It’s a question many investors — both new and experienced — ask themselves. And with sites like Airbnb and HomeAway booming across the world, offering tourists, weekenders and business travellers a more spacious, more private, more flexible and often more affordable alternative to hotel accommodation, it’s a very good question.
A serviced accommodation is a fully furnished property (house or flat) that is used for both short-term and long-term accommodation stays, and more amenities than those offered in traditional rentals, including bedding and towels, TV, Wifi and a fully-fitted and equipped kitchen.
Here at SeaAyr Homes we have invested in serviced accommodation (also known as serviced apartments) and can say without a doubt that it has been worth it. But it’s not for everyone — and it demands a very different (some may say more demanding) approach to buy-to-let investing.
Here’s what we’ve learned about serviced accommodation to help you figure out if it’s a step you want to take.
Serviced apartments have the potential to generate higher rental returns than buy-to-lets, but it’s important to work out your long-term rental income. If your serviced accommodation is seasonal, you might make just as much from a 12-month buy-to-let rental.
The running costs of a serviced accommodation property are higher. You have the same general upkeep and maintenance costs as you do for your buy-to-let, but the additional bills and services your buy-to-let tenants are responsible for.
You also have to invest more to keep your guests happy — and remember that they are guests, not tenants. Their appreciation of your product is key. We’ve been running a serviced accommodation property for the last 18 months with some outstanding results but it took a while to get going — and there are still ups and downs!
Before you go down the serviced accommodation route, consider the location of the property. Is it in a beautiful seaside town? In a vibrant city centre? Close to an airport or the motorway? If your location doesn’t immediately appeal to the tourist or the business traveller, you might want to rethink.
Any type of property investment takes time, effort and energy (not to mention money!) but serviced accommodation can be a full-time job. Having a team of people makes a huge difference. If you’re going solo, consider whether you can keep up with regular meet and greets, cleaning (this may be a same-day changeover), the upkeep of the property, managing your bookings, dealing with complaints, etc. And remember if you employ people to help you out with these things, that comes out of your profit.
Serviced accommodation may be something of an enigma in property investing, but we love it. People come to property investment for many different reasons and the more opportunities, the better. There is potential for huge success with serviced accommodation, provided you have realistic expectations and are prepared to work hard.
Recently we did something a little different with a void in one of our portfolio buy-to-let flats. We smartened the flat up, took some creative pictures and added it to Airbnb. Two hours later, we had a week’s booking, arriving the next day. The following 24 hours were a complete rollercoaster to take the apartment from picture-ready to guest-ready for the two Indian businessmen who have a short-term contract at the local airport, but we did it.
If property investment is a rollercoaster, serviced accommodation is the Big Dipper!