So, my buy to let mortgage came in and I’ve got around £40,000 in the bank from my first property. So I initially bought the property for £40,000, spent just under £5,000 doing cosmetic repair to the property. I’ve had two years worth of rent with no void periods equalling around £12,600.
So as you can see, I’ve spent in total of £45,000 buying the property and renovation. I’ve had a return of: my £40,000 back (from mortgaging it up after the initial cash purchase), a further £12,600 in rental income over two years gives me a total net profit of £7,600 + my £40,000 back + a property thats now yielding £525 a month in rent (minus £110 mortgage).
I’m very pleased with how things have panned out, but there is something ticking in my mind as to how I can achieve more passive income per month. The thing with a long term rent is, to earn a great deal more, then the simple way to achieve this is more properties…
However, after doing some research I believe that holiday lets could prove to be a greater source of income. I’ve been looking into costal properties in North Wales. The reason for this, is firstly it’s close to me and secondly house prices are a lot cheaper than you’d pay in England for a sea view and a semi-rural location.
I stumbled across a gem on Rightmove, it was a two bedroom traditional cottage, and get this it has sea views from the kitchen and the bedroom to the rear of the property. To the front of the property it overlooks a mountain and a quarry, and comes with a large front garden. It’s in a quiet village in Wales, but it’s close to Llandudno, Colwyn Bay and other tourist traps. The best thing about this property? it’s JUST £71,450!… Okay it was listed on Rightmove for £80,000, but I put a cheeky offer in at £71,450 and it was accepted!
To be honest, I couldn’t believe my luck. It’s fair to say the property needs modernising to reach its full potential as a holiday let. However, there is value to be added, as the property next door sold for £90,000 and the cottage a few doors down is up for sale for £110,000.
I didn’t jump in to this idea, I’ve spent a considerable amount of time researching holiday lets. I’ve seen similar properties reaching as much as £700 a week in the summer months, and £300 a week in off season. You can do the maths, and assuming it’s rented out that works out at around £2,800 a month in the summer, and £1,200 in the offseason. This doesn’t include bills that we will have to pay mind you.
There is a potential for this holiday let to bring in around £27,200 a year (assuming its rented out every week, without any void periods). Obviously, I’ll need to take into account household utility bills and a cleaners expense too. But comparing this to a normal buy to let to a long term Tennant, which would bring in a annual yield of £6,300 – the comparison is big.
Even if you take into account void periods and expenses, the holiday let should bring in a lot more cash and any void periods the property may have, will provide a free getaway for myself and family. I do have to admit, it’s more risky than a standard long term let, but in the event of any void periods, will be covered by my rental income from my long term let. I also keep a safety buffer just incase the two properties have void periods (it’s best to cover your ass in this game).
I’m hoping the mortgage goes through, will post any further updates! fingers crossed.