Can I make my self-build dream a reality?

Self_Build_Dreamer · 19 September 2018 at 4:35PM

Hi,

First post here although long-term fan of this excellent site! I've posted this question in the 'Loans' section as opposed to the 'Housing' as I'm not sure a self-build mortgage is the only (or best) way to proceed here.

My dillemma:

I have dreamed for a long time of building my own holiday home that I can use myself part of the year, and rent out when not in use to bring in a small income. For a long time this was just a dream, however it might recently have become viable - i'm not sure yet: it's why I'm posting here!

What I want to do:

Buy a plot of land at £90k, and build a small 30-40sqm 1 bedroom, single-story home for what I estimate at £25-35k (from experience this seems viable). I am a cabinet maker / carpenter with some house building expereinece and plan to do all (with the exception of some plumbing / electrics) of the work myself, keeping the design and build as simple as possible.

Total costs expected to be around the £120k mark. I estimate that a conservative annual income I could receive on the property is around £15k (profit).

About me:

Recent graduate and currently part-time self-employed. Approximate annual income currently: £12k. I also have an inherited savings pot of around £40k. I have no debt (aside from a student loan) and currently have an 'excellent' credit score.

My question:

Is there anyway I can borrow enough money to make this happen through whatever means I have available. Open to all creative suggestions and ideas!

Thank you in advance for your help!!

glennstar · 19 September 2018 at 5:22PM

Your credit score is irrelevant, your credit file is the important thing...

also, whilst I'm being relatively unhelpful, I think you need to put in some pretty generous contingency on that £120k budget. Cost overrun on creative projects such as this is mandatory.

Self_Build_Dreamer · 19 September 2018 at 5:29PM

Hi, thanks for the clarification on the credit issue.

Yes, I agree on the contingency: if I add a 15% contingency to the land + build costs we're at £138k.

Nasqueron · 19 September 2018 at 5:30PM

A one bedroom house immediately means limiting to couples / singles and it's a very competitive market thanks to comparison sites and trip adviser

15,000 profit / 40 weeks (assuming you live there 3 months) is £375 a week profit, let alone the income and expenditure of cleaning, buying/replacing the day to day things people need. Don't forget as a holiday let you need basics like fridge/freezer, oven, microwave, TV, internet etc etc and need them to be kept in very high order.

We stayed, as a couple, in the channel islands in rented places, end of season sure but around £500 a week got extremely nice houses, one was modern and extremely well kitted out, the other a huge farmhouse that could sleep 4. Obviously you charge more in peak but really you're looking at 2-3 months at high rates. If you're staying there in peak season you aren't making money. Do budget more carefully

Self_Build_Dreamer · 19 September 2018 at 6:25PM

Hi Nasqueron,

I based my approximate rental figure on the following formula:

- 45 days a year personal use.

- £90 per night all year round in a extremely popular holiday destination all year round (this figure based on similar properties).

- 75% occupancy rate. This sounds high but seems realistic based on my research. Perhaps it needs revising?

- £40 per week cleanng fees (assuming lets between 3 - 7 days).

- 15% wear and tear costs.

- 7% agent / air BnB fees (a total guess here, I admit!)

...the one thing I've yet to factor in is furnishing the house, although this shouldn't be astronomical because its essentially a bedroom / kitchen living area / bathroom. I should really do my sums on this.

The most important thing in these figures is to make sure I can bring in enough to cover loan repayments. Can anyone verify if any of these figures are wildly innacurate?

Gaz83 · 19 September 2018 at 6:37PM

You've got an income of £12k.

No lender is going to touch this with a bargepole.

Self_Build_Dreamer · 19 September 2018 at 6:41PM

Haha! To be honest, this is what I thought although I hoped there might be a creative loophole using my savings to make repayments on loans.

redux · 20 September 2018 at 9:35AM

For ideas on the design and construction, look up Irish vernacular, if you haven't already heard of it.

This is a self-build timber frame by an Irish architect Dominic Stevens for €25,000, which suggests that part of your scheme can realistically be in range.

Probably need a bit of a windfall on the overall finances or land though.

Nasqueron · 20 September 2018 at 10:27AM

Self_Build_Dreamer wrote: »

Hi Nasqueron,

I based my approximate rental figure on the following formula:

- 45 days a year personal use.

- £90 per night all year round in a extremely popular holiday destination all year round (this figure based on similar properties).

- 75% occupancy rate. This sounds high but seems realistic based on my research. Perhaps it needs revising?

- £40 per week cleanng fees (assuming lets between 3 - 7 days).

- 15% wear and tear costs.

- 7% agent / air BnB fees (a total guess here, I admit!)

...the one thing I've yet to factor in is furnishing the house, although this shouldn't be astronomical because its essentially a bedroom / kitchen living area / bathroom. I should really do my sums on this.

The most important thing in these figures is to make sure I can bring in enough to cover loan repayments. Can anyone verify if any of these figures are wildly innacurate?

I suspect there will be letting firm forums that cover stuff like this and what you can realistically expect to pay in fees etc

I'd budget for 50% occupancy and go from there, if it is 75%, great, if it is 50% you're still covered. Even in good holiday locations outside of the peak June-August time and half term you will find fewer people going away and houses going spare - remember you're looking at couples only so no chance you'd rent to a family looking for cheap outside term time holidays and as soon as you're away from school holidays the prices tank. £40 a week cleaning - 4 hours at £10 an hour (the places I have stayed in are usually checkout 10, check in 2) - even if it's a reliable cleaner who is available at those times, I bet they charge a fair bit more, or you get a half arsed job. In popular areas the good cleaners will be going to the highest bidder and you need to ensure they're in and out quickly. You only need 1-2 bad reviews on trip adviser or similar and you're immediately losing business

If you're in there 45 days ~ 6 weeks a year if it's the middle of summer that's losing money...

spadoosh · 20 September 2018 at 10:30AM

You need to get past the first hurdle of buying land with permission to build a holiday let and financing it.

Youre probably there with your side of a deposit youre quite far away off with the earnings.

You need to either save a lot more or earn more. Before you even think about occupancy rates.

Potbellypig · 20 September 2018 at 3:50PM

God loves a trier. Unfortunately, this isn't University anymore. This is real life.

The fact is that you're income isn't enough to turn this from anything else but a pipe-dream.

Can I make my self-build dream a reality?

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