Why Serviced Accommodation Is A Solid Property Investment

Property investing is one of the most solid and successful investments that people have historically made. With the market and economy constantly evolving and also fluctuating, people have become more creative in the ways they generate cash flow from their property investments. Thousands of investors, as well as everyday people, have found amazing success operating serviced accommodation properties taking on guests who are booking through travel sites, as well as showcasing their short-stay properties on their websites, whether it’s in London, the midlands countryside or anywhere in between. 

Investing in serviced accommodation is a great alternative to your standard buy-to-let property. It is important to first do your research as to whether serviced accommodation is the right strategy for you and then take actionable steps to make sure your serviced accommodation business will be successful from the ground up.

What is serviced accommodation? 

If there is still any confusion surrounding what serviced accommodation is, it is essentially a property that is let out on short-term stays, typically less than 90 days, and charged to guests on a nightly basis. Guests tend to opt for serviced accommodation properties over hotels for the extra amenities that are possible in serviced accommodation properties. 

For example that will typically be fully fitted with a kitchen, different rooms in the home, and other extras that hotels wouldn’t typically provide. Serviced accommodation properties can be let out to guests of all genres. Whether it is holiday seekers looking to explore the local areas, or even business professionals who need to travel to new areas for long periods and would prefer to have some homely features where they stay that a hotel can’t provide, serviced accommodations are perfect for all scenarios

The benefits of serviced accommodation

There are many benefits of investing in and operating your own serviced accommodation business. Here are just a few of the most prominent benefits:

• Greater returns than buy-to-let – Guests who stay in serviced accommodation properties pay on a nightly basis, which is charged at £100 a night on average, will accumulate to £3,000 revenue at the end of the month (assuming that the month is fully booked). When compared to a monthly rent that is paid to buy-to-let properties, this might be charged at £1,300 for a 3-bed property. You can also adjust your nightly rates depending on how many guests are staying, which is an added benefit.
• More control over the property – Any landlords who have dealt with tenant troubles and missed rent payments know the struggles of firstly getting back their missed payments, and secondly removing the tenants from the property. If tenants refuse to leave the property they have legal rights that protect them. On the other hand, serviced accommodation guests have no legal right to stay on the property if they cause damage, and their card details can also be kept on record to charge for damage.

The downsides of serviced accommodation

As much as the benefits may have persuaded you to dive into your journey, you should also understand the downsides and risks involved with managing a serviced accommodation property. Here a some of the downsides:

• Possible long void periods – As serviced accommodation properties are charged on a nightly basis, you may experience periods of no stays depending on the time of the year or demand in the area. Ideally, you will have a mixture of short stays and also business stays that will take the majority of the months, but when you are starting you may find inconsistencies and void periods.
• High running costs – While running a standard buy-to-let costs money, the spending involved with serviced accommodation properties will be much higher. The cost of cleaning, and installing essential amenities, and also the time it will take to get everything running will be a large investment. 
• More customer-facing – depending on how you intend to run the property at the beginning, you will possibly need to meet and greet guests with the keys to the property. This would involve being heavily involved in making the guests feel welcome and also being their point of content for any queries. This can be streamlined and outsourced further down the line, but when trying to save money in the beginning stages this will be necessary.

How you can begin investing in serviced accommodation

If the benefits of running serviced accommodation properties outweigh the downsides involved, you should start by creating a business plan for getting started. Consider the following steps:

Check the mortgage 

First of all, if you have already acquired a property with a mortgage or you are looking to change your buy-to-lets into a serviced accommodation, you need to make sure that you have the correct mortgage. A buy-to-let mortgage will not permit you to use the property for serviced accommodation. Review your existing mortgage and speak with your lenders as to which avenue is ideal for serviced accommodation.

Check the demand of the area 

If you are yet to buy a home fit for serviced accommodation, you should first find out the demand for the area. The demand for serviced accommodation can be found in several different ways. First of all, you might consider checking out your competitors who are operating on booking sites such as Airbnb, and see how booked up they are for the next few months. Make sure the property is in a similar area to yours and offers the same amenities as you intend.

Also, you might consider ringing the hotels local to the area of your choosing to ask how booked up they are. If they are busy it would suggest that people are making frequent short stays in the area. There are also applications you can buy which tell you the exact demand and occupancy rate for specific areas and even lets you see the seasonal differences.

Invest in quality decor

If you want guests to choose your property over others, you need to make sure that it looks inviting. One way to do that is to make the design of the property high-standard, including items such as luxury cushion covers and also unique furniture. Small design features can elevate your property and make it seem much more attractive, even if the decor is affordable.

Do more than just amenities

Whilst amenities such as a fully functioning kitchen is a key part of successfully serviced accommodations, there are also small additions that should also be considered. For example, the kitchen should be fully equipped with utensils to cook with, and perhaps you might consider adding a fully equipped coffee station for guests. Also, it would be valuable to offer incentives such as balloons and bottles of bubbly for guests staying for birthdays.

Bottom line

Overall, investing your money into creating serviced accommodation properties is a valuable investment that will give you great profitable rewards. Make sure that you do integrate research into the area you are operating in for your serviced accommodation property, as well as nail down the right steps to take before listing your property online for stays.