Hi everyone
Firstly thanks for all of your invaluable advice, we have certainly learnt a lot on here so far!
My husband and I are looking to buy our first holiday home, we have no experience in this area and it is very early days so apologies for the vagueness on location etc. We are looking at a 1 or 2 bed flat around Devon or Cornwall, by the coast. Our initial intention was to rent it out as a holiday home but we didn’t realise quite how many associated costs there were! We are definitely going to buy a place whether we just keep it for personal use/rent, we just figured it may help to pay for itself if we rented it, however we are wondering whether we may actually end up out of pocket by doing so!
From the hospitality side, we live too far away to clean the property ourselves (but would visit regularly for maintenance etc) so would have to employ a property management company/cleaners, from what I have read on here I am surprised how much a changeover clean plus laundry and linen can potentially cost! We fully appreciate the importance of this but I don’t think we had quite factored in quite how much this could be, in some cases more than we would potentially rent it out for!
We are doing research in terms of the legal side, from which I gather PAT testing electrical equipment, smoke detectors and carbon monoxide - annual testing of these, public liability insurance are essentials, and from the GOV website a fire safety risk assessment, is there anything else we have missed?
At the moment we are weighing up the pros/cons of renting it out, trying to estimate rough costs, plus this would probably influence the location as well, any advice would be greatly appreciated!
Thank you so much!
To rent or not to rent?
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Joanna
- Posts: 1091
- Joined: Thu Aug 23, 2007 3:12 pm
- Location: Chester, North West England & Sidmouth, East Devon
- Contact:
Firstly welcome to Lay My Hat 
We bought a house in Sidmouth, Devon partly as an investment, partly as a possible future home and also so that we'd have somewhere to stay near to my parents without them having to put us up. We already had a cottage in Chester that we bought for similar reasons, near to my husbands family.
With the Chester house we wildly underestimated the running costs and if took about 3-4 years to reach the point where it covered its costs. Being off site means that we have to pay other people to do a lot of things that we could do ourselves but we're just too far away. Also, initially we used an agency (Sykes) who set the rental rates way too low and after we'd paid their fees we were losing money.
Since taking over marketing the Chester house we've managed to make a small profit which is now covering the running costs of the Sidmouth house. That made a tiny profit, also in its third year and will probably never do as well as the Chester one because it has a much shorter season.
It's a lot of work and if I took into account my time it would be a loss overall. However, we do use both houses a lot ourselves so we're saving the money that we would have spent renting elsewhere. Plus there's the long term investment aspect.
It works for us because we have family in the area and want to keep going back there. We wouldn't buy a place in an area we had no connection with because after a while we might get fed up with always having to stay in the same place.
My advice would be to choose an area that you'll want to keep visiting so you keep your enthusiasm which will show in your marketing. Somewhere that has a low season appeal would also be good - either in or near a large town or city or somewhere which appeals to a specific market like dog owners, ornithologists, walkers or star gazers. Some kind of niche will help with the marketing, especially in the West Country where there is a lot of competition.
We bought a house in Sidmouth, Devon partly as an investment, partly as a possible future home and also so that we'd have somewhere to stay near to my parents without them having to put us up. We already had a cottage in Chester that we bought for similar reasons, near to my husbands family.
With the Chester house we wildly underestimated the running costs and if took about 3-4 years to reach the point where it covered its costs. Being off site means that we have to pay other people to do a lot of things that we could do ourselves but we're just too far away. Also, initially we used an agency (Sykes) who set the rental rates way too low and after we'd paid their fees we were losing money.
Since taking over marketing the Chester house we've managed to make a small profit which is now covering the running costs of the Sidmouth house. That made a tiny profit, also in its third year and will probably never do as well as the Chester one because it has a much shorter season.
It's a lot of work and if I took into account my time it would be a loss overall. However, we do use both houses a lot ourselves so we're saving the money that we would have spent renting elsewhere. Plus there's the long term investment aspect.
It works for us because we have family in the area and want to keep going back there. We wouldn't buy a place in an area we had no connection with because after a while we might get fed up with always having to stay in the same place.
My advice would be to choose an area that you'll want to keep visiting so you keep your enthusiasm which will show in your marketing. Somewhere that has a low season appeal would also be good - either in or near a large town or city or somewhere which appeals to a specific market like dog owners, ornithologists, walkers or star gazers. Some kind of niche will help with the marketing, especially in the West Country where there is a lot of competition.
Jo
Joint owner of Baker's Cottage in Chester & Chandler's Cottage in Sidmouth
Joint owner of Baker's Cottage in Chester & Chandler's Cottage in Sidmouth
If you are buying a flat, you need to factor in additional charges regardless of whether or not you let to guests. Apologies if you are an experienced flat owner for stating the obvious. You will have the monthly management fees and potentially you will have other fees to pay with regard to any maintenance or repairs that require larger sums of money. On the surface this would appear to be the same as if you bought a house and eg needed new Windows you would have to pay for them. However, with a flat, the management company will decide what needs to be done and when, which may not be when you would have chosen to undertake the work. If the management company decide to relay the Tarmac on the parking area, for example, you will have to pay, so take a good look around at the external condition of the grounds and property, not just the internal condition.
If you let to holiday makers, you will need to decorate very frequently and provide a high standard of appliances and furnishings. You will need an annual gas safety certificate and boiler service and cannot afford to let timescales for these slip. If you are buying the property with a mortgage, you will need permission from the mortgage provider to let to holiday makers and this may mean you need a different mortgage product.
Either chose a flat with ample storage, where you can have a locked cupboard or wardrobe without impacting on the storage for your guests or be prepared to accept that you cannot leave any of your own clothes at the property and will have to take everything with you and away after your stay.
You will need to ensure that there is nothing in the terms and conditions either of the lease or management company rules which prevents you from letting your flat as a holiday let.
You will also need to think through how you will ensure that the guests don't disturb or upset the neighbouring flat owners. This can be straight forward, if other flats are let, to very difficult depending upon the personalities of the neighbours and how good the sound insulation is. As you will be using the flat yourselves a lot you stand to hear if any of your guests have caused any problems. This may be ok with you if you are reasonably thick skinned, but could put a bit of a cloud over your enjoyment if one of the other nearby flat owners really doesn't like the idea of the holiday guests.
I didn't mean this post to sound so negative. Most of the above could apply if your flat is in a converted property of other flats or purpose built, but not necessarily if, say, the flat was over a shop. What I am trying to say in a clumsy way is that you need to weigh up any potential purchase from the perspective of a business, and not just your own personal preferences as the very nature of a flat means that you usually are in a closer environment to your neighbours than with a house.
If you let to holiday makers, you will need to decorate very frequently and provide a high standard of appliances and furnishings. You will need an annual gas safety certificate and boiler service and cannot afford to let timescales for these slip. If you are buying the property with a mortgage, you will need permission from the mortgage provider to let to holiday makers and this may mean you need a different mortgage product.
Either chose a flat with ample storage, where you can have a locked cupboard or wardrobe without impacting on the storage for your guests or be prepared to accept that you cannot leave any of your own clothes at the property and will have to take everything with you and away after your stay.
You will need to ensure that there is nothing in the terms and conditions either of the lease or management company rules which prevents you from letting your flat as a holiday let.
You will also need to think through how you will ensure that the guests don't disturb or upset the neighbouring flat owners. This can be straight forward, if other flats are let, to very difficult depending upon the personalities of the neighbours and how good the sound insulation is. As you will be using the flat yourselves a lot you stand to hear if any of your guests have caused any problems. This may be ok with you if you are reasonably thick skinned, but could put a bit of a cloud over your enjoyment if one of the other nearby flat owners really doesn't like the idea of the holiday guests.
I didn't mean this post to sound so negative. Most of the above could apply if your flat is in a converted property of other flats or purpose built, but not necessarily if, say, the flat was over a shop. What I am trying to say in a clumsy way is that you need to weigh up any potential purchase from the perspective of a business, and not just your own personal preferences as the very nature of a flat means that you usually are in a closer environment to your neighbours than with a house.
Re: To rent or not to rent?
There's a wealth of information on LMH, so just keep reading.sprthompson wrote:around Devon or Cornwall, by the coast.
The only additional point I would make is in reference to your purchase decision. When we were in your position, some 8 or 9 years ago, we were considering a Devon coastal property for FHL purposes. We met the local tourist dept representative at a quaint hotel in Thurlestone(South Hams). She happened to mention the frustration that some(many?) tourists experience when the single track lanes to the coast from the main A roads become blocked with increasingly irate tourists during the height of the season. That comment changed our perspective entirely because our target market was the touring holidaymaker as opposed to the bucket & spade brigade. For tourers, who like to get out & about each day, being stuck in the lanes every day could be the ultimate frustration.
So, when you are considering location, if FHL is the primary driver for your purchase, also think about what profile of guest you might be looking to attract and whether the locations you are considering would meet expectations.
Web: https://yofftoo.com/property/esmes-cottage
Twitter/Facebook/Instagram: @esmescottage
Twitter/Facebook/Instagram: @esmescottage
Hi
We are also new to this business. Our's is a slightly different set up however in that we purchased a large house with an attached annex with the intention of creating some income.
The set up costs have been significant, ie putting in a new kitchen and shower room as well as furnishing the place. We had advice from a firefighter friend with regards the fire assessment etc and took some advice from a local architect with regard planning consents etc.
We were able to set up a website ourselves and manage this with adding additional photos etc. When it came to bookings however this did not provide much in the way of interest, it being a new venture so we have had to sign up with an agency who charge quite a chunk. That said we now have some bookings which we would not have otherwise had and its starting to take off (3 months after launching)
At the moment as we are on site we do our own changeovers and maintenance and are considering offering this service to others who are local as employing a management company is indeed really expensive and would outweigh any income gained! Having three different guests over 10 days at Easter was a bit exhausting though!
I agree with the point about the narrow lanes as this does put some people off but most folk soon adapt and its all part of the Cornish holiday experience!
Hope your venture is successful if you decide the take the plunge!
We are also new to this business. Our's is a slightly different set up however in that we purchased a large house with an attached annex with the intention of creating some income.
The set up costs have been significant, ie putting in a new kitchen and shower room as well as furnishing the place. We had advice from a firefighter friend with regards the fire assessment etc and took some advice from a local architect with regard planning consents etc.
We were able to set up a website ourselves and manage this with adding additional photos etc. When it came to bookings however this did not provide much in the way of interest, it being a new venture so we have had to sign up with an agency who charge quite a chunk. That said we now have some bookings which we would not have otherwise had and its starting to take off (3 months after launching)
At the moment as we are on site we do our own changeovers and maintenance and are considering offering this service to others who are local as employing a management company is indeed really expensive and would outweigh any income gained! Having three different guests over 10 days at Easter was a bit exhausting though!
I agree with the point about the narrow lanes as this does put some people off but most folk soon adapt and its all part of the Cornish holiday experience!
Hope your venture is successful if you decide the take the plunge!
Spending Our Kids Inheritance
www.greathillslodge.com
www.greathillslodge.com
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jonesalice34
- Posts: 4
- Joined: Tue Jul 12, 2016 2:07 pm
Are you thinking about short-term rental or long-term? You should take into consideration that short-term will let you earn upwards of 5% net yields, compared 2–3% on a flat with one long-term tenant.
Property management company will manage the premises, find customers, maximise occupancy, pay the bills and taxes as well as deal with the cleaning and any maintenance. It takes 20–25% of the revenue, but it will help you to get more money. This article contains a lot of useful information for you, check it https://tranio.com/traniopedia/tips/the ... in-the-uk/
Property management company will manage the premises, find customers, maximise occupancy, pay the bills and taxes as well as deal with the cleaning and any maintenance. It takes 20–25% of the revenue, but it will help you to get more money. This article contains a lot of useful information for you, check it https://tranio.com/traniopedia/tips/the ... in-the-uk/
If you haven't already found it, have a look at the information provided in the signature links in posts from LMH member Charles Cawley (do a search on member name). Charles runs a small agency (not in the part of the country you're looking at) and gives some very good insights based on UK experience; he's a valued and trusted contributor!
Secondly, an essential reference is what is referred to as "the Pink Book Online" which has a wealth of information on legal responsibilities provided by Visit Britain. Here's the link: www.visitbritain.org/pink-book
Secondly, an essential reference is what is referred to as "the Pink Book Online" which has a wealth of information on legal responsibilities provided by Visit Britain. Here's the link: www.visitbritain.org/pink-book
Welcome.jonesalice34 wrote:Are you thinking about short-term rental or long-term? You should take into consideration that short-term will let you earn upwards of 5% net yields, compared 2–3% on a flat with one long-term tenant.
Property management company will manage the premises, find customers, maximise occupancy, pay the bills and taxes as well as deal with the cleaning and any maintenance. It takes 20–25% of the revenue, but it will help you to get more money. This article contains a lot of useful information for you, check it https://tranio.com/traniopedia/tips/the ... in-the-uk/
Interesting link, although I'm always a bit wary of websites based in Russia due to the number of scams from there! They look like a pretty big operation.
Do you have any direct experience of Tranio?
Welcome.greenbarn wrote:short-term-rental-landlords-in-the-uk/[/url]
Interesting link, although I'm always a bit wary of websites based in Russia due to the number of scams from there! They look like a pretty big operation.
Do you have any direct experience of Tranio?[/quote]
I thought the choice of popular destinations to buy in was odd. It looks like they've just selected 5 major cities outside London. Whilst Edinburgh is popular I don't know many tourists desperate to visit Birmingham!
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PW in Polemi
- Posts: 1781
- Joined: Sun Oct 21, 2012 5:23 am
- Location: A village in Paphos, Cyprus
Welcome. We've got a 1 bed flat (in addition to our 2 bed sleeps 4 FHL cottage) and when the long term tenants moved out, we considered turning it into another FHL. BUT ... it is too far away for us to easily service ourselves and what we could charge for (yet another) 1 bed FHL would pretty much be wiped out by what we would have to pay for cleaning/meet'n'greet etc. So we've got another long term tenant in there.
Think very carefully about costs - furnishing a 1 bed is not much cheaper than furnishing a 2 bed - and consider how much more you could charge per week for a 2 bed (which will appeal to 2 people as well as 4, thus doubling your target market).
Finally, think about the future - eventually you will want to sell it and it must be in a good location, not just for tourists to want to stay in it, but in order to sell easily.
Good luck!
Think very carefully about costs - furnishing a 1 bed is not much cheaper than furnishing a 2 bed - and consider how much more you could charge per week for a 2 bed (which will appeal to 2 people as well as 4, thus doubling your target market).
Finally, think about the future - eventually you will want to sell it and it must be in a good location, not just for tourists to want to stay in it, but in order to sell easily.
Good luck!
Dogs have masters. Cats have slaves!
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jonesalice34
- Posts: 4
- Joined: Tue Jul 12, 2016 2:07 pm
[/quote]
Welcome.
Interesting link, although I'm always a bit wary of websites based in Russia due to the number of scams from there! They look like a pretty big operation.
Do you have any direct experience of Tranio?[/quote]
Come on, don't be that prejudiced, you know that not nationality determines the quality of service (as well as an individual's character). My parents bought an apartment in Budapest with Tranio, as far I know they didn't pay any extra money and everything went well
Welcome.
Interesting link, although I'm always a bit wary of websites based in Russia due to the number of scams from there! They look like a pretty big operation.
Do you have any direct experience of Tranio?[/quote]
Come on, don't be that prejudiced, you know that not nationality determines the quality of service (as well as an individual's character). My parents bought an apartment in Budapest with Tranio, as far I know they didn't pay any extra money and everything went well
I rather object to being called prejudiced, but never mind. The general (not just mine) wariness among owners is due to the proliferation of bogus holiday rental listing sites that fraudulently copied entries from genuine listing sites in an attempt to pass themselves off as genuine and steal money from guests who thought, mistakenly, that they'd paid for a holiday. For whatever reason, most of these sites were based in Russia and disappeared shortly after they started, to be followed by the next clone. The site you linked to doesn't seem to fall into that category.jonesalice34 wrote:Come on, don't be that prejudiced, you know that not nationality determines the quality of service (as well as an individual's character). My parents bought an apartment in Budapest with Tranio, as far I know they didn't pay any extra money and everything went wellWelcome.
Interesting link, although I'm always a bit wary of websites based in Russia due to the number of scams from there! They look like a pretty big operation.
Do you have any direct experience of Tranio?
As an owner yourself I'm sure you pick up on certain signals that make you question if you might be about to be scammed, and keep your guard up. Which may, of course, be seen as a form of prejudice depending on your POV, and how many people you know who've been on the receiving end of scams.
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jonesalice34
- Posts: 4
- Joined: Tue Jul 12, 2016 2:07 pm
I see, I am really sorry if I offended you, I didn't mean that.greenbarn wrote:I rather object to being called prejudiced, but never mind. The general (not just mine) wariness among owners is due to the proliferation of bogus holiday rental listing sites that fraudulently copied entries from genuine listing sites in an attempt to pass themselves off as genuine and steal money from guests who thought, mistakenly, that they'd paid for a holiday. For whatever reason, most of these sites were based in Russia and disappeared shortly after they started, to be followed by the next clone. The site you linked to doesn't seem to fall into that category.jonesalice34 wrote:Come on, don't be that prejudiced, you know that not nationality determines the quality of service (as well as an individual's character). My parents bought an apartment in Budapest with Tranio, as far I know they didn't pay any extra money and everything went wellWelcome.
Interesting link, although I'm always a bit wary of websites based in Russia due to the number of scams from there! They look like a pretty big operation.
Do you have any direct experience of Tranio?
As an owner yourself I'm sure you pick up on certain signals that make you question if you might be about to be scammed, and keep your guard up. Which may, of course, be seen as a form of prejudice depending on your POV, and how many people you know who've been on the receiving end of scams.
jonesalice34, perhaps if you read the forum rules you'd understand why we believed that you are simply a spammer of some sort, looking to get traffic to your site. It's classic behaviour; join a forum, post a link on your very first post recommending some random site, professing that you have nothing to do with it and hey presto, lo and behold, within a very short time, the members here spot a connection.
If that's not the case here, then a quick introduction, telling us all about the holiday home you own, with a link so that we know it's real, will get us off your case.
Here are the potential rules that we are thinking of, that you may have broken.
If that's not the case here, then a quick introduction, telling us all about the holiday home you own, with a link so that we know it's real, will get us off your case.
Here are the potential rules that we are thinking of, that you may have broken.
2. No advertising please. Any posts that advertise a product or service with which you are associated may be removed. You may post clickable links if you are a known, active forum member, where appropriate to the topic, but not for self-promotion. If I think you are only posting to get some traffic to your site, I will delete your posts at my discretion.
4. If you are posting to recommend or give an opinion on a listing site or other service, please include a link to your own website or listing site ad in your profile - so we know you are a rental owner, and not the listing site owner! The site or ad you link to should include your name and contact information, and the site being recommended must have its contact information publicly viewable.