So today I’m going to tell you about starting a holiday let business so if you have a property and you have been thinking about making an income from it, this blog will tell you all you need to know.
In this blog, I will walk you through getting your property set up to be a holiday let, give you my tips on running a holiday let and also tell you what you need to do from an accounting perspective when running a business.
By the end of this blog, you will be on course to making money and running a very profitable holiday let business.
I am sure you are wondering, why are we talking about holiday lets and why we are experts in this area of business?
Well, not only do we have a lot of clients who are start up & established holiday let businesses, we have also helped a lot of clients to make the transition from a residential let to a holiday let.
And on a personal note, I have been running a successful holiday let business since 2017. I purchased the holiday let property with funding and in three years, I was able to pay off the loan. I can therefore say, hand on heart, that running a property let business was an amazing decision and is highly rewarding financially and operationally and I am going to tell you why.
So let’s start with the financial rewards because making money is more than likely (but I could be wrong) the number 1 reason why you are thinking about starting a holiday let business and the reason why you are reading this blog.
So here are some numbers to get you thinking….
A residential let could give you a monthly income between £500 to £1500 whereas a holiday let operating on a per night basis, can give you the same money with no more than 10 nights’ stay.
So by running a holiday let instead of a residential let, there is a potential to triple your income!
Also, think about this – some people have to work 40 hours a week for a month to take home £1500. I say to you that if you for example, accept bookings with a minimum of two nights’ stay, this would give you a maximum of three bookings in a week. From my experience, I would budget 3 hours of your time for each booking, so no more than 9 hours a week of your time for 3 bookings of 2 nights each. This saves you 31 hours of your time! Wow!
So what are the costs?
To start, you need to furnish your property. My advice is buy good quality goods at reasonable prices, do not go crazy and buy expensive goods if you don’t have to.
Next, you need to think about how you will advertise your holiday let to secure bookings. You may have ambitions to have your own website and I am not against it but it could be a longer term goal. In the short and immediate term, use established platforms like booking.com and Air BNB. With these platforms, you will pay a fee which is deducted from the money that is paid to you known as net of fees and these fees can range from 3% to 15%.
A tip if you run multiple platforms – make sure you sync your calendars because if you do not do this then you run the risk of double bookings. Double bookings are not just only embarrassing, can discredit your business but can cost. Real story, I had a double booking in the earlier days and thankfully not since, but it cost me £180. This was because Booking.com had to find alternative accommodation for the guest and I had to pay the difference between the guest’s booking price with me and the price of the new accommodation . At the end of the day, why should the guest pay? So I have never forgotten so learn from me on that one so it does not happen to you! Sync calendars, double check and if you do also have private bookings, remember to block out the dates!
Asides from furnishing and advertising fees, the costs of actual running a holiday let are minimal and are made up of lighting and heating, water, TV licence, insurance, Internet and possibly subscriptions like netflix.
And if we work on the basis that the property is in good condition, its exactly how you want it to be then maybe maintenance costs will be no more than £500 per year.
You are now open for business
Now the operations begin…So what do I mean by operations?, well, you are running a business so you will need to do go through a process of actions to complete the sale or hit your targets. You may do this yourself or pay someone to do it.
These actions are made up to two things; Check In and Check Out.
- Check In involves greeting the guest, providing the key and ensuring the property is ready
- Check Out involves the return of the key, completing the exit checks and cleaning the property ready for the next guest.
You will need to provide the linen for your guests so make sure you have enough for at least three changeovers. If you do not want to wash, dry and iron linen yourself, there are businesses out there that will do this for you. My note above that three hours of your time is needed per booking is based on all the tasks being carried out by yourself which whilst the cost is your time, you can farm the all or some of the tasks out to someone else, costing you money but saving your time. You will still be in profit either way! I have to say, getting someone dedicated to running the holiday let could be the difference between being 75% occupied and 100% occupied because if you are like me, I run another business so my holiday let is available 5 days a week, allowing me two days to go in and get it ready. If, however you had a housekeeper, then you can easily do bookings back to back and still make money. I am only doing it this way because it works for me as I choose to do the tasks myself.
So we hope you have found this blog useful and if you have any questions or need some help getting your holiday let business up and running, please get in touch!