Reply to: Plan B idea v7.253

[d000hg]

Yes. In cities they call them serviced apartments. Weekly rentals with everything included (no bills). Alternative to hotel for slightly longer stays, should be priced similar to a smart and clean low cost hotel.

I thought serviced apartments normally had daily cleaning (like a hotel) whereas holiday lets didn't but other than that it is the same*


*and the fact a holiday let is often 3X the price but only attracts income 4 months a year.

[DimPrawn]

This is basically the holiday let model, right?

Yes. In cities they call them serviced apartments. Weekly rentals with everything included (no bills). Alternative to hotel for slightly longer stays, should be priced similar to a smart and clean low cost hotel.

[d000hg]

140k BTL mortgage max 600/month interest only.

Wowser, BTL mortgages are pricey.

We only just remortgaged and pay ~£550 repayments pcm on a £175k mortgage!

[SimonMac]

Still no answer - are there any drawbacks here, this is my calculation:

140k BTL mortgage max 600/month interest only.

Short-term rental income: 1560 based on 60% occupancy

Cleaning costs: 150/month

What's the catch?

What about other bills Electric, Water, Council Tax, most places expect WiFi to all be included? Agency costs to find tenants?

After all that you then got to pay tax on the income?

£1560 a month
-600 mortgage
-150 cleaning
-350 "other bills"
-125 Agency fee (8%)

£335 a month or just over 4 grand a year.

For £600 a week people would expect very high end furnishings etc which will eat that £4k up

[d000hg]

This is basically the holiday let model, right?

[NorthWestPerm2Contr]

Still no answer - are there any drawbacks here, this is my calculation:

140k BTL mortgage max 600/month interest only.

Short-term rental income: 1560 based on 60% occupancy

Cleaning costs: 150/month

What's the catch?

[SimonMac]

It's good to see you have grand ambitions.

Most of the folkes on here could get their hands on £25k without too much problem, £140k and you are looking at a mortgage which complicates thing. Also if your tenant trashes a £25k house, you will shrugg it off, if they trash a £140k house you are in trouble.

From little acorns mighty oaks grow!

[DimPrawn]

Funny you should say that, I was looking at a place up here (arse end of no where but lots of contractors).

Two bedroom house here £25k, say £100 a week per room @ 45 weeks a year = £9,000

A cleaner is £25 a week = £1300 a year

Electric, water, council tax and broadband say £250 a month = £3000

£4700 a year on a £25k investment

Won't make you a king but nice little supliment to real income

It's good to see you have grand ambitions.

[vetran]

well B&B for the council is about £500 a week, get a few of those and you could retire.Though you might have to pay the cleaner a lot more.

[AtW]

nah that would be by the hour

ATW how's life, did you buy your Porsche ?

Milan.

Not yet.

But I've got a German car that requires lots of maintenance and doing around 13 mpg in the city

[milanbenes]

Kings Cross?

nah that would be by the hour

ATW how's life, did you buy your Porsche ?

Milan.

[AtW]

£800/week? That's ~ £115/night. You'd get a nice hotel for that with lots of amenities. I find it pretty unlikely you'd get anything people would want to pay that for for £140k.

Do you have any examples?

You only let it out to the kind of tenants no hotel would want to put in - like axe murders on parole etc...

[AtW]

Are you talking about services apartments, which are like a self catering hotel room (cleaning, electric, water, laundry, internet included in weekly rent)?

https://en.wikipedia.org/wiki/Serviced_apartment

Sounds like a good idea near a train station or close to a large business park.

Kings Cross?

[milanbenes]

as a business proposition you should be expecting the profit from the venture to cover the cost of the apartment within 10 years

therefore, looking at it one way, 140k for the apartment divided by 10 years, when I went to skool was, 14k

14k divided by 52 weeks (and now we are assuming 100% utilisation) is 269 spondoolees per week.

269spondoolees divided by 7 days is 39quid a night.

so, after all your costs and assuming 100% utilisation you need to be making 40quid a night to pay it off in 10 years.

working the calculation the other way, if we assume your numbers, 800quid a week rental income at 100% utilisation, that's 40k a year, multiplied by ten years giving a retail value of 400,000 for the apartment.

to conclude, if you can buy something for 140,000 and rent it out with very high utilisation for 800quid a week

then it sounds like a winner

Milan.

disclaimer - usual conditions apply and I am not authorised or qualified to give any financial advice at all in any respect ever

[NorthWestPerm2Contr]

£800/week? That's ~ £115/night. You'd get a nice hotel for that with lots of amenities. I find it pretty unlikely you'd get anything people would want to pay that for for £140k.

Do you have any examples?

You can have a family of 5 staying in a 2 bed flat without having to rent 2 seperate rooms out and you get the comforts of kitchen/lounge and home living.

The example is what I just rented out for a friend - 800/week for a flat that cost 130k a year ago near manchester airport. It's new build accommodation that's furnished to a high standard. You have alternatives with places like central Manchester and they command higher rents of 1600+/week. Though the price is more like 2x the cost of the cheaper rental - obviously.