Investing in Serviced Accommodations: Should You Consider It?
Investing in serviced accommodation is a substitute for the traditional rental market, and with the correct property and location, it can generate excellent returns.
As real estate professionals, we are always on the lookout for opportunities for our clients, so let’s examine investing in serviced accommodation and determine whether it is suitable for you.
What is a Serviced Apartment?
Serviced accommodation falls somewhere between a standard rental and a hotel. We recognize that this is a very comprehensive description, so let’s refine it a bit!
Serviced accommodation refers to fully furnished and equipped accommodations that are available for short-term or long-term stays and typically provide services and amenities similar to those of a hotel, such as housekeeping, reception, and maintenance.
Serviced accommodations can include apartments, suites, villas, and other types of lodging. They are designed to offer a more flexible and comfortable alternative to traditional hotel rooms, especially for travelers who require more space, privacy, and amenities than a hotel room can provide. Serviced accommodations are commonly used by business travelers, families, and tourists who are seeking a comfortable and convenient home away from home.
What to expect from a R2SA investment, and what to avoid.
Are the advantages of investing in serviced housing sufficient to counteract the disadvantages? What are the possible disadvantages? Let’s take a look.
The returns on an investment in serviced housing can be significantly higher than those from a long-term lease.
The average returns on serviced accommodation range between 6%- 9%, which is more than acceptable. This is accomplished through significantly increased rental income, as you will be renting by the night. It is difficult to define an average rental rate due to the wide range of variables that can affect it, such as location, time of year, quality of the accommodation, and many others.
Using a nightly rate of £100 as an example, this equates to £3,000 for a typical thirty-day month.
Another benefit of investing in rent to serviced accommodation is that it can provide a more stable income stream. This is because serviced accommodations are often rented out on a short-term basis, meaning that investors can enjoy a more regular and reliable rental income.
In addition, serviced accommodations are typically managed by a professional management company, which can handle everything from bookings and cleaning to maintenance and repairs. This means that investors can benefit from a more hands-off investment opportunity, with less hassle and stress compared to managing a traditional buy-to-let property.
While investing in rent to serviced accommodation in the UK can offer several benefits, there are also some potential drawbacks that investors should be aware of.
One possible drawback is that serviced accommodations may experience higher vacancy rates than traditional properties due to their short-term nature, which could affect the regularity of rental income. However, this is a rare case, and with the correct property (location, staging, etc) and aggressive marketing, this drawback can easily be tackled.
Investors may also face some competition from other serviced accommodation providers in popular UK destinations. But there’s nothing to worry about! Star Sterling has a team of experts that can help you find a property in the most desirable locations, without the investor having to worry about anything at all!
Overall, investing in rent to serviced accommodation in the UK can provide investors with a great opportunity to generate stable and high rental yields, while also benefiting from a more hands-off investment experience. With a growing demand for short-term rentals, particularly in popular UK destinations, investors can enjoy a strong and stable investment opportunity in this exciting sector.