Any business minded people who can help/give advice? (1 Viewer)

pastythegreat · Jun 2, 2019

Ok, so, I've had a little (quite big actually) venture I've been mulling over for some time really. It's been just thoughts and daydreams for a good few years now really. But the more I think about turning the dream into reality, the more it confuses me on exactly how I'd manage to make it happen.

Without overly boring people with the details, I basically want to move to Snowdonia and buy a house with land/barn conversions and use them for glamping/self contained holiday let's. I've seen a few properties for sale on right move and 2 in particular that are perfect.
However, I'm (only) around £500k short for both of these properties. I mean, who has £500k just lying around in an old bank account?!?!
Which brings me to the question of how exactly would people normally go about these sorts of things?
In terms of getting a mortgage, I currently don't earn enough to get a mortgage of that size, besides, I'd be upping sticks and moving to Snowdon so would be leaving my job and becoming self employed/running my own company.
In terms of investment, I don't think it would ever make the sort of money investors would be interested in. it would be a good amount annually for me and my family after all overheads are taken, but only in the 10s of thousands. So investors would most probably be out of the question.
And I'm not sure I'd get a business loan of that size with no capital to put down.

People buy and sell these sort of properties and businesses all the time, so surely there's a way, I'm just not money/business minded enough to realise how to male a daydream possible.

So any advice/ideas much welcome.

clint van damme · Jun 2, 2019

pastythegreat said:
Ok, so, I've had a little (quite big actually) venture I've been mulling over for some time really. It's been just thoughts and daydreams for a good few years now really. But the more I think about turning the dream into reality, the more it confuses me on exactly how I'd manage to make it happen.

Without overly boring people with the details, I basically want to move to Snowdonia and buy a house with land/barn conversions and use them for glamping/self contained holiday let's. I've seen a few properties for sale on right move and 2 in particular that are perfect.
However, I'm (only) around £500k short for both of these properties. I mean, who has £500k just lying around in an old bank account?!?!
Which brings me to the question of how exactly would people normally go about these sorts of things?
In terms of getting a mortgage, I currently don't earn enough to get a mortgage of that size, besides, I'd be upping sticks and moving to Snowdon so would be leaving my job and becoming self employed/running my own company.
In terms of investment, I don't think it would ever make the sort of money investors would be interested in. it would be a good amount annually for me and my family after all overheads are taken, but only in the 10s of thousands. So investors would most probably be out of the question.
And I'm not sure I'd get a business loan of that size with no capital to put down.

People buy and sell these sort of properties and businesses all the time, so surely there's a way, I'm just not money/business minded enough to realise how to male a daydream possible.

So any advice/ideas much welcome.

Cant be of help with advise but sounds great, good luck!

rob9872 · Jun 2, 2019

I've thought similar with a caravan park. We gave a hit of equity in the house, but otherwise wouldnt have much to put down. I can always find too many reasons not to do it but perhaps one day.

Sky_Blue_Dreamer · Jun 2, 2019

pastythegreat said:
Ok, so, I've had a little (quite big actually) venture I've been mulling over for some time really. It's been just thoughts and daydreams for a good few years now really. But the more I think about turning the dream into reality, the more it confuses me on exactly how I'd manage to make it happen.

Without overly boring people with the details, I basically want to move to Snowdonia and buy a house with land/barn conversions and use them for glamping/self contained holiday let's. I've seen a few properties for sale on right move and 2 in particular that are perfect.
However, I'm (only) around £500k short for both of these properties. I mean, who has £500k just lying around in an old bank account?!?!
Which brings me to the question of how exactly would people normally go about these sorts of things?
In terms of getting a mortgage, I currently don't earn enough to get a mortgage of that size, besides, I'd be upping sticks and moving to Snowdon so would be leaving my job and becoming self employed/running my own company.
In terms of investment, I don't think it would ever make the sort of money investors would be interested in. it would be a good amount annually for me and my family after all overheads are taken, but only in the 10s of thousands. So investors would most probably be out of the question.
And I'm not sure I'd get a business loan of that size with no capital to put down.

People buy and sell these sort of properties and businesses all the time, so surely there's a way, I'm just not money/business minded enough to realise how to male a daydream possible.

So any advice/ideas much welcome.

If you're looking at the properties as a business venture rather than a home then your ability to raise a bigger mortgage might be improved. What condition are the properties in - would you be able to open up pretty much straight away or would it need work and the money you need also have to cover doing them up? The properties would be collateral in case of default but not having any regular income at all will put you at a huge disadvantage though. How much capital/cash reserves and how long could you get by?

If you'd be moving do you have a house you'd be selling here to use as a deposit? Would you be living in the property as well? Is there no-one else you know personally who would be interested? You mention your family - what would their work situation.

Do you have a business plan written out on exactly what you want to do/timescale/costings? Without it you're not going to get very far I'm afraid.

Alan Dugdales Moustache · Jun 2, 2019

You can go some way on a buy to let mortgage. I did it to get a property in Gwynedd to get me a foothold in that part of the world and took it from there. Develop it bit by bit.

pastythegreat · Jun 2, 2019

Sky_Blue_Dreamer said:
If you're looking at the properties as a business venture rather than a home then your ability to raise a bigger mortgage might be improved. What condition are the properties in - would you be able to open up pretty much straight away or would it need work and the money you need also have to cover doing them up? The properties would be collateral in case of default but not having any regular income at all will put you at a huge disadvantage though. How much capital/cash reserves and how long could you get by?

If you'd be moving do you have a house you'd be selling here to use as a deposit? Would you be living in the property as well? Is there no-one else you know personally who would be interested? You mention your family - what would their work situation.

Do you have a business plan written out on exactly what you want to do/timescale/costings? Without it you're not going to get very far I'm afraid.

So the 2 that I'm looking at are both already running as businesses. Both are 3 bedroom cottages, 1 with 2 log cabins and 11 acres, the other with 2 private self catering cottages and no land. Both advertised as around 80% occupancy (which I find hard to believe) but both already running as businesses with their own websites etc.

I don't own the house I live in currently, it's council

In terms of work, it's only me and the partner as the kids are 10 and 4 so I don't think I could get them down the pit just yet but the holiday let would be our main income. Both (run properly) could bring in (my rough workings out) over £55-60k gross. Which given our business is our home, take out expenditure, would be comfortable to live on.
If need be, I kayak, MTB and am training currently as a Mountain Leader so can tale people/guests on guided walks and rides etc to bring in extra income. My Mrs. Is also a trained TA, so if needs be, can always find work wherever we moved to. Although, we'd hopefully male the holiday let's successful enough to be both our main income.
I don't currently have a business plan written up. It's all in my head, but I wouldn't even know where to start on writing it out formally.

pastythegreat · Jun 2, 2019

rob9872 said:
I've thought similar with a caravan park. We gave a hit of equity in the house, but otherwise wouldnt have much to put down. I can always find too many reasons not to do it but perhaps one day.

I'm running out of reasons to not do it in all honesty. I even (sort of) finally got a green(ish) light from the Mrs. She's fed up living in Coventry and wants a move. She said, if I can make it possible, she open to change.

Alan Dugdales Moustache · Jun 2, 2019

pastythegreat said:
So the 2 that I'm looking at are both already running as businesses. Both are 3 bedroom cottages, 1 with 2 log cabins and 11 acres, the other with 2 private self catering cottages and no land. Both advertised as around 80% occupancy (which I find hard to believe) but both already running as businesses with their own websites etc.
.

If you need to go and live there to run the business would the second option (private cottages ) be better ? Is it possible to put a caravan on the land in addition to the houses, on a temporary basis, for your own occupation in the short term, to maximise income from 2 properties ?

pastythegreat · Jun 2, 2019

Alan Dugdales Moustache said:
If you need to go and live there to run the business would the second option (private cottages ) be better ? Is it possible to put a caravan on the land in addition to the houses, on a temporary basis, for your own occupation in the short term, to maximise income from 2 properties ?

So both are about me moving there. It's as much about moving and changing my lifestyle as it is just buying a cottage to rent out for holiday let's.
I'm not sure how overly interested you are but I'll attach the links of the properties, much easier than me trying to draw put the picture.

Check out this property for sale on Rightmove!

So this is the 1st (and cheapest option). It consists of a 3 bed cottage (where me and the family would live, and 2 separate holiday let's. A 4 berth and a 2 berth, both private, with own private hot tub and garden and use of shared gym. Outside of this though, there is no land and no real room for expansion.

The 2nd

Check out this property for sale on Rightmove!

Is much more expensive (and my prefered choice), but holds MUCH more scope. It currently has a 3 bed cottage (for my family home) 2 log cabins (1 2 berth, 1 6 berth) and a barn (currently being converted into a 6 berth bunk house) it has stables which can be used for extra income, a river (which pulls in around £4k a year through a hydro electricity company) and 11 acres which I could use for Glamping in the summer months.

Razzle Dazzle Dean Gordon · Jun 2, 2019

Do you have any figures for how much either property has turned over for the past few years? That would give you a better idea of viability as a business. You'd need to balance that against the outgoings you know you'd have on a mortgage/business loan and your own living expenses.

Deleted member 5849 · Jun 2, 2019

pastythegreat said:
I don't own the house I live in currently, it's council

As an aside (and I don't agree with the principle as government policy, but it's there, so not your fault!) have you lived in your house long enough to be eligible to buy it? You'd have to live in it a few more years to get the benefit of any sale from that, so it's certainly not the instant route, but it could gain you some equity to put towards any deal...

dancers lance · Jun 2, 2019

Razzle Dazzle Dean Gordon said:
Do you have any figures for how much either property has turned over for the past few years? That would give you a better idea of viability as a business. You'd need to balance that against the outgoings you know you'd have on a mortgage/business loan and your own living expenses.

Agree, a 500k mortgage would require a monthly payment of about 3k (obviously less if you have a decent deposit) so you would need to show the lender some proof that this can be easily covered before they would even consider it. One thing I would say to the OP, as a small business owner myself, is be prepared to work stupid hours for no money for the first year at least, all the very best though, I hope it works out.

Sky_Blue_Dreamer · Jun 2, 2019

Not having a property to sell to help fund is a big setback, and the businessplan is essential. Would you just be choosing to leave your job or is it due to potential redundancy and there would therefore be come sort of redundancy payment which could help a little? I'm assuming you've no previous experience as a landlord or had lettings, which would also put off potential business lendors.

I assumed it would just be your wife as a potential breadmaker with kids in tow, but best to check. Have you also looked at things that affect the kids like schools (I notice it has a school checker on the website)? I noticed the second mentioned a local school, which would be good for them and possibly for your wife depending on if they needed a TA. In this region of Wales will the main language used be English? The school names are in Welsh.

The idea for extra income from tours etc is a good one, as every little helps.

The fact that the businesses are already up and running is great, but make sure to ask to look at their business accounts/P&L etc (they'll have to have some for tax purposes) to check how well they're actually doing. It would also be a massive help to you in drawing up the business plan because you've got actual figures to work from. It doesn't say if the properties have been surveyed to ensure the condition of the properties and make sure there's no nasty and expensive surprises coming your way. I'd see that as essential, but probably wouldn't be cheap if it hasn't already been done.

Also, don't forget to factor in tax payments from self employment, business liability/landlord insurance etc, but all these would hopefully also be set out in any accounts you'd get from them.

Looking at each property:

the first I noticed doesn't appear to have mains gas or sewerage, which is a bit of a drawback IMO. LPG/Oil canisters etc are more expensive than mains, and you'd need to pay someone to empty the septic tank periodically. However, these costs should be shown in the accounts I mentioned early.
I also noticed 'viewing is essential' - it doesn't necessarily mean much (for me viewing is essential to any property) but there's just something about them putting in specifically that makes me a bit nervous, but I'm naturally cautious.
I also noticed it mentioned surrounding pasture land - I'd ensure there is no issue with access rights if all the surrounding land is owned by a neighbouring estate. Again, it might be apparent in the accounts but check anyway - it should be apparent with a quick application to Land Registry.

Second property
I'd check how far the barn conversion has got and if it will be completed as part of the asking price.
Similarly I noticed it said the hydro-electric scheme was proposed, not actually yet installed. I'd check how much this will impact the properties in terms of access, noise etc. It wold also mean that the figures for income from the project are estimates, which although useful for your business plan aren't guaranteed in terms of cash and it's often cashflow that causes the problems.

Also, I noticed you said you were about 500k short on both properties but the price difference is about 200k between the two. How come you'd have more to put towards the second one?

Sorry if I seem to be a bit down on the idea - I don't mean to be as it seems like a lovely idea to do - but I don't want you going into it without being aware of potential problems and pitfalls. It's easy to let heart rule head in this and I'd rather make you aware now than it it to be a problem after. I agree that it will be difficult to get the capital required to buy but I wish you all the best.

pastythegreat · Jun 2, 2019

Razzle Dazzle Dean Gordon said:
Do you have any figures for how much either property has turned over for the past few years? That would give you a better idea of viability as a business. You'd need to balance that against the outgoings you know you'd have on a mortgage/business loan and your own living expenses.

I dont have exact figures. Something im sure i could get hold of easily enough from the curremt owners.
I have my own estimates of how much gross they make and estimates of any extra I could add on to that profit. But nothing concrete yet.

dancers lance · Jun 2, 2019

pastythegreat said:
I dont have exact figures. Something im sure i could get hold of easily enough from the curremt owners.
I have my own estimates of how much gross they make and estimates of any extra I could add on to that profit. But nothing concrete yet.

What condition are the properties in Pasty, would you need to undertake much renovation?

pastythegreat · Jun 2, 2019

Sky_Blue_Dreamer said:
Not having a property to sell to help fund is a big setback, and the businessplan is essential. Would you just be choosing to leave your job or is it due to potential redundancy and there would therefore be come sort of redundancy payment which could help a little? I'm assuming you've no previous experience as a landlord or had lettings, which would also put off potential business lendors.

I assumed it would just be your wife as a potential breadmaker with kids in tow, but best to check. Have you also looked at things that affect the kids like schools (I notice it has a school checker on the website)? I noticed the second mentioned a local school, which would be good for them and possibly for your wife depending on if they needed a TA. In this region of Wales will the main language used be English? The school names are in Welsh.

The idea for extra income from tours etc is a good one, as every little helps.

The fact that the businesses are already up and running is great, but make sure to ask to look at their business accounts/P&L etc (they'll have to have some for tax purposes) to check how well they're actually doing. It would also be a massive help to you in drawing up the business plan because you've got actual figures to work from. It doesn't say if the properties have been surveyed to ensure the condition of the properties and make sure there's no nasty and expensive surprises coming your way. I'd see that as essential, but probably wouldn't be cheap if it hasn't already been done.

Also, don't forget to factor in tax payments from self employment, business liability/landlord insurance etc, but all these would hopefully also be set out in any accounts you'd get from them.

Looking at each property:

the first I noticed doesn't appear to have mains gas or sewerage, which is a bit of a drawback IMO. LPG/Oil canisters etc are more expensive than mains, and you'd need to pay someone to empty the septic tank periodically. However, these costs should be shown in the accounts I mentioned early.
I also noticed 'viewing is essential' - it doesn't necessarily mean much (for me viewing is essential to any property) but there's just something about them putting in specifically that makes me a bit nervous, but I'm naturally cautious.
I also noticed it mentioned surrounding pasture land - I'd ensure there is no issue with access rights if all the surrounding land is owned by a neighbouring estate. Again, it might be apparent in the accounts but check anyway - it should be apparent with a quick application to Land Registry.

Second property
I'd check how far the barn conversion has got and if it will be completed as part of the asking price.
Similarly I noticed it said the hydro-electric scheme was proposed, not actually yet installed. I'd check how much this will impact the properties in terms of access, noise etc. It wold also mean that the figures for income from the project are estimates, which although useful for your business plan aren't guaranteed in terms of cash and it's often cashflow that causes the problems.

Also, I noticed you said you were about 500k short on both properties but the price difference is about 200k between the two. How come you'd have more to put towards the second one?

Sorry if I seem to be a bit down on the idea - I don't mean to be as it seems like a lovely idea to do - but I don't want you going into it without being aware of potential problems and pitfalls. It's easy to let heart rule head in this and I'd rather make you aware now than it it to be a problem after. I agree that it will be difficult to get the capital required to buy but I wish you all the best.

Quit a lot to tale in a reply to but I have thought about most of what your saying.
I wouldn't ever spend that sort of cash without checking the ins and outs of all the business and all that goes with it.
In terms of schools/language etc, the main language is English, although some places do teach Welsh. Being highly driven by tourism it's a predomently English spoken area. I have no experience as a landlord but have previously worked in hospitality and did work for a lettings agent once so have a good understanding, it would still be a steep learning curve though. Something I'm sure I could speak to the current owners about help and ideas and experiences. In terms of accounts, when viewing I'd be sure to check all aspects, not just to look at the properties but the books and accounts and all business sides anyway. I think it's quite common out those parts not to be hooked up to mains. It's so isolated. Being connected would be better, but not the end of the world.
Again, with the hydro electric scheme, they are quite common in Snowdonia nowadays. If there's anything Wales doesn't have a shortage on, it's rain. Their never anything overly imposing. It's national park so has to fit in with standards. Their not generally big noisy things. The ones I've seen before are generally dams that control the waterflow through generators (don't get me into the ins and outs as I'm no expert).

Appreciate the honesty. I'd rather hear it straight tbh

pastythegreat · Jun 2, 2019

dancers lance said:
What condition are the properties in Pasty, would you need to undertake much renovation?

Looking at them it doesn't look much
Just a bit of decorating in the main house. Maybe a new bathroom suite

ovduk78 · Jun 3, 2019

We bought a guest house in Inverness in 2004 with the help of a loan from RBS but to get the loan we had to have a sizeable deposit, we had about 50%, and a business plan based on operating figures provided by previous owners. We had offers from help from 2 other banks and I realise it might be a lot different now. You will have to get operating figures from the sellers, create a business plan and speak to a bank/business loan company to check you are going to get funding. You may be eligible for new business start up grants so check that out too. The FSB were helpful and we moved our loan from RSB to them which reduced our monthly repayments and the charges we paid for credit card transactions. You will need a deposit as I don't think anyone will lend you money without any financial commitment from yourself. The sellers operating figures may not be as comprehensive as you would like or will need to get a business loan, we looked at another guest house and a pub/guest house which both had annual turnover's under £20K as most of their trade didn't go through the books.

Whatever happens good luck!

Gazolba · Jun 3, 2019

I'm assuming you have no experience running this type of business.
I'd start small, buy a house you can afford in some tourist area and rent out one or two rooms.
Then if you find you like the lifestyle and it is profitable, you can expand later.
And network with people who have run these types of businesses to get some insider knowledge

Travs · Jun 3, 2019

You obviously know the area well... but as someone who spends a fair amount of time there myself, I’d certainly consider the Beddgelert property as a first choice, even though it’s more expensive (if you can afford it). It’s right in the thick of it for the Snowdon tourists.

pastythegreat · Jun 3, 2019

Travs said:
You obviously know the area well... but as someone who spends a fair amount of time there myself, I’d certainly consider the Beddgelert property as a first choice, even though it’s more expensive (if you can afford it). It’s right in the thick of it for the Snowdon tourists.

This is my way of thinking also. More expensive but in a much more desirable area. In fairness as well, it as by far more scope for profit.

Sky_Blue_Dreamer · Jun 4, 2019

pastythegreat said:
Quit a lot to tale in a reply to but I have thought about most of what your saying.
I wouldn't ever spend that sort of cash without checking the ins and outs of all the business and all that goes with it.
In terms of schools/language etc, the main language is English, although some places do teach Welsh. Being highly driven by tourism it's a predomently English spoken area. I have no experience as a landlord but have previously worked in hospitality and did work for a lettings agent once so have a good understanding, it would still be a steep learning curve though. Something I'm sure I could speak to the current owners about help and ideas and experiences. In terms of accounts, when viewing I'd be sure to check all aspects, not just to look at the properties but the books and accounts and all business sides anyway. I think it's quite common out those parts not to be hooked up to mains. It's so isolated. Being connected would be better, but not the end of the world.
Again, with the hydro electric scheme, they are quite common in Snowdonia nowadays. If there's anything Wales doesn't have a shortage on, it's rain. Their never anything overly imposing. It's national park so has to fit in with standards. Their not generally big noisy things. The ones I've seen before are generally dams that control the waterflow through generators (don't get me into the ins and outs as I'm no expert).

Appreciate the honesty. I'd rather hear it straight tbh

Pleased to hear you've considered and researched a lot of those points. The fact you have a least a small amount of experience in the lettings industry, even if not as a letter yourself, is useful too.

I've tried to have a think on other sources of capital.

There will be trade shows and probably even forums like this for lettings etc so get along to those and get talking to people - at the least you'll likely get access to valuable information and experience from others. You may even find an individual/company to help you with finance. This would obviously reduce the amount of control you'd have and with companies be very careful as you can effectively become a franchise and be tied into their finance deal and be forced to use particular suppliers/contractors on the notion its quality control when often it's because they've got a lucrative supply contract in place.

Another option would be to contact successful local guesthouses/landlords that have been operating for some time near to you, asking for their experiences and advice. In all honesty chances are the vast majority of them won't even reply and the vast majority of those that do will be to politely decline, but you may get some positive reply. If you're really lucky and you get a rapport with one of them it may be possible they'd be interested in partnership (as a Ltd/LLP IMO) increasing your ability to get loans etc with their experience in the project, as well as any capital they may be able/willing to provide themselves. Obviously this would reduce your returns personally as they'd be due a percentage, but given your situation I think your main hope is having other people on board.

Houchens Head · Jun 4, 2019

Go to your bank with a business plan. Outline all projections of profits and any foreseeable losses, income, outgoings etc. Annual profit projections etc. Your bank is an investor. They like to invest in something that will make both you and them money.

Any business minded people who can help/give advice? (1 Viewer)

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