IS SERVICED ACCOMMODATION DEAD?
In today’s article, I’ll be talking about serviced accommodation and whether it’s dead or still buzzing.
Service accommodation, for anyone that doesn’t know what it is, it’s simply when you rent out your property but instead of renting it out to a normal tenant on a contract, you rent it out on short term basis.
An example of a short stay booking would be renting it out on Airbnb to guests that might have parties just like when you stay in a hotel like a guest and not a tenant.
The advantage to doing serviced accommodation is the cash flow because if you’re renting a property out per night instead of on a monthly basis, you might get 100 pound a night which is more than 500 pound you would be getting on a monthly basis.
You can quickly generate more profit because people are prepared to pay more as they’re
There’s also lots of tax advantages as well such as if you’re buying a property to rent it out as a serviced accommodation, you’re going to pay commercial rates for stamp duty which is considerably less tax.
You can also claim more things back such as tax-deductible expenses that you wouldn’t be able to do if it was just a regular buy to let. Another thing is that the section 24 doesn’t apply for serviced accommodation which means you can claim back your mortgage payments something you can’t unless you buy through a company when you’re doing buy to let.
However, the big question is, is it working at the moment?
Well, it all depends on the type of guest that your property is catering for and therefore, there are four types of guests that will generally stay in service accommodation properties and that is;
What most people think of when they hear the word short term service accommodation is, getting someone that’s traveling on holiday.
If you’re in Birmingham, you could be thinking of all the tourists in the area and so, that is the first type of guest you’ve got to think of.
These are people that will just need to stay somewhere overnight as they’ve got a business meeting and are traveling for the same purpose.
If you go to the village hotel, the hotel is filled with people in suits and briefcases and these are the people that comprise of this class of professionals such as doctors and entrepreneurs.
I’m talking about people that are going somewhere on a contract to do a job. A really good example would be builders and so if you’ve got a small team of builders say, five or six builders and they’ve got a job to do but it’s not near their house which means they’ve got to travel each day for hours to go to work on the project, that’s when a Hmo is needed more than ever.
The builders might just say, you know what, rather than traveling back and forth to the job that’s going to take two or three weeks to complete, let’s find a house that is on serviced accommodation where we can crash for a couple weeks.
People are moving from house to house all the time as they are being told to work from home while university students are saying, a lot of my studies are all virtual and so i can just move back to live near my family.
In fact, house sales are a record high right now as people are moving houses while others are selling their houses.
The reason these people moving houses will want to stay in your service apartment or your serviced property is very simple. If you’re selling a house to buy another or even if you’re renting a house but you want to move in another, usually there’s a little bit of a discrepancy between timing and so it might be a case of handing your keys back to the landlord or selling the house on the 1st of November and then moving on the 2nd of November to your new house but what happens is that there’s a delay where you can’t sell your house on time and so you stay in a serviced accommodation for the time being.
Another great thing about relocators is that they think it’s going to be for a couple of days or a couple of weeks while it can end up being months which means that they’re paying top dollar for your services.
Right now, tourism is dead and not just in the UK but worldwide and if you have got a property and you are marketing it and pitching it to tourists, it’s not going to work out because people right now can’t really go anywhere.
Some people are traveling but if your property is tailored for tourists, you’re going to be getting massive discounts and you’re going to be half empty at best as you’re going to be really struggling.
However, business is booming right now as people are still traveling and doing business. In fact, at the moment, a lot of people’s offices are closed and so they’re working out of rooms and while meeting other people.
If your property is tailored to business people, that’s great and to tailor such kind of people, you can list it on Airbnb and booking.com.
Right now, a lot of hotels are full and if you are about to take on a serviced accommodation property, do your research on the area and check what the hotels are doing and since a lot of hotels are full, make sure you’re marketing to the right people your serviced accommodation apartment.
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