Buying a chalet holiday let
Bertha123
Posts: 11 Forumite
Hello all; I have posted similar elsewhere as not sure which section this is most suited for..
So there are a few holiday chalets to buy in Isle of Wight. Could probably get one for £30,000. There is an 85 year old lease on it. At the moment the site is awaiting to be bought so the clubhouse is shut. Site fees are £1500 per year, I have been told the fees have been set by the Leasehold regulation (or something like that) so unlikely to rise that much when the site is bought (I don't know if this true?!). Outgoings might be £2500 per year. NB. I live in South west England so would for a company to do the cleaning after every changeover and I would be unlikely to visit THAT often. I do love the IOW though so I would use it and visit to check it etc!
Now rental potential; they are only tiny chalets but I have had a look at the prices the others charge. Based on occupancy for 2 weeks in both May and June, 3 weeks in July and August, and 2 weeks in September, plus another two short stays outside of this time, would mean overall I would get a couple thousand profit per year after my outgoings. Not a huge amount I know. However this still would be better interest than if that £30,000 was in a savings account. Also perhaps I might even get more guests than that (or less!).
However my only concern is selling the chalet. If I can get m y £30k back then great as the money I made would be better than a bank so great. However people on Lay my Hat forum are concerned that chalets do not increase in value much, the lease is already very short and the profit margins are small. Also it is a worry that site is waiting to be bought as it is unknown and something to be wary of perhaps?!
However I also thought perhaps once site is bought and clubhouse is up and running again, maybe chalets are more desirable for the people considering buying them. (I am aware clubhouses aren't attractive to everyone but since there is one that is empty, surely that is a bit of an eye sore and if it was open again, would be better). I thought would the fact the clubhouse is open cancel out the shorter lease. Please note the chalets have risen in price but obviously not much because of their low value so it is not silly to think it will increase again, but at what point is the lease an issue.
I wanted to get other views from you guys on here. I know I wouldn't make loads and as such isn't much of an 'investment', all I am concerned with is getting better interest than in an account and getting back what I paid for the chalet in so many years time.
Thank you for reading
So there are a few holiday chalets to buy in Isle of Wight. Could probably get one for £30,000. There is an 85 year old lease on it. At the moment the site is awaiting to be bought so the clubhouse is shut. Site fees are £1500 per year, I have been told the fees have been set by the Leasehold regulation (or something like that) so unlikely to rise that much when the site is bought (I don't know if this true?!). Outgoings might be £2500 per year. NB. I live in South west England so would for a company to do the cleaning after every changeover and I would be unlikely to visit THAT often. I do love the IOW though so I would use it and visit to check it etc!
Now rental potential; they are only tiny chalets but I have had a look at the prices the others charge. Based on occupancy for 2 weeks in both May and June, 3 weeks in July and August, and 2 weeks in September, plus another two short stays outside of this time, would mean overall I would get a couple thousand profit per year after my outgoings. Not a huge amount I know. However this still would be better interest than if that £30,000 was in a savings account. Also perhaps I might even get more guests than that (or less!).
However my only concern is selling the chalet. If I can get m y £30k back then great as the money I made would be better than a bank so great. However people on Lay my Hat forum are concerned that chalets do not increase in value much, the lease is already very short and the profit margins are small. Also it is a worry that site is waiting to be bought as it is unknown and something to be wary of perhaps?!
However I also thought perhaps once site is bought and clubhouse is up and running again, maybe chalets are more desirable for the people considering buying them. (I am aware clubhouses aren't attractive to everyone but since there is one that is empty, surely that is a bit of an eye sore and if it was open again, would be better). I thought would the fact the clubhouse is open cancel out the shorter lease. Please note the chalets have risen in price but obviously not much because of their low value so it is not silly to think it will increase again, but at what point is the lease an issue.
I wanted to get other views from you guys on here. I know I wouldn't make loads and as such isn't much of an 'investment', all I am concerned with is getting better interest than in an account and getting back what I paid for the chalet in so many years time.
Thank you for reading
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Comments
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Out of interest, where in the Isle of Wight is the chalet??"If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes” Warren Buffett
Save £12k in 2021 - #027 £15,268 (76%)0 -
In Sandown! 0
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I've stayed in Chalets in Sandown Bay, please tell me it's not there? Have you stayed in the chalets you're thinking of buying?
Personally I'd be a little concerned about the Isle of Wight right now. The ferry prices are definitely putting people off and they're not coming down anytime soon. We stayed in Shanklin recently on a site that always used to be full, but it was 1/4 empty and this was in Cowes week. We've just had a great summer and people are worried about going abroad, yet the IoW sites aren't anywhere near full this season.
With a low lease time left, unknown future fees and the fact that it may not even be developed, for me there is a very simple answer. Stay clear.Pants0 -
However this still would be better interest than if that £30,000 was in a savings account.
Two very different propositions. Savings interest rates are low but so is inflation currently. Going from no risk to a potentially high risk venture where you could lose a lot of your hard earned money requires careful consideration. First rule of investing is don't lose your capital.
Is your pension provision adequate? Might be boring but far more rewarding.0 -
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However this still would be better interest than if that £30,000 was in a savings account.
There is obviously a world of difference between the two things. Plus, this ignores conventional investments too.
If the site is profitable, why do they need you to buy the lease?
What happens if the site closes?
Holiday lets are notorious for suffering frequent damage. You need to cost that in.
This is not a liquid holding. Can you accept that?all I am concerned with is getting better interest than in an account and getting back what I paid for the chalet in so many years time.
It fails to meet that criteria. So, that means it is unsuitable.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Lots of ifs, buts and maybe's there. What if it doesn't work out and you have to sell for £10k losing £20k in the process? Would that matter?However I also thought perhaps once site is bought and clubhouse is up and running again, maybe chalets are more desirable for the people considering buying them. (I am aware clubhouses aren't attractive to everyone but since there is one that is empty, surely that is a bit of an eye sore and if it was open again, would be better). I thought would the fact the clubhouse is open cancel out the shorter lease. Please note the chalets have risen in price but obviously not much because of their low value so it is not silly to think it will increase again, but at what point is the lease an issue.
Do you already have plenty of other investments as they are far more likely to go up in value and pay a better income that this?Remember the saying: if it looks too good to be true it almost certainly is.0 -
This is certainly quite a high risk venture which could loose all its value very swiftly unless the area is in some demand.
If the site is not sold for some years you are looking at a fast depreciating asset which may make you look fondly at 1.5% at Santander.
You need to find out if there are any site fee regulation controls in writing as just being told it is okay will not protect you if any new owners doubles the fees overnight.
As to the value, I do not think holiday homes will even hold their value (never mind increase) when you include repairs and upkeep and fees etc.
On the positive side, you could invite the former head of OFSTED for a holiday.0 -
I've stayed in Chalets in Sandown Bay, please tell me it's not there? Have you stayed in the chalets you're thinking of buying?
Personally I'd be a little concerned about the Isle of Wight right now. The ferry prices are definitely putting people off and they're not coming down anytime soon. We stayed in Shanklin recently on a site that always used to be full, but it was 1/4 empty and this was in Cowes week. We've just had a great summer and people are worried about going abroad, yet the IoW sites aren't anywhere near full this season.
With a low lease time left, unknown future fees and the fact that it may not even be developed, for me there is a very simple answer. Stay clear.
Hello, yes it is Sandown Bay Holiday Centre..my dad owned one years ago so I used to holiday there 15 years ago! Is it that bad?!0 -
Thrugelmir wrote: »Two very different propositions. Savings interest rates are low but so is inflation currently. Going from no risk to a potentially high risk venture where you could lose a lot of your hard earned money requires careful consideration. First rule of investing is don't lose your capital.
Is your pension provision adequate? Might be boring but far more rewarding.
I do have a bit more than that, its from an accident and so do not want to lose it. Just a shame that it is a decent amount of money but I have no idea what to do with it. And it still is nowhere near enough to buy a property without a mortgage. I had it in loads of different accounts years ago but became lazy as to much effort to keep moving it around. Now its sat getting pretty much 0%.
I am 30...so pension not there yet!0
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