THE PATH TO ENOUGH PART 6 – GO BIG?

Bigger or more expensive assets (things like property) aren’t necessarily better.

I am very fortunate. I have a couple of holiday let cottages in a lovely part of the country. Each stands me at around £250,000.

I can rent them all year and have healthy bookings. The gross income that I get from each one can be as much as £40,000 a year. But by the time I’ve paid all the bills, run the hot tubs, paid cleaners to do changeovers, refreshed furniture, towels and linens and provided all the many little things that makes guest’s stays special, I can lose 60% or more of that. So that I net about £15,000 a cottage. Now that’s not a bad return, and I’m not complaining. But there are better returns.

For example, the expensive bricks and mortar that I own generates a lower nightly rate than a shepherd’s hut in the same area! A shepherd’s hut is a luxury shed! They cost around one tenth of one of my places. And they take up much less space. Yet luxury glamping is so very vogue, and people love to stay in places like that.

Consequently the return on investment is much higher.

A friend of mine rents pinball machines. On average they cost around £8-10,000 each new. He rents them at £250 a month. They retain a large proportion of their value even when used (the are designed to be played commercially). For the price of one of my cottages he can buy at least 25 pinball machines, and if he rented all of those his gross return would be around £75,000 a year. Much more than my cottages with much lower overheads.

Sometimes smaller or more niche assets are better than bigger more mainstream ones.

And remember that this is about getting to enough. Not about who has the most at the end.

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