Holiday House(s) Finance

[ultramods]

Once our self build is complete I am contemplating starting to build holiday houses (1 at a time) that we would let out most of the year. 

 

The budget would be roughly:

Plot: £100,000

Professional: £20,000-30,000

Build: £300,000 - 330,000

 

Assuming we would be putting no money ourselves (we would have around £250,000 equity in our new house), does anyone know the best way to finance such a build?

 

Edited July 21, 2018 by ultramods

[Ferdinand]

I think you are into the various options for BTL funding.

 

Holiday let’s are more specialised than usual BTL, possibly with lower LTV. And I think you may want a specialist broker especially if you want to build it as well, or bridge + remortgage, or fund via a main residence mortgage.

 

Holiday let’s have not been as heavily clobbered by tax as btl, but who knows what will happen, and Scotland will do its own thing.

 

Useful links:

https://www.propertytribes.com/holiday-let-every-portfolio-should-have-one-t-127628186.html

https://www.propertytribes.com/forumdisplay.php?fid=25&action=latest_posts

https://www.primelocation.com/discover/property-news/the-most-profitable-places-to-own-a-holiday-home-in-the-uk/

 

Ferdinand

 

Edited July 22, 2018 by Ferdinand

[Simplysimon]

relatives did this, both worked and then on a saturday had to strip and clean 2 houses. as new holiday houses it took a while to get regular income. be aware of the potential income difficulties, cleaning costs if you don't do it and that you may not be able to let as anything else as a holiday rent so the winter cannot be a 6 month rental to get you through it. they sold up after a few years of hard work. it's a decision not to be taken lightly.

[Ferdinand]

31 minutes ago, Simplysimon said:

relatives did this, both worked and then on a saturday had to strip and clean 2 houses. as new holiday houses it took a while to get regular income. be aware of the potential income difficulties, cleaning costs if you don't do it and that you may not be able to let as anything else as a holiday rent so the winter cannot be a 6 month rental to get you through it. they sold up after a few years of hard work. it's a decision not to be taken lightly.

 

It will be about year 3 before you have a very significant proportion being repeats, if it is gooD enough and good enough value that they keep wanting to come back.

 

Even after that, reckon on needing to recruit perhaps 30% or 50% new each year, though if you get customers with ties eg people visiting married children then you may do well on this front.

 

Finding a good management service is important, even as a backup. Have a good look at my links above.

 

Aberdeen should be a good location, however. But ca; it give a decent return on a 500k investment.

 

F

Edited July 22, 2018 by Ferdinand

[ultramods]

1 hour ago, Ferdinand said:

 

It will be about year 3 before you have a very significant proportion being repeats, if it is gooD enough and good enough value that they keep wanting to come back.

 

Even after that, reckon on needing to recruit perhaps 30% or 50% new each year, though if you get customers with ties eg people visiting married children then you may do well on this front.

 

Finding a good management service is important, even as a backup. Have a good look at my links above.

 

Aberdeen should be a good location, however. But ca; it give a decent return on a 500k investment.

 

F

 

The plan would be to build a contemporary 5* 5 double bedrooms, all with ensuites, near Aviemore (Aviemore benefits from visitors almost all year round).

 

Here is what one of the management companies emailed me (obviously I can't just take their word, will need to do a lot more research):

 

We charge 21% commission.

 

We work closely with and can recommend local cleaning and maintenance (including hot tub) companies.

 

We routinely secure over 80% occupancy, some of the lodges well over 90%. We could sell this type of property for 52 weeks of the year in this area and would expect at least 45 weeks to be sold.

 

This size of property, appropriately presented, would return around £1500 weekly for the low weeks to around £1999 for high weeks and £3200 for festive weeks.

 

Cost for chnage over clean would be £200

 

 

Annual income would expected to be £80,000 plus

 

Edited July 22, 2018 by ultramods