YOUR FLEXIBLE LEASE QUESTIONS ANSWERED
When buying a property to operate on a short term or holiday let basis, am I buying a standard property that is available to all options of letting and occupation should I choose? Yes – flexible lets like corporate or holiday let, standard 6 or 12 month lets through a company, self-manage or owner occupation Is the property I buy fully owned by myself or my company or whomever I buy with? Yes – it is not associated with any other entity and a full asset owned fully by those listed on the contract Am I reliant on a separate business to succeed for the property to secure a return, like a Hotel room or a Holiday Cabin on a holiday park? Absolutely not – this is a BTL property that just allows you to tap into a different revenue stream for your income and is legally allowed to do so. Can I secure a mortgage? Yes – obviously dependent on your status and eligibility Can I buy cash? Yes Can I buy in a company format? Yes Can I buy in a personal name? Yes I am a buyer from overseas, can I secure a mortgage? Please consult the recommended broker, it may be possible. Are there tax benefits to buying these properties? Yes If I want to wait until I am secure in the flexible let market and what it offers, can I rent it out to a standard let? Yes What deposit do I require? As with all investment properties and Buy to lets you will need a minimum of 25% and your rates get better the more you put down Can I live in the property? Yes Are the properties priced higher because of the option to get higher returns? No, the asset is based on the asset itself, the bricks and mortar – the income stream you choose is a separate entity. As well as this the property needs to be priced as a standard Buy to let if you choose that option for your mortgage? Can Residential Estates recommend third party contacts? Yes, such as brokers, solicitors, tax advisors, company set up and furniture supplies
Will I be notified by Residential Estates when I need to action aspects of the property sale? Yes, we work with you throughout the process and our system is perfectly set up for this If it a Holiday let property can I or my family and friends use the property for ourselves? Of course, you just have to block off the dates to take it off the letting market for those dates Will this affect my income? If you are using it for yourself then it cannot create an income so this would affect your yearly income Can I let it out to family and friends myself and charge a preferential rate? Yes, you can block it off as an owner booking, but obviously it would affect your income. Do Residential Estates offer a fully hands-off package? Yes, we can supply the property to buy and do everything to manage it Once I buy the property and it is ready, do I need to do anything in addition to buying the property to get it to market? Yes, you need to fully furnish the property Can Residential Estates organise this? Yes Do I need to do anything else or any other costs associated with preparing the property for flexible lets? No, apart from standard buying costs, such as SDLT, mortgage and legal fees Are there other tricks or ways I can increase my income? Yes, we will give you one to one advice on how best to market your property and what it needs to set it apart How do you guarantee the average nightly rates suggested? We cannot guarantee rates, but our research allows us to get indicative rates and our in-house tools and algorithms that allow us to lower or higher the price as demand dictates. We can also focus on certain times of the year, or events to maximise returns (Valentines, school holidays, Christmas etc) – our aim is to get the property let at the maximum achievable rate How do you come to the figure for a nightly rate? We take it based on research comparable properties in the area, that are of similar build and quality, the monthly average rates, the higher rates, the times when demand will be high and lower. It is an average rate based over the year and are expectations. How do you arrive at occupancy rate you expect to achieve? Based on experience and the properties we manage – in the first year we would aim to achieve 75% occupancy and from then on historical evidence dictates this figure increases due to the maturity of presence of the property on the market and repeat and serial visitor’s market. How do we know you are doing all you can to fill our property to maximum potential? To put it very simply, we effectively become your business partner for these properties, the better you do, then the better we do. We have a management charge but that is irrelevant if there isn’t a booking.
Do I get paid monthly? Yes, on a set date Do I have access to details of bookings? Yes, a full online system is available that you log into. Am I free to use another letting specialist? Yes absolutely, however we find clients like a one stop shop. If I need to sell then who can I sell to, am I restricted to a limited market? This is the beauty of these properties, it is actually the opposite, you are available to sell to the entire market. These properties only work in an area of high demand and great location which in turn means they will appeal to the owner occupier market or the investor market If I want to sell to the investment market, would you sell it for me? Yes In general, what can I expect in terms of return when I compare it to a standard buy to let? Nothing is every guaranteed as we have seen with 2019 but given normal circumstances and based on all over years apart from this one then once up and running then we can confidently say it should at least double a standard return, if not more, and the longer it is marketed and more mature with good reviews this will increase over time – once fully set it is confidently expected that returns on your purchase price will be double figures. Again we cannot guarantee this but all forecasts lead to this assumption. How long before I get these returns? This is not an exact science as you could get lucky straight away, but in general the first 1-4 months are spent in marketing the property and getting it recognised and comfortable with our suppliers. However, we have often had properties fly at the start as they hit the market at the right time. From completing on the property purchase when will my property be on the market? This will depend on the buyer – we can organise everything, but the main drawback is clients delaying with installing furniture, which we can arrange – the sooner the apartment is ready to let, the sooner we can get it on the market and earning. If I buy a property through Residential Estates can they look after me from purchase through to full management? Yes, it is something we do for numerous investors already, many overseas. What makes a good location? For company and corporate short term lets it is lack of supply vs demand which is usually towns and cities you may not think of but in a strategically good location form the town or City (central). For the Holiday let market it is the growing tourism areas like Wales and the Lakes that appeal as industry figures show the rise and unlike cities you do not get new developments popping up to feed supply. This means the demand is increasing but the supply is not. Are Residential Estates looking for other locations? Yes always, and we have a few earmarked but it is not just that easy, and properties re scarce and a lot of work goes into bringing something to market for an investor. There are a lot of variables we must consider, price vs nightly rate, upward curves in demand and finding the right developer and development to make this work.
Are there places to avoid? This depends on how you look at it, if purely investment and returns are your primary focus, then I would say yes. When buying a new property, it all relates to the price you pay versus the nightly rate, so we are not talking about converting a historically owned property into a Holiday let, this is different. For example, if you have a property in Central Manchester or London that you bought 10 years ago at a fraction of the price it would cost now then those locations work. However, buying a property in those locations now, at a much higher purchase price, will bring you lower returns. The nightly rates depend on location, options, amount of people that can sleep and demand vs supply – they are not related to property price. The larger cities have a larger supply and property prices are rising so your graph is going the wrong way. For Central City investments it is about getting in early to a growth in the property price market, like Chester, Leeds, York or Preston as examples, and we are focusing on more areas like these. The reason behind or absolute faith in our locations on the holiday let market is simple, more people looking, staying for longer, preferring this form of accommodation with no chance of over saturation due to building regulations and restrictions.