In today’s changing property market, serviced accommodation units are becoming a popular way to invest in property for business people and business travellers, especially concerning business rates as well. It can provide good rental income. This guide will show you the important steps to get started with rent-to-serviced accommodation. You will find helpful tips and advice for both experienced investors and new ones. We will cover the basics and explain the legal side of things. Our goal is to help you understand everything you need to know to make smart choices and increase your profits.
Key Highlights
Unlock Higher Rental Yields: Serviced accommodation often yields higher returns compared to traditional long-term rentals, making it a lucrative option for investors.
Embrace Flexibility and Control: This model allows for flexible lease terms and greater control over property presentation and marketing, attracting a wider range of guests.
Diversification for Reduced Risks: Investing in multiple serviced accommodation properties can help spread risk and enhance potential returns.
Capitalise on Your Investment: Serviced accommodation, particularly in desirable locations, has the potential to appreciate in value over time, building long-term wealth.
High Occupancy Rate: By tapping into the growing demand for short-term stays, serviced accommodation can achieve higher occupancy rates compared to traditional rentals.
What is Rent To Serviced Accommodation?
Rent to Serviced Accommodation (R2SA) is a smart way to manage traditional rental properties as serviced accommodation (SA) units, utilizing a strategic approach. You rent a place from a landlord and then lease it out as a furnished, short-term rental that includes amenities like a TV and concierge services. It’s like a mix of a hotel and a regular rental, but it also has its cons. Instead of looking for people to stay long-term, you host guests who need a place for just a few nights or a few months.
This method helps both property owners and investors. Landlords benefit because they receive a steady rental income while having less hassle. Investors can take advantage of the profitable short-term rental market. R2SA is especially appealing because it can bring in more rental income than regular long-term rentals.
Benefits of the Rent to Serviced Accommodations
Rent to Serviced Accommodation has many benefits compared to regular rental properties. If you are an investor looking for good returns, you can earn more money with this type of rental. The short-term rental market can often give higher rental yields than long-term leases.
This approach also offers more control over your investment. You can decide your own rental prices, manage your bookings, and adjust how the property looks to appeal to your target customers. This control helps you increase your rental income and create a unique appeal for your serviced accommodation.
1. Increased rental returns
One of the best things about the Rent-to-Serviced Accommodation model is that it can help you make more rental income, but you must consider the overheads involved. Unlike regular long-term rentals that rely on a single tenant and have set monthly prices, rent to serviced accommodation can change its rates with great agility at different times of the year. This is based on how popular it is with holidaymakers, the season, and how long someone will stay, often incorporating additional services to enhance the guest experience on a rental income basis.
This way of working lets property investors set their prices smartly to get the most guests and money. When it is the busy season or interest is high, you can raise your rates to take advantage of the extra demand.
By carefully managing your bookings and rates, you can often see more guests than with long-term rentals. This can lead to a steadier and possibly higher rental income.
2. Better flexibility and control
Rent-to-Serviced Accommodation is different from traditional rentals run by a management company or a landlord. It gives you more freedom and control as an investor. You can choose your market, set house rules, and create a great guest experience.
You can focus on luxury travelers, budget families, or business professionals. This means you can customize your property and amenities to fit their needs. You can also control pricing and booking. This helps you change your rates based on demand and the time of year.
You can also decide how your property looks. This lets you show a brand image that meets what guests expect. With this level of control, you can provide a unique and attractive option in the crowded accommodation market. It's like running a boutique hotel or a well-kept guest house.
3. Diversity mitigates risks
The property market changes a lot, which can make things tough for investors. Rent-to-Serviced Accommodation provides a way to reduce some of these risks.
When you invest in several properties in different places or target various groups in the short-term rental market, you can share the risk. This can help you build a stronger investment portfolio.
Having a variety of properties can protect your investment from local market drops, seasonal changes, and different renter preferences. By having a mix of serviced accommodation options, you can help keep a steady income.
4. Leverage your investment
While making good rental income is very important, Rent-to-Serviced Accommodation can also help your property grow in value over time. Just like any property investment, the worth of your asset can go up as time passes.
By choosing properties in good locations and areas where the market is strong, you can set yourself up for possible future profits. Some things that help property value go up include how nice the neighborhood is, what local amenities are available, and any new infrastructure being built.
Even though we cannot guess what the market will do in the future, putting your money in areas with high demand and growth potential can improve the chances of your property gaining value over the long term. This means Rent-to-Serviced Accommodation is not just a way to earn income but can also be a tool for building wealth for organisations.
5. High occupancy rate
The success of any accommodation business depends on keeping high occupancy rates. Serviced accommodation can do better than traditional rentals. This is because it offers flexible booking options and appeals to more types of travelers, including business travelers.
You can get more bookings by listing your property on different platforms. You should also set competitive prices and provide excellent guest experiences. Meeting the growing demand for short-term stays from tourists and those needing temporary housing will improve your chances of high occupancy rates.
To keep your property busy, you need a strong approach to marketing, pricing, and guest communication. By managing these areas well, your property can stay occupied for much of the year.
How Does Rent to Serviced Accommodation Stand Out From the Crowd?
In a competitive market, it is very important to have a unique selling point for your rent to serviced accommodation. What makes your serviced accommodation different from hotels, guesthouses, or other rental properties? Your unique selling point is not just about giving a place to sleep; it is about creating a special experience for your rent to serviced accommodation guests.
Try to give great customer service, add personal touches, and build a friendly atmosphere, much like one would expect in a hotel room in your rent to serviced accommodation. Show off the amenities that make your rent to serviced accommodation property stand out, like a fully equipped kitchen, in-unit laundry, or a space for work. Don’t forget, the small things can make a stay in your rent to serviced accommodation much better and different from others.
Step-by-Step Guide to Starting in Serviced Accommodation
Getting into serviced accommodation needs careful planning. You must understand the key steps involved. Getting to know the market, buying a property, furnishing it, and marketing are all important stages for your success.
This simple guide will outline these steps. It will help you start your journey in serviced accommodation with confidence and clarity.
Step 1: Market Research and Location Selection
Thorough market research is very important for any successful business. To start, you need to understand the local property market. You should also identify your target audience and look at your competitors.
Look at things like the local demand for short-term accommodation. Check the average rental rates and see what types of properties are popular. It is also a good idea to talk to your local authority. They can help you with specific rules or licenses you need for running serviced accommodation.
Good planning is key at this stage. Think about your ideal guest. Are you targeting families, business travelers, or a special group? Knowing your target audience will help you choose the right property, set the best prices, and create a strong marketing plan.
Step 2: Securing Your Property - Buy or Rent?
Once you know your target market and location well, the next step is to find the right property through strategic planning. You have two main choices: buying or renting. Buying a property means you have full control. However, it needs a lot of money upfront. It also brings added responsibilities, like getting a commercial mortgage.
On the other hand, a rent-to-rent deal with a landlord gives you an easier way to start with less money to begin. But this option needs careful talks about lease agreements to make sure they fit your business plan.
No matter which way you pick, focus on properties in great locations that your target market would like. Think about things like how close they are to transport and local amenities. These can affect your occupancy rates a lot.
Step 3: Furnishing Your Property for Success
Creating a cozy and welcoming space is very important for attracting guests and getting good reviews. Use quality furniture, comfy bedding, and nice decor that fits what your guests like.
Think about the amenities that can make the guest's stay better. A kitchen that has everything, fast internet, a comfy place to work, and laundry options are things guests really want. You might also want to add special touches. A welcome basket with local treats, board games for fun, or a few books can leave a great impression.
Remember, your aim is to make a place that feels like home. It should meet the needs and wants of your guests.
Step 4: Setting Up Management Operations
Managing bookings, talking with guests, cleaning, and maintenance well is important for smooth operations. You can do these tasks yourself or hire a professional property management company.
Doing it yourself gives you more control, but it can take a lot of time. Hiring a management company can save your time. You can then focus more on growing your business and marketing it.
If you choose to manage things by yourself, invest in good property management software. This will help you with bookings, guest communication, and keeping track of money. Make clear rules for cleaning, maintenance, and checking guests in and out. This will help make the experience better for everyone.
Step 5: Marketing Your Serviced Accommodation
Getting your property noticed by potential guests is important for boosting bookings. A good marketing plan includes both online and offline methods. Here are some important points to think about:
Online Presence: Make strong listings on popular sites like Airbnb, Booking.com, and Expedia. Use professional photos to highlight the best parts of your property.
Direct Bookings: Build your own website to get direct bookings and save money on platform fees.
Social Media: Use social media to connect with potential guests, share updates, and run focused ads.
Guest Communication: Respond quickly to questions, give personal recommendations, and go the extra mile to ensure guests have a great experience.
The Future of Rent to Rent Serviced Accommodation
The serviced accommodation sector is set to keep growing because more people are looking for flexible places to stay. There are trends showing that business travel and staycations are increasing. Platforms like Airbnb are becoming more popular.
At the same time, local authorities are starting to pay more attention to regulations for short-term rentals, including the number of days you can operate in a calendar year. It’s important to stay updated on these changes and to adjust your business to follow the laws. Using technology can help you improve your operations, boost guest satisfaction, and stay ahead in a changing market.
Conclusion
In conclusion, the Rent-to-Serviced Accommodation property investment strategy has many benefits. It can give you higher rental yields, more flexibility, and lower risks. By using high occupancy rates, this method is special in the real estate market. If you follow a step-by-step guide, from doing market research to marketing your accommodation, you can find success. This future-focused strategy can help you earn well. For more help with industry challenges and opportunities, check out our FAQ section. Success in serviced accommodation is possible for those who take advantage of this good investment chance.
Are you Ready to Take your Property Investment to the Next Level?
With UpperKey, you can effortlessly maximize your rental income through serviced accommodation. Whether you're a seasoned investor or just starting out, we provide full-service management to ensure high occupancy rates and smooth operations, giving you peace of mind and more time to focus on growing your portfolio.
Let’s discuss how UpperKey can help you achieve better returns with less effort. Get in touch today, and let’s start building your success together!
Frequently Asked Questions
Is Serviced Accommodation Profitable in the UK?
Serviced accommodation in the UK can make good money for property investors. However, it depends on smart property choices, good management, and knowing the local market. While high rental yields are possible, they are not certain.
How Do I Compete with Hotels and Other Serviced Accommodations?
Make your serviced accommodation stand out by providing special amenities, custom customer service, and a comfortable, home-like feel. By thoughtfully designing what you offer and how you promote it, you can create an edge over the competition.
What Are the Most Common Challenges in Serviced Accommodation?
Common challenges in property management are keeping guests happy, managing repairs, following the law, and dealing with competition. It is important to manage property well and be proactive to succeed.
Can I Convert My Existing Property into Serviced Accommodation?
Yes, it might be possible. But, you should look at your local council's zoning laws. Also, think about the costs to fix up your property and whether it is suitable for short-term rentals. It is very important to follow the rules and make sure your guests will feel comfortable.
How Does the 90-Day Rule Affect My Serviced Accommodation?
In Greater London, you can rent out your whole property as a short-term let for up to 90 days each year. If you want to rent it for more days, you need permission from the council. This rule helps to make sure there are enough long-term rental properties available.