Thursday 27 February 2020

Life is not a bed of roses - the economics providing a rental Holiday Cottage

We chose to put part of our retirement savings into property investment. Comparing with the other investments we took out at the same time via our financial advisor, we'd be looking at a 54% gain on the capital investment. Our holiday cottage, whilst providing some protection against financial market risks, has not yet broken even after seven years.

Here's the typical average weekly costs that we face in operating the cottage:

Attending site travel cost£12.80
Internet & phone£4.90
Electricity & gas£14.77
Water & sewer£3.65
Trade waste£3.81
Milk n biscuits (greeting)£2.00
TV licence£2.96
Ironing & cleaning£10.13
Repairs & Maintenance£25.27
VAT on agency fee£4.83

These figures are taken directly from our accounting system, and are auditable for tax purposes. If the guests fail to put out the rubbish for collection, we have to put in an extra trip to the cottage the following week, at a cost of £6.00, to put out the bags/bin make sure the rubbish, for the previous week, is collected.

There are other cost/loss of income amounts to be considered, that we don't currently charge to the cottage project:

Notional Interest on Capital£91.35
Business Rates£18.46
Man hours/Minimum wage£34.88
Furniture/White goods replacement£11.54

The notional interest is the income we'd have received if we just invested the capital amount in the financial markets.  Business Rates are what we'd have to pay for the Holiday Cottage on assessment by the local authority. Fortunately we have a Government Exemption on Business Rates, but that could easily cease.  Man Hours is the amount of time we spend each week dealing with the cottage, if nothing goes wrong and we have perfect guests. Currently we do not charge for those man hours. Furniture and white goods have to be replaced frequently, but at the moment we treat those as an asset rather than an operational cost.

Over the same period, the average amount  we received is:

Average take rental fees received£120.63Week

So ignoring the "other costs" we take about £3/day as "profits" in exchange for a lot of worry.  If we properly factored in the "other costs" as if we were a normal business it is evident that we subsidise our guests to the tune of £19/day.

Sunday 23 February 2020

Goldilocks and the three bears.

Last year, a few of the people staying in the holiday cottage complained that the bed mattress was too soft/thin. Most people didn't complain in the previous three years, though we did have one guest who complained the bed was too short, i.e. he was taller than most. We are happy to provide different beds, provided the guests are prepared to pay for the rental, storage of the normal bed, installation of special furniture for the week and subsequent reinstatement. When people book they are given our phone number, so I'm sure we can consider requests in advance. 

Folk should remember we are not the Ritz Hotel. We are half the price of the local Premier Inn and provide twice the space. Unlike many other places we also allow guests to bring their pet to stay free of charge. This increases our cleaning and maintenance costs, but  avoids the owner having to pay £10 to £15 in daily kennel fees.

In the cottage handbook, we invite people to let us know straight away if there are any facilities not working, broken or not to their liking so we can, if possible, address the issue. We even provide a free phone facility for such contacts.

Phone extension in cottage; free to contact owners

Anyway, back to the bed mattress. We saw a £600 memory foam double bed mattress for a respected and award wining supplier in a sale and decided this was the chance to tackle the "too soft/thin" mattress issue. We purchased it and had it delivered to our house, because there were people in the cottage the time. We allowed the mattress to "inflate" from it's compressed state for several days in a spare bedroom. I even tried it out overnight and found it to be firm but very comfortable. We shipped it over to the cottage, between bookings, and set it up on the bedroom. This was back in September 2019, since then during several bookings there were no complaints until now, the end of February. Today we heard from the Agency that the guests had not been happy. It appears to have been Goldilocks staying. The bed mattress was too hard, the sofa was not comfortable, the road was too noisy, they didn't like the Victorian brick paved back yard. In a contrasting event, a few days ago we were in receipt of a "perfect" rating from the previous guests.

Details of the road, outside the cottage, are made obvious at the time of booking. We are conveniently close to the centre of town on a bus route. A brief look at the map will identify the road as the main one through town The backyard is a shared backyard in a terrace of Victorian Quarry workers cottages, we cannot control what the neighbours do in their parts of the backyard.

I drove over to the cottage to collect the linen/bedding for laundry after their departure. On arrival, I couldn't get in through the front door, they'd moved a door mat from its usual position and it became tightly wedged behind the inner door. They'd left a bin bag of rubbish in the yard, rather than put it in the waste bin. That would be strong temptation for the local foxes, to tear open the bags and scatter the content. The guest had managed to burn a tea towel, no mention of this! When I checked the fridge, which we do after every stay, I found one of the plastic door shelves had become broken during their stay, with a bodged repair attempted using adhesive tape. It will cost us £18.82 to provide a replacement, but more importantly, why didn't they tell us there'd been a problem with the fridge door shelf?

Fridge door shelf - broken, with dodgy guest repair

It seems that owners of rental holiday homes should have a reverse tripadvisor website where we can rate guests, especially the keyboard warriors who don't tell us of issues during the rental. Given their comments have not been challenged on the agent's web site after discussion with us, it is clear that some action is needed. Perhaps we should remove the property from the holiday rental business, use AirBnB or go for long term rental. It would certainly take less of our personal time and add to the local housing stock in Wirksworth.

Edit: 26/2/20 
The replacement door component for the fridge arrived today, thankfully before the next guest is due. It is a good job I keep all documentation relating to the cottage and was able to to locate a spare part long after the original model had ceased to be retailed. When a white-goods item breaks in the cottage we don't normally have the luxury of waiting for repairs if guests are due, often we just have to buy an immediate replacement and dispose of the broken item.

Sunday 16 February 2020

Removing tobacco smells from laundry

Here's a recent tip we've picked up to remove the smell of smokers from our holiday cottage laundry, the towels, the bedding, rugs and soft furnishing covers. We were surprised it worked so well and doesn't require the purchase of proprietary cleansing products.

When washing the contaminated laundry, don't bother adding fabric conditioner, just add about 150 ml of  distilled white vinegar to the main wash cycle in addition to the normal detergent.  The result doesn't smell of vinegar.  It also leaves towels fluffy too.

Nightmare guests at the holiday cottage

In our rental Holiday Cottage we leave a handbook for our guests to provide helpful guidance and also to remind them of the conditions of booking. One of those conditions is that the rental is strictly non-smoking. A recent pair of guests, during a four week stay, appear to have ignored that condition leaving the whole cottage reeking of cigarette smoke on their departure. This would be very unpleasant for the next set of guests who have booked expecting a non-smoking accommodation free of the smells of tobacco smoke. During the "turn around" period between bookings we have only four hours to clean the place and to rectify any problems in the accommodation.  As part of the cottage handbook we ask guests to contact us before they leave of any faults/issues with the cottage. We even provide a free phone facility for such reports. It gives us chance to prepare in advance to fix the problems.

Here's what we found on arrival and had to fix quickly before the next guests:
  • A strong smell of tobacco smoke throughout the property, there was a Febreze Heavy Smoker spray (empty) left behind where they had attempted to mask the smell.
  • The security 5-lever back door lock was broken (damage) and had to be replaced.
  • Rubbish had been accumulated, and not put out for collection. We had to take away four large bags full to the council tip.
  • The vacuum cleaner was jammed with dog hair and not working properly, we had to replace it.
  • The cottage handbook was missing, we'd placed a new one at the commencement of their stay with a complete list of Council waste collections.
  • Five light bulbs needed replacing, no prior warning of the issue.
  • The shower drain was blocked with dog fur.
  • The toilet seat was damaged.
  • There were three cigarette burns on the kitchen table.
  • A kitchen cupboard was left in disarray.
  • A large cushion has disappeared from the property.
  • The bedside table was badly marked by cup rings, despite coasters being provided.
We arrived to undertake a normal cleaning process for a guest turn-around, without warning of the problems. To deal with the smoke odour we had to strip all linen, towels, seat covers, curtains from the building. We treated the carpets throughout the house with carpet deodorising powder. We washed down all interior walls in the building with sugar soap cleaner and treat exposed woodwork with orange oil polish. We collected another vacuum cleaner to remove the deodorising powder, clean the carpets, and to leave the unit for the next guests' use. Seat covers were replaced with spares and the damaged ones sent for dry cleaning. All bedding and towels were swapped out, and later given three wash cycles (12 hours load for the machine) to remove the smoke smell. Four pillows were removed from the bed and replaced by on-site spares.Three rugs replaced, for washing. The bedroom and lounge curtains were replaced with new curtains, we didn't have time to get them cleaned, before the new guests. We replaced the missing cushion. We had enough spare light bulbs on site to replace the broken ones, we've ordered some more spares.

In order to get the place ready in time for the next guests, we had a service company to resolve the problem with the shower drain, to replace the back door security lock and treat the bedroom table (£165 invoice received). 

We donned rubber gloves to empty the waste bins, removing an unusually large amount of cigarette packets and beer/spirit cans and bottles. We took four large full bin bags, and cardboard boxes left by the guests, to the local waste depot (16 miles travel). The vacuum cleaner has been sent for repair, if possible. 

We delivered a new handbook to the cottage. In all the whole process necessitated five additional trips (80 miles additional travel) to the cottage to complete all of the work.

The broken door lock
Damage to the rear door

Halfway through emptying the waste bins

Four large bags of rubbish to go
A kitchen cupboard left in disarray

A clot of dog hair and plastic razor cover removed from shower drain

A pair of new curtains, one pair in lounge, one pair in bedroom
We don't know who damaged the door lock, it may have been a break-in attempt while the guests were staying. However the problem was obvious when you tried to use a key in the lock and those guests didn't bother to report the problem before they left. We were lucky to be able to fix the problem within time. We're sending the lock back to the manufacturers for a diagnostic report.  It was not a fair use failure. As the front and back door locks were "keyed alike" we may have to replace the front door lock too.

After two washes, the four bed pillows have not lost the smoker's taint and may need to have replacements purchased.

After six years of operating the holiday home, Ignoring the capital cost (and lost notional interest) of the building, we've yet to break-even in terms cost vs income. Even though we run it as a business we don't take any payment for the maintenance/cleaning hours that we spend on preparing the place ready for the next guests. When compared with putting the same original  investment into an ISA fund, we would have been about £30,000 better off if we'd not entered into the holiday cottage business. The ISA fund investment route would have not involved any unpaid labour on our part.

The present booking rate for February, after deduction of agency fees is £183.20 for a week for two people and one pet. By the way we have to pay VAT on that fee, so £146 is more realistic.  The local Premier Inn rate for a room, not a whole house house, is £350 for 6 nights and doesn't allow pets.

Edit: 15th March

The curtains returned from the Dry Cleaners; the bill was £48.55

Edit 17th June

Further consequential cleaning:

  • Professional carpet cleaning to remove lingering smells £75 (plus three day outage);
  • Redecorate to remove residual smell from paint work, this work was due under general maintenance, but was accelerated because of the odour.
Edit 5/8/2020

During the cleaning process we've noticed these guest had also wet the bed, staining the 9 month old mattress with urine. They had not reported this.