Your financial objectives
There are some fundamental questions you need to ask yourself before you go ahead with letting your Holiday Cottage with the aim of making money from your investment:
√ What are your financial or Investment objectives with your Holiday Home?
√ Do you want to maximise the commercial income from your investment or just cover the costs?
√ How often do you want to holiday at your 2nd home yourself?
√ Do you want to be there on certain set dates, or can you be flexible?
√ Do you want to be there in the peak, summer holiday times (when the rates are highest?)
√ Are you happy to have children, (and is your holiday home suitable?)
√ Would you consider allowing the visitor in bringing a pet? (Many visitors holiday locally with their dogs.)
√ What are you prepared to invest in terms of renovations, furnishings, appliances and the like?
√ Will you do your own property management, or will you be employing a property manager?
√ What price per week are you looking to achieve? (Choice's expert team will help decide this with you.)
You may have to make some compromises, but you should be clear in advance where you stand on these issues, as many other decisions flow from them.
Buying your Holiday Home - It goes without saying that there are associated costs with purchasing and/or mortgaging your Cottage or second home for Holiday Let purposes.
Signing on fee and commission - To become part of our team you will need to agree to contract your property with us for one year as your sole letting agents. Our registration fee is £95 + VAT, (only payable with your 1st booking) and our commission is highly competitive. Our annual renewal fee is £75 + VAT.
Payment and booking process - We deal with all booking and payment processes. We initially take a deposit from the customer and notify you of the full details of the booking and the details of the client. We also notify the Property Manager of the Booking Details on your behalf. We then take the remaining balance 8 weeks prior to the holiday. You will be paid monthly by electronic bank transfer or cheque on the 7th of each month for arrivals in the preceding month. We also send clients their booking information and arrival guidelines.
Tax Due - It may be that you will have to pay tax on the income from your Holiday Cottage Let. We could recommend you seek advice from a qualified accountant or tax specialist to clarify the potential costs, as well as the potential savings against income.
Changeover Costs - If you are going to employ a Property Manager rather than do the changeovers yourself, there will be costs associated for cleaning and linen. These costs will need to be negotiated with your Property Manager and will be largely dependent on the size of your property. Choice Cottages would be happy to supply you with a recommended list of Property Managers in your area.
Utilities - There will be the obvious costs around gas, electricity, water and council tax. There may also be additional costs for broadband, digital TV, garden services, upkeep and pool maintenance; depending on your property.
Damages - Although we can implement a Damage Deposit, you may incur damages from time to time, or will need to replace items due to natural wear & tear. For this you will need to take out insurance and/or budget for the replacement of appliances or the like on an annual basis.
Income & Return:
Equity of your Holiday Cottage - Dependent on the economic climate, it would be reasonable to expect that your Holiday Home Investment would increase in value and provide equity over time so that ultimately you make money from your second home. This is particularly true if you buy in recession-resistant Tourist hotspots.
Booking Revenue - Owners can enjoy considerable income from letting out their Holiday Cottages and dependant on the area and property size, this can more than cover your mortgage repayments. It is certainly not unheard of for Owners to use the surplus income from their Holiday Cottage to fund the purchase of an additional Holiday Home over time. Choice Cottages expert team will proactively work with you on the income potential of your home. Every property is different, but properties achieving in excess of 20 bookings per annum, will earn on average between £7000.00 (for a 1 bed property) to £50,000.00 (for a high-spec 6 bed property).
Add to Basket items - Items including Pets, WiFi, Travel Cot, High Chair, Beach Towels, Bath Towels, secondary Firewood Supply and where applicable, Hot Tub usage - are all Add to Basket Items for which you will receive the revenue and which will help offset your running costs. (Note: Some Owners elect to include some or all of the Add to Baskets Items as Inclusive.)
Tax Deductions - Many costs you incur, such as mortgage interest and our agency fees can be claimed against pretax earnings. We could recommend you seek advice from a qualified accountant or tax specialist to clarify the potential savings.
Changeover Costs - As the Owner of the property, you and/or your family and friends will benefit from Owner Bookings at your Holiday Home and for which you will 'pay' considerably less than you would have letting a Holiday Cottage or for a Hotel stay. (Note: Choice Cottages do not levy a charge to the Owner for an Owner Booking. We are also very flexible as to the weeks you as the Owner reserve, provided there is not already a Booking in place and that you give Advance Notice.)
Cancellation Plan - We implement a holiday Cancellation Plan, which is payable by the customer and will eliminate any financial loss to you if a holiday is cancelled. The scheme covers serious illness, bereavement or redundancy.
Damage Deposit - We can implement a Damage Deposit to a maximum of £100, which is payable by the customer on receipt of proof from the Owner and/or associated invoices relating to the damage. For larger damages, the Damage Deposit serves to assist in covering the Owner's Insurance Excess.