As we have recently been evaluating our holiday cottage business, and currently have Aird View up for sale, I thought a post here about our plans and the financial aspects of the business might be of interest.
We are trying to sell Aird View largely because of the long journey we have to make from our home to the bungalow to do the turn-rounds and maintenance. The bungalow is in a lovely location, and has sold well as a holiday let every one of the several years we have owned it, though to keep it at the top of the letting market, we are aware that we need to be upgrading some of the fixtures and fittings in the not too distant future. The greatest demand today comes for very high quality holiday accommodation, so we could do with installing an en-suite bathroom and a bang up-to-date kitchen. Ideally, we will sell Aird View as it is, and would replace it with another cottage located much closer to home, which will either be already in high quality condition, or priced so that we could upgrade it within the income from our sale. Unfortunately, the state of the property market here does not fill us with confidence that the bungalow will sell, so we will just wait and see for the time being, and will continue to market it for holiday letting into 2014.
But how about the finances? Well, we bought Aird View in 1996 for £137,000, and now have it on the market for £175,000. (It's not London/South East prices or rocketing price rises here...!!!). But that's still a reasonable return of £38,000 on our investment. Add to that the rental income, which totals around £70,000 over the seven years of trading, and buy-to-let begins to look very attractive. Of course, these are gross figures. With a holiday-let, we pay for heating, electricity, broadband, local taxes and income tax, and also have to maintain the building, garden and its contents in top order. It is handy that I am 'retired', and can do much of the maintenance work myself - paying local people to do turn-rounds, lawn mowing and decorating would take a big chunk from the income! We also market and manage our properties ourselves. Using an agency to find your visitors for you will take another 15 - 20% of your profits.
Regarding long-term letting, we have little direct experience of this, though I am aware that there is high demand for rental property on Skye, and nowhere near as many properties available for let as there are for purchase. As a long-let, Aird View would probably achieve a rental of about £550 per month, with the tenant responsible for their own utility bills and Council tax.
So, for all you blog readers who are making plans to move to Skye to live - if you have the budget to do it, buying a couple of properties to let might make sense. But do your research carefully into the best locations to buy, and buy an up-and-running holiday let to be reasonably sure of a quick start into high occupancy rates. New-to-the-market holiday lets can take two or three years of expensive advertising before they are full throughout the season.