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The key is to be on the lookout for issues that are potentially off-putting to a homeowner and assess whether they can be over-come by running the property as a holiday let.

Holiday Homes – quirky layouts & considered risks

Buying a residential property to convert to a holiday home is a brilliant opportunity to expand your usual search parameters. You’re not buying the property as your permanent home so it’s time to open your mind and consider those properties that might not otherwise have made it onto your shortlist.

Alongside Cotswold Property Partners, we also run Let’s Escape, which is a thriving holiday property business. Being more open minded as a buyer has certainly worked with our own holiday property purchases and has brought with it a wealth of opportunity to buy properties below market value and increase profit margins.

Equally, this approach necessitated a strong understanding of risk assessment, mitigation and the balance of risk versus financial reward. The key is to be on the lookout for issues that are potentially off-putting to a homeowner and assess whether they can be over-come by running the property as a holiday let. If the answer is yes, then you’re onto a winner, as was the case with two of our current holiday homes.

Mill View

Our very first Let’s Escape property, Mill View was sold at auction with a multitude of lease issues in the legal pack and was deemed not mortgageable. In a situation like this, if you have access to cash funds you are immediately in a strong position on any purchase as the pool of people bidding against you is significantly reduced.

Mill View’s ‘issue’ was leasehold, with a short-lease (below 75 years) meaning you couldn’t secure a mortgage against it in the auctions four-week completion time.  Add to this ‘flying leasehold’ and ‘absent landlord’ indemnities in the legal pack and you had a perfect combination of issues making the property too high risk for a homeowner.

With my contracts head on, I reviewed the legal pack, investigated the nature of the issues and possible solutions. I also engaged specialist advice on the issues and resolution and used this to drive my financial modelling prior to auction.  The finance modelling was essential to fully understand the rental potential versus the risk we were prepared to take on.

We finally bought Mill View for around £50k below market value. I was able to mortgage the property two years later and it currently attracts guests as a holiday let all year round.

Holiday Homes

The Old Coach House

The Old Coach House is a beautiful 18th century, Cotswold stone former coaching house.  It is 10 minutes from my own home, and I am often asked why we don’t live there.  The answer is, it fits this model exactly – it is a beautiful holiday home but there are things that just wouldn’t work for our family home.

The Old Coach House has a quirky layout and it’s a flood risk!! Guests absolutely love the unusual layout for a holiday, its spread-out bedrooms are all part of the appeal, but as a home it wouldn’t work for us a young family.

The flood risk is understandably a major no-go for house hunters.  For a holiday home it really isn’t to be taken lightly either, but I know the area well and was able to thoroughly assess income potential versus the flood impact. Again, I engaged specialist advisors, this time around insurance to ensure we were fully covered. I’ve also kitted out the property for minimum loss.

We bought The Old Coach House £90,000 below the asking price and it has been turning a great profit for the last four years, even during the pandemic and following a flood.

Holiday Homes – quirky layouts & considered risks
Holiday Homes – quirky layouts & considered risks

Whilst I am not advocating people take on a flood risk property, both Mill View and The Old Coach House are great examples of thinking beyond your requirements as a home owner and looking past issues for a home, that can be overcome if they are a holiday let.  Quirky layouts and issues in the deeds can be a gold mine when you understand the risk and financial modelling.

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