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Holiday Lets... What are your thoughts ?


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What are peoples thoughts towards holiday lets as a property investment ?

 

I have always fancied the idea of owning a holiday apartment for my family and close friends to benefit from. And also like the idea of letting the property out when I am not using it...

 

I will hopefully soon be in a position to progress with this idea, as I have found a suitable property that is ideal for myself and family, but will also give me a 6% yield in holiday rental...

 

Would be interested to hear if anyone else has a holiday let as part of their portfolio and how successful you have found it to be as an investment ?

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Hi Michael,

 

We have had a couple of holiday lets in the past, though don't have any at the moment and it's a strategy I personally really like. We sold the first before we started properly investing in property (mistake!) and the second to release a chunk of equity. I would definitely do it again in the right area. Common thought is that it takes 2-3 years to become established and be regularly full through peak seasons. That was our experience as well. It might be possible to achieve that in a quicker timeframe if the owner is very proactive in marketing and the property is in the right area. Agents' fees (if you use an agent) are high - we paid in excess of 25% about 5 years ago. Some agents are more willing to negotiate on rates and time available for family/own bookings than others. From observation, I think a lot more people seem to manage their own properties now with the proliferation of web sites/portals, like Holiday Rentals and AirBnB, especially if they are already in property.

 

With regard to figures, on the first one (sleep 6 in Cornwall, sold in 1994), we were happy for that one to break even as our main reason for owning it was for personal use. Renting June-September covered all costs with a bit to spare. The second (sleep 14 in Carmarthenshire, sold 2010) was a very different situation. We found the market for large holiday lets to be quite different. Although very lucrative, they are harder to rent out beyond the peak periods through an agent. We only operated this for 2 seasons. It more than broke even and with better marketing and another year's trading, had the potential to do much better. As mentioned above, we decided to sell it to release equity, as at that point it was a challenge to find the time needed to market it properly.

Jayne Owen
@jayneowen

Editor: Your Property Network magazine
Investor: Mozaique Property, South & West Wales

Editor: The Property Bookshop (@Property_Books)

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Two points to consider here from the financing point of view Michael

  1. short term holiday lets, as opposed to the normal longer term AST agreement contravenes most BTL lenders T&C's i.e. they would prohibit you from renting the property out on anything but a standard AST letting basis to someone who wanted to live in it as their home. They expressly forbid shorter term lets below 6 months. There is a very small, you could say tiny, band of lenders that specifically allow holiday lets. So your choice of mortgage lenders is reduced massively
  2. to be able to get a BTL mortgage in general and a holiday let mortgage in particular you must currently own at least one property. If you sell your house and that is the only property you own, you will be declined as you fail to meet their basic criteria by the very lenders you need to be able to buy a holiday let property

Kevin Wright

Positive Property Finance

Telephone: 01206 586586

Email: inspireme@thinkpositively.co.uk

Brokerage website: www.positivepropertyfinance.co.uk

Workshop website: www.ninjainvestorprogramme.co.uk

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Hey Michael,

I wouldnt give up on this, if thats the area that interests you. I personally dont hold any holiday lets but they have some tax benefits over normal btl, which make them interesting, as long as you are in the right area with good demand, seems like a great strategy. If you sell your current property, you could buy the target property with an owner mortgage on a better interest rate, stay there for a period yourself, then if you decide to use as holiday let, just advise your insurance company of the change. Use your discretion with regards to the lender, but it seems fair enough that they get their repayments and the asset is covered by the appropriate insurance.

Rgds,

Laurie

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Thanks guys for all your useful info...

It wouldn't be practical for me to live in my proposed holiday let for logistical reasons. I'm downsizing for personal reasons and just seems like the perfect time to use the freed up equity to start my property investment journey...

The holiday let I have my eye on already has a proven rental income, which is ideal, so just waiting to sell up now... Watch this space

Thanks again for your feedback, this forum really is a great source of knowledge and advice...

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cquiring a property abroad in sunnier climates is a dream for many Brits each year. With niche prices and a strong pound there are many bargains to grab. But hurry guys, as these will not be around forevever because economic recovery spreads across Europe at certain times like now.

check out this blog for further info:http://realestateforyouallc.ipage.com/ever-dreamed-of-having-a-property-abroad-heres-how-to-do-it-right/

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Thanks guys for all your useful info...

It wouldn't be practical for me to live in my proposed holiday let for logistical reasons. I'm downsizing for personal reasons and just seems like the perfect time to use the freed up equity to start my property investment journey...

The holiday let I have my eye on already has a proven rental income, which is ideal, so just waiting to sell up now... Watch this space

Thanks again for your feedback, this forum really is a great source of knowledge and advice...

 

Hi Michael,

 

Unfortunately I don't have anything to add as I don't know anything about holiday lets other than the occasional day dream, however, this episode of the property podcast might be of interest to you, as it's all about holiday lets. I just listened to it myself and had a lot of good points.

 

http://thepropertypodcast.com/2014/05/tpp059-are-holiday-lets-a-good-investment/

 

All the best, and keep us updated in what you are doing.

James​

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