Static caravan advice

sal_III

edgex wrote: »

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?

It's even worse, as your math doesn't account for asset depreciation and the £400ish in interests that the MiL £20k would accrue in a savings account.

If you have money to burn laying around - sure go for it. But getting into debt over that is just crazy.

13Kent

colsten wrote: »

Are you going to underwrite that it will retain its value?

Colsten, the point I was trying to make was that in 15 years the flat would not depreciate in value as much as a new caravan would do, sorry if I did not make myself clear enough.

Bravepants

I wonder how many caravans the site owner actually owns at the same place? If I owned a site with several caravans I would probably hire mine out first before anyone else's.

13Kent

There are lots - the site owners make their money from the site fees that the caravan owners pay each year, and from the cost of selling a caravan on their site - an unsited caravan costs significantly less than the same caravan on a site. Also on some sites they owners allow the site to rent their vans out to guests on their behalf, so the site owners get ground rent from the caravan owner, plus their cut of the rental fee for the same caravan that the owner has paid for and the site haven't had to buy. So the sites would rather sell caravans and claim the guaranteed income of 5k site fees (or more on some sites) fore each pitch than have to buy a van themselves to place on a pitch and then let out - they have to make more than the site fees plus the cost of the van before they are in profit. Brean has loads of vans on site - hundreds!

Terry_Towelling

You've got your figures wrong. The way you've done it, you are effectively asking your MiL to pay for half of your loan - clearly that isn't right.

Let's assume that you do get £9600 per year income from the van and the only outlay is £5K site fees, then the surplus for a year is actually £4600. This is the bit that gets split between you and your MiL.

So, you end up with £2300 in so-called profit. It is at this point that you have to deduct your own personal costs of purchasing your half of the van - i.e. £3200 pa for the first 7 years.

So, working on the basis that all costs and incomes remain static (which they won't) you would be running at a £900 loss for each of the first 7 years. That is £6300 to recover from year 8 onwards. So it will be roughly another 3 years before you recoup that loss and then you will have 5 years left where your £2300 share of the surplus is all yours.

So you make £11500 (5 x £2300) in the last 5 years of life of the van and have an asset that is virtually worthless at the end.

Do you think it is worth waiting 10 years before you make any money? Consider instead a slightly different arrangement. You pay £267 per month (which would be your loan repayments) for 7 years into an easy access saver paying 1.5%. After year 7 you just leave it to compound without adding any more to it. After 15 years, you end up with approx. £26650 instead.

I do of course accept that you'd have to pay for your holidays during that time rather than taking them 'free' in your own van.

The outlook for your Mil is slightly rosier. Assuming all things are the same and she gets her £2300 annual surplus in equal monthly instalments, she will end up with over £38K after 15 years (if placed in a 1.5% saver). If she just stuck her £20K into said saver now, she'd only get £25K after 15 years of compounding.

arwain

Someone asked a similar question a while back take a look at this thread.
https://forums.moneysavingexpert.com/discussion/5696629/buying-a-static-caravan-as-an-investment

Bravepants

Please don't buy the caravan!!

AnotherJoe

How much is a week in a caravan? £500 off peak - £1,000 peak?
So for your 10 weeks a year you could probably buy that time for your £5k a year maintenance. And no need to also pay £40k upfront. Except you've paid it all up front iso if one year you decide you don't want to (or can't) spend all ten weeks in a caravan on that site the per week cost has gone up as you've paid anyway

So forget your ten weeks Pre paid holiday now, and focus on the question, do you want to borrow £40k to let out a caravan for 10 or so years for 30 weeks a year as a business? maybe you'll get 50% - 60% occupancy, and will the cost of doing that (loan, cleaning, repair and maintenance) cover the £40k given that at the end of that time the caravan will be worth very little. I very much doubt it would even cover its costs.

Best way to regard this is, you absolutely love the place and you are happy to pay in the region of £100k over ten years (£40k caravan written off to near zero after ten years) plus interest on loan plus site rental for ten years plus maintenance costs) for unlimited holidays there and any return from rentals isa bonus. Personally I wouldn't pay £10k a year on caravan holidays with the small possibility of reducing the cost by letting it out now and then but each to their own.
I have a friend who does this on the south coast but she has the money and lets it out to relatives and friends. No one else, But you don't fall into that financial area of not needing a loan and that money being small beer. Even for her I don't think it's worth it but she values the convenience against the hassle of booking, and knowing she can go whenever even in peak time. I know two other people who do similar with foreign apartments. Again they do it for convenience not for profit. Neither let their places out.
So if you do it do it for convenience, for being able to go at the drop of a hat. Not for the income.

Zanderman

We owned a static for 10 plus years - and would agree with everyone else replying that you will definitely not make a profit. Especially if you're starting with a loan.

The unit itself depreciates very fast, equipping it and keeping it equipped and pristine costs a lot, site fees go up and up and up.

If you expect profit you'll be disappointed. We just saw ours as a long-term 'investment' (not the right word at all) to enable convenient and (relatively) cheap holidays for ourselves over those 10 years, We knew it would be a net cost, but saw the spend as, in effect, replacing other holidays costs during that period.

molerat

I know 2 people that did it at different ends of the country. Both lasted 2 seasons before they sold them to stem their losses even though they had above average occupancy.


As for the advice - don't !