. If it woks you could grow it.
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!
£4500 a week!!!! Dream on mate.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 cant answer the finance questions, but regarding running the place.....
Wife and I have taken over a 5 bed 16th century grade 2 listed farmhouse.It has 2 huge barns and a few small outbuildings, orchard etc. We also inherited 10 sheep, 90 hens, some quails, guinea fowl and 20 doves lol.
We have inherited 3 lodgers full time (professionals who work at the big company nearby), but when they leave the 2 largest rooms will be B&B.
Its only 4.5 acres and a small is (3/4 acre) garden, but we currently cannot do all the work ourselves. We have a maintenance guy 3 days a week and a gardener 2 days a week. It would be impossible to keep on top of the upkeep ourselves.
Regarding income, I dont want to give numbers, but B&B and lodgers will bring in some. Wife will doing cake and decorating classes in the huge farmhouse kitchen and next spring we will be doing gourmet dining for up to 10 Friday night/Sat night/Sunday lunchtimes.We have loads os fruit and will be selling jams and preserves that wifey makes on line as well as to local delis and farmshops. I dont think any money will be made via jams etc, but it will get the name out and we wont lose any money either doing it.
And finally, nice weather weekends we will offer teas and coffees, homemade icecreams in the gardens. We are slap bang in the middle of a country park, and the park is packed when sunny & bank holidays.
Please note that I do not ever expect to get rich. It is all about living the lifestyle in the country. As long as we break even or make a small profit I will be happy (I will still work). The point of all this is that we do not have huge finance.....and will still never be rich!
ETA-I am finding the hardest part is the website and getting us "out there" and talked about!
Wife and I have taken over a 5 bed 16th century grade 2 listed farmhouse.It has 2 huge barns and a few small outbuildings, orchard etc. We also inherited 10 sheep, 90 hens, some quails, guinea fowl and 20 doves lol.
We have inherited 3 lodgers full time (professionals who work at the big company nearby), but when they leave the 2 largest rooms will be B&B.
Its only 4.5 acres and a small is (3/4 acre) garden, but we currently cannot do all the work ourselves. We have a maintenance guy 3 days a week and a gardener 2 days a week. It would be impossible to keep on top of the upkeep ourselves.
Regarding income, I dont want to give numbers, but B&B and lodgers will bring in some. Wife will doing cake and decorating classes in the huge farmhouse kitchen and next spring we will be doing gourmet dining for up to 10 Friday night/Sat night/Sunday lunchtimes.We have loads os fruit and will be selling jams and preserves that wifey makes on line as well as to local delis and farmshops. I dont think any money will be made via jams etc, but it will get the name out and we wont lose any money either doing it.
And finally, nice weather weekends we will offer teas and coffees, homemade icecreams in the gardens. We are slap bang in the middle of a country park, and the park is packed when sunny & bank holidays.
Please note that I do not ever expect to get rich. It is all about living the lifestyle in the country. As long as we break even or make a small profit I will be happy (I will still work). The point of all this is that we do not have huge finance.....and will still never be rich!
ETA-I am finding the hardest part is the website and getting us "out there" and talked about!
Here is how I would do it. And I take a view that business at the basic level is all about making money, everything else is wrapping paper.
get a decent place to rent for 2 years
pay rent in advance, cash money on the table always makes eyes pop and deals easier.
budget for all jobs to be outsourced contracts as much as possible
create a brand and rent out under that brand, allows flexibility to change location if the landlord changes tune in 2 years.
end of 2 years you have a credible brand, decent accounts and potential to expand.
expansion could be ownership of asset if cost of finance and asset maintenance is low enough to generate a decent profit/income
IF cost of finance and maintaining the asset is expensive, expand by way of renting another property in a different location.
rinse & repeat every 2 years.
forget trying to do all jobs by yourself to save costs, trick is to use the income to get work done quicker and better than you can do. You may even be able to do this by giving up the wife's income and still keep your contracting income going as a safety net. That way you have your supervision of your business and a seperate income safety net at the same time.
get a decent place to rent for 2 years
pay rent in advance, cash money on the table always makes eyes pop and deals easier.
budget for all jobs to be outsourced contracts as much as possible
create a brand and rent out under that brand, allows flexibility to change location if the landlord changes tune in 2 years.
end of 2 years you have a credible brand, decent accounts and potential to expand.
expansion could be ownership of asset if cost of finance and asset maintenance is low enough to generate a decent profit/income
IF cost of finance and maintaining the asset is expensive, expand by way of renting another property in a different location.
rinse & repeat every 2 years.
forget trying to do all jobs by yourself to save costs, trick is to use the income to get work done quicker and better than you can do. You may even be able to do this by giving up the wife's income and still keep your contracting income going as a safety net. That way you have your supervision of your business and a seperate income safety net at the same time.
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