What’s a good ROI on a holiday cottage let in the U.K.?

[Adam678]

Looking at a couple of holidays cottages that are said to be producing a £18k turnover (15k profit for the 2) with an asking price of 255k for the 2. They are situated in Norfolk and let through Airbnb. Does this sound a reasonable investment?

 

[Socio South West]

You need to dig into the figures a bit on holiday cottages: An owner doing their own cleaning and changeover may not appear in the figures: If the lets are short and you are going to pay a cleaner at every changeover that profit is soon going to diminish.

Property survey is also important, apart from your own visual inspection of the facilities with your eyes - assuming furniture etc is included. Are the gas, electricity and any other tests up to date?

Assuming you are declaring earnings, a chunk of your £15k profit will probably go in tax.

Finally check the Planning Permission for any restrictions that may have been imposed on the number of weeks that can be let which may hinder development of the business.

Is it a reasonable investment? Its a pretty standard 6% return price tag. A lot more work than an ordinary residential let which would offer the same sort of return.

 

[ethical PR]

No-one can tell you whether it is a good investment based on the information you have provided.

I agree with @Socio South West.

Ask them how many days a year is each place let.

Do they pay a cleaner to clean and maintain the property. If not then that 15k profit for two will mean you will need to clean them or pay a cleaner out of your profits.

 

[Daisy Rowley]

Is £15k profit realistic for an £18k turnover?
Surely running costs would be rather higher than £3k.

 

[ethical PR]

It would depend on how they are allocating costs. For whole lettings through Airbnb you need to allow for:

Cleaning
Maintenance
Linen and towels
Basics such as soap and shampoo
Utilities
Cleaner
Cleaning materials
Council tax/business rates (although there is some sort of exemption for holiday lets I think)

So unlikely I agree that it would come out at £1500 a year, but it might be a shared space and the owners haven't allocated costs properly.

 

[Stedurham]

How much are you borrowing and how much is deposit, im guessing once you borrow money theres no profit in this what so ever and the up keep maintenance etc is way more expensive than a normal renal property

 

[dan19900]

Sounds terrible to me, that's a yield of about 6%, you could do better than that on a long term rent so what's the point in the extra hassle of short term.

 

[Mark T Jones]

As others have said there are far too many variables to give a sensible answer.

Above those asked,
What are your investment goals?

 

[Mitch3473]

Have you taken into account management/marketing agents fees, wear and tear, cleaning and general upkeep, rates, general overheads etc etc etc. 15k profit on an 18k turnover seems extremely generous...........the rates alone would eat up 3k unless you're in tourist/business developement area. Are you letting it all year, will you allow dogs, how are other similar properties performing at that price range, how close to the Broads are you.
There are so many variables to take into account.
If they are mortgage free, fine but if not and without putting too finer point on it, you might get a ' drink ' out of it short term so look at it as a couple of holiday cottages for yourselves when you can and hope the property value increases enough to make something in the long term.

 

[Stedurham]

Why do people post for help then vanish all the time?

 

[Mark T Jones]

Why do people post for help then vanish all the time?

Much of the time it's because they are having a bit of a day dream about easy ways to make money, then reality kicks in & they lose interest

 

[Darren_Ssc]

Why do people post for help then vanish all the time?

Seems some people just post silly questions for fun? I think it's best to wait to see if the person engages before wasting time responding?

 

[Mark T Jones]

Seems some people just post silly questions for fun? I think it's best to wait to see if the person engages before wasting time responding?

I take the view that someone else potentially interested might read and learn.

 

[Darren_Ssc]

I take the view that someone else potentially interested might read and learn.

Fair enough.

 

[Jamie Monumental]

10% seems to be the standard - location will be a big factor!