Is a holiday-let right for me?
Making as much money as possible from a property investment is what it’s all about, but should you invest in a property as a buy-to-let or as a holiday let? This week I’ve been speaking to Jen, who owns both a holiday let and a residential BTL property. She’s been kind enough to share her thoughts on the pros and cons running one of each.
Most weeks someone gets in touch to ask me which one I would recommend and which one will make the most money (yes, they are different questions!)
Before we get into the finer details of the pros and cons of running holiday lets, we need to talk money. There are very few mortgage lenders out there who will even consider lending for holiday lets. The ones that do will require substantial deposits. The uncertainty of Brexit may well affect holiday-let mortgages too (have a read of my previous blog about the effects of Brexit on the property market – Ross).
Pros of running holiday-lets:
- Meeting interesting people
- Pride and satisfaction in your work
Income: Many people will be able to tell you that the price of a self-contained holiday let per week is roughly equivalent to its rental value per month. Not too bad, I hear you say. But, and here is the big but. You need to think about the expenses involved. Holiday let management companies usually advise that holiday lets should achieve 20/52 weeks of bookings. Do remember that you will need to factor in all of the usual insurances and all of the additional cleaning, repairs and management required for a holiday let.
Meeting interesting people: I live in an old farmhouse and my holiday let is a converted barn a few meters away. I love meeting interesting people, and I find that those who want to chat will do! I’ve met people from many different countries and cultures, and all walks of life. (A Japanese family were particularly interested in finding out about living in England). If you don’t live on site, then you generally will not meet them (depending on your key arrangements.)
Pride and satisfaction: I love getting my barn immaculate for my guests, just wish I had the energy to keep my own home as tidy! I find that people are particularly pleased by the finishing touches. I usually have a vase of fresh cut flowers and a locally sourced loaf of bread waiting for them on the table; the feedback suggests that the little touches are all really appreciated. Think about how you plan to maintain your holiday let. (There are some great tips on one of my previous blogs about maintaining a rental property - Ross).
Cons of running holiday-lets:
- Tied to a turn-over which usually needs to be very quick
- Being on hand for problems 24/7
- Unreasonable demands
Tied to the turn over day: If you are planning on completing the housework and maintenance yourself, then you will be tied to your holiday let on that day. Let me tell you; it’s not just the cleaning, it’s the getting it done in just a few hours. Sometimes I do wonder whether hiring someone to help me would be worth every penny!
Being on hand 24/7: However your holiday let is managed, someone will need to be on hand to sort and fix anything that comes up, day or night. This is another issue that makes you feel as if you are chained to the holiday let (see why it’s not just about the rental?!) Think about how much your time is worth!
Unreasonable demands: now I don’t get many of these, but I feel that they are a big enough issue to make it into my three cons of running a holiday let. The one that got to me the most was when one family arrived at my front door to complain about the Internet speed and asking me to improve it! My holiday let is in a very rural location and the Internet is fast enough to stream iPlayer on an iPad; I’ve checked! In this type of situation, there really isn’t anything you can do about it and it’s just one of those things you have to accept as par for the course when you run a holiday let. (Turns out they also left feedback that the TV in my barn was too small; don’t think I was going to please them whatever I did!)
Funny story … once it was over!
It’s a funny old world and as an owner of a holiday let property you will, very quickly, see it all and hear it all!
Last summer I had a lovely German couple staying in my holiday let for a fortnight (and they didn’t request additional mid-stay cleaning – bonus!) They were very pleasant and stopped to chat while I was out working in my front garden. One afternoon I suddenly heard screaming and the couple emerged and ran towards my house. When they had finally calmed down, they were able to explain that my barn was full of ‘flying buzzing creatures’. Unsure of what to expect I went up to have a look myself. Lo and behold, the barn was full of honeybees! It turned out that they were a whole swarm from the neighbouring farm. The farmer arrived and took the queen away and I tidied the barn up. Nervously the guests came back, inspected the rooms, and sat down for a drink.
The moral of the story? Expect the unexpected, and do everything you can for a smooth ‘fix’. They left some lovely feedback with the holiday management company!
Ross: So as you can see, whilst holiday lets can be a fabulous way to use your property, the devil is all in the details, as they say. You need to consider carefully both location and lifestyle before deciding whether a holiday let is right for you. Like so many areas of property investment, it pays to have a conversation with professionals first, who may be able to show you issues (and solutions) you had never considered. As ever, Jasmine, Matt and myself are always here to help – why not give us a call today?