Lay My Hat home page Lay My Hat Forum
The forum for holiday rental owners


 
  FAQFAQ    SearchSearch    MemberlistMemberlist   UsergroupsUsergroups    RegisterRegister  
  ProfileProfile    Log in to check your private messagesLog in to check your private messages    Log inLog in 

Is it possible to earn a profit if you use a mgmt co.?
Goto page 1, 2  Next
 
Post new topic   Reply to topic    Lay My Hat Forum Index -> UK & Ireland
View previous topic :: View next topic  

Can a newly-purchased holiday let make a profit using a property management company?
Yes
5%
 5%  [ 1 ]
No
94%
 94%  [ 18 ]
Total Votes : 19

Author Message
Jo222



Joined: 28 Dec 2017
Posts: 9
Location: New to this and looking in UK

PostPosted: Sun Dec 31, 2017 10:59 am    Post subject: Is it possible to earn a profit if you use a mgmt co.? Reply with quote

Hello from a newbie!

After calculating the numbers, I can't figure out a way that a faraway buyer can make money buying a UK holiday let.

Am I missing something? Or have property prices just gone too high for this investment to make a profit?

I drew on the really helpful tips in different parts of Lay My Hat to come up with a financial spreadsheet. (I'm new, so I'd love your corrections & tips!) Very Happy I did a lot of research, so in case it's helpful, I put the results here: https://www.laymyhat.com/forum/viewtopic.php?p=354790#354790.

(Apologies for the cross-post, but I'm not sure if posts get seen across forums.)

Best,
Jo


Last edited by Jo222 on Mon Jan 01, 2018 3:51 pm; edited 1 time in total
Back to top
View user's profile Send private message
Joanna



Joined: 23 Aug 2007
Posts: 1007
Location: Chester, North West England & Sidmouth, East Devon

PostPosted: Sun Dec 31, 2017 5:47 pm    Post subject: Reply with quote

I voted no - although that's just based on our own experience so drawn on a very small sample of 1. When we started we used Sykes for marketing and taking bookings. We had to organise cleaning, laundry, maintenance etc ourselves. We had a mortgage and made a loss each year. When we dropped Sykes and did the marketing ourselves we went into a small profit. Partly because we spent less on listing sites than we had spent on Sykes, partly because we charged more (they're notorious for under pricing) and partly because our mortgage interest rates were going down.

If you started with a small mortgage or none at all then it would be a different story. Also, we're off site so have to pay other people to do everything - if you can do your own cleaning, laundry, gardening, etc. That makes a big difference, but then you may not have the time to do all that.

We bought our houses because we wanted places to stay near our families so we don't mind the short term financial losses - we've gained in other ways.
_________________
Jo

Joint owner of Baker's Cottage in Chester & Chandler's Cottage in Sidmouth
Back to top
View user's profile Send private message Visit poster's website
Jenster



Joined: 08 Mar 2016
Posts: 454
Location: Cornwall

PostPosted: Sun Dec 31, 2017 7:13 pm    Post subject: Reply with quote

Agree with Joanna. I do it all myself, although I pay a cleaner in the busy summer period as I also work and have a family. I am in my second year and will turn a small profit this year (last year most of it went back into improving the property) but am lucky I don't have a mortgage. If I did the profit would be a lot smaller and would be largely eaten up by agents fees.
_________________
www.seashellsporthtowan.co.uk
Back to top
View user's profile Send private message Visit poster's website
Jo222



Joined: 28 Dec 2017
Posts: 9
Location: New to this and looking in UK

PostPosted: Sun Dec 31, 2017 7:27 pm    Post subject: Reply with quote

Jo and Jenster,

Thank you so much for your honest feedback! I saw how many businesses are supporting holiday lets and I kept questioning my numbers. It's a bit disappointing to hear, of course, but so helpful to know that I did my homework properly.
Back to top
View user's profile Send private message
rosebud



Joined: 14 Mar 2012
Posts: 624
Location: Steyning, West Sussex

PostPosted: Mon Jan 01, 2018 2:48 pm    Post subject: Reply with quote

I haven't used a management company but do employ a local person to do my cleaning and laundry.

Personally I think it is quite a challenge to match income from a long term rental... but perhaps it depends on where one has the holiday let?

I think I may achieve matching a long term let income for the very first time this financial year .. but fell far short in previous years .. especially during the first 2 years when I let through a local agent..
Back to top
View user's profile Send private message
Cymraes



Joined: 07 Jul 2015
Posts: 488
Location: North Wales

PostPosted: Mon Jan 01, 2018 6:48 pm    Post subject: Reply with quote

I also voted no. I certainly didn't and I'm not having to service a mortgage.
_________________
Caro
Back to top
View user's profile Send private message
e-richard



Joined: 17 Oct 2004
Posts: 5006
Location: Algarve, Portugal

PostPosted: Tue Jan 02, 2018 9:34 am    Post subject: Reply with quote

Based on the last 10 years of very detailed spreadsheet records for my REMOTE property in Portugal where:

1. No Mortgage
2. I do all the rentals
3. Local manager, local cleaners, local maintenance and laundry.

I have managed about 40% annual profit on revenue but that's only a 3.3% yield (the percentage of profit over initial capital cost), which is really how you should measure rental success. I'm aware that many people mix up these two terms, but they both have a use Wink
_________________
** Richard
PIMS: Holiday Rental Management system
They say we learn from our mistakes. That makes me a genius !
Back to top
View user's profile Send private message Visit poster's website
COYS



Joined: 06 Jun 2015
Posts: 795
Location: Greek Islands

PostPosted: Tue Jan 02, 2018 11:00 am    Post subject: Reply with quote

Agree e-richard from a similar situation.
We took a good few years of reinvestment to break even & any subsequent profit has been modest at best. Itís easy to neglect to factor in our own time & physical input (considerable in my case) which would add a chunk to the debit column were we to do so.
As a stand alone business I think there must be far easier ways of making a living.
_________________
This time next year Rodney, we'll be millionaires.
Back to top
View user's profile Send private message
Mister PAYE



Joined: 03 Jul 2018
Posts: 4

PostPosted: Tue Jul 03, 2018 9:57 pm    Post subject: Reply with quote

Seriously. Why are people running businesses that donít make money?
Back to top
View user's profile Send private message
ianh100



Joined: 10 Jan 2013
Posts: 583
Location: Sherborne Dorset

PostPosted: Wed Jul 04, 2018 6:01 am    Post subject: Reply with quote

Hi Mister PAYE

In the buy to let world I know many people that do just that but assume the capital gain in the property over time will return a profit.

We make a modest profit and get to use the property ourselves, the capital gain would be a bonus.
Back to top
View user's profile Send private message
e-richard



Joined: 17 Oct 2004
Posts: 5006
Location: Algarve, Portugal

PostPosted: Wed Jul 04, 2018 7:15 am    Post subject: Reply with quote

Mister PAYE wrote:
Seriously. Why are people running businesses that donít make money?

I know many owners who are happy to break even annually (on a spreadsheet), but then get to use the holiday home themselves FREE.

Or put another way, would you like to watch your savings grow looking at a spreadsheet of investment funds or would you like to watch your savings grow while lounging around the swimming pool?

Of course we can argue till the cows come home whether you should invest in property or in shares for your old age (or for your kids)
_________________
** Richard
PIMS: Holiday Rental Management system
They say we learn from our mistakes. That makes me a genius !
Back to top
View user's profile Send private message Visit poster's website
Mouse



Joined: 20 Jun 2006
Posts: 7273
Location: Balearics

PostPosted: Wed Jul 04, 2018 8:32 am    Post subject: Reply with quote

I voted no too as I had raised that same issue a couple of years ago. I did the figures and couldn't see how it would turn much of a profit even going high end. The hassle factor of being a off site owner convinced me.

I can see the attraction of having a place abroad/holiday home you use and being happy for it to wash it's own face, but having a place solely as an income from holiday let's just doesn't attract.
I don't think in the UK that the growth in house prices is even enough.

Mousie
x
Back to top
View user's profile Send private message Visit poster's website
Martha



Joined: 16 Apr 2006
Posts: 2256
Location: Chamonix

PostPosted: Wed Jul 04, 2018 2:55 pm    Post subject: Reply with quote

Depends on the mortgage situation but if it's the kind of fairly typical setup you have in your list, then I would say no. As a way to finance your own life in a place you love, it works. Or if you have little to no mortgage.

Also my experience was that having everything agency run did show in both the standards and the bookings. When we did everything remotely and via an agency, we made less money of course but also had fewer bookings and fewer returners. The personal touch does make a real difference and people now comment all the time about the details. A carefully considered reply to an enquiry gets you a lot more bookings than an agency's standard one. A constantly maintained online presence also helps - this is hard to do if you are not actually there.

There was nothing actually wrong with the agency, I was happy with them and we parted on good terms. But I think you'll always get better results by doing more yourself *if* you can put the time in.

Added to what Mouse says, I think it's often true (certainly here) that high-end doesn't necessarily make the actual owner all that much extra money, by the time everyone's had their cut and factoring in the extra work to make everything super-duper perfect, and any issues must be fixed ultra fast.

Even quite a small thing like (recent example) a baby gate that was found to have lost a screw on arrival on Saturday night. We improvised a solution to tide them over till Monday, it was all fine, no biggie. We have three anyway.

But a high end place would have had to drive an hour or so to find a place open on Sunday morning, arriving as it opened, then drive back, unpack and install it. All that time would have been charged for. Any issue with the house, even quite small things, and they will have you back and forth. It really adds up. I know someone here with a very high-end place that is all dealt with via an agency, and she ends up with less than half what I get per week, and a lot of it is because of these kinds of things.

As a purely profit-making exercise, done entirely remotely, I would say there are far better ways to invest your money. If you wanted to keep it in property it may well be better to look at long term lettings as a better option.
_________________
Chalet la Foret, Chamonix
Back to top
View user's profile Send private message
Mister PAYE



Joined: 03 Jul 2018
Posts: 4

PostPosted: Wed Jul 04, 2018 9:35 pm    Post subject: Reply with quote

Does anyone do it for the money? I currently do btl but wouldnít consider doing so for capital gains alone, in fact they are a nice bonus - not the core of a good business
Back to top
View user's profile Send private message
Ecosse



Joined: 29 May 2014
Posts: 808
Location: Saint Gervais les Bains, France

PostPosted: Wed Jul 04, 2018 10:29 pm    Post subject: Reply with quote

Mister PAYE wrote:
Does anyone do it for the money? I currently do btl but wouldnít consider doing so for capital gains alone, in fact they are a nice bonus - not the core of a good business


While I'm not based in the UK, what I am about to say is not country relevant: in my opinion, it's not possible to make it financially worthwhile (i.e. that the financial gains are equal or more than what you may gain by investing your money elsewhere) with anything less that 5 units. That's 5 holiday lets or 5 rooms for rent if, like us, you're a b&b that you can spread the fixed costs over. Even with 5 units it's marginal and beyond that, you're looking at running your holiday let business as a full time venture.

For us, being foreigners who couldn't do any other reasonably paid work in France when we arrived, setting up our business was a means to staying here - one that I don't regret in the slightest, but it is very hard, time consuming work and now that we're more 'in the system', we've started to look for easier employment opportunities. We always said we would do it for a maximum of 10 years: we've worked hard to build something from nothing, but it's not been without its sacrifices.

If you're simply looking to invest money (i.e. aren't looking to keep a treasured family home going, or it's your hobby -
and great pleasure - to ensure your guests have the best time possible), I would look at other investment opportunities.
Back to top
View user's profile Send private message Visit poster's website
Display posts from previous:   
Post new topic   Reply to topic    Lay My Hat Forum Index -> UK & Ireland All times are GMT
Goto page 1, 2  Next
Page 1 of 2

 
Jump to:  
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum


Powered by phpBB © 2001, 2005 phpBB Group