Forecasted rental income

[Antony173]

Hi, 

I am looking to secure a holiday-let mortgage and my broker has asked for a ‘forecasted rental income’ so they can see how much the property is going to bring in to check affordability. Apparently this is something I need in writing for. Air BNB but they don’t seem to be able to help? Has anyone come accross this before and how I get around it? 

thanks in advance 

[Helen3]

The only way I know you can get this if it's not a prexisting holiday let is to work with a holiday let company that will manage your bookings @Antony173  who will give you an estimate.

dont forget many UK markets are oversaturated so its not as easy to turn a profit as many think particularly with a holiday mortgage to cover. 

Airbnb is just a marketing company for STRs they would not  be able to give you a market estimate for mortgage purposes 

[Emilie]

Hi @Antony173, 

Whereabouts are you looking to purchase a property, out of curiosity? 

Helen shared some advice with you on how to get that information, it would be great if you could take a look and let us know what you think of whether you've found out more since, when you get a chance. 🙂

Best of luck with your project!

Emilie

[Elaine701]

@Antony173 

@Helen3  is correct, but if you only need a "rule of thumb" estimate, it's a fairly simple calculation. 

Accommodation prices vary in different markets, but yours is amongst the more developed destinations, where rule of thumb accommodation cost is around 50£ per person per night. 

So, multiply that x number of bed spaces, subtract 30% in commissions and other operating costs, and assume about 50% occupancy - Helen is right - London is a pretty competitive market. If you can get 60 - 80% occupancy, you'll be doing well. Then, calculate and subtract your tax burden on that income.

Also bear in mind that the first year in business will be slower than subsequent years after you've established a history and (hopefully good) reputation.

That should give you a realistic number to expect. Your results will vary, but it will hover around that number. Yet if you have something more spectacular, your turnover could be quite a bit higher.

Good luck and happy hosting. 

[Helen3]

Hi @Elaine701 

To get a holiday mortgage you an estimate of projected income in writing from one of the holidays let companies they don't accept people estimating it themselves I'm afraid. 

[Elaine701]

@Helen3 

Yes, of course. But perhaps this little self-scribble might help set expectations before going to the expense and trouble. Especially if he's expecting the income to pay the mortgage.

It may or may not, but it's probably a good to have some idea of the current before swimming too far from shore. 

[Helen3]

Yes I agree @Elaine701