Anyone here rent out a holiday home? Advice...(7 Posts)
Basically, would you do it all over again?
We are thinking of buying a small place - UK- which we could afford to buy outright but don't want to as that would use up 50% of our savings. It's in a place I know- going back to my roots -so I'm happy about the location.
So, we intend to put down a large deposit of about 50-60% and get a short term mortgage until we receive our pensions which include a large lump sum ( this will be in around 4 years time or sooner.) We'd rent it out in the short term to cover the outgoings.
We have no mortgage on our main home - paid off almost a year ago-and no other debts.
So, the question is- if you own a holiday home and rent it out is it a lot of hassle?
What do we need to consider, bearing in mind it's 250 miles away and the cleaning etc (and I'm fussy) would be done by someone locally. Is this a nightmare? Do you need a team of people on standby? Is it best to use an agent? What about spillages and damage when we aren't there to replace items between lets?
What kind of income would we expect for a 2-bed cottage annually? presumably it would only be rented out April-October mainly with maybe the odd week over Xmas.
Look at how much you would get if you put that money in the bank and got 5% on it. Does it compare?
You would be better with a cleaning agency, I would think, to guarantee it was always kept clean, but this would be relatively expensive.
Are you thinking of buying it and eventually living in it?
Yes it can be a lot of hassle if you're not nearby to keep an eye on it. The hardest part is getting good, reliable cleaners/caretakers, when people are on holiday and something goes wrong - no hot water, power cut, appliance breaks down etc - it needs to be sorted asap, with minimum fuss and inconvenience
I would do the rentals yourself, have a look on some listing sites to get an idea of the weekly rates for similar properties
I've no idea of UK yields, our properties are in the algarve, and so are we
IB- It will not be our main home- it will be a 2nd home and used by close family and friends. The plan is to get a small loan and repay it with the rental income and also our own income over around 4 years then we'd own it outright on retirement when we would use it more.
There are no interest rates paying 5%. The best are around 2% - on ISAs- and then it's stocks and shares . The money we have IS invested and earning peanuts.
you can get better interest rates but not on house-buying sums. Maxing out of the interest-paying current accounts will only house 50k at most with two people.
I looked into a UK holiday let. Assume max 20 weeks rental and a LOT of expense/hassle. Do your sums still work?
what about a 'normal' rental? Will still only return 3-4% gross and could still be a lot of hassle.
head to landlordzone because MN hates landlords.
Maybe I didn't explain this clearly enough.
This is not a money-making or investment driven purchase; it's about buying a 2nd home for us. Due to the distance and our work we'd not get good use out of it for another 3-4 years so it makes sense to rent it out to cover costs.
we could afford to buy it outright for cash. we don't want to use a large proportion of our savings at this stage but once DH retires in 2-4 years we will have a lot of cash to play with (final salary lump sum) so will clear the balance then- or even before.
My query wasn't so much about the money but about the reality of managing a property being so far away. It's in a popular area but is up north in a small village. There are other holiday homes in the village so I'd assume that finding cleaners and odd-job people to maintain it in emergencies is not impossible. But at the same time wonder if it's more hassle than it's worth and we should cover the costs ourselves with a small mortgage for a few years and forget renting it. Whatever we buy will need some work- I'd want to make it really nice and good quality - so the odds are we'd not be able to rent out for a year anyway.
I've rented UK cottages for 30 years so know what can go wrong and realise that you need someone on hand to sort out if the washing machine breaks down, or the boiler etc.
I'm sure you can find people to look after it - but will they be honest and reliable? That's the problem. I know owners who've been through several sets of cleaners and managers, it's a difficult thing to manage remotely
We have an excellent maid, and a handyman on standby, but we still go into the properties regularly, either to help out in busy periods (like now!) or just to check everything is ok
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