To buy a holiday home before own home?

[hinklee]

I want to get on the property ladder with dp. We have about 100k saved up (late 20s) which isn’t a huge amount for London. We like London but can’t face paying £600k for a flat we might get stuck with. BTL is too risky, and would be somewhere cheaper.

So we are thinking of buying a holiday home to renovate and let out. DP studied architecture. Is this a crazy idea to buy a holiday home for £200-300k and then using it for a month a year and letting it out for as much as we can otherwise?

Our figures show that at a minimum this would cover interest costs and upkeep.

Not crazy no. But you might find you end up actually living in it, so choose somewhere convenient.

The locals won't like it.

property is looking a bit shaky at the moment so it's potentially risky.

Why not spend 600k on a house in the outer zones of London to figure proof?

Massively research the costs.
Insurance and council tax are enormous on second homes. You’d also lose the first time buyer discount for your main house when you buy and could incur capital gains tax.

Yeah I see that too.

We don’t want to live in the suburbs, not yet anyway

We would purchase through a company structure and not in the UK

Don't buy yet but it's not worth buying a 600k to then buy a house as the gap between them keeps growing & stamp duty etc.

Just depends how risk adverse you are.

From experience, renting out a holiday home means a lot of maintenance is required. Guests can't work out the front door lock, washing machine/fridge is broken, toilet seat is damaged, spills coffee on mattress, shower is blocked/leaking and on and on. So you need to factor in paying for someone/an agency to manage and maintain the place on the ground. Also cleaning and laundry. These things can be pretty expensive so get plenty of quotes for the costs beforehand you buy anywhere

Willy's need to sell the holiday home when you want to buy in the UK? If so, consider that it may take a long time to sell

It can definitely work but it's likely to be expensive and risks locking up your savings for years

You really need to crunch the numbers. I'd argue a property is better than no property but you need to work out the various scenarios and factor in risk. You may be better saving for longer and having a bigger deposit to put towards a home you live in unless you can guarantee your holiday home will increase hugely in value (which you can't). Rent is dead money unfortunately

Not buying in the uk is hugely risky. Finding someone reliable, who actually does what they say with the property, ie cleans and maintains it for the rental market is a gamble. And you can’t ensure they wouldn’t rent it out during void weeks. They also could potentially find long term tenants and collect the rent themselves. So you’d have to be super careful who you choose to manage the property, which would then bump up costs. In some countries once this happened, it could be nigh on impossible to get rid of the tenants. I’ve changed my vote to yabu.