Rental Property Expenses

[ajroberts]

Hi all,

I'm trying to decide whether to rent out my house to long-term tenants or as a holiday cottage. So I've created a spreadsheet to estimate the costs and project the profit. Looking pretty close if I use an agent for the holiday let but find tenants myself.

I'm after ball park figures for expenses, and other expenses I might have forgotten. I've got:

Agent VAT 17.5%
Agent Comm 25%
Mortgage
Elec
Oil
Council Tax
Insurance
Tax 25%?

Andrew

p.s. Excellent site and forum, just what I was looking for. Any more like this on the web?

[Fraise]

What about cleaning? Complimentary toiletries? Wine/water/fruit juice/tea/coffee/rubbish bags/loo rolls etc. The cost of laundry-even wear and tear on your own machine if you do it yourself? Flowers ( I buy them every week),cost of furnishings inc pots,pans,glasses etc as well as big stuff like tele ,sofas,beds,duvets,duvet covers.
The cost of paying for satellite? TV licence? Gardener? .
I'm sure someone will think of more !!

www.thepetitmanoir.com

[alexia s.]

Andrew,
Where is your house? Tax will depend on the location of the property.
You should add water consumption & depreciation, and allow for repairs.

[Fraise]

I just KNEW there were more! Don't forget septic tank things like special enzymes and emptying -if you have a septic tank that is!! We have electricty,oil and gas to pay for.

www.thepetitmanoir.com

[ajroberts]

Oh yeah, forgot about all the little stuff (toileteries, consumables,etc) - put in £15/wk for that.

Live locally so will do all the manual stuff myself: cleaning laundry.

The house is in Mid-Wales, so have guessed 20% tax on the net profits.

Is 25% steep for commision? That's wales-holidays.co.uk who come up second on a google for "Holiday Cottages Wales".

Andrew

[Sue Dyer]

The repair contingency fund is important. In your own house you can put up with breakages/faults until you get someone in. In a rental you need to move fast which usually equals emergency rates and top £££'s - as I know only too well.

Might sound minor but even things like washing powder/conditioner and cost of tumble drying in winter (or summer - see towels thread!!). I expect to probably have to replace my washer & dryer much quicker as with the rental laundry they are really getting at least twice as much use. Cleaning products as well as cleaning labour.

[A-two]

Hi all,

I'm trying to decide whether to rent out my house to long-term tenants or as a holiday cottage.

With respect to everyone here, the best people to help you answer that question are your friendly local real estate agents, accountants and solicitors. Nobody understands the quirks of your particular neighborhood better than them, and if you don't know any of those people, you're not spending enough time in the pub.

Once armed with three opinions all saying the same thing, you can jump on board the latest trend or carve out your own niche to fill a gap in the market. It all depends on your objectives and how brave you feel.

p.s. Excellent site and forum, just what I was looking for. Any more like this on the web?

How many more do you need?

P.S. don't forget light bulbs

[paolo]

Is 25% steep for commision? That's wales-holidays.co.uk who come up second on a google for "Holiday Cottages Wales".

25% is not as high as it could be but it depends what you get for that - just a webpage, or an entry in a brochure too.

I lean heavily towards doing away with agencies and using listing sites to get your own bookings, but that is not appropriate for all properties. You may be in a market where most accommodation-seekers still use brochures.

However, if your arrangement with wales-holidays is not exclusive, I see that for that search, cottageguide.co.uk is at number 4 - that is the sort of site you could use to get your own bookings at much better than 25% per booking.

[ravetildon]

Another point to consider is the vacany factor. Once you get a long term tenant they probably won't go anywhere for 3 years or more....

With a vacation rental you are typically getting a new one every weekend. So you may have much more unbooked time, especially the first couple years.

[Ju]

I am assuming that you are comparing a short season for holiday lets (say 15 weeks) with a fully booked long term rental.

You may well get more weeks than that with good advertising and a good product, but it is by no means guarenteed.

Equally if you are doing longer term lets it will depend on whether you are going for long term unfurnished lets or 6 month shorthold tenancies. Depending on the market you can end up with an empty property for months at a time with these, and if someone doesn't pay their rent they don't pay it for months, where as a vacation rental is paid for up front. My Dad got stuck with tenants who didn't pay for months then did a nightime flit leaving him several months rent worse off.

Don't forget that your tax is only on the profits, if you have a mortgage to pay you won't have much left after all the expenses have gone out.