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Are we mad to be buying a holiday let?
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smallblondehippy



Joined: 23 Jul 2020
Posts: 5

PostPosted: Fri Jul 24, 2020 5:34 pm    Post subject: Are we mad to be buying a holiday let? Reply with quote

Hello all,

I would really appreciate some advice. We are currently in the process of buying a holiday let in the Peak District and the reality is starting to kick in. Will we be able to let it out? Will it be more hassle than it's worth? Etc. Etc.

We aren't after making any money but see this as a long term investment that will eventually provide a small income in retirement and allow some holidays in the meantime.

We want to be as 'hands-off' as possible and for the let to just cover its costs. It's already a holiday let and if the figures the current owner have given us are correct it should 'just' about cover its costs.

Is this a feasible plan do you think? Or are we completely mad to be considering buying a holiday let in the current climate?
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greenbarn



Joined: 30 May 2009
Posts: 6147
Location: The Westmorland Dales, Cumbria

PostPosted: Sat Jul 25, 2020 8:37 am    Post subject: Reply with quote

My view, which isnít going to be popular, is that if you arenít committed to the idea and work of running it successfully, at a profit, as a holiday let as the prime intention, then donít do it. Nobody else will do it all for you, youíll need constant involvement even if from a distance, and a completely reliable point of contact near to the let. Plus the most important part of the equation is the guest, not you.
The dream of the ďnice little second homeĒ ticking over is a long way from the reality (which is hard work and rewarding), and following the outrage in some areas at the hobby owners receiving £10k grants, the criteria of how a holiday let should be regarded as a bona fide business will be up for government review - which might put a very different slant on the viability. If nothing else, itís probably a good idea to wait and see what happens there.
My 2p worth, youíll probably get a number of different views!
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newtimber



Joined: 24 Nov 2012
Posts: 1815
Location: Brighton

PostPosted: Sat Jul 25, 2020 10:22 am    Post subject: Reply with quote

I think it's a high risk venture that might pay off well or might be a complete disaster.
Running a self-catering property at a distance in the current climate is going to be very stressful unless you can find a reliable local agent to do everything for you - and they stay in business!
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zebedee



Joined: 12 Sep 2014
Posts: 1195
Location: yorkshire dales

PostPosted: Sat Jul 25, 2020 1:08 pm    Post subject: Re: Are we mad to be buying a holiday let? Reply with quote

smallblondehippy wrote:
Hello all,

I would really appreciate some advice. We are currently in the process of buying a holiday let in the Peak District and the reality is starting to kick in. Will we be able to let it out? Will it be more hassle than it's worth? Etc. Etc.

We aren't after making any money but see this as a long term investment that will eventually provide a small income in retirement and allow some holidays in the meantime.

We want to be as 'hands-off' as possible and for the let to just cover its costs. It's already a holiday let and if the figures the current owner have given us are correct it should 'just' about cover its costs.

Is this a feasible plan do you think? Or are we completely mad to be considering buying a holiday let in the current climate?


Did you actually stay at the property before deciding to buy it? Are the current owners remote owners or local to the property?
If you havenít stayed, how do you know that what you are taking on is what a guest would want from a property? (Donít be fooled by a list of bookings, they may all be unhappy guests staying for the first time!)

These are key questions. Many people who own a holiday let but donít want to manage it are unaware of the maintenance issues that can start off small but become huge irritations for guests.

If the current owners are local and hands on, then you plan to pay people to do what they do for free. eg an agent will organise a repair for you (at a cost to themselves for their trouble) but will not necessarily use the most competitively priced contractor. They will likely use a regular contractor who will factor in having to wait for his/her invoices to be paid into their price.
This may mean you donít actually cover costs.

You will be distancing yourself from knowing about the standards of work you are paying for (including cleaning). I just donít see how that is possible for as long as we have COVID-19 or some other similar virus to contend with.

I tend to agree with Greenbarn about the current climate as well.

I am sympathetic. When difficult things are done well, it often looks much easier than it actually is - and more lucrative.
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declanja



Joined: 27 Mar 2008
Posts: 513
Location: Nice France

PostPosted: Sat Jul 25, 2020 1:45 pm    Post subject: Reply with quote

We have a holiday let in Nice and live in Ireland. I manage the bookings and have a reliable couple in Nice that meet the guests, clean and organise repairs etc. It is hard work.

When we first started we got enquires through the booking sites rather than the instant bookings nowadays. I enjoyed the challenge of converting enquires into bookings and having some sort of relationship with prospective guests. I think both parties gained from the security of this email correspondence and some trust developed. That has changed with the advent of instant booking sites, not to mention their high commission.

I would concur with the others that a person needs to be committed to making the project profitable or it wont be profitable. I see management companies in Nice that take 25% commission and would charge Ä30 call out charge to buy a replacement item from the local supermarket. If I had to pay this, i would be out of business.
This year with C19 is very difficult for everyone, we had no guests from March to July. However, the downturn might make the cost of buying a holiday more affordable.

Running costs on a holiday let are higher than in your own home. Replacement furniture and electrical equipment costs seem to be higher with holiday lets because of the multitude of different users and regular maintenance jobs such as painting have to be carried out more frequently.
So my view would be not to buy if you plan to be a passive owner. If committed, do the maths and don't take the estate agent or sellers word as Gospel!
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Joanna



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

PostPosted: Sat Jul 25, 2020 3:39 pm    Post subject: Reply with quote

We're off site owners - live in Harrow and have lets in Chester and Devon. We bought the Chester one 16 years ago with not much idea what we were doing. It made less money than we expected and cost us more than we thought and it was several years before we broke even. Fortunately, we always saw it as a long term investment and a base for us to visit our relatives so we weren't too worried about profitability.

I manage them myself with the help of local cleaners which works out much more cost effective than using an agency. It helps that I'm self employed so have the flexibility to respond to enquiries and take bookings and so on whenever they come in. However, it's been getting more stressful over the last few years with the advent of TripAdvisor and Airbnb which have changed guest expectations. You'll find lots of information on here about them and the big agency sites like Sykes, etc.

The Covid-19 cleaning guidance is pretty demanding and has kept me up at night wondering how we're going to manage it. Since we can't be at every changeover to make sure it's all being done properly we've decided to leave gaps between bookings to allow any virus to degrade naturally. Then we also have a more intense cleaning regime which has put our cleaning costs up. So that means that our availability is down by 50% even before any guests book. Hopefully, this is a temporary situation but I think it may well affect bookings for the rest of this year.

Have the owners given you pre-covid figures? Things will be very different from now on. Also, why are they selling up?
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Joint owner of Baker's Cottage in Chester & Chandler's Cottage in Sidmouth
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Norfolk Canary



Joined: 07 Sep 2016
Posts: 64

PostPosted: Mon Jul 27, 2020 8:17 am    Post subject: Reply with quote

On a slightly more positive note than the previous posts, I believe that our current predicament may actually have a positive effect for holiday lets in popular areas of the UK. Unfortunately I believe the opposite will be the case for those abroad that rely on guest that are not from the country where the holiday let is located. We bought our small place in North Norfolk three years ago and it is managed by a local agent who takes 20% plus VAT, so 24%. It seemed like a lot (and still does!), but we have still managed to make a reasonable profit each year. Even before the current pandemic there was a growing movement to reduce the amount of flights for Ďgreení reasons and I believe the new concerns over unpredictable lockdowns and, most importantly, new travel insurance exclusions to cover cancellations due to pandemics will scare many people away from flying abroad. Also, during the last few months many families have learned that they can get outdoors together in their own country and have a great time doing it.
As you will be remote I would recommend a low maintenance property, including the outdoor areas.
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SPJ



Joined: 28 Dec 2015
Posts: 432
Location: Aquitaine

PostPosted: Mon Jul 27, 2020 9:50 am    Post subject: Reply with quote

I agree with Norfolk Canary that for the next few years at least, 'til people forget, domestic holiday markets will be very strong - or for those of us on the continent - the European market.
However, bear in mind there will be intense competition and being on site gives an edge in terms of quality of service. We solve issues immediately - this morning, a casual conversation about walks along our local canal (they are looking for things to do outside that do not involve close proximity to other humans) and within 30 minutes I've provided them with a plastified map of how to get there - yes, they could google it for themselves, now they don't have to. That is how I get repeat business and detach myself from HA.
So if you are at a distance make sure your service company is superb.
I also agree with Joanna about the intensity of the COVID cleaning regime between guests, if it's to be done properly. So again, superb cleaners - very well trained (and I do mean trained) will be essential if you are not there yourself.
So, without doubt it WILL be a hassle. But only you can tell whether it will be worth it to have somewhere beautiful for the longer term.
Also, for the longer term you may find that the money begins to matter.
When we restored our "cottage at the bottom of the garden" I swore I would NEVER let it as a gite (I knew it would be hard work). It was supposed to "just" be for friends. But then I realised I was getting the hard work and not making the money! Now, as the years have passed, that money matters and I suspect it will do in the UK once you are out of the EU.
At the very least you want the place to pay for itself.
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SusanMay



Joined: 29 Jan 2012
Posts: 103
Location: Dorset

PostPosted: Mon Jul 27, 2020 3:16 pm    Post subject: Reply with quote

Hereís a link to a post I wrote at the start of the year for my cottage website. Basically my view on the pros and cons of buying a place with the thought of holiday letting it too, 10 years on. Written before Covid-19 Sad

https://westbaycottage.co.uk/a-decade-of-west-bay-cottage/
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Drax



Joined: 21 Jul 2016
Posts: 151
Location: Yorkshire Dales

PostPosted: Mon Jul 27, 2020 4:16 pm    Post subject: Reply with quote

SusanMay wrote:
Hereís a link to a post I wrote at the start of the year for my cottage website. Basically my view on the pros and cons of buying a place with the thought of holiday letting it too, 10 years on. Written before Covid-19 Sad

https://westbaycottage.co.uk/a-decade-of-west-bay-cottage/


Excellent post Susan May, after reading it I found many similarities to our experience of setting up a holiday let.
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smallblondehippy



Joined: 23 Jul 2020
Posts: 5

PostPosted: Mon Jul 27, 2020 7:38 pm    Post subject: Reply with quote

Thanks for the replies. There seem to be varying opinions, as expected. We don't live miles away from the property (about 20 miles) and would probably visit once a month to check on it, so not totally hands off. What I don't really want is to handle the bookings or changeovers but would do the cleaning if necessary.I'm of the mindset nothing ventured nothing gained. If it doesn't work out the cottage would also let as a normal long term let so we do have a plan B.

Would you recommend an agents like Cottages or Sykes for ease? Air bnb seems to be short breaks which is more hassle and cleaning.
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CSE



Joined: 06 Nov 2006
Posts: 4262
Location: Galicia

PostPosted: Mon Jul 27, 2020 8:00 pm    Post subject: Reply with quote

smallblondehippy wrote:
Thanks for the replies. There seem to be varying opinions, as expected. We don't live miles away from the property (about 20 miles) and would probably visit once a month to check on it, so not totally hands off. What I don't really want is to handle the bookings or changeovers but would do the cleaning if necessary.I'm of the mindset nothing ventured nothing gained. If it doesn't work out the cottage would also let as a normal long term let so we do have a plan B.

Would you recommend an agents like Cottages or Sykes for ease? Air bnb seems to be short breaks which is more hassle and cleaning.

For recommendations you should read through this forum.
When you write agent are you looking for an agent who will take on the daily grind, like cleaning key facilitator, organise repairs etc? Of do you want somewhere just to advertise with?
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Norfolk Canary



Joined: 07 Sep 2016
Posts: 64

PostPosted: Mon Jul 27, 2020 8:07 pm    Post subject: Reply with quote

I doubt Airbnb would work unless you do changeovers yourself as the cost would be too high. I read a lot of complaints regarding websites like Sykes etc. I use an agent who is local to the area of our place. They are five minutes walk away in fact. When we first joined them their IT nouse wasnít the best and their website wasnít the best but they have improved a great deal and all the places on their books are now marketed via a few other holiday sites. It does give peace of mind having actual Ďhumansí locally as they can deal with any issues more effectively. It is also great being able to leave dealing with the bookings and money to them and just getting a direct payment every month. The owners area of their website allows me to download all the money transactions between any dates which helps at tax return time. We intend to retire near our holiday let in a few years but we are likely to stick with the letting agent set-up so we are free to enjoy our retirement.
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smallblondehippy



Joined: 23 Jul 2020
Posts: 5

PostPosted: Mon Jul 27, 2020 8:10 pm    Post subject: Reply with quote

Quote:

For recommendations you should read through this forum.
When you write agent are you looking for an agent who will take on the daily grind, like cleaning key facilitator, organise repairs etc? Of do you want somewhere just to advertise with?


Ideally someone to take the bookings and be a point of contact for guests. Don't mind organising the cleaning and repairs ourselves.
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smallblondehippy



Joined: 23 Jul 2020
Posts: 5

PostPosted: Mon Jul 27, 2020 8:28 pm    Post subject: Reply with quote

Norfolk Canary wrote:
I doubt Airbnb would work unless you do changeovers yourself as the cost would be too high. I read a lot of complaints regarding websites like Sykes etc. I use an agent who is local to the area of our place. They are five minutes walk away in fact. When we first joined them their IT nouse wasnít the best and their website wasnít the best but they have improved a great deal and all the places on their books are now marketed via a few other holiday sites. It does give peace of mind having actual Ďhumansí locally as they can deal with any issues more effectively. It is also great being able to leave dealing with the bookings and money to them and just getting a direct payment every month. The owners area of their website allows me to download all the money transactions between any dates which helps at tax return time. We intend to retire near our holiday let in a few years but we are likely to stick with the letting agent set-up so we are free to enjoy our retirement.


I am thinking along these lines too. There are several sites that are specific to the peak district which I would prefer. However, do local agents bring in the same number of bookings that a national site like Sykes would?
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