How do you decide whether to DIY your holiday let property?
You’ve asked yourself, “Is holiday let property a good investment?”, and decided to take the plunge. I think it’s a great decision – you’re about to invest in the stability and growth potential of the UK property market, with the added potential to benefit from amazing rental yields. You’re also buying a property that you can use as a bolthole when it’s not occupied.
Before you invest, you’ll need to decide whether you should self-manage your holiday let or have someone do it for you. In this article, you’ll learn the pros and cons of self-managing a holiday let.
Why you should self-manage your holiday let
Your investment, your money, your responsibility. All this is true about your investment. It’s natural that you want to keep control of it, and this includes managing your property – and all that holiday let property management involves. This mindset is especially true of the first-time holiday let investors.
Here are the advantages of self-managing your holiday let investment.
· You could make more money
When you do it yourself, the fees and commissions that you would pay to a holiday let property manager are saved. This increases your bottom line. However, don’t forget that you will pay tax on the higher profits. Therefore, the extra real profit you make is not equal to the fees and commission you save.
· You let to who you want to let
When you use a property manager, you have no real control over who lets your property. As a DIYer, you can screen your holiday tenants more effectively and decide whether to let or not. However, if your screening system is too strict, you could find yourself with unnecessary void periods.
· You can use a multitude of market entry points
It’s far easier to find holidaymakers who want to stay in your property than ever before. The number of online portals that people can use to find holiday accommodation has exploded in recent years. You create the advert, and booking systems handle your lettings calendar automatically.
However, if you are advertising on more than one site, you will need to ensure you have a process in place to ensure you don’t double-book. And don’t forget that online sites that help you let your holiday let take commissions on booking made. If you hire a holiday let property manager, they’ll control your property’s diary – so no embarrassing overbookings.
· Greater price flexibility
When you self-manage, you can change pricing quickly and easily. This may help you secure last-minute bookings or reward loyal customers. Using a property manager, this process is naturally slowed down. You’ll need to contact the manager, request the change, and then wait for them to reflect the change on their website. A property manager may also have limits on the discounts you could offer.
· More flexibility to use yourself
Some holiday let property managers may put restrictions on when you can use the property. They won’t want to miss a booking in the lucrative high season because you wish to use the property for a family getaway. When self-managing, you choose exactly when your property is available.
Why you should not self-manage a holiday let
While the benefits of self-managing your holiday let look attractive, it’s not all plain sailing. There are many drawbacks. Here are the main ones:
· Self-managing a holiday let is time-consuming
Managing a holiday let property will eat up your free time. You’ll need to monitor and manage bookings, answer holidaymakers’ questions and concerns, keep your listings updated, ensure you are on hand to answer holidaymakers’ requests during their stay, organise welcome packs, and keep on top of maintenance and cleaning (including changeovers).
You could easily find yourself spending eight to 10 hours each week on managing your holiday let. If you want a second job, self-manage your holiday let.
· It may not be practical to self-manage a holiday let – or most profitable
To self-manage a holiday let property, you have two choices when investing:
- Invest near you – in which case, you may not be buying in the most profitable location
- Travel to your holiday let regularly – in which case, you’ll be spending more time and money
A local property manager is on hand for holidaymakers, and more able to take action quickly when it’s needed (for example, if the boiler breaks down).
· Your lack of expertise could cost you
Holiday let management is not easy. If you have little or no experience, you will make mistakes. While you’ll learn from these, they could cost you, dear. Bad mistakes translate to poor reviews on TripAdvisor and elsewhere – and bad reviews will harm your rentals.
· Self-managing could be more expensive
The idea of self-managing is to save money, but you could find that it ends up costing you as much, if not more. You’ll need to pay your own advertising and marketing costs, perhaps run pay-per-click campaigns (e.g. on Facebook), manage email contact lists, and pay listing site fees and commissions. Don’t forget, there is no guarantee that what you spend will result in bookings. On the other hand, over time, as you grow your contact list and your repeat bookings increase, your costs should reduce.
· The competition is fierce
The downside of easier access to the market via online portals is that competition for guests is fierce. You’ll be up against other self-managers, professional property managers and lettings agencies – who have bigger pockets, more expertise, and lower costs per property.
· Increased responsibilities
If you decide to decrease the time you spend on the nuts and bolts of holiday let property management, your responsibilities will probably increase. For example, if you hire a cleaner to do the changeovers, you may need to provide a contract of work, arrange payment of wages, and pay for insurance while they undertake their job.
· Is self-management of your holiday let for you?
The final choice of whether to self-manage your holiday let will depend on several factors. If you’re a people person, live near your property, and have several hours per week to dedicate to the job of self-managing your holiday let, then it may make a positive difference to your bottom line.
To work out whether self-management is a good choice financially, compare the costs of hiring a holiday let property manager to the cost of your time. Let’s say a property manager would cost, for example, £3,000 per year before tax. If you spend an average of eight hours per week on managing your holiday let, this works out at around £7.20 per hour. Now, ask yourself, is your time worth just £7.20 per hour? Could you earn more by working overtime at your usual job?
To learn more about the advantages and benefits of holiday let property investment, contact Gladfish today on +44 207 923 6100. We’ll be happy to discuss how a holiday let investment might fit in with an existing portfolio or be the investment to help you achieve your lifestyle goals.
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