New business-Need property

claire8370

Thanks for that doozergirl, very interesting what you say about B&Bs which is closest to the kind of accomodation it would be, only difference being the tenants get the keys so no staff around
. The fact I dont have a clue lies in the area of buying houses for business purposes, deposits, what type of mortgage etc however What we plan to do with it we haveideas a plenty and as said before its not rocket science.

My big hurdle lies in buying the property in the first place, namely getting together a sufficient deposit and just want to know whether banks would invest in it as a business idea maybe reducing the need for a 25% depsosit.

Cleaver

Doozergirl wrote: »

She's asking questions. She has plenty of time to research. One unit of self catering accommodation isn't exactly going to be the most complicated of businesses to run either.

New business can be built on a good idea, not just something you're already experienced at.

You're right, I was a bit harsh. Apologies.

I just thought this may not be the best time for two you people with zero cash, no experience of commercial property to be getting in to this type of thing.

PasturesNew

claire8370 wrote: »

My big hurdle lies in buying the property in the first place, namely getting together a sufficient deposit and just want to know whether banks would invest in it as a business idea maybe reducing the need for a 25% depsosit.

No bank will "invest" in it. That's what you are doing.
You would need to put some of your own money up for any loan, so 25% is likely.
They'd expect you to also have some idea/experience about what you're taking on as a business.

You say they'd pick the keys up, from where?
Who will monitor the state of the property when they leave/book out?
Who will check they hand the keys back at all?
What if there are problems with bad behaviour?

I fear that many people booking such a place will have a slack attitude to their responsibilities and will not see it as lovely handy accommodation, but a great party room to get w4nkered in and trash.

I've heard many stories from people who run B&Bs. Lots of lads pee the bed when they're drunk, and like to pull fittings from the walls (e.g. sinks).

You'd certainly need planning permission for such a venture.

claire8370

PasturesNew wrote: »

No bank will "invest" in it. That's what you are doing.
You would need to put some of your own money up for any loan, so 25% is likely.
They'd expect you to also have some idea/experience about what you're taking on as a business.

You say they'd pick the keys up, from where?
Who will monitor the state of the property when they leave/book out?
Who will check they hand the keys back at all?
What if there are problems with bad behaviour?

I fear that many people booking such a place will have a slack attitude to their responsibilities and will not see it as lovely handy accommodation, but a great party room to get w4nkered in and trash.

I've heard many stories from people who run B&Bs. Lots of lads pee the bed when they're drunk, and like to pull fittings from the walls (e.g. sinks).

You'd certainly need planning permission for such a venture.

I understand your above points, the accomodation will be near one of us to do the checking,keys etc, refundable deposits will be taken, and accomodation rented to primarily hen parties or all girl party groups, men do tend to cause the damage.

No business experience but people have to start somewhere to get the experience, dont you think? and I know there is loads of help out there for young people, business link are great.

So Im going to have to get saving to get the deposit together!

poppysarah

You'd need to look at the property's covenants and rules on possible HMO. It'd have to be very safe fire regs wise - just as a hotel would. I'd imagine it'd be unpopular with it's neighbours too. You might need change of use on planning permission.
And insurance would be a nightmare. What if the place got trashed night one of 10 booked and the damage took 10 days to repair? You'd have to find alternative accomodation for the other bookings or pay compensation.

You'd also check liablity for any illegal activities which take place there.

It's a very interesting idea but the market is perhaps not best suited to something as decadent as this unless you're very very rich and in which case you've got the penthouse suites at major hotels very happy to deal with this sort of clientel.

It's a very interesting idea, but as they say on the den, "I'm out".

Doozergirl

The bank will be investing in you to an extent. The 25% is something you have to come up with because they won't take all the risk on themselves. They will probably help with small business overdrafts and credit cards that won't be secured but in terms of the secured part, the building, I think you have to come up with 25%.

Business insurance isn't too much of a nightmare, there are packages out there specially designed for small hotels, certainly with AXA through Lloyds TSB so there will be something to cover you. I'm sure that HMO regulations have nothing to do with it. It simply isn't an HMO.

poppysarah

Doozergirl wrote: »

The bank will be investing in you to an extent. The 25% is something you have to come up with because they won't take all the risk on themselves. They will probably help with small business overdrafts and credit cards that won't be secured but in terms of the secured part, the building, I think you have to come up with 25%.

Business insurance isn't too much of a nightmare, there are packages out there specially designed for small hotels so there will be something to cover you. I'm sure that HMO regulations have nothing to do with it. It simply isn't an HMO.

I was thinking more the level of fire regs that HMO havce to have - I imagine B&B etc have to have very high levels of fire safety.

But the rules allow for:

2. Additional licensing of HMOs.

• A discretionary power that Councils may decide to apply to a particular type of HMO, for example, two storey properties occupied by three or more students or asylum seekers.

http://www.eppingforestdc.gov.uk/Council_Services/environmental_health/Licensing/Do_all_HMOs_have_to_be_licensed.asp

Insurance will be an expensive problem. By the time you're on your second claim you'll be uninsurable.

Premier_2

claire8370 wrote: »

I understand your above points, the accomodation will be near one of us to do the checking,keys etc, refundable deposits will be taken, and accomodation rented to primarily hen parties or all girl party groups, men do tend to cause the damage.

No business experience but people have to start somewhere to get the experience, dont you think? and I know there is loads of help out there for young people, business link are great.

So Im going to have to get saving to get the deposit together!

Have you thought about this? Bearing in mind you could book a very swanky hotel room for £200 a night, how much deposit do you expect to take?

Read a few of the threads on this forum where tenants have left a property trashed meaning the month's rental (perhaps £600 - £1000) the LL was holding as a security deposit was woefully inadequate. Fortunately, most LLs also carry our credit referencing as a means to protect themselves, ensuring that a prospective tenant has a means to repay any damage caused. Trust me, £000's damage can be caused in a property extremely quickly by those wanton or drunken enough. Will you be credit referencing all overnighters as well as demanding massive deposits?

By not accepting male customers you have immediately cut your prospective market by 50% (perhaps more - take a look in any city hotel and I think you'll find more male than female guests. I might be wrong on that assumption but that seems to be the way mid-week at least)

That top notch city centre hotel is suddenly looking a very attractive proposition for an overnight stay.

Doozergirl

poppysarah wrote: »

I was thinking more the level of fire regs that HMO havce to have - I imagine B&B etc have to have very high levels of fire safety.

But the rules allow for:

2. Additional licensing of HMOs.

• A discretionary power that Councils may decide to apply to a particular type of HMO, for example, two storey properties occupied by three or more students or asylum seekers.

http://www.eppingforestdc.gov.uk/Council_Services/environmental_health/Licensing/Do_all_HMOs_have_to_be_licensed.asp

Insurance will be an expensive problem. By the time you're on your second claim you'll be uninsurable.

Fire regulations had already been mentioned and being a holiday let does not make you an HMO.

I don't think that's true on the insurance front. Previous claims may affect the premium but it doesn't make you uninsurable. I've seen application forms for business insurance with an entire A4 side of the application given over to space for writing in your claims history. And they are often used!

epz_2

Occasionally if I have trouble booking a hotel room when away I will occasionally book a managed apartment. They start about £20 a night more than a 5* hotel room but are much more pleasant to say in. They tend to be your typical 1-2bed flats in the town center just available with a higher spec of furniture.

Personally i would always prefer to stay in them, use the free wifi and make my own food so there is a market but for some reason my company would prefer I eat at posh restaurants that cost more than the £20 savings.


edit just noticed there are apartments in leeds going for £75 a night now