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What return do you get (or would you need) on a holiday home/BTL?

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    What return do you get (or would you need) on a holiday home/BTL?

    We're considering investing in a holiday let in Cornwall. Around £150k and we'd ideally be cash buyers although we might use a mortgage around 60-70% LTV.

    Rental prices peak at nearly £800pw but only for a few weeks and it looks like ballpark we'd net 5% after fees but before tax on the income. Clearly less if a mortgage was involved.

    Is this a decent proposition or for pure investment return would something else be better? This location has emotional attachment to us and is somewhere we'd likely visit ourselves but I don't want to cloud my judgement on what is meant to be a long term investment. It is a desirable area where demand is unlikely to diminish and supply is pretty limited.

    I know lots of you own BTLs, do many of you have holiday let properties? What would you consider a reasonable minimum ROI?
    Originally posted by MaryPoppins
    I'd still not breastfeed a nazi
    Originally posted by vetran
    Urine is quite nourishing

    #2
    We have a holiday let in Edinburgh. I'd say half our income goes on expenses. If your costs are covered by half your income, go for it.

    I'd consider a 'up and coming area' rather than a overpriced market myself.
    "Never argue with stupid people, they will drag you down to their level and beat you with experience". Mark Twain

    Comment


      #3
      Seems cheap. House, flat or as I suspect one of those luxury mobile homes?
      What happens in General, stays in General.
      You know what they say about assumptions!

      Comment


        #4
        Originally posted by MarillionFan View Post
        one of those luxury mobile homes?
        BrilloPods?

        Comment


          #5
          Originally posted by MarillionFan View Post
          Seems cheap. House, flat or as I suspect one of those luxury mobile homes?
          I thought the same but it's a rather nicely done two bedroom flat, the middle floor in a Victorian/Edwardian townhouse in a cute Cornish village.
          Originally posted by MaryPoppins
          I'd still not breastfeed a nazi
          Originally posted by vetran
          Urine is quite nourishing

          Comment


            #6
            I'd not touch a flat as BTL. Too much hassle when other people are involved with your investment.
            'CUK forum personality of 2011 - Winner - Yes really!!!!

            Comment


              #7
              Sorry, I've cashed in on everything, and bought baked beans and shotguns, ready for USA, Japan and China to economically crush us in revenge for Brexit. I read it in the Guardian and BBC so it must be true.

              HTH BIDI

              Comment


                #8
                Originally posted by northernladuk View Post
                I'd not touch a flat as BTL. Too much hassle when other people are involved with your investment.
                I agree with this.

                Flats have additional costs - service charge and ground rent - which kill your ROI. Unless of course you find one with very low charges that are guaranteed not to increase dramatically. Furthermore, the lease is a ticking bomb that will reduce the value of your investment the longer you hold it and especially when it goes lower than 80 years. Leases can be extended, but at a cost determined by the freeholder.

                I'm not saying all flats are bad investments, but most are. We have a maisonette that has a 900 year lease and only a £5 annual ground rent, with no other charges.... so that is a good investment and has proven to be.

                On another note, holiday lets are not subject to the new S24 taxation that BTLs are being hammered by next year. You will have to pay the additional 3% SDLT though.
                Last edited by ChimpMaster; 4 September 2016, 11:43.

                Comment


                  #9
                  Originally posted by ChimpMaster View Post
                  ...Leases can be extended, but at a cost determined by the freeholder.
                  I believe that's not quite right. IIRC the cost can be controlled by a tribunal.

                  It does start to get markedly more expensive once the reaining term falls below 80 years, though.

                  The other consideration is that the Lease may explicitly forbid anything other than owner occupation or long term rental.

                  Depends on your appetite for risk/ aggro.

                  Comment


                    #10
                    Always thought about it, never done it. If you're going to take good use of it, then it's a good idea. In most cases, the numbers dont stack up when you consider for investment.

                    May I suggest you invest in a tent.
                    What happens in General, stays in General.
                    You know what they say about assumptions!

                    Comment

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