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marlowtech

Tell Me Why Not To Buy Holiday Let In Cornwall!

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Please can you tell me why I should not buy an overpriced holiday home in a famous seaside town, which is over half a million, and will only give me (in a good year) a return of £30k.

Unfortunately my heart is telling me to buy it, and I need your help to get my head to over rule it!

Thanks in advance for your help.....

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whats the holiday letting business like when times get hard?

Debatable..obviously not ideal, but will people rather holiday in the UK than abroad?

At best neutral, at worse...

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if you can afford to lose 20% of its value over the next 5 years then buy it, if not, then........

I probably agree with you, but why do you think it will go down by 20%?

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Debatable..obviously not ideal, but will people rather holiday in the UK than abroad?

Not necessarily. One of my mates went to Greece and ate for two weeks for the cost of one decent meal in the UK. Throw in cheap flights, a cheap flat and hot weather guaranteed and it's a no-brainer.

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Please can you tell me why I should not buy an overpriced holiday home in a famous seaside town, which is over half a million, and will only give me (in a good year) a return of £30k.

Speaking as a person who is trying to sell a £500k property in Cornwall with crappy returns I advise you to buy, buy, buy! :lol:

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Because Cornwall is dependent on Tourists, and when the hard times hit Cornwall is hit very hard as the Tourists dont come as they dont have the money.

Most people who holiday in Cornwall are families on a tight budget that pay 1k for a cottage that will house themselves, their friends, and all the kids.

If they took themselves away on a overseas holiday it would cost several thousands of pounds.

So they are the bread and butter market and the first to be hit in the pocket when interest rates rise as the Chancellor realises that he has screwed the economy over.

I certainly would not like 500k of my cash sitting in Cornwall, and certainly no mortgage.

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Please can you tell me why I should not buy an overpriced holiday home in a famous seaside town, which is over half a million, and will only give me (in a good year) a return of £30k.

Unfortunately my heart is telling me to buy it, and I need your help to get my head to over rule it!

Thanks in advance for your help.....

Heart? What heart? It's bad enough pricing locals out for economic gain, but you propose doing it for a loss. Are you for real?

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Speaking as someone from a gentile village, overrun by tourists, I can only give the following advise:

Dont buy a holiday home unless you have at least one cleaner to clean it.

Sounds silly? Trust me, getting a reliable cleaner is a nightmare. Who cna blame them - its only

4 hours of work on Saturday at minimum wage.

Most people (well women) who would do cleaning work will be on benefit - its impossible to survice in the average holiday town on low-skill wages. Doing 4 hours cleaning on the black is not worth risking your benefits for.

Even if you get a reliable claener, you can expect a no-show every 2 months. So you, lanlord, willhave toclimb into the car and do the the cleaning yourelf - great if you lie in London and the cottgae is in Cornwall.

You could always trust your 500K house to some kids to clean .....

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Heart? What heart? It's bad enough pricing locals out for economic gain, but you propose doing it for a loss. Are you for real?

Blimey, I was only seeking some advice!

Perhaps I should explain. My wife and I have always dreamed of retiring to the coast. We are not due to retire for another 5 years (may be longer depending on circumstance). We have seen somewhere we really like, and could finance it by using it as a holiday let until we are ready to retire. When we do retire, we will sell our home and move down there permanently.

I was really asking if people could give any thoughts as to whether it is better to wait 5 years until we are really ready to move.

I have absolutely no interest in pricing locals out....indeed we would become locals....

Judging by the responses, we should wait. All I was looking for was some convincing arguments as to why we should wait.....

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You have to bear (ahem, pun intended) that Cornwall has the lowest wages in the country..

That some of these towns (in the extreme cases) are not over half empty most of the year as they are holiday homes.

I saw some bungalows that were £30,000 pre boom hit over £270,000 (this was shown on the news a couple of years ago)

The £30,000 reflected the wages in the area, the £270,000 reflected what some townie was able to borrow with scant thought as to how they were going to pay it back..

I probably agree with you, but why do you think it will go down by 20%?

Just for one second would you look at how much the locals earn...

Now look at those who can afford £500,000 on a holiday home...

look to see how much similar property went for pre boom..

Think about the economic cycle and remember.

1: The Economic Cycle exists, this cannot be denied, it is easy to spot looking back through history

2: People are surprised by the Economic Cycle every time

3: People are Stupid

A property investor has sold their properties..

Someone who still holds property and considers themseleves to be a property investor is not a property investor, they are the person who has bought property from property investors.

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You have to bear (ahem, pun intended) that Cornwall has the lowest wages in the country..

That some of these towns (in the extreme cases) are not over half empty most of the year as they are holiday homes.

I saw some bungalows that were £30,000 pre boom hit over £270,000 (this was shown on the news a couple of years ago)

The £30,000 reflected the wages in the area, the £270,000 reflected what some townie was able to borrow with scant thought as to how they were going to pay it back..

Just for one second would you look at how much the locals earn...

Now look at those who can afford £500,000 on a holiday home...

look to see how much similar property went for pre boom..

Think about the economic cycle and remember.

1: The Economic Cycle exists, this cannot be denied, it is easy to spot looking back through history

2: People are surprised by the Economic Cycle every time

3: People are Stupid

A property investor has sold their properties..

Someone who still holds property and considers themseleves to be a property investor is not a property investor, they are the person who has bought property from property investors.

Just wanted to say thank you!

This is the stuff I want to hear!

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Guest Guy_Montag

If people here are right, in five years you'll be able to pick up a similar property in 5 years for 400k, rather than 500k.

Focus on the £100,000 & what you can do with that.

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I have absolutely no interest in pricing locals out....indeed we would become locals....

Belive me you would not become locals!! People like you are becoming about as popular as a pokpie at a Jewish wedding.

I've lived down here in cornwall for nearly 10 years i married a cornish girl have 2 cornish children and i am definatly still not a true Local!!

There is a backlash brewing against emmits and second home owners you have been warned!

:ph34r:;)

Phil

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Marlowtech

Considering buying a holiday home, note to self, Engage Brain![/u]

If the saying ‘that the first casualty of war is the truth’ is a truism, then ‘the first casualty of buying a holiday home is often basic common sense’.

We are a nation seemingly obsessed with property and property prices. Witness the rash of TV programs imploring us to relocate, trade up, buy to let and do up to sell. In the five last five years property prices in Britain have increased dramatically and a whole industry has sprung up encouraging us to release equity and buy abroad. The vested interests (VI) such as the Developers, Estate Agents and Banks/Building Societies are ably assisted by the ‘Lifestyle Media’, in marketing the dream.

So what happens when we buy a holiday property? Is it a home or an investment? It’s not really a home, or more correctly our home, as we don’t live there, we just visit occasionally. However due to the cost and commitment of owning a holiday property, we have to view it in investment terms. On the other hand we shouldnt view holiday properties purely as an investment though, as we are going to spend a fair proportion of our limited but highly valued, family holiday time there. So a holiday property is neither a family home in the true sense, or a pure investment, only to be judged on the financials. A second property bought as a holiday retreat is in reality a bit of both. A home away from home and part of our long term investment strategy, in other words, a compromise! There is no doubt in my mind when we’re buying a holiday property, the line between emotional ‘home buying’ and hard headed ‘investment analysis’ becomes blurred. The former always triumphs over the later as we metaphorically chase our rose tinted dream and in sum cases, Rose gardened cottage.

Once we’ve found a holiday property, the contracts have been exchanged and our Solicitor rings to say we’ve completed, the honeymoon period appears all too brief. Previously caught up in the full flush and thrill of the chase, bask awhile in the afterglow, for it does not last long. The fact that we may have let our heart rule, in the run up to buying our holiday property, soon becomes apparent with the arrival of the first set of bills. Mortgage, insurance, council tax, utilities, appliances, furnishings, service charges, the list is almost endless. Having let our heart rule up to now, we re-engage our heads and focus on the investment side of the equation.

The dying embers of the honeymoon period are finally extinguished when a sober assessment of the business case you put together on the back of a napkin in a beer garden, doesn’t now seem quite so robust. Its human nature that if we really want something we tend to emphasise the positives. This is to convince those around us and indeed ourselves that we’re doing the right thing, for the right reasons. It is easy to play down any negatives that don’t help support your case. If you want to be convinced of something, you can be pretty persuasive.

We generally underestimate the costs that go along with ownership of a holiday home and over estimate the revenue, especially on short term holiday lets of a week or two, its easy to grossly underestimate the costs. These costs come in the form of our time and the direct costs associated with the property being used on a short term, high turnover basis. Estate Agents and Developers Sales staff can play a big part in this. Ask them questions about running costs and rather than be evasive, they will tell you exactly what you want to hear. The only lies they tell, may be by omission but they will spin everything their way. Ask them about income from both long and short term lets and they will be bullish, confirming your own thoughts. Beware of sales people bearing good news. Do not take anything you’re told at face value, cross check and always test assumptions (especially your own). The key rules of the property buying game you need to remember are, firstly Caveat Emptor or Buyer Beware! The second rule is if the deal seems too good to be true it usually is and the third and final rule is, ensure you take independent ‘subject matter expert’ advice on legal, value/survey and financial matters. Both Estate Agents and Developers will offer you a ‘one stop shop’, for a property, legal work, survey and mortgage. It’s too cosy and they will all have a vested financial interest in you buying and therefore perhaps not be as diligent as you my like.

Just a few thoughts (oh and you will be able to get one for £80 to 100k cheaper in 18 months to two years).

Pablo Silver or Lead?

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Marlowtech

Considering buying a holiday home, note to self, Engage Brain![/u]

If the saying ‘that the first casualty of war is the truth’ is a truism, then ‘the first casualty of buying a holiday home is often basic common sense’.

We are a nation seemingly obsessed with property and property prices. Witness the rash of TV programs imploring us to relocate, trade up, buy to let and do up to sell. In the five last five years property prices in Britain have increased dramatically and a whole industry has sprung up encouraging us to release equity and buy abroad. The vested interests (VI) such as the Developers, Estate Agents and Banks/Building Societies are ably assisted by the ‘Lifestyle Media’, in marketing the dream.

So what happens when we buy a holiday property? Is it a home or an investment? It’s not really a home, or more correctly our home, as we don’t live there, we just visit occasionally. However due to the cost and commitment of owning a holiday property, we have to view it in investment terms. On the other hand we shouldnt view holiday properties purely as an investment though, as we are going to spend a fair proportion of our limited but highly valued, family holiday time there. So a holiday property is neither a family home in the true sense, or a pure investment, only to be judged on the financials. A second property bought as a holiday retreat is in reality a bit of both. A home away from home and part of our long term investment strategy, in other words, a compromise! There is no doubt in my mind when we’re buying a holiday property, the line between emotional ‘home buying’ and hard headed ‘investment analysis’ becomes blurred. The former always triumphs over the later as we metaphorically chase our rose tinted dream and in sum cases, Rose gardened cottage.

Once we’ve found a holiday property, the contracts have been exchanged and our Solicitor rings to say we’ve completed, the honeymoon period appears all too brief. Previously caught up in the full flush and thrill of the chase, bask awhile in the afterglow, for it does not last long. The fact that we may have let our heart rule, in the run up to buying our holiday property, soon becomes apparent with the arrival of the first set of bills. Mortgage, insurance, council tax, utilities, appliances, furnishings, service charges, the list is almost endless. Having let our heart rule up to now, we re-engage our heads and focus on the investment side of the equation.

The dying embers of the honeymoon period are finally extinguished when a sober assessment of the business case you put together on the back of a napkin in a beer garden, doesn’t now seem quite so robust. Its human nature that if we really want something we tend to emphasise the positives. This is to convince those around us and indeed ourselves that we’re doing the right thing, for the right reasons. It is easy to play down any negatives that don’t help support your case. If you want to be convinced of something, you can be pretty persuasive.

We generally underestimate the costs that go along with ownership of a holiday home and over estimate the revenue, especially on short term holiday lets of a week or two, its easy to grossly underestimate the costs. These costs come in the form of our time and the direct costs associated with the property being used on a short term, high turnover basis. Estate Agents and Developers Sales staff can play a big part in this. Ask them questions about running costs and rather than be evasive, they will tell you exactly what you want to hear. The only lies they tell, may be by omission but they will spin everything their way. Ask them about income from both long and short term lets and they will be bullish, confirming your own thoughts. Beware of sales people bearing good news. Do not take anything you’re told at face value, cross check and always test assumptions (especially your own). The key rules of the property buying game you need to remember are, firstly Caveat Emptor or Buyer Beware! The second rule is if the deal seems too good to be true it usually is and the third and final rule is, ensure you take independent ‘subject matter expert’ advice on legal, value/survey and financial matters. Both Estate Agents and Developers will offer you a ‘one stop shop’, for a property, legal work, survey and mortgage. It’s too cosy and they will all have a vested financial interest in you buying and therefore perhaps not be as diligent as you my like.

Just a few thoughts (oh and you will be able to get one for £80 to 100k cheaper in 18 months to two years).

Pablo Silver or Lead?

Absolutely brilliant! You sound just like my accountant...and I'm indebted to you for taking so much time to write such a lengthy reponse.

I particularly like the bit about it being a "compromise"...it is not an investment, it is a form of consumption.

Thank you..and keep them coming as I'm getting cooler and cooler on the whole idea.

One thing though..why do you think it will be £80k less in 2 years time?

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Marlowtech

I have no strong VI in prices going Up or Down. The Market ‘Will Out’. I am however a bull turned bear. There are just too many pent up risk factors/indicators (all covered on this forum) pushing against the ‘dam wall’ of current house price sustainability. Property in the south west dropping 15% in two years could be a best case scenario, depending on which side people are coming from!

I’ve been a few things in my time CSE maths failure, Waiter, Washer Up, Royal Marine, Estate Agent (sorry) and European Sales Director but to be likened to an accountant! I’ll have to take all my grey suites down to the charity shop and call in a lifestyle consultant.

In the end i'm sure you'll make the right decision for the right reasons, good luck.

Pablo Silver or Lead?

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  • 333 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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