Advice on Buy to Let to Airbandb properties

Sutekh666

We have a flat that we've been renting out to Airbandb guests and have found it very lucrative so we're considering buying more properties to do the same. We own the current property out right, and so to but the others we'd need to take out a buy to let mortgage, so some questions...
Would we have to take out separate mortgages for each property? I presume so?
Would it be best to set up a Limited Company for the properties?
Should we employ an accountant?

Any help appreciated.

need_an_answer

Have you approached any mortgage lenders with the proposition yet...?

Many lenders wont lend if Airbnb is the source of income.

For a BTL you'll need a minimum deposit of 25% and very clear indications of projected rent and costs. As Airbnb is not a constant income,but sporadic that is possibly the element of affordability/income that you will fail to progress the mortgage on

Leases on properties are also something to be wary of ...many now are excluding Airbnb type occupation

Separate mortgages would be required on each property

Also you will need to factor in higher rate stamp duty for each additional purchase

Interested to know how its very lucrative just using Airbnb ...yes I get that you can probably get in 2 weeks what I can with a traditional rental,however is that constant throughout a 12 month period or are you very seasonal.

Expenses like management charges,utilites and council tax are surely still borne by yourself(even the cost of cleaning between guests) and adding in regular mortgage payments and the costs of setting the purchases up surely would mean heavy losses in the initial years?

Why not just run a traditional b&b instead of multiple properties....

Comms69

At the minute you have very little overheads, so the property im sure is lucrative (don't forget to pay taxes )


But once you start to factor in mortgage payments it drops down quite significantly compared to many other investments.

silvercar

Would it be best to set up a Limited Company for the properties?

Downsides to this are that the limited company would have to prepare accounts, you would need to take out loans in the name of the limited company, any income you take from the company would need to be taken as pay or dividend and taxed accordingly.

Although you can get mortgages in the name of the limited company, the rates can be higher, less lenders interested in this market and they would be likely to require personal guarantee(s). You have to put this against the tax advantages of the better treatment of the interest.

eddddy

Sutekh666 wrote: »

We have a flat that we've been renting out to Airbandb guests...

Assuming it's a leasehold flat, does your lease allow this and/or do you have the freeholder's consent?

Do you have planning consent?

Does the freeholder's buildings insurance allow this?


Lack of freeholder's consent and lack of planning consent are less important. If the freeholder or council serve notice on you, and you stop doing it - probably nothing more will happen.

(Although you'd have to cancel all your future bookings - which might annoy guests who are days away from their holiday!)

But insurance might be more serious. If an airbnb guest lets a bath overflow, or causes a chip-pan fire - and the insurance doesn't allow airbnb guests - you might be responsible for the cost of repairs to the whole building.

Benight

Sutekh666 wrote: »

We have a flat that we've been renting out to Airbandb guests and have found it very lucrative so we're considering buying more properties to do the same. We own the current property out right, and so to but the others we'd need to take out a buy to let mortgage, so some questions...
Would we have to take out separate mortgages for each property? I presume so?
Would it be best to set up a Limited Company for the properties?
Should we employ an accountant?

Any help appreciated.

Most BTL mortgages require you to let under an ASTA; I don't think Airbandb advertise such properties.
Alternative mortgages are available though - best to consult a broker (preferably one who has experience in this particular field)

Sutekh666 wrote: »

Would we have to take out separate mortgages for each property? I presume so?

That would depend. Maybe not necessary, But you could do (and probably financially best to do so, but you would have your existing one mortgaged if you wanted to maximise financial return)

Sutekh666 wrote: »

Would it be best to set up a Limited Company for the properties?

Probably not, but you may wish to.

Sutekh666 wrote: »

Should we employ an accountant?

Up to you. Certainly worth getting their advice if you are serious and considering operating via a limited company. Also useful for doing your accounts and tax return at least.
But in any event getting advice at the start of the year so you know what they will expect from you at the end of the year is always recommended.

Sutekh666

That's all food for thought.

The flat we're currently letting to Airbandb guests is mortgage free and we own the freehold. We do pay the council tax and utilities but at the moment we're way in profit, but yes we'd need to pay mortgages on any other properties we buy. We've been doing this since November so it might be worth running it for year and seeing how much money it brings in and how seasonal it is. We are in a central big city with constant events.

babyblade41

ermmmm I sold one of my properties to someone who did this...they had one other mortgage free and this under mortgage

It lasted less than a year , about 4 miles from a tourist town but in a village with good links to the city and to London



It seemed to always be occupied and definitely not seasonal but it failed miserably , the overheads far exceeded the incomings.

They did operate as a Ltd company

Comms69

Sutekh666 wrote: »

That's all food for thought.

The flat we're currently letting to Airbandb guests is mortgage free and we own the freehold. We do pay the council tax and utilities but at the moment we're way in profit, but yes we'd need to pay mortgages on any other properties we buy. We've been doing this since November so it might be worth running it for year and seeing how much money it brings in and how seasonal it is. We are in a central big city with constant events.

I meant income tax

antilles

I did look into this a last year as we were thinking of buying a holiday home and letting it out most of the year. What I found was (some of which is already mentioned by other posters):

- Normal BTL mortgages are no good for this as they require an AST as mentioned already. I did find a couple of specialist providers that do holiday let mortgages. Can't remember who they were but one was a building society. In summary - more difficult to get finance.
- Operating as a company - this depends on lots of factors, including how much other income you have. Best speak to an accountant. Main thing I found was that financing through a company was more expensive (higher interest rates).

- The costs go up dramatically if you aren't prepared to clean the property yourself or live far away as you'll have to use a management company.

Two friends of mine both owned this type of let - one in Liverpool City Centre and one in Manchester City Centre. Liverpool one was let to tourists and my friend self-managed and cleaned herself every Saturday. She spent almost every weekend dealing with breakages, drunken people locking themselves out and calling her in the early hours, police incidents, dealing with vomit-soiled toilets and sheets, etc. She then paid a cleaning company for a few months then decided it wasn't worth it and converted it to a regular BTL.

The Manchester flat - basically same story - my friend converted it to a BTL in the end - it was mainly used for tourists and concert-goers - same issues. Of course both of these will attract a particular clientele so it would depend on what you are looking at - but I'd avoid the city centre rental type thing.

Also, your wear and tear goes up massively due to constant changeovers, and people will not look after the place like (most) tenants will.

After hearing their stories and looking at the costs of management, it put me off tbh.

jonnygee2

Bear in mind that AirBnB type lets are also at risk from potential legislation changes. There is nothing in the pipeline yet but it has been raised in parliament several times and is an issue - in many countries / cities it is being legislated against. That's a considerable risk when thinking about expanding the business.