Should I abandon plans to buy a home to let on Airbnb? Dave Fishwick replies

I am in the process of buying a small one bedroom house in St Albans, Hertfordshire which I intend to rent out as an Airbnb.

I was able to buy it for a reasonable price. I think it’s because the house is quite quirky and therefore ideal for Airbnb, but not so good to live in. I had to take out a holiday mortgage on it, which is not cheap.

I am concerned about the cost of heating for guests with higher energy bills. There’s also the issue of renting it out, given a potential recession on the horizon, potentially leaving people with less money to spend.

I want to go through with it but feel unsure about buying real estate right now as I am using all my savings for the down payment and initial fees, and the thought of starting a business during these times.

On the other hand, I think it’s important to move forward with dreams, because there’s always something to use as an excuse, like Brexit or Covid. Should I stay on track or abandon my plans? Via email.

Dave Fishwick, this is money doctor, replies: First, there is never a perfect time to start a business.

An old saying I use a lot is, ‘The best time to plant a tree is 25 years ago. The second best time to plant a tree is today.”

During my life I have built many businesses here in the UK and US and there has never been a perfect time to start.

Owning a holiday home in a beautiful location is a dream for many people, so let’s start and plant that tree and let it grow.

I think it can be an important business venture if you approach it with a realistic attitude and don’t let your better judgment be dominated by emotion.

No matter how beautiful the house is, always keep in mind that the numbers have to be right. In business you only have to do a few things right, so as long as you don’t do too many things wrong, such as borrowing too much or spending more than you need to.

I think quirky is good for a holiday home. Appeal and styling will be essential factors in competing for customization alongside location. It sounds like an ideal choice for a holiday retreat.

I was involved in setting up an Airbnb rental business in Dover, Kent, as part of a business mentoring series I filmed for Channel 4.

I remember it was essential to take quality photos of the property inside and out, including some of the picturesque areas surrounding the property.

Hiring a professional photographer is well worth the investment. We partnered with many local attractions and organized discounted tickets to local events for everyone staying at our Airbnb.

I also recommend taking many trips to St Albans to meet other Airbnb business owners, and I found it essential and incredibly helpful to talk to the hosts about the issues they faced and the solutions they found.

While there are certainly some challenging times ahead, I don’t think this industry will go away and could even take advantage of overseas holidays which are becoming too expensive for some as the UK short breaks offer a more affordable alternative.

You may find that some of your habits come from wedding guests, business trips, and many other types of visitors to this area.

If possible, I think it’s essential to have some cash in reserve when starting a new business, and you can almost guarantee that there will be unforeseen costs, be it repairs, adjustments or just a quiet one. period when you are just starting out.

You might want to take another look at your finances to see if you can build a reserve fund. Make sure to earn some money as soon as possible after completion.

Build a website for the real estate and start marketing on social media and get it out in as many ways as possible. This includes local websites and attractions and things to do.

The more valuable and unique content on your site, the more visits it should get.

At the Dover Airbnb, I got involved in a fantastic double-decker tour bus, making trips to the local Spitfire museum, which we posted as an activity on the accommodation website.

These activities look great on your blurb and generate free publicity.

My advice is to also do a lot of research in the area and include a lot of local history.

Research other properties in the area as if you were going to rent one yourself and the price matches yours.

You should pick up some tricks of the trade from people who already have websites.

I wouldn’t worry too much about heating. Day rates for vacation accommodations are generally so high that utilities shouldn’t be your main expense.

Perhaps a wood stove or open fire can help here. I think having one would add to the experience, and you might get a little free fuel.

Fixed overheads, especially mortgage payments, are likely to take the top spot in your expenses, so empty time when the property is unoccupied will likely be a bigger concern.

Some companies specialize in marketing vacation properties, and some will buy up and resell short stays throughout the season.

This can remove some of the uncertainty for the first few years, although they don’t do this for free, and the rate you get may be lower than hosting it yourself.

Maybe a combination of the two, maybe sell some of the seasons to the holidays, leave the business and maybe the peak hours itself in the market to maximize profits and take away any worries that you won’t be able to pay the mortgage.

In the long run, real estate is generally a good investment, and short-term rental is often the best way to get the best return.

My main concern is that you might have some early cash flow problems without having a little reserve.

Manage your budget carefully during your first year, and I think you’ll be fine. Let’s go plant that tree. Good luck with it if you decide to continue.