Holiday let investment?

Beckyy

Does anybody have a holiday yet investment? I am considering looking for one. We live in a good touristy area and most local ones seem to book well.

How do you find it? Is it worth it for the time and money you put in to it? Are there competitive mortgages out there? I know we're looking at a 70% LTV ish and a specific holiday let mortgage rather than drawing equity from our own house for a better LTV (ours was fixed for another 2 years not so long ago - seemed wise at the time!)

Up until 18 month ago we had a residential BTL which I managed so I do have a good idea of the effort required, which I'm guessing is more so with a holiday let. Our BTL flooded and insurance excess was increased to close to a years rental income so we took advantage of the house being re-done and sold up otherwise we would still have it. I've toyed with the idea of another residential BTL but a holiday let seems more appealing currently.

loveka

There are only a few building societies that do holiday let mortgages. Look at Principality and Cumbernauld.

Ours is our job, as well as hopefully being our pension. I think it's a better investment than btl as you don't have the risk of rent being unpaid or unrented periods. You can also offset more against tax as its
a business.

I think it's important to go for an area where you have lots of tourists, not just near to a tourist area. Ours is in an area where people go for winter breaks too.

Setting it up cost a lot more than we thought. It's important to have good quality stuff that will last though. I spent nearly £2000 on bedding!

There is a brilliant resource on line called Lay My Hat that I have found invaluable. Also, many holiday let companies will give you free advice. We are with a small local company, but they were happy to advise before we signed up. They have a lot of repeat business so we are happy to pay them as marketing agents.

Beckyy

Very insightful post loveka, thank you!

I won't lie in that I would love to have this as my sole job eventually. I had envisaged a fair amount must go on furnishings and setting up probably more than I'd imagined the more I think about what's needed (I won't ask how many towels and bed sheets you had to buy!)

How long did it take for you to become established and get steady bookings if you don't mind me asking? I guess this depends on the marketing and advertising you use essentially.

ViolaLass

loveka wrote: »

Ours is our job, as well as hopefully being our pension. I think it's a better investment than btl as you don't have the risk of rent being unpaid or unrented periods. You can also offset more against tax as its
a business.

Don't you have more risks of voids as people will not stay for long and not many will want to visit at certain times of year?

Also BTL is a business so what extra tax breaks does a holiday home get?

Tiners

I live in a touristy area, one that's becoming ever more busy and ''touristy''... and yet most of the local holiday lets don't seem to get fully booked.

Whenever we have relatives coming over they seem to have no trouble selecting from a choice of local holiday lets which all have vacancies even in high season.

I think most of the holiday lets near to me are mortgage free so the owners don't need to worry about void periods, something which would be, I imagine, more of a concern for someone with a 70% mortgage on a holiday let.

Madmel

We have a holiday let which is attached to our house. We cannot sell it on without selling the house, so we let it out to holidaymakers.

We deliberately do not make it available 52 weeks per year. I teach and have teenage kids and we do like to get away ourselves. We are in a hamlet with no facilities (or mobile phone signal) so do not appeal to everyone. However, we more than cover our costs by letting it out 15+ weeks per year.

Do not underestimate how tying it is. We do all the changeovers ourselves, which takes about 3 hours plus all the laundry. That wipes out Saturdays. Although we ask guests not to arrive before 3pm, and to leave by 10am, we have the late leavers and early arrivers, which is a pain. We also get people who roll up at 10pm having not thought to contact us to tell us they will be late and we have hung around all afternoon waiting for them.

You need to be on hand to explain how things work, despite leaving written instructions. We often have to set up the wifi because people are too stupid to read simple instructions. They knock on the door at 6.30am needing to know where the nearest doctor is (again, written down for them). Even though we show them where to park, we have been blocked in and out by thoughtless guests.

I have never owned a BTL so cannot comment on the difference between them. However, I imagine you get several queries in the first month of a let, then only hear from tenants if there is a problem. Holiday lets is like the first month on a weekly basis. When we have had people stay for longer, life is much simpler.

Sorry if this sounds negative, but you need to be aware of the facts. if you still want to go ahead, go and talk to your local tourist information office. They can tell you what rents quickly (people like to bring their pets round here) and may also know if anyone is thinking of selling up.

loveka

Beckyy wrote: »

Very insightful post loveka, thank you!

I won't lie in that I would love to have this as my sole job eventually. I had envisaged a fair amount must go on furnishings and setting up probably more than I'd imagined the more I think about what's needed (I won't ask how many towels and bed sheets you had to buy!)

How long did it take for you to become established and get steady bookings if you don't mind me asking? I guess this depends on the marketing and advertising you use essentially.

Actually it didn't take long. We went up on the website in early February, and it was available to rent 2nd week of April. From then we have been full until 2nd week of June when we have a week free. We have bookings through to mid November. There are a few weeks free that we are hoping to sell! So better than I expected.

Of course it must vary area to area. As I said ours is in a very tourist heavy area, but it's a small village so there are a finite number of lets available. That's why it's important to get advice from a letting agent and do a business plan before you offer on everything.

We use a marketing agency locally. They are well established and I think that's a lot to do with it. They helped us do projections of what we should get based on similar cottages on their books.

Offering short breaks and a flexible changeover day (apart from school holidays) really helps too

The person who said about voids in letting- it's different with a holiday let as you cost the rent to take into account you may not have anyone in January,for example. What you are very unlikely to have are squatters, or an extended period where it's empty. The tax situation is you can offset all your expenses.