Who's right and wwyd?

[Harryhenderson10]

My DH and I are having an argument at the moment and I could do with MN to give some solid advice on wwyd.

So you have £110,000 in savings.

You live in a property that has a building that could become a holiday let. It would take all of the budget and maybe a little more but it is in a pretty popular tourist location.

Or would you do something else with the money?

The savings need to at least stay the same in value over the long term and preferably give a monthly amount of income.

One of us thinks a holiday let will give an income per week and add value to the property longterm.
The other thinks it would be easier and less hassle to invest in shares, but honestly I don't see how this will generate nearly as much income as a holiday let?

What would you do?

I wouldn’t do it tbh.

It sounds really fun, and I am all about doing fun things. However it sounds like a massive ball ache. Massive.

I would do:

£50k each into premium bonds
£5k each stocks and shares ISA

Assuming you aren’t making a lot of interest or growth where the current savings are.

*Wary of shares obv!

Tbh OP I’d go on some flash holidays, get debt free and by a kit car and bung the rest in my pension 😂 so you can tell I wouldn’t run a holiday let!

I'd buy a car 🤷‍♀️

It depends if you want to run a holiday let though and manage what sound like a big renovation. Especially as one person doesn't want to do it so if you twist their arm then you cant expect their help.

I would look at other holiday let properties online in your area and see how much a week you could get and what facilities they offer. Are you in an area where you could let it for holidays all year round? A lot of places do now, as people want to get away in the winter too.

If not then some people rent them out as a furnished property for 6 months from 1 Oct to 31 March, then back to being a holiday let again for the other 6 months. I work for an EA who has a couple of clients who do this every year, there are always people looking for temporary accommodation for various reasons. Again, look into how much rent a month this would give you for the period. (It has to be 6 months minimum).

If you want to invest it, then please talk to an Independant Financial Advisor who will assess your attitude to risk and match you with something suitable for your needs.

Also, would the holiday let property be tied to your property? as that could affect future sale or change of use etc.

Investing in an index fund would give far more return!

Sounds like too much hard work to me. I'd invest it into shares.

Other people have done a cracking job on the financial practicalities, so I'll add some social ones:

Do you have lots of friends that visit? Kids that might want a cheap rental from you in the future to stay in the area? Parents who might want a granny annexe? Are you planning to stay there forever?

You get the drift - does having a convenient property next to your home add anything to your life apart from income?

It depends what the holiday let season is like.

We make as much from holiday lets over a 9/10 week period as we would from a year round tenant.

Are there any good agencies in your area. Speak to them and perhaps use them till you understand the business.

Or be prepared to have your holidays another time during the year.

A second habitable property and potential income will add value to your home. Go for it!

Investments into the correct risk category for your circumstances £40k straight into ISAs the utilise ISA allowance each every year until it's all in ISAs, and tax efficient making sure you leave enough for emergencies as it should be viewed as long term investment if investing in a portfolio.

We run holiday lets. One of our properties is a building next to our house which we have been letting for 18 years. We are closing it down this year. We have had enough of tiptoeing around people because they are on holiday. Having to keep the bedroom window closed because they are having late night drinks on the terrace. Of being interrupted during family meals because the gas or hot water has run out, or because their car won't start and they need help. It is a constant presence and that is without the work involved.

You can't let the grass get long because you have paying guests, but you can't cut it at 9am because they are having a sleep in, nor at 2pm because they baby is having a nap.

You get the picture. If you really want a holiday let then buy a property that is not next to your home.

I have some money I am waiting to invest from a defunct savings account that was costing me more than I was getting out of it (thanks Santander!) most savings schemes are currently offering very poor interest, shares are a bit grim at the moment, premium bonds a possibility though statistically they are a poor return according to Martin Lewis.

I am hoping the chancellor announces some decent interest two or three year fixed rate government bonds to help pay for getting the country out of recession . Come on Rishi. I'm waiting.

Are you prepared to do all the work involved in running a holiday let or pay someone at least to do it?

I think that with a holiday let you both have to be on board. It will be an awful lot of work and will intrude on your private family life.

We do virtually no work. Our agency does it all.

@Needmoresleep

We do virtually no work. Our agency does it all.

Does that not significantly cut into the profits you could make and also mean a big disturbance with even more strangers repeatedly on your grounds?

Thank you all very much for the advice.

To clear a few things up,
The property is about 100 yards from the main house. We would do all the cleaning, upkeep, greeting, etc ourselves. If it makes a difference, one of us would be newly retired. Its very difficult to do decent costings as it's all a bit 'we might rent it out for the majority of the time, or we might only get peak season' but from a couple of local-ish lets they tend to book out for most of the year with decent advertising.
Realistically we wouldn't be able to sell the place separately as it would be a shared drive and would probably devalue the main house.
The property needs nearly complete renovation, in fact it would probably be cheaper if there was no building there to begin with.
The building already has planning granted and has had the first phase completed, although it would still cost £110,000+.
A holiday/full time let would add to the value of the main house.
It would make a decent 3 bed but not big enough to split into flats or anything.

We have a mortgage but it is small and will be paid off in a couple of years.

I think a Financial Advisor is the best way forward for us.

If we were to put in into stocks, shares we would do so through a professional stock broker or similar.

I don't think sitting on the money is a very good idea for us as the temptation is to spend a little here and there eventually leaving us with nothing.

Thanks again for the advice so far.

I would only do the holiday let if the extension/adaptation would add value to the property to cover or almost cover the cost of the works.

We had a similar amount in the bank. We've used half for a loft conversion and renovation. We're saving the other half for a rainy day/when we are more stable to do an extension downstairs. We live in an expensive area so don't get much house for our money so extensions are needed.

I wouldn't stocks and shares it, too risky. I would put it away in premium bonds (£50k each) and wait until you can agree where best to spend it. It would be wrong to invest it if either partner isn't happy with that idea.

Sunbathing dragon. Yes, obviously using an agency cuts into profits. But we still make a very good return, and I prefer to pay someone else to first manage bookings, payments vetting and advertising, and second to clean and organise repairmen. Money well spent.

We just use the place, nicely cleaned, and lend it to friends when we want.

People here are suggesting that the work involved means it is not a worthwhile investment. It really does not have to be.

“It’s very difficult to do decent costings” is a total cop out! If you’re in such a popular tourist area, there’ll be plenty of properties that you can use for research.

No way would I sink £110K+ into the idea of someone who can’t cost the likely return. I would only have a serious conversation over a business plan, not a pipe dream.

It might well be an excellent idea - but a “who’s right” conversation isn’t meaningless without a business plan.

Obviously at the moment a holiday let looks like a money spinner. This year people are paying ££££ for a manhole next to public toilets in Cornwall.

But - there (hopefully) will be normal years. So I’d try to find out the going rate and occupancy levels for 2018 and 19, not 2020. Also holiday properties on the owner’s premises are always the last to be booked. I always screen those out. Not that I am anything other than a model guest (!) but I don’t want to risk falling foul of an over-zealous owner. We stayed in a property once where the owner could remotely monitor the energy use and actually RANG UP and asked me if I had turned up the heat on the swimming pool. I had not. This owner also had bossy messages everywhere, including not to steal the dvds. Yep, I came here specifically with the intention of lifting a few 1990s dvds...

*is meaningless

premium bonds are shite, so are stocks and shares at the moment.

Interested in why you’ve already spent out on phase one of the redevelopment, when the two of you have no clear business plan or even agreement on the business you want to run

(and why the “one of us” is retiring? There’s no need for cloak and dagger)

13:25Cocomarine

We didn't pay out for the first phase

And one of us is retiring so could do the cleaning, greeting, upkeep etc.