Opening hotel, tax and property investing

Locornwall

gwynlas said:

My first career was in the hospitality industry and you really need hands on experience before considerin ownership of any catering establishment and ideally a partner interested in the sane thing. Many many years later we have had a suvccessful first year with our second holiday let but are awaiting this years bookings to see if this was covid led.or repeatable business.

What type of holiday let have you got?

Grumpy_chap

If I read this thread correctly, the OP plans (at age 55?) to take the 25% pension tax free lump sum

Then invest this in BTL property(ies) for 10 years.

Then sell the BTL properties with the value used to fund the purchase of a hotel / guest house.

Then to start a new career / business running the guest house (as is the OP's dream to do).

If that is correct, that would mean the OP starts the new business venture at age 65.  While age is no barrier, more people start to think about retirement at that age than starting a new and exhausting long-hours business venture.

I am also unclear as to the funding approach to buy the hotel / guest house.  If the pension lump sum is insufficient to buy a guest house property in 2022, an investment in residential property is possibly too closely linked to the same market space to significantly out-perform the guest house property market and facilitate the purchase in 2032.  I have no expert knowledge on that, but it is just my uninformed lay-man's take on it that the funds would need to be invested in a market that can outperform the property market over the 10-year time span.  I don't know what that market is?

Is there any reason, other than the 25% pension lump sum being insufficient, as to why the OP does not wish to set about fulfilling the dream this year rather than in 10-year's time?

Savvy_Sue

Grumpy_chap, I agree with your assessment.

And to the OP I'll add that DH and I are mid 60s. While never being superfit, we've enjoyed good health. Now, every little niggle seems to niggle more, for longer. 

This summer, we hired a van and moved furniture for one of our sons. It left me exhausted - too tired to knit! - for a month. When the others move, I'll pay for a removal van. And yet around 5 years ago, we moved all three of them in a single weekend - less furniture, but still.

If this is your dream, I'd say work actively towards doing it sooner. The future is so uncertain!

At the very least, get some hospitality experience - in case you find you hate it!

Locornwall

Grumpy_chap said:

If I read this thread correctly, the OP plans (at age 55?) to take the 25% pension tax free lump sum

Then invest this in BTL property(ies) for 10 years.

Then sell the BTL properties with the value used to fund the purchase of a hotel / guest house.

Then to start a new career / business running the guest house (as is the OP's dream to do).

If that is correct, that would mean the OP starts the new business venture at age 65.  While age is no barrier, more people start to think about retirement at that age than starting a new and exhausting long-hours business venture.

I am also unclear as to the funding approach to buy the hotel / guest house.  If the pension lump sum is insufficient to buy a guest house property in 2022, an investment in residential property is possibly too closely linked to the same market space to significantly out-perform the guest house property market and facilitate the purchase in 2032.  I have no expert knowledge on that, but it is just my uninformed lay-man's take on it that the funds would need to be invested in a market that can outperform the property market over the 10-year time span.  I don't know what that market is?

Is there any reason, other than the 25% pension lump sum being insufficient, as to why the OP does not wish to set about fulfilling the dream this year rather than in 10-year's time?

Grumpy_chap said:

If I read this thread correctly, the OP plans (at age 55?) to take the 25% pension tax free lump sum

Then invest this in BTL property(ies) for 10 years.

Then sell the BTL properties with the value used to fund the purchase of a hotel / guest house.

Then to start a new career / business running the guest house (as is the OP's dream to do).

If that is correct, that would mean the OP starts the new business venture at age 65.  While age is no barrier, more people start to think about retirement at that age than starting a new and exhausting long-hours business venture.

I am also unclear as to the funding approach to buy the hotel / guest house.  If the pension lump sum is insufficient to buy a guest house property in 2022, an investment in residential property is possibly too closely linked to the same market space to significantly out-perform the guest house property market and facilitate the purchase in 2032.  I have no expert knowledge on that, but it is just my uninformed lay-man's take on it that the funds would need to be invested in a market that can outperform the property market over the 10-year time span.  I don't know what that market is?

Is there any reason, other than the 25% pension lump sum being insufficient, as to why the OP does not wish to set about fulfilling the dream this year rather than in 10-year's time?

No, plan is to invest in property now and in the next few years. After 12 years retire at 55. I will then have the commutation from the pension and money from properties to invest in a guesthouse at 55.

J_B

Locornwall said:

No, plan is to invest in property now and in the next few years. After 12 years retire at 55. I will then have the commutation from the pension and money from properties to invest in a guesthouse at 55.

I gave up 'proper' work at 50  - I wondered about various other business opportunities but being retired is much easier - have you thought about just that?

Locornwall

J_B said:

Locornwall said:

No, plan is to invest in property now and in the next few years. After 12 years retire at 55. I will then have the commutation from the pension and money from properties to invest in a guesthouse at 55.

I gave up 'proper' work at 50  - I wondered about various other business opportunities but being retired is much easier - have you thought about just that?

100%. Retirement is nice, but you’ve got to do something. Semi retirement I think is a good compromise.

Thrugelmir

Locornwall said:

Savvy_Sue said:

Locornwall said:

Savvy_Sue said:

Also, please, if you don't already work in the industry, get some practical experience in hotel management at someone else's risk and expense ...

Thanks Sue. Definitely will do a little closer to the time. I’m not looking to make a Hilton empire, just a small place.

Well, you may find you enjoy the property investment interesting and enjoyable in its own right, but it might be worth looking into the hotel experience sooner rather than later. It's just if the reality doesn't match the dream (and in this line of work it often doesn't ...) and you find out later rather than sooner that actually, this is not what you had in mind with your dream, it may be difficult to find a new dream, especially if you've sunk a lot of money into what you thought would be your dream hotel. 

I'm sorry, I'm a horribly practical person, and also a fairly antisocial one, so every time I hear of someone with a dream of opening a coffee shop / getting a coffee van / starting a B&B / running a pub / opening a hotel / whatever, I just get the heebie jeebies thinking of All Those People they'll have to be nice to, and What Hard Work it will be, and so on. And I realise this is MY nature, and some people do actually just LOVE being nice to All Those People (which I really appreciate when I visit their coffee shop etc), and don't mind working all the hours of the night and day to keep it going, so do take that into account when you read my posts, BUT do also be aware that people sometimes run into major problems simply through inexperience. Some time ago, on here, there was

• a couple running a pub who ran into major problems I think because of equipment leases which they remained responsible for after they gave up the pub
• someone renting a large property to run as a B&B facing major issues for I can't remember what reason, but it was costing an arm and a leg 

And at work we were given some lovely crockery and cutlery by someone who'd tried to start their dream cafe but run into huge problems before they even opened, they were in tears about it all. 

And we do visit a small hotel (less then 10 bedrooms) and have often spent time with the owner, obviously the pandemic hasn't helped although they were able to spend lockdown improving the facilities without inconveniencing guests. They have a USP which with a reluctance to travel abroad means they are fully booked more often than they used to be, and they have day visitors, but it's not for the faint-hearted!

Agree. I am very easy going, and think I could be good at it. It’s a dream to have my own business to be honest. It’s not something I will do for purely business reasons. I’ll no doubt operate as a limited company, so limited exposure. 

Get a job in the type of business you are thinking of running and gain experience from within. 

MobileSaver

Locornwall said:

Agree. I am very easy going, and think I could be good at it. It’s a dream to have my own business to be honest. It’s not something I will do for purely business reasons. I’ll no doubt operate as a limited company, so limited exposure. 

I'm sure you know already but if you need to borrow any money for the new business then you are likely to have to sign personal guarantees so the limited exposure of the limited company won't help if things don't work out.

Without knowing how hands-on you intend to be, as others have alluded to, doing hospitality yourself is seriously hard work and is of course typically anti-social hours. I'd add to the chorus of those suggesting you definitely need to try and get some real-world experience to ensure the reality has at least some semblance to your dream...