Potential Holiday Let Renovation Idea to Fund Care Home

Section62

CapeMoth said:

Thank you, glad to hear I'm not the only one who thinks it could be viable! I am visiting next week and meeting with a renovation company so they can view the house and maybe even give us some rough numbers. Maybe from these I could work out how best to fund it, loan, remortage, business mortage etc. (There isnt currently any mortage or debt against the house.)

In the long term if the house is established and gets bookings I am willing to dedicate some of my time to running it. It will also benefit my mum so I hope she will also assist. I currently work 40hours a week and she does not work, so ideally I hope she would take up some of the day to day admin. I am the initiative to get this moving!

I think the arrangements you'd like to make are too complicated to work to your grandfather's benefit.

For business finance you'll need a business plan.  It isn't clear how this business could ever work using a property owned by someone already in a care home.  Lenders will be very hesitant to lend to him, and if he (rather than you or your mum) owns the property then you won't be able to use it to secure loans you want to take out.

The distance is a huge issue - not just for the renovation, but also for running the business.  You can buy-in local services, but that will eat into the profit margin.

With no idea how much the renovation might cost you can't make a realistic assessment of whether you'll ever break even.  The use/involvement of a "renovation company" rings a very large alarm bell.

People who develop/redevelop property make a profit because they can use their experience and contacts (and often their own labour) to get work done at rock-bottom prices.  You won't be able to achieve the same result by employing others to do all the work for you.  You are also contemplating this project at a time where the building industry (and costs) are operating at highs which I haven't experienced in my whole career.  Just finding a reliable builder able to take on a project of this kind is a challenge itself.

Sorry if this comes across as pouring cold water on your plan, but I think you need to be realistic here.  You are talking about doing something to your GF's property using borrowed money.  The risks taken will be his, and it isn't clear that he will get any benefit from the plan himself.  In my view it is likely that the best outcome for him would be if the property was sold as is, or with some modest repair/updating work if the current condition is such that a sale at reasonable market value would be impossible.

Loza2016

We are currently 15 months into a bungalow renovation and extension. 

We are self renovators with trade accounts and have access to much better prices than most. We pay cost price for windows & doors. 

We will probably break even once all the work is done.  

Please enjoy your time with your grandad while you still can don’t burden yourself and family with the stress of renovating. 

My Dad was in a care home self funding so do understand. 

Grumpy_chap

CapeMoth said:

Grandfather moved in to a care home in Kent near myself and my mum (his only family) from his house in Cornwall. . He wants rid of it and to use money to fund care.

Me: no experience of renovation but tortured to think the house will be snapped up and renovated by someone else or flattened and 3 built in its place. Totally willing to take on the challenge but logistics of being 300 miles away an obvious challenge. 

CapeMoth said:

 I am the initiative to get this moving!

If this is your Grandfather's house and he has capacity and wants rid of the house then the best way to support him is to facilitate his wish.  If he does not have capacity and you are acting under PoA, then the duty is to act in the best interest of your Grandfather and it is not obviously demonstrated that the best interest is starting a business (which is, essentially what this would be).

You admit to not having experience of property renovation plus you are 300 miles away.  Two good reasons to not do the renovation. 
Who will fund the renovation?  
What if the final costs exceed the initial budget plan?
Will there be a risk of DoA if the renovations consume all of Grandfather's funds and he still needs to fund the care home fees?  Could that risk a "fire-sale" of a partially renovated property realising less value than a simple straight forward sale now?
Who will manage the new business (which the holiday let will be) once the renovations are complete and the trading holiday let has reached income-generating stage?
Who will own the holiday let cottage?  Have you considered that the owner will be subject to CGT at some future point?

This really seems as though it is your wish and not necessarily your Grandfather's or your Mother's.  What is the true driver behind wanting to keep the property rather than sell?  Sentiment?  Desire to inherit one day?  If that is the case, buy the property at open market value from your Grandfather and then you can undertake the renovations and run the holiday let business.  That tick the sentiment box and, if there are funds remaining when Grandfather does move elsewhere eventually, then you still stand to inherit whatever you inherit.

knightstyle

Could you sell it and buy a place ready to use as a holiday let close to you? 

[Deleted User]

"Me: no experience of renovation but tortured to think the house will be snapped up and renovated by someone else or flattened and 3 built in its place"


I would get the house sold. Much easier to get the cash and let someone else reno it. Especially with no experience and little funding at present. 

J_B

CapeMoth said:

 Yes, I have found a holiday let company, Sykes Cottages (unsure if anyone has experience with them?). They had a quick calculator thing which recommended it would provide income of around £25k a year. Seem keen to talk to me but don't have anything concrete for them and don't want to waste their time at present. They may recommendations on those things though.

I think Sykes would give you a generous guide as they want your business!

Maybe take a look at the "Lay My Hat" forum for advice for FHL's