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Original poster

Any holiday home owners ever make a profit?

59 replies

Wallywobbles · 11/04/2022 02:32

I've owned a holiday home since 2010. It's at the beach in Normandy. It's still mortgaged. It sleeps 12 so not what everyone is looking for but we do manage to rent it for about 14 weeks a year.

Our costs are about 2K a month. I'd imagine more now with rising gas prices. And I don't think we've ever made a profit on it. The sheets laundering is the biggest cost after the mortgage.

Is this also the case in the UK? I know rental owners are seen as parasites by some.

I used to live locally and am now 2h away but have an amazing local cleaner. The first 2 years I did it all myself but with 2 small kids and a full time job it was back breaking work. All weekends and holidays we did nothing else but the changeovers on Saturdays. And hours of sheets ironing over the week.

OP posts:
caringcarer · 11/04/2022 03:15

I have a 7 bedroom holiday home in Brittany close to beach. French taxes are very expensive but I don't let it out. I just let family and friends borrow it. Sometimes when we are there my niece, his and and 2 children Will come over for a week to stay with us then after they have lefty sister might pop over for a few nights.

DownUdderer · 11/04/2022 06:28

Do you want to make a profit?

Whataplonkerheis · 11/04/2022 06:45

A sleeps 12 is only ever going to be used for part of the year.

My 2 bed, sleeps 4 in the UK is let for at least 45 weeks of the year, so yes, it is possible.

Interested in this thread?

Then you might like threads about this subject:

Holidays
Caspianberg · 11/04/2022 06:54

Ours sleeps 4. We just about break even, but it’s within same property we live in, so some costs like % utilities, and garden/ house upkeep benefit us also. It’s only rented peak season 8-10 weeks a year. High taxes as it’s ‘additional income’. Not uk.

Dizzywizz · 11/04/2022 06:57

I find this surprising, I always assumed it was only ever done if profitable?

Troublesometooth · 11/04/2022 06:58

Won’t your profit come from the increase in value when you eventually sell it?

colosmbo · 11/04/2022 06:58

One of my parents have a second home in France. It's never let out though except family & friends. Apparently too much hassle & not enough gain.

UK I'm not sure, anyone who bought years ago yes but I think it's a different story now & agree it's seen as a bit of a negative.

Woeismethischristmas · 11/04/2022 06:59

I’ve had a holiday let 3 bed and used to let it out 30 weeks or so of the year it was next door to me so covered under my mortgage which is low anyway. It did make a profit but like you it sucked up my weekends 4-5 hour clean on Saturdays plus washing and ironing through the week. Electric under floor heating so made no sense to let it in the colder months as it’d all be used up in electric bills.

People often underestimate the costs of flipping a holiday cottage. I got change of use planning permission and mines is now residential.

People vastly underestimate what it takes to flip a holiday cottage also costs etc.

DogDaysNeverEnd · 11/04/2022 07:05

My friend has a holiday house in the lakes that has about 5 bedrooms, I think bought with family cash and not mortgaged. She says she makes about 50% of what it's rented out at after all the costs. It's huge and in a nice location so I expect it would be very expensive and wouldn't make much if it was mortgaged. It sounds like varying degrees of hassle but must be worth it.

User0610134049 · 11/04/2022 07:17

I think it’s hard to make a profit when it’s mortgaged. We took over a family property in the Alps in a ski area. But it wasn’t right on the slopes and not an area particularly popular with brits. It also slept 10 so we could’ve let it 3 times over in peak school holiday/ski season but out of those times we didn’t have loads of bookings.
Such a hassle managing it from afar.
We made a loss year after year - doesn’t help that because of the cold we had to have the (electric) heating on slightly all winter even when house was empty.
We did have some lovely family holidays there and with friends but we felt like we had to spend holidays there because of how much £ we put in every year.
It’s sold now and it’s a massive weight off our shoulders.

Original poster
Wallywobbles · 11/04/2022 20:24

I have another 4 years of mortgage left and then it will provide a bit of income going into retirement which is why I did it originally as my pension will be very small. But year one of covid was very costly.

OP posts:
fairylightsandwaxmelts · 11/04/2022 20:32

A property that sleeps 12 isn't going to be as popular as a smaller property (or smaller properties) that sleep 2-6 people.

A two bed, for example, will sell even in a rainy week in November because couples without children often go away "out of season". Big properties like yours will mainly appeal to families who are tied to school holidays, plus maybe the odd stag/hen do.

Friends of mine own a holiday property and it's currently fully booked up until 2024.

LauraNicolaides · 11/04/2022 20:37

There's some questionable accounting going on here!

Even if the place is not mortgaged you should account for the opportunity cost of your capital (which may well be higher than current mortgage rates). In other words if you have a house worth £200k which you own outright there is a cost to you of tying up your capital in that asset rather than somewhere else. How you quantify it is more of an art than a science. But the long-term return on the FTSE100 wouldn't be a bad starting point. 3% pa would be a conservative starting point. In other words leaving your £200k in a holiday cottage is costing you £6k pa before you start adding in electricity and sheets.

caringcarer · 11/04/2022 20:45

Mine is mortgage free and I know I could let it out if I wanted to. I am content to just use it ourselves and let friends and family borrow it when we are not using it. I actually bought it not just for us but for our families and friends to share too. Some of my nephew's and nieces have high mortgages to pay and would never afford a holiday abroad unless we loaned them our house. I bought it with inherited money so like to share it. It has 7 large bedrooms, 3 bedrooms have four poster beds and romantic voile hangings. I expect I could let it for £900 per week in school summer holidays as 2 km to lovely port to walk around and sops, cafes, eateries and market, 20 mins from beach and golf course, 200 metres from National Forest and green cycle route into town. Plus we have bikes, kayaks, tennis rackets, golf clubs etc there and many wet suits in various sizes and pre programmed sat nav that takes to secret coves, and lots of nice places of interest.

irregularegular · 11/04/2022 20:51

I have a small 2 bed house in the city where I work (we live outside the city). I just started renting out on airbnb this year and I've quite quickly got to the point where it is rented out about half the time. Before capital and maintenance costs it is making about 1500 a month. On 400k of value. Which seems OK to me. Plus I like having a house to use myself from time to time when it's not booked (it's quite a long commute). It's a year-round kind of place.

irregularegular · 11/04/2022 20:53

I pay someone to manage it (look after bookings, communicate with guests, arrange cleaning and laundry, refill bathroom and kitchen supplies etc). It's quite expensive but there is no way I was doing that myself!

Polyethyl · 11/04/2022 21:15

By the time I've paid the agent, cleaner, laundrette, gardener, window cleaner, commercial waste collection and for standard replacement items (stained towels, scratched frying pans, broken glasses), no there has never, ever been a profit.

HardbackWriter · 11/04/2022 21:18

@LauraNicolaides

There's some questionable accounting going on here!

Even if the place is not mortgaged you should account for the opportunity cost of your capital (which may well be higher than current mortgage rates). In other words if you have a house worth £200k which you own outright there is a cost to you of tying up your capital in that asset rather than somewhere else. How you quantify it is more of an art than a science. But the long-term return on the FTSE100 wouldn't be a bad starting point. 3% pa would be a conservative starting point. In other words leaving your £200k in a holiday cottage is costing you £6k pa before you start adding in electricity and sheets.

Only if house prices are totally static? If they're going up by more than 3% a year then the house is a great place to have the money.

I'd say the opposite, that OP is underestimating how well it's working for her - because she's counting getting her mortgage paid off using none of her own money as a business expense. Which it is, in the short run, but in the long run she'll own a property.

MySecretHistory · 11/04/2022 21:20

Surely it depends on you tax rate.
50% tax makes anything less attractive

LauraNicolaides · 11/04/2022 21:24

Only if house prices are totally static? If they're going up by more than 3% a year then the house is a great place to have the money.

No, you still need to account for the cost of the capital to judge your investment.

You've got £200k tied up in a house. If you could make £6k pa by investing the money elsewhere then that's your opportunity cost, and you need to make £6k on your holiday cottage just to break even. It's the same as having to borrow the £200k and paying £6k pa in interest.

OctopusSay · 11/04/2022 21:32

Don't most owners see is as a contribution to the cost of their holiday home/a property investment for the capital gain, rather than expecting an annual profit?

Polyethyl · 12/04/2022 07:49

@OctopusSay

Don't most owners see is as a contribution to the cost of their holiday home/a property investment for the capital gain, rather than expecting an annual profit?
Yes. Twice friends who are thinking of buying a holiday let have asked me about my profits. When I reply "I have never made a profit" they didn't believe me. One went ahead and bought a holiday let and is now frantic about her lack of profit. The other friend bought a holiday home for her own use only and decided against letting it out.
OctopusSay · 12/04/2022 07:54

@MySecretHistory

Surely it depends on you tax rate. 50% tax makes anything less attractive
That only cones into play if you make a profit...
Badbadbunny · 12/04/2022 08:00

@OctopusSay

That only cones into play if you make a profit...

Only mortgage interest is an allowable expense not the capital element, so it's possible to make a taxable profit even if there's negative cash flow.

OctopusSay · 12/04/2022 08:03

Yes, but that's different to profit