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Static caravan advice

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  • I just wouldn't do it, you hear too many horror stories.


    £40k on a caravan, absolutely no way
  • Seabee42
    Seabee42 Posts: 448 Forumite
    I did this with my mum a long time ago and for a second hand caravan to help her get out of the city. Even so cost wise it was cheaper to go away to a reasonable hotel for each of the weekends we would use it than the cost of everything else. If buying and renting caravans out actually profited more than the loss in worth in the caravan the sites would do it themselves.
  • SonOf
    SonOf Posts: 2,631 Forumite
    1,000 Posts Fourth Anniversary
    edited 8 August 2019 at 11:48AM
    We are looking into the figures of buying a static caravan with the intention of making some profit off it, however small.

    That rarely happens.
    I've looked at a First Direct loan
    Which makes this proposition a whole lot worse as you are gearing it increasing the risks.
    Minus ground rent and the loan repayments leaves a profit of £1,400 per year roughly. This of course would need to be halved with the mother in law.

    What about cleaning and paying for someone to sort the changeover each week?
    What about repairs and refurbishment? And some of it on immediate call-out rates as damage may need to be repaired within hours.
    Every season, and during the season, you are going to have to do repairs and replacement.
    They stipulate that the caravan has to be replaced or moved after 15 years. At this point we could reevaluate whether to buy another or sell it.

    It will have virtually nil value after 15 years. Indeed, the cost of removal may be greater than the asset value.

    This is before you consider the risks of the site closing or the site owner going under. If the proposition is so profitable, why is the site owner selling off plots?
    This is commonly seen with site owners that are a) in financial difficulty and need to raise money and/or b) looking to exit and get as much money out of people whilst they can.
    It starts a spiral of the site owner earning less income as they dont earn from all the plots. So, they need to sell more plots to make up for it. Which in turn means they earn less income, which in turn means they need to sell more until there is nothing left to sell and the site closes. You end up with a caravan on a closed site.
  • colsten
    colsten Posts: 17,597 Forumite
    10,000 Posts Seventh Anniversary Photogenic Name Dropper
    13Kent wrote: »

    If you want a holiday home in Brean this may be a better option as it will retain it's value. https://www.rightmove.co.uk/property-for-sale/property-69998665.html
    Are you going to underwrite that it will retain its value?
  • barnstar2077
    barnstar2077 Posts: 1,650 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper Photogenic
    I have to agree with the others, this doesn't sound like a very good use of the money to me. If it was a cheap caravan/static home then maybe. Also, lets say after a year you realise that it isn't working, would selling the static home give everyone their money back? I wouldn't want to go near anything that could lose my family money. Personally I think your mother-in-law would be better off having your wife put the money in a multi asset fund in a Stocks and Shares ISA.

    Edit: Those site fees are shocking!
    Think first of your goal, then make it happen!
  • edgex
    edgex Posts: 4,212 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    gramezza wrote: »
    We are looking into the figures of buying a static caravan with the intention of making some profit off it, however small. Long story short we are interested in a brand new one in Brean which is going for £40k.

    My wife's mom is putting £20k of her own money into it as a joint thing, meaning we have to put the other £20k. In order to do this we would need a loan. The caravan will be in our name only, this is because the wife's mom doesn't work so she can't be putting her name on things like this (she was left the £20k as inheritance...but that's another story).

    As you may know Brean is a popular destination for fans of caravan holidays which is what spikes our interest. The site is open 42 weeks of the year, and we would be looking at reserving 10 weeks of that for family use, meaning we would rent it out for 32 weeks of the year (or aim to, at least).

    Site fees are £5,000 per year, which includes utilities. The site has good reviews so I'm not hugely concerned about lack of interest.

    Now despite the £20k put in by the mother in law, we still have to put in £20k of our own. Although we both have good jobs, £20k is still a lot of money. I've looked at a First Direct loan - I bank with them and have had a loan with them before. The rate is 3.3% (if approved) and would end up paying £22,388 back over 7 years. This equates to just under £3,200 per year in loan payments to buy the caravan.

    Of course any profit we make will have to be split 50/50 with the mother in law as it is half owned by her. I also need to factor in tax at 20% which I assume I need to pay on the profit. (It's also just occurred to me that I may need to pay 40% tax on it maybe? I'm not sure how the tax works fully in this regard as the profit will most likely take me into the higher tax bracket. But happy to accept advice on this too).

    As an example I've gone on worst case scenario. An average of £400 p/w rent over 30 weeks (rather than the 32 weeks). It's a deluxe caravan so would command a higher payment for the week but I have to accept there may be some weeks where its unoccupied so I've gone worst case at £400 per week. This equates to £9,600 after tax has been deducted at 20%. Minus ground rent and the loan repayments leaves a profit of £1,400 per year roughly. This of course would need to be halved with the mother in law.

    Any advice, thoughts or recommendations welcome.


    Occupancy rate is way over whats realistic, run the numbers on 20weeks out of 32.
    £400 * 20 = £8000

    Annual costs
    £5000
    £3200
    = £8200
    (& thats with no cleaning, maintenance or other costs)



    Is the MiL on benefits?
    Has she come up with / heard about / found this idea somewhere?
  • stripeyfox
    stripeyfox Posts: 474 Forumite
    It will likely be a money pit.
    Don't forget if you're kitting it out as your "home from home" you'll need to buy all the stuff you'll need / want for your own enjoyment but not necessarily left lying around for your paying guests.

    I doubt you will make any money from this and there is a strong possibility that you will end up losing money (possibly a lot of it).
  • Dorian1958
    Dorian1958 Posts: 241 Forumite
    Seventh Anniversary 100 Posts Combo Breaker
    After 15 years you have spent at least (not including increases in site fees) a total of £40k + 15 years site fees (£75k) + loan Interest (£3200) = £118,200, and are left with a worthless caravan and a bill for removing it from the site. From an MSE perspective, it's a bad idea. You might have some lovely holidays though, I love going to caravans.
  • kazwookie
    kazwookie Posts: 14,266 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Don't do it.

    You will never get your money back.

    Fees/ repairs /general wear and tear / taxes etc etc
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  • badger09
    badger09 Posts: 11,589 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Dorian1958 wrote: »
    After 15 years you have spent at least (not including increases in site fees) a total of £40k + 15 years site fees (£75k) + loan Interest (£3200) = £118,200, and are left with a worthless caravan and a bill for removing it from the site. From an MSE perspective, it's a bad idea. You might have some lovely holidays though, I love going to caravans.

    You could have an awful lot:cool: of caravan holidays for that sort of money.
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