Let to Buy for a B&B

Soggychip

Hello,

My wife and I own a property outright in London. We would like to move out of London and purchase a property that we will run as a Bed and Breakfast, up North.

We've had the house in London valued at around £380 000, with a rental income of £500 per week. The properties we are looking at for the B&B - with enough rooms to provide a decent income in a desirable location - are around £350 - £500, 000.

Originally we were thinking about selling the London property but are now hoping to hold onto it and rent it out. It seems we can get a buy-to-let mortgage for £285 000 and use this as investment in the B&B - but would a bank consider giving us another mortgage to cover the rest of the B&B's purchase price? Especially considering we would be leaving our current employment (joint income of £43,000) and essentially only having the speculative income of the B&B as income - and only £5K savings.

Are we metaphorically eating our own cake by wanting to hold onto the London property?

Thanks in advance for any help,

Simon

maninthestreet

£5K savings, and not employed? Are you mad??

Thrugelmir

Sell your London property if you are seriously considering setting and running a business.

holly_hobby

Any mge on the B&B will be at best a semi-commercial mge - with equivilent rates - i.e you won't get high street mge deals. Semi-Commercial rates are usually lender svr & 2% (could be more).

To even get the bank to entertain you, you will need the books from the business (3 yrs ideally), showing turnover, gross & net profit. You will also need to convince them with a well constructed business plan, how having no experience, you will be able to make a viable profitable business from the venture and how you intend to develop it & repay the loan.

You also need to strongly consider this if you plan to sell your own home to fund the business - how you will make a living & not lose everything if things don't go to plan - a lot to consider !!

Good luck with your venture ... if you decide to go for it ...

Holly

smartiedriver_2

Sell the London property! B&Bs are classed by most banks as high-risk opportunities for commercial lending and you are unlikely to get any borrowing against it, particularly if you cannot demonstrate sound B&B experience.