Help me decide whether to sell this house please

[Movinghouseatlast]

When I turned 55 I invested my pension pot into a holiday cottage. I was really excited as it was a new project and loved the house.

The reality soon hit as it needed a lot of work that I hadn't realised and couldn't have been been spotted in the survey. I had to spend £40k on it to get it up and running- I had budgeted for £20k.

It has run really well as a holiday let, but after expenses I only get a profit of around £5k a year- which is a 7% yield so not terrible at all.

I did a lot of work on it in lockdown, and I have been told I could increase my prices considerably. So I could be looking at a profit of £10k. Maybe!

However, within the next 5 years I am going to have to replace the kitchen, bathroom and roof ( I knew this when I bought it.

I have an opportunity to develop part of my garden and use it for holiday lettings. I haven't got the money to do this, so I put the cottage on the market last week. There is a mini boom in holiday properties where I am. I had 3 full asking price offers in the first 2 days! They are all aware of the work it will need in the future.

Now I feel conflicted. On one hand I feel I should just get rid of something that will be a money pit for the next few years. I will be 65 by the time it is 'perfect' and who knows what the market will be like then. I will be able to do the project in my garden which will probably bring in much more money than the cottage does. I will also be able to pay off a pretty hefty bank loan I took out last year. I feel Ishould take advantage of upturn of the market.

On the other hand I have worked so hard on the cottage, it is beautiful now. I would be just breaking even on my investment, so no profit from 6 years of work.

It is a good time to sell it. I reckon after the mini boom is over it will be worth £50k less than it is now.

Don’t sell!!! This is 2020 you can do kitchens up so cheap!!! You don’t need to spend lots repaint the one you’ve got and maybe get a new work top, think what your property could be worth in ten years, I’m 30 and my goal is to have a holiday home at your age..... download Pinterest and get cheap quick fixes cottage are all about shabby quirkiness

Sell it and develop your garden. It will be easier to manage a lettings business on site

Sell. Cash in the bank beats a decreasing asset. I'm not in the UK but if i was I'd sell. Brexit is gonna cause untold misery plus corona. Take the money and run. If you want a nice break you will have a pot of money to do it. I say this as someone who sold a rental and put the money in the bank. Plus do you really want to start into refurb and possible use at 65??

I don't understand how you say you can make £10K and then say you will just be breaking even?

Three offers in 2 days is a very good sign - you may get further bidders on it.

Sell. The garden one will be easier to manage.

I’d sell. It’s a lot of hassle is you want to be retired.

Are you sure you’ve got your numbers right? 5k as a 7% yield means the property is worth 78k. With the value you’re predicting soon-50k, that would be down to under 30k?

I think it’d be worth selling the cottage, paying off your loan and seeing an IFA to plan for a retirement. Or if you love the cottage that much, you could always live there and sell your current main home.

I would sell. Doesn't matter if it is beautiful, it isn't your main home it is just an investment.

Sell. The older you get the less you will want the bother esp if you know there will be big projects down the line.

@organisedmother I have already done that. I'm extremely good at doing places up on a budget!!! Even though I do say so myself.

There will come a time though where the kitchen will have to be replaced!

@Movinghouseatlast u will know deep down if it’s time to say goodbye, good luck with what you decide

I'd sell.

We had a rental flat, 80 miles away, and sold it when it was more bother to us than it was worth. Timing is all - take the money and run!

@Porseb we potentially will make £10k income a year from renting it out. We get a £5k income on it now. That is my job though- I earn that doing the cleaning and managing it.

Breaking even is on what we bought it for and what we have spent doing it up. So we are making no profit on the sale.

That’s not a very good investment if this 7% yield involves you doing physical labour if all the cleaning and managing. Even if you account for you cleaning at minimum wage, you probably end up with no money out of it? You’d be much better off with the money invested properly and having a part-time job.

@JoJoSM2

That’s not a very good investment if this 7% yield involves you doing physical labour if all the cleaning and managing. Even if you account for you cleaning at minimum wage, you probably end up with no money out of it? You’d be much better off with the money invested properly and having a part-time job.

I agree with JoJo - 5k per annum is not an income if you are required to wok for it on top of having all our spare capital tied up in the place. I assumed you were making 5k net of having it cleaned and managed.

How realistic is the 10k? Also, after this year I would think people are wary of having an investment in a tourism entity, seeing as a lockdown can be implemented at any time. I would sell while you have offers on the table and go with the best one.

If you break even but have taken the rental money - you are still in profit ( your time to one side ) Personally - I would sell it - a "potential £10k" is not actually £10k - I can understand you are proud of it but if you have another project - i.e. the garden rental idea I would move on and do that. It was an investment . But good luck whatever you choose

Sell it and develop your garden. If the government do as they have said, you could be paying CGT at income tax rates. Also if you selfbuild in your garden, you could get the 20% VAT reimbursed but you'd have to live in it. You can always clean for other holiday lets and make an income.