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The Rise of Rent to Serviced Apartments

Posted by Jehan Anis on December 8, 2022
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What is Rent to Serviced Accommodation?

 

The term “Rent to Serviced Accommodation” (or “R2SA”) is used to describe a property available for short-term lets. The property is rented from the owner (landlord) at the standard long-term market rent, and it is then rented on short-term rental services such as Airbnb. The goal here is to increase revenue from rental services by focusing on short-term leases. The quality and presentation of Airbnb short-term rentals is substantially higher than that of a typical tenanted property since it has to appeal to short-term renters (often as little as 2 days) who want a high level of presentation, similar to what they would get in a hotel or bed & breakfast. Many of the short-term rentals in a city may be for tourists, but these rentals serve a variety of purposes, including corporate housing and seasonal housing (i.e. workers near a Christmas factory).

 

Serviced Accommodation provides the amenities of a fully furnished home that renters can utilise by arriving with only a bag, similar to going on vacation.

 

 

Serviced Accommodation provides the amenities of a fully furnished home that renters can utilise by arriving with only a bag, similar to going on vacation. Additionally, the vast majority of serviced accommodations include a kitchen, bedrooms, bathroom, and living room. Similar to a vacation rental, all other expenses such as utilities and internet are included in the rent. This affords renters the convenience and privacy of a home, allowing them to enjoy their brief stay while working, on vacation, or visiting friends.

 

Serviced accommodation is one of the property market’s fastest-growing sectors; if done effectively, it can generate a substantial income stream for both landlords and R2SA Operators.

 

 

 

Why does R2SA benefit landlords?

 

With classic buy-to-let properties featuring assured shorthold tenancies (ASTs) ranging from six to twenty-two months, voids are common. This might result in a loss for landlords throughout the vacant period. R2SA has a management agreement (if the owner has a mortgage) or a lease (if the owner paid cash for the property) with a 3, 4, or 5-year term. This is in place of a standard long-term lease termed an AST (assured shorthold tenancy agreement). This ensures that landlords do not lose income during void times and can maintain a consistent cash flow.

 

the more attractive and comfortable a property is, the better it is for the business that your renter operates.

 

Another advantage of the Rent to serviced accommodation program for landlords is that houses are carefully maintained. Typical wear and tear in a rental property includes scuffs and blemishes that are usually left neglected. In serviced accommodations, however, these are regularly maintained. This is because the more attractive and comfortable a property is, the better it is for the business that your renter operates. This reduces maintenance expenditures over time and keeps your property appearing well-maintained and fresh.

 

With numerous years of assured rent, it’s easy to see why Serviced Accommodation is gaining in popularity among landlords and gaining in demand.

 

 

 

Why do property investors find the R2SA strategy appealing?

 

Profiting from an asset you don’t personally own is the ultimate benefit for property entrepreneurs. This is yet another simple method of entering the real estate market and making a substantial profit. Additionally, R2SA operators are not required to obtain a mortgage or make a substantial down payment. Because of this, the option to convert a rental property into a serviced apartment can be a highly lucrative venture with low initial investment requirements.

 

 

 

How may you benefit from the Rent to Serviced Accommodation Scheme?

 

First and foremost, it is crucial to view this business as a service business. To attract a large number of bookings at a reasonable price, the R2SA operator must provide superior customer service and high quality standards. This allows the R2SA operator to maximise their income. This differs greatly from managing a typical rental property. In serviced housing, if a washing machine breaks down, you have hours, not days, to fix it before your reputation or guest reviews are negatively damaged. Profitability depends on satisfied customers.

 

R2SA must hire trustworthy and competent cleaners. The property must be spotless and the linens, towels, and supplies must be presented professionally.

 

Housekeeping is arguably one of the most essential aspects of Airbnb/serviced accommodations. R2SA must hire trustworthy and competent cleaners. The property must be spotless and the linens, towels, and supplies must be presented professionally. R2SA operators must guarantee that they have quality assurance processes in place and conduct continuous quality checks.

 

When you initially get a property, you should verify that it is in the finest possible condition. Therefore, we advocate making an initial investment in the property’s furnishings and design in order to increase its desirability. You can accomplish this by sprucing up the house, such as by considering a feature wall, artwork, lights, etc… Consider what you would do to the property if you intended to reside there. If you are unfamiliar with doing this task, we recommend seeking expert assistance from us.

 

This is one of the best things you can do for your property, so don’t skip it. By improving the appearance of your home, you will attract more guests.

 

 

 

So, how do you go about securing guests?

 

To attract short-stay tenants, you must market your property via online channels such as Airbnb, and/or booking.com. There are additional channels available, but these are the ones that are the most popular. The benefit of having short-term tenants is that you may charge a significantly higher rate. Star Sterling  believes that you should aim for an occupancy rate between 65% and 85%. Depending on the property, occupancy rate, and location, your monthly profit should range from £500 to £1,500 after paying all the expenses.

 

This has been stated previously, but it bears repeating because it is so crucial: Once you have guests, customer service is crucial! To maintain customer satisfaction, you must ensure that, similar to a hotel, sheets are changed between customers and your property is kept clean and organised. To do this, we advise that you hire a trustworthy cleaner to clean your property and ensure that the beds and towels are arranged to perfection.

 

Utilising a virtual assistant is a cost-effective method of obtaining assistance so that you may concentrate on the business aspects of this investment.

 

Within the rent to serviced accommodation plan, you must be organised and have protocols in place for communicating with current, former, and prospective guests. Utilising a virtual assistant is a cost-effective method of obtaining assistance so that you may concentrate on the business aspects of this investment. Virtual assistants are excellent for systematising your business and ensuring that everything works properly. 

 

 

 

Conclusion: How can Star Sterling help?

 

We offer R2SA possibilities all around the UK. We give R2SA Operators three to five-year contracts that include guaranteed monthly rent.

 

We provide you properties that may be suitable for R2SA. We will evaluate the viability of the R2SA units, but it is imperative that you verify that a reasonable budget and profit margin are likely.

 

If you are a landlord or property investor interested in this thriving business, please contact us for additional information.

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ABOUT US

Established in 2019, Star Sterling is a family-run business based in the UK. As a cutting-edge investment advisory firm, we aim to deliver top-of-the-line investment services to all our valued clients. Leveraging a dynamic combination of finance and real estate expertise, we specialize in B2SA, R2SA, and BTL property investments.
Our professionals work tirelessly to identify the best investment solutions for estate agents, landlords, and investors and cultivate long-term partnerships for future success. We partner with businesses to find suitable properties to provide premium accommodation on a short-term basis to business travelers and contractors. By creating customized strategies for our clients, our services extend beyond the traditional confines of real estate

Our Typical Investors are

✓ People with a minimum of £7,500 to invest into Rent To Serviced Accommodation and £50,000 into Below Market Value property deals
✓ Looking to build high cash-flowing Rent To Serviced Accommodation portfolio (either passively or self-managed)
✓ Looking to buy Below Market Value residential properties with 8% to 10% annual return on capital
✓ Looking to achieve financial freedom through property investment in the UK
✓ Looking for safe and secure investment opportunities with low risk
✓ Looking to build a legacy for their family’s future

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