Holiday lets, self-catering holiday rentals, serviced accommodation, furnished holiday lettings – what do these terms mean to you? Perhaps you have a good idea or perhaps you are dipping your toe in the water. Either way, we are going to take a dive into what is a holiday let and offer some honest considerations about owning one.
What is a holiday let?
Firstly, all the terms in the introduction essentially describe the same thing. Commonly referred to as Furnished Holiday Lettings (FHL), they are fully-furnished properties used for short-term lets that will normally provide amenities above that of a standard buy-to-let. You may be familiar with them as the quaint cottages to be found on Airbnb and Booking.com that you can book for a weekend away or a longer stay if you are lucky.
Furnished holiday lets come in all manner of styles and locations, and not all are tucked away in rural tranquillity. Properties will range from houses to flats, in cities, up mountains and beside airports. Anything and everything can be used as a holiday let, the biggest determining factor being its location.
A holiday let, by its nature, will obviously need to be where people want to stay on holiday. It may be just a short stay in-between places or just passing through. It may be a homely retreat that will keep the kids, adults and Spot the dog satisfied and relaxed. For whatever the purpose, its location could be the difference between making a profit or a loss, but if done right, the profits can be considerable.
Why own a holiday let?
The big attraction of holiday lettings is the generous cashflow that can be achieved from even a modest one or two bedroom property. Often they are viewed as a type of hotel where the guest has more freedom, privacy and choices. People are therefore prepared to pay hotel prices for a short stay or enjoy a discount for a longer booking.
Paying per night soon adds up to a weekly figure that can cast a shadow over an entire month’s rental income from a standard buy-to-let. Understanding the needs of your area and the types of guests who will likely be staying will allow you to fine-tune your property to attract premium paying customers. This is why holiday lets have gained so much popularity in recent years.
Over the last 10 years demand has steadily grown for holiday rentals, driven largely by the ease of booking through online service providers. It has never been quicker or simpler to book a stay in virtually any location around the world. With demand continuing to grow, moving into a holiday let strategy is a solid plan, but it’s not without cost.
Holiday lets are not for everyone
It is fair to say that running a holiday let business will involve more work and time commitment than investing in residential properties. Rather than tenants, you will have guests that will have expectations with regards to cleanliness, fresh bed linen, towels and clear communications to allow them to find the property and gain access.
The changeovers between each stay will need to be coordinated and bookings arranged carefully to allow time to clean and avoid the nightmare situation of a double booking. The online reviews that will be left for your property will be essential for attracting future guests. Managing reviews, dealing with queries and organising the bookings can be a job in itself, even when using an online booking service.
Some people will choose to manage the entire process themselves to maximise their cashflow, others will hire cleaners and outsource the management of bookings. The more that is outsourced the higher the costs and your profits can quickly diminish. The question to ask yourself then, is how will a holiday let business impact my work/life balance?
Understand your needs
If you want to put the hours in and prioritise high profits, a holiday let business could be for you. Perhaps your personal circumstances are conducive to a more hands-on strategy or perhaps you have someone in mind that would love to do the changeovers for you. Perhaps you are comfortable with outsourcing most of the work and can still hit your cashflow goals in doing so.
For others who seek a more hands-off approach, one that generates income more passively, there are many other options that may be more suitable. You can view some of the other strategies we teach here. By understanding your personal needs and with the help of a good mentor, you will be able to fine tune your strategy to tick all of the boxes that need ticking. Even if it can all feel overwhelming at present.
On a final note, even if you set out on a different path of property investing, say with standard buy to lets, having the holiday let strategy in your toolkit can be a valuable skill. Sometimes a property can be hard to find tenants for, or changes to the circumstances in the surrounding area can create problems for standard lettings. Sometimes converting a property over to a holiday let can be a smart solution to maintain cashflow and continue moving forwards as an investor.
