Should we buy this holiday let business?

Rockporkchop

I have got an appointment to go through all the books, accounts, booking levels, customer database etc on 14 August and also get another good look around the place as it is changeover day. The sellers said they are perfectly happy to provide any information we need. It will probably end up being just out of our reach financially but I really want to check all possibilities first.

Apparently people come for the golf, the local fishing lake, the Broads and because the properties are equipped really well for twins and triplets, hence the reason we stayed there (it means you don't need to pack a removal van for a weekend away). Also they seem to have a lot of Dutch people coming for breaks as it is just a short cheap flight to Norwich.

Thank you for the info about Aylsham, we were quite smitten with the place and the people were so friendly too.

Thanks so much for all of your input - you have provided me with so many points and I am embarrassed to admit that none of them would ever have entered my head. I tend to be too impulsive about these things and get carried away by the romantic idea of it all.

If by some miracle it all works out you are all invited to a big MSE weekend away in Norfolk! xx

chickmug

Any web site link to it yet?

I would love the know who the agents are even if a PM as there are so many lying business agents who make EA's look like angels. They over inflate everything especially accounting information.

One last point struck me is do they do six months tenancys over the winter months which is quite common in self catering businesses? Sometimes to DSS. This being the case it will not be as pleasant a lifestyle as greeting holiday makers?

I look forward to the weekend away in Norfolk;)

Thrugelmir

Rockporkchop wrote: »

Thanks GDB222 - there is no link at the moment as the particulars are still being prepared. The house is easily worth £500k and the 4 cottages definitely make up the balance of the money. There is no room for any more cottages but if we do get sick of running it as a let then we could convert it back to one massive house with two self contained cottages.

Picking up GDB222's post. The value is made up of more than just 5 properties. The asking price will include a premium for value of the business. You should seek an independent value.

I am surprised that only the "mortgage" will only cost you £25k per annum. Are you budgeting on an interest only basis?

Rockporkchop

No link yet, I am wondering if she has even instructed the agents properly yet. We heard of the sale first because we were there and she mentioned she was thinking of selling. She was going to use a local estate agent rather than a business agent.

They do not offer long term lets, just 3 day, sometimes 4 day and 1 week lets.

Thrugelmir - yes it's roughly £25k a year (depending on interest rates) over 30 years with a view to decreasing the term when/if we return to work full time. DH would hopefully take a couple of years off with us all and I would return to work virtually full time when babies are at school. Mine is a job I can put down and pick up anytime and if we were really struggling in the meantime I could go back sooner. If we did move there we would not be planning to move again.

Thrugelmir

Rockporkchop wrote: »

No link yet, I am wondering if she has even instructed the agents properly yet. We heard of the sale first because we were there and she mentioned she was thinking of selling. She was going to use a local estate agent rather than a business agent.

They do not offer long term lets, just 3 day, sometimes 4 day and 1 week lets.

Thrugelmir - yes it's roughly £25k a year (depending on interest rates) over 30 years with a view to decreasing the term when/if we return to work full time. DH would hopefully take a couple of years off with us all and I would return to work virtually full time when babies are at school. Mine is a job I can put down and pick up anytime and if we were really struggling in the meantime I could go back sooner. If we did move there we would not be planning to move again.

I would be surprised if a lender would advance money on an interest only basis on a business venture for a 30 year term.

Although you are borrowing against property. You may find yourselves paying commercial rates of interest rather than residential mortgage ones.

Rockporkchop

Sorry, no I meant it's a repayment mortgage - my current mortgage ported over plus 2% increase in rate due to letting part of the property.

dopester

Rockporkchop wrote: »

The cost of the property inc all furniture etc is £850,000 and the gross annual turnover for the last 6 years has been around the £100,000 mark, with no change since the recession.

I personally think it is way too soon to draw your bearings about the extent of the recession, the consequences still playing out, and the economic shocks ahead.

PasturesNew

Rockporkchop wrote: »

the properties are equipped really well for twins and triplets, hence the reason we stayed there

Well, that's a niche for a marketing hook. Do they currently advertise or partner with any twins/triplets organisations/groups/websites?

Rockporkchop

Hi, yes they post on two of the popular "multiples" websites, which are free to advertise on. No partnerships though, which is one of the first things I would do. I can think of a dozen places they could/should be advertising on just off the top of my head.

chickmug

Thrugelmir wrote: »

Picking up GDB222's post. The value is made up of more than just 5 properties. The asking price will include a premium for value of the business. You should seek an independent value.

I am surprised that only the "mortgage" will only cost you £25k per annum. Are you budgeting on an interest only basis?

The valuation, in simplistic terms, is made up of
1) Bricks and morter, land
2) Fixtures and fittings, furniture type of stuff
3) Goodwill which usually is a multiple of the Net Profits after removing current owners personal costs from the accounts.

I would be amazed if a normal mortgage could be obtained.

Usually this type of lending is subject to a Pinders type of report.
http://www.pinders.co.uk/business_appraisal_&_valuation/business_appraisal_&_valuation.html
And these cost more than a full structural survery and only cover the valuation but very in depth.