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palmeam
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Thinking of purchasing a caravan

Post by palmeam » 2 years ago

Hi everyone. Have always taken out holidays in the UK in a caravan, sometimes but not always in a Haven site. Now in our 50's, children grown up and no grandchildren on the horizon, thought we would look into purchasing a caravan of our own. We would do this to primarily let out and would only use it ourselves for a couple of weeks each year (not during school holidays). I read somewhere, it may have been on this forum, that when taking into account all charges including the cost of purchase that I would need to expect to pay out around £800 per month. However I should not see this as a money making exercise. Am I missing something as I don't understand how I will not make money. Any help about anything gratefully received!!

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Keith
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Re: Thinking of purchasing a caravan

Post by Keith » 2 years ago

The cost of owning a caravan can be very high financially, but if you get the lifestyle you want then it may be worth it. I have been an owner for 22 years and I wouldn't like to try and work out how much I have spent, but it has been well worth it for the lifestyle and friends I have gained.

If you are only going to use the caravan for a couple of weeks it may be more economical to just rent a van when you want a break and if you rent from an owner rather than through Haven you will usually get a much better caravan at a more realistic price.

Can I suggest that, unless you have already done so, that you have a look at our 'Buyers Guide' - link at top of page. It should answer many of your questions and perhaps raise some more. It will also give you a good guide to the real cost of ownership.

You will find our members are more than willing to help so feel free to ask.
Keith

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Re: Thinking of purchasing a caravan

Post by palmeam » 2 years ago

Thank you Keith. We intend to use this opportunity as an investment and way to make money but I am wondering if this is not the best way to do it?

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Re: Thinking of purchasing a caravan

Post by Keith » 2 years ago

I don't want to 'put you off' but, although it is possible to make money by owning and sub-letting caravans, it would take up a lot of your time because you would have to do the sub-letting yourself to get anything like a decent return and then it would not be a high return. You can cover the costs of ownership and have a few quid left, but I would not advise it as a method of investment.

I am not a financial advisor but I'm sure you could get a better return on your investment in other areas such as paying into a pension fund. However only you know your situation and what you want to achieve.
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Re: Thinking of purchasing a caravan

Post by Macarw » 2 years ago

We thought it would be easy to make a profit from letting out a caravan, but in reality we have never made a profit.

The caravan will depreciate in value as soon as you buy it,( a bit like a car but the depreciation is huge) they are hard to sell on as parks prefer you to sell back to them at a loss- there are lots of stories on here of people buying a van, after a year realising that financially they can't afford it and selling at a huge loss.

As a business you would want to make your money back for your site fees, insurance, utilities, business tax, advertising costs, cleaning costs, gas and electric safety checks, maintenance and replacement of items within the van either because they have been broken or gone missing, or through wear and tear. - Not forgetting your monthly finance payments if you have chosen to take out finance to buy the van. Also to make money on it as a business you would want to recoup the capital outlay of the cost of purchasing the van in the first place. Site fees vary depending on the sort of site you choose, what sort of pitch you have and what facilities the site has, and the price you can charge in rent also reflects this. For each rental you are getting wear and tear on your van, things like the seat cushions in our older van began to look tatty and in need of re-upholstering in places where it was obvious people had put their feet up on the sofas with shoes on and worn holes in the fabric - we were careful not to do that but often renters don't care about looking after your van. We also had our carpet so badly stained it couldn't be cleaned off. When the van starts to look tatty and the park has newer sparkling vans on site you then have to drop the price you can charge for your van. Some sites will rent the van for you, but after it is a certain number of years old they will no longer rent it out. Some sites have an age limit on the vans allowed on their sites, so once your van is too old for the site you either have to upgrade or move your van off the site.

We have been letting for about 7 years now, and have usually managed to get about 10 weeks of bookings per year - mostly the school holidays - which means we can't use it then unless we are prepared to 'lose' the rental for that week. It's hard to compete with the cheaper school time weeks with big companies like Haven who sell their term time holidays really cheaply. You have to weigh up whether it's worth letting your van at a really cheap cost considering the the hassle and wear and tear and your cleaning and admin costs which stay the same whether you are charging £500 a week or £100 a week. We have only just about manage to cover all our running costs some years, and some years we don't cover everything, and if we included the cost of the purchase of the van, and then a subsequent upgrade as a business we would have made a significant loss.

However letting our van out contributes to the cost of having the van and allows us to enjoy the lifestyle of feeling part of a 'family' on our park, and enjoying breaks and holidays when we want to do so, and also allowing us to treat friends and family to holidays too. It makes it cheaper which enables us to have the van, but for us it's not a profit making business.

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Re: Thinking of purchasing a caravan

Post by bradders » 2 years ago

palmeam wrote:Thank you Keith. We intend to use this opportunity as an investment and way to make money but I am wondering if this is not the best way to do it?
In all likelihood, this isn't the best investment you could make if you look at it purely financially, as others have said.

The depreciation of a caravan (not withstanding paying over the odds initially and then selling back at a much reduced rate) makes it very tough to turn a profit. After all costs (maybe £5-8,000 a year) you might be able to make £1-2,000 of profit based on rental income through the year. If you have purchased on finance then you'll undoubtedly be running at a loss. Throw in the depreciation of your asset by 20-25% a year and the losses get worse.

You'd be better investing in bricks and mortar and renting the property as the value of the house is highly unlikely to ever drop to 10% of what you paid for it 10 years earlier!

If you look at it as a lifestyle investment then it's very different! As you can't put a price on good times and happy memories. Although if you're only using it for a fortnight then those would be limited too.

Put the money into a bond or property and use the profits to pay for a holiday :-)

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Re: Thinking of purchasing a caravan

Post by Whitey » 2 years ago

Hi,

If you're only going to use it for a couple of weeks a year, don't bother buying a caravan, you will regret it, and just keep going on holidays the odd week here and there.

Coupled with the fact you are then not restricted to one park, you've not got the head ache of renting it out, accounts for tax, liability, Gas & Electric checks, PAT testing, draining down, draining up, replacing items that wear or break over time, complaints from customers, timewasting from people you thought would be customers, other owners using underhand tactics to poach your potential customers away from you (mainly facebook advertising), the list goes on.....

Unless you are wanting a hobby that takes up quite a large amount of your time, and you have lots of spare time to put into it, run to the hills!!!

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