Hotel Conversion into Flats

gooders96

I’ve been considering for a while now about becoming a property developer and I know some people who are, and have done incredibly well. 

I have noticed a 22 bedroom hotel come up for sale near to where I live for a bargain price - £350,000 (Blackpool) - the hotel itself would need completely renovating -  the decor is dated - at least 20 years old and it appears that the current owner completed extensive building work to property just after they purchased in 1993 (I have had a look at historic planning permission) -
Now my question is - I would be interested in converting this hotel into a block of flats (residential/ holiday) that I would rent out.  Has anyone done anything like this before and the average cost?  For this project, I would be completely gutting the property including a re-wire. 

I’ve asked the agent for a floor plan so I could visualise how many flats would be viable. 

lincroft1710

First thing, are you likely to get PP for such a conversion/


Second, holiday flats tend to be smaller, kitchenettes rather than kitchens, smaller bedrooms, shower rooms rather than bathrooms etc. So you need to decide whether these will be holiday or residential lettings.


It will totally depend on the work that needs doing, the number of proposed units, whether there needs to be external as well as internal works and really only a local builder could give an indication of cost.

For the record £350K would get you a basic 1960s 3 bed semi on a private estate in a pleasant suburb 50 miles north of London, so it is probably cheap for a very good reason.

warby68

Do you have experience and a decent sized contribution?

Speculative building developments are not easy to finance.

What do you know about the Blackpool property market? It will be cheap for a good reason. 

If you're new to the game this would be a very ambitious first go.

Bear in mind also this is primarily a consumer forum and this is a business transaction. Plenty of knowledgable people but not the main purpose of the site.

GDB2222

gooders96 said:

I’ve been considering for a while now about becoming a property developer and I know some people who are, and have done incredibly well. 

I have noticed a 22 bedroom hotel come up for sale near to where I live for a bargain price - £350,000 (Blackpool) - the hotel itself would need completely renovating -  the decor is dated - at least 20 years old and it appears that the current owner completed extensive building work to property just after they purchased in 1993 (I have had a look at historic planning permission) -
Now my question is - I would be interested in converting this hotel into a block of flats (residential/ holiday) that I would rent out.  Has anyone done anything like this before and the average cost?  For this project, I would be completely gutting the property including a re-wire. 

I’ve asked the agent for a floor plan so I could visualise how many flats would be viable. 

Are you thinking about the one in Wilton Place? That looks rather expensive to me. 

How about this?

https://www.rightmove.co.uk/properties/81750011#/?channel=COM_BUY

It's been on the market since 2019. Originally at £500k, but now under offer with an asking price of £365k.  39 bedrooms.



You may well find that, to convert to flats, you have to meet all the modern sound insulation standards, which is very, very expensive, as well as very difficult to do in an old building. To do all that, as well as provide individual heating/electrics/kitchen/bathroom to each flat, you would be looking at several £10ks per flat. There's also fire-proofing, of course.

And, at the end of that, I'm not sure how much more you would get out of it than this:

https://www.rightmove.co.uk/properties/112737806#/?channel=RES_BUY

gooders96

lincroft1710 said:

First thing, are you likely to get PP for such a conversion/


Second, holiday flats tend to be smaller, kitchenettes rather than kitchens, smaller bedrooms, shower rooms rather than bathrooms etc. So you need to decide whether these will be holiday or residential lettings.


It will totally depend on the work that needs doing, the number of proposed units, whether there needs to be external as well as internal works and really only a local builder could give an indication of cost.

For the record £350K would get you a basic 1960s 3 bed semi on a private estate in a pleasant suburb 50 miles north of London, so it is probably cheap for a very good reason.

There are a number of other former hotels in Blackpool that have been converted.  I’ve done research into planning applications. 

Given that BP is saturated with hotels, I really don’t think it would be viable to trade as hotel as every hotelier is competing for business and it’s a dog-eat-dog scenario.  The USP that I will have is affordable living on BP promenade.  

I think I would be swaying more towards residential - it means less maintenance and a regular income.  I considered the holiday let idea in the sense that this is a different option to hotels (self catering) - but i guess that’s not what people want when they come to places like this. 

Blackpool and the North West and upwards is generally cheap for properties. 

I purchased my current home in 2007 for £55,000 - it’s a 4 bedroom semi detached -  my neighbour (same layout property as mine) and in a renovated condition sold last year for £140,000.  Anywhere else in the country and you could be looking at £400k + -  there are other hotels for sale that are cheaper. 

gooders96

warby68 said:

Do you have experience and a decent sized contribution?

Speculative building developments are not easy to finance.

What do you know about the Blackpool property market? It will be cheap for a good reason. 

If you're new to the game this would be a very ambitious first go.

Bear in mind also this is primarily a consumer forum and this is a business transaction. Plenty of knowledgable people but not the main purpose of the site.

This would be my first actual project that would be ‘mine’ - but I’ve taken a genuine interest for years and helped a friend who is a PD. 

My budget for the whole project would be £650k - £350k for the property and up to £300k for the renovation - it should come in cheaper than that, but worse case scenario.  Plan is to mortgage the property and the funds I have can be injected into the project. 

Waiting a response from the agent in regards to floor plans on Monday so I can then decipher how many flats would be viable.  I will be able to work out yields etc.  

I think it will be better for me to rent the properties out as opposed to selling them as this will be more profitable in the long run. 

Doozergirl

I've got 20 years of development experience, with plenty of experience of Blackpool to boot. I wouldn't touch it with someone else's bargepole.

Literally the worst place to start.  There's

so many !!!!!! Whittingtons in Blackpool and not many find the gold.   It's very hard to make money when everyone is in a race to the bottom. 

So many reasons not to, the very first is low property value.  It costs more to build a house than buy the same one. Zero margins.  

 

Doozergirl

If it's the 20 bed on the Prom near South Shore then you've got some of the very worst roads in Blackpool
directly behind it.  

gooders96

The hotel is on the North Promenade itself - you get crime everywhere. 

I had the floor plans today, it appears that looking at the floor plans, I would only be able to at most convert the hotel into six decent sized flats. Each with 2/3 bedrooms, this would include the conversion of communal reception/bar areas.  It wouldn’t be financially viable to convert them into flats -  it would take just over 20 years to ‘break even’ on the overall investment. 

Think I’m going to start my PD portfolio with a house and see where I go from there!