Before making a serviced accommodation investment, ensure you are looking in the right place. There are several ways you could go about this, and we’ll discuss several popular methods that serviced accommodation investors use now:
1. Invest with a Property Investment Company
Property investment companies work with developers to sell buy-to-let properties directly to investors, thereby cutting out go-betweens such as estate agents.
From time to time, you will find property investment companies selling properties specifically built to be serviced accommodation, and these are some of the best investments you can make.
Not only will you be buying property designed with the specific purpose of being used as serviced accommodation, meaning it will likely come with added amenities that will help draw guests to your investment, but because you are buying directly from the developer, the price is likely to be below market value.
Additionally, developers are building properties with the specific purpose of being used for short-term rentals. In that case, they will likely secure the correct planning permission to allow landlords to rent out their serviced accommodation throughout the year.
New-build properties are also often constructed in areas of heavy regeneration and in major cities, where many potential guests are likely to need high-quality short-term lets without wanting to pay hotel prices.
Our development, Rice Works, is such an investment. With stunning facilities that include a hotel-quality spa and a fully equipped gym, Rice Works also features the correct planning permission to allow landlords to operate their units in the development as holiday lets throughout the year.
2. Convert a Residential Property
One of the most common methods of investing in serviced accommodation is to buy a residential property or use one they already own and convert it for use as a holiday let, either all year round or during busy periods, such as summer.
This gives you a much wider net to cast when looking for a property you can use as serviced accommodation, as you can find residential property for sale and filter out those which don’t fit the criteria you have set.
Guests often rent these kinds of serviced apartments and accommodations because of the homely feel they bring to their stay, and because many converted residential properties have on-site or nearby parking, allowing for easy travel.
However, this is a costly method of investing in serviced accommodation, as not only will you have to purchase your chosen property, but also pay for any furnishings, conversions, or renovations that you want to include or make.
You may also need to obtain planning permission from your local council for holiday lets. With the aforementioned new regulations coming into effect soon, you may only be able to rent out your serviced accommodation for a short period each year.
This does add a degree of flexibility, though, as when you are unable to use your serviced accommodation as a holiday or short-term let, you can rent it out to regular tenants with a medium or long-term lease and charge a higher level of rent, thanks to the furnishings you provide.
3. Use Your Own Home
The third option for those who want to begin investing in serviced accommodation property is to use their own home for short-term lets, either by renting out a spare room or the entire property whilst they are away.
This is far and away the cheapest method of investing in serviced accommodation, as it only requires ensuring that your living space is tidy, clean, and presentable for when the guest arrives. You’ll already have amenities they would expect, like WiFi and a cooking area, without needing to pay any extra.
Suppose you are going away on holiday or travelling due to work for an extended period. In that case, you can use your home as serviced accommodation to earn passive income while you are away. Rather than seeing bills rack up or leaving an empty house, you’ll be able to make money whilst enjoying your holiday. However, you won’t be able to do this in the long term.
There are, however, some downsides to this method. Firstly, you’ll be letting strangers into your own home on a regular basis. You and your family will need to be comfortable with this, and you should do a background check to be safe.
Suppose you rent out your home to someone while you are away and return to find it damaged or in disrepair, you’ll have to deal with the hassle and discomfort of having it repaired. This may deter you from using your home as serviced accommodation in the future.
Secondly, you won’t be able to collect rental income from serviced accommodation all year round, unlike with the other methods of investing we have discussed. If you choose to rent out your entire home rather than just a room, you will naturally only be able to do this when you are away.