Buy to let or invest?

p00hsticks

I can't comment on the Devon coast, but I live in a very popular holiday resort in the North East and there are a lot of hoiday let owners trying to sell up round here - there was a boom in demand during Covid when people couldn't go abroad but now a lot of people find that holidays abroad are cheaper and with more reliable weather.

Quite a few can't sell at the price they want and seem to be looking into the long-term rental market instead (of which there is currently a shortage in the area)

Whiterose23

https://forums.moneysavingexpert.com/discussion/comment/81876112#Comment_81876112

I’m aware that new govt legislation, not just around the double council tax issue on second homes, but also due to the improved protections for tenants which are due to become law soon, has resulted in many landlords selling up. I guess they’ve had it good up until now.

An estate agent told me this is the case, but it appears to affect those who let out to tenants on a long term basis, rather than holiday lets.

I’m in a very popular tourist area which is overrun in summer (nightmare) but also has a fairly steady winter season, which I believe would yield an income but of course there would be quiet periods. Research suggests around 60% occupancy in this area.

A friend runs a 1-bed Airbnb and she isn’t based on the coast but is in a small market town around 12 miles from Exeter. However, she still has a steady income stream from people who are visiting relatives or working in the immediate area.

_Penny_Dreadful

I’m intrigued that in a popular tourist destination there are 2-bedroom flats you can pick up for as little as £150,000 in parts of the town where tourists would want to stay.

Does the leasehold allow you to do short term lets? What’s the local authorities attitude towards short term lets? North of the border we’ve seen the Scottish government and councils crack down on short term lets especially in popular tourist destinations.

I suppose it boils down to your main motivation: maximising the return on your money, keeping a foothold in Devon which you could do by letting on an AST basis, or maintaining a pied-a-terre for you to use 5 or 6 times a year. I don’t think you can do all three.

user1977

As above I would take into account the risk of restrictions on short term lets which may scupper the whole business plan.

And although property generally increases in value, there is the (not insignificant) risk that it can fall in value - unlike some other forms of investment where (for all practical purposes) your capital is safe. Plus the costs involved in buying and selling which you don't have in other investments.

Herzlos

If you're only talking about visiting the rental flat occasionally, have you considered how much it'd cost to just stay in hotels instead? Significantly less hassle and potentially cheaper.

Uriziel

Investing is not exactly rocket science. You merely put your money on an index fund which is a big group of companies so it is not going to fail unless the entire country is finished. The FTSE100 has been doing well as people try to stay clear of the AI companies in US. I would not get into renting anything out. at your age. It is going to be stressful and rob you of any time you have left. You will get tenants from hell that don't pay up. Instead you can grow your wealth by around 10% to 20% a year and take money out when you need it.

Whiterose23

I've talked to a few estate agents in the area and it's right to assume that the majority of leasehold flats do not allow holiday lets, although if you look on Airbnb in Devon there are many, many flats on there. One of the estate agents said they're probably beng advertised illegally.

I'm aware of someone who has been using their home as an airbnb for around four years without telling their mortgage lender as well. It seems people are taking risks but I wouldn't want to do that.

So best case scenario with this is to buy a freehold property and use that. Although I would want full management so that might negate the costs.

Oh well back to the drawing board …

Whiterose23

I'm actually thinking I might get a camper van instead :-).

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81877321#Comment_81877321

The OP has already said they are a bit risk averse, and would be horrified if their investment dropped 25%.

So clearly an 100% equity index fund is not an appropriate investment for the OP, as most likely they would panic and pull out in a market crash, which is inevitably going to happen one day.

Something a bit less racy like a 60:40 fund , or even 40:60, would be more suitable.

theartfullodger

Buy 2 let us supposed to be an investment, and like most investments sometimes goes wrong:

You lose money....