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The Pros & Cons Of Serviced Accommodation · The Property Unleashed Podcast

• 0:00
  Speaker 1: The pros and cons of serviced accommodation.
• 0:02
  Speaker 1: Hello, my name's Marcus Sherwood.
• 0:15
  Speaker 1: It's great to have you joining me here.
• 0:17
  Speaker 1: So what are some of the pros and cons of doing the serviced accommodation short-term rent to holiday let strategy?
• 0:26
  Speaker 1: Let's cover those right here, right now, and I always like to start with the comms because, well, why not?
• 0:33
  Speaker 1: And if you don't know what this strategy is, let me just remind you.
• 0:36
  Speaker 1: It's like holiday let, so it's where you let a property out for short-term rental.
• 0:42
  Speaker 1: It's not somebody's primary residence.
• 0:45
  Speaker 1: They are basically staying there.
• 0:47
  Speaker 1: So if you go to a seaside resort and you stay in a flat rather than a hotel, it's normally somebody's holiday let.
• 0:54
  Speaker 1: Now, you can do this with contractors, you can do this for holiday makers, you can do it for all types of different clients, but you need to make sure that, a you know what you're doing and, b that it's in the right area for the right type of client.
• 1:09
  Speaker 1: The type of clients that you're trying to put in there are so, so important.
• 1:12
  Speaker 1: So one of the cons can be seasonal demand.
• 1:16
  Speaker 1: Seasonal demand is massive because if you are in a coastal part of the UK then chances are the winter times you're not going to get as many bookings, as potentially you are in the summer times Now.
• 1:28
  Speaker 1: Obviously in the good old UK here nobody can really ever tell when it's winter and when it's summer half the time but again when it's school holidays, it could be very, very busy.
• 1:36
  Speaker 1: If you're close to stadiums, that could be great when football seasons are on or concerts are on and stuff, but it could slow down.
• 1:43
  Speaker 1: So you do need to take those numbers into your account that month on month you may not be making the same money Now.
• 1:49
  Speaker 1: Don't make the mistakes of thinking that just because you've had a good three months, it's going to stay like that the rest of the year.
• 1:54
  Speaker 1: You always want to be planning for those slower months and making sure that you're taking into account your costs on whatever it is you're doing.
• 2:02
  Speaker 1: So, whether you're buying the properties to do this or you're using strategies like rent to rent or you're doing joint ventures with people, do make sure that you understand your numbers and make sure you have a cash buffer behind you as well to help you on those slower times.
• 2:16
  Speaker 1: Another con is with serviced accommodation, there can be higher management on the properties.
• 2:22
  Speaker 1: Okay, because it really can test you.
• 2:25
  Speaker 1: When it comes to those, what you're going to have is a lot of moving parts.
• 2:30
  Speaker 1: You're going to have a lot of people coming and going from the properties, so you need to make sure that you're using the right systems and the right tools and you're booking people in and out promptly.
• 2:38
  Speaker 1: You're also getting your cleaners in there, getting that linen changed and making sure that those properties are maintained to the highest standard and of course that can come at a bit of a demand on you and your time as well.
• 2:49
  Speaker 1: But you don't want to be in there cleaning properties.
• 2:51
  Speaker 1: You want to be paying people who are professionals in that sector to go and do those jobs for you.
• 2:56
  Speaker 1: But it's not as easy as just a vanilla buy to let property.
• 2:59
  Speaker 1: You put somebody in cleaning the properties down to them and everything, cutting the grass and all of those sorts of things.
• 3:04
  Speaker 1: They'll do all of that In a serviced accommodation.
• 3:08
  Speaker 1: You are going to be doing it.
• 3:09
  Speaker 1: So you are going to be maintaining the gardens.
• 3:11
  Speaker 1: You are going to be making sure that it's nice and clean.
• 3:14
  Speaker 1: Anything gets broken, you are replacing, you are sorting them out.
• 3:17
  Speaker 1: So management on it can be a lot more demanding.
• 3:21
  Speaker 1: Equally to that, maintenance costs as well.
• 3:24
  Speaker 1: You will have to, obviously, as a landlord, whether you're doing service accommodation or a buy to let, have maintenance as a budget in your profits.
• 3:33
  Speaker 1: So when you are making all this money, you keep some money aside for when the boiler breaks or when the washing machine goes down and things like that.
• 3:40
  Speaker 1: Now, maintenance on a furnished holiday let Could also be a bit of a pro as well, because you shouldn't have as much to worry about as you do with a buy to let or where somebody's living in it full time.
• 3:54
  Speaker 1: The reason I've got it in the cons is because you have to act so, so quickly when it comes to furnished lets, holiday lets, serviced accommodation.
• 4:05
  Speaker 1: You have to be right on the money.
• 4:07
  Speaker 1: Why?
• 4:07
  Speaker 1: Because somebody might only be there one or two nights and if you cannot get something fixed or sorted for them straight away, it's going to be a bad review.
• 4:14
  Speaker 1: Okay, you've got to make sure that you've got a good maintenance team.
• 4:17
  Speaker 1: You've got people that are going to come out, they're going to jump on it, they're going to help you, they're going to support you and you can really react very, very quickly to any of those demands or problems.
• 4:29
  Speaker 1: Okay, the next one is we are going to have new regulations coming in.
• 4:33
  Speaker 1: The government are going to change a few bits and bobs for us.
• 4:36
  Speaker 1: I don't think that's a bad thing, I think that's all right.
• 4:40
  Speaker 1: The regulations that are coming in could be licensing, could mean that the property needs to change use of planning and things like that.
• 4:47
  Speaker 1: We'll see when it actually comes in and gets rolled out properly, but it is coming in and that will put a lot of people off and obviously it will make it a bit harder to be able to get into serviced accommodation as well, which, again, if you're already getting started or just getting started now, that's not a bad thing.
• 5:03
  Speaker 1: And if you are looking at getting started now, then do reach out to us, because we have the tools, the training and the support to be able to help you to do this, to supercharge your results.
• 5:16
  Speaker 1: So just check out thepropertyunleashedcom and we have free tools and resources, training, spreadsheets, deal analyzers and all sorts of things there under the free resources tab to help you and, of course, training and coaching if you need it.
• 5:28
  Speaker 1: So what's another con?
• 5:30
  Speaker 1: Well, the potential for damage of your property.
• 5:33
  Speaker 1: So parties are probably the biggest fear of any serviced accommodation operator out there.
• 5:39
  Speaker 1: There are things that we can put in place and methods that we can use to prevent this from happening.
• 5:44
  Speaker 1: But you will get damages from time to time.
• 5:46
  Speaker 1: But you don't want your property trashed because people have just paid for the night, gone in there to have a massive, massive party and then you're left picking up the pieces.
• 5:55
  Speaker 1: So do make sure that you have the right things, that you are doing your due diligence on people staying there, you have your deposits in check and things like that, and you have monitors, maybe a ring doorbell to see who's coming and going, and making sure that you have some noise level indicators in there as well, in case people are making lots of noise.
• 6:13
  Speaker 1: Then you can be proactive and the neighbors don't always get upset.
• 6:18
  Speaker 1: And the other thing is it can be time consuming with guests with turnaround.
• 6:22
  Speaker 1: So it's not like you've done a viewing somebody's going to move in.
• 6:24
  Speaker 1: You check them in.
• 6:25
  Speaker 1: You leave them 12 months potentially, you will go in there and do some checks.
• 6:28
  Speaker 1: This could be that you're checking guests in on a regular basis, every day, every couple of days, a few days a week and things like that.
• 6:36
  Speaker 1: That can be very, very time consuming.
• 6:38
  Speaker 1: Guest turnover is massive on serviced accommodation, so you do need to make sure that, again, you've got your systems in place, your key boxes, potentially, and every way of getting in and out of the property is documented and is very, very easily accessible to whoever is going to be staying in your property.
• 6:57
  Speaker 1: Okay, so those are some of the cons.
• 6:59
  Speaker 1: Let's go for some of the pros Now.
• 7:01
  Speaker 1: I'll leave you all on a high, but I like to make sure that you understand the cons, because in any business, it's not all singing and dancing.
• 7:10
  Speaker 1: It's not all.
• 7:10
  Speaker 1: I've got a property.
• 7:11
  Speaker 1: I'm going to go and sit on a beach now.
• 7:13
  Speaker 1: I'm going to watch my bookingcom on Airbnb and I'm going to let everything roll in as it's made out to be.
• 7:19
  Speaker 1: A lot of people are showing you this or telling you this.
• 7:21
  Speaker 1: It's a business, trust me, it's hard work, it's rewarding work, but you will have to work.
• 7:28
  Speaker 1: You can even get a company to manage it for you, but you still need to make sure that you're monitoring what they're doing as well.
• 7:34
  Speaker 1: Be the CEO, director of your property business.
• 7:37
  Speaker 1: So let's start with the first pro.
• 7:40
  Speaker 1: And the first pro realistically, is you will get higher rental income from doing serviced accommodation in most cases.
• 7:49
  Speaker 1: Okay, don't get carried away here and just think because it's serviced accommodation, you are gonna make more money.
• 7:54
  Speaker 1: You need to know your client.
• 7:56
  Speaker 1: Who's your customer, who are you gonna talk to to come and book your property?
• 8:02
  Speaker 1: Understand this in your area.
• 8:04
  Speaker 1: So if you're on an area that's close to where people can go off hiking, you're gonna be looking for ramblers for hikers for that sort of clientele, aren't you?
• 8:13
  Speaker 1: You want to make sure that you cater your property for that.
• 8:16
  Speaker 1: Can you make it quite easy for them to take their clothes off, in the sense of their raincoats, if they're all wet coming out of rainy seasons, muddy boots and things like that?
• 8:28
  Speaker 1: Can you do a little bit above and beyond what everybody else would do there to make it more comfortable for them?
• 8:32
  Speaker 1: If you're in an area for holidaymakers and you're close to the beach and things like that, you're going to be catering, potentially looking for families, maybe If you've got a big enough property for families to be able to come and stay at home, from home, because there's nothing worse than having little toddlers or potential babies and things like that and then just being stuck in a hotel room.
• 8:49
  Speaker 1: So you need to know who you're catering for, who your clients are going to be, and if you do that then of course you can earn very, very good returns on a month-on-month basis from your serviced accommodation units.
• 9:04
  Speaker 1: You've also got flexibility in your occupancy periods, so potentially you may have a nice property down by the coast that you want to use yourself, so you can book out of your week here or there for you to be able to go and use the property and then rent it out the rest of the time.
• 9:20
  Speaker 1: Of course, you can put your prices up if you're very close to stadiums or any gigs or anything like that that's going on that people might want to stay at.
• 9:29
  Speaker 1: So you can really maximize your potential.
• 9:32
  Speaker 1: When those times come, when those periods are around, you just need to go through your calendar and make sure that you're planning for that.
• 9:40
  Speaker 1: Another pro is you can have different clients, different customers coming.
• 9:45
  Speaker 1: So, as I say, you really want to niche down onto who you're talking to, but you're not stuck with one tenant.
• 9:51
  Speaker 1: You're not stuck with somebody in there for 12 months who could potentially be a real pain in the backside.
• 9:56
  Speaker 1: Okay, predominantly they might be there a week.
• 9:59
  Speaker 1: They might be there two weeks.
• 10:00
  Speaker 1: If they're corporate clients or they're contractors, they may be there for a good few weeks, but you're not stuck with them for years on end.
• 10:07
  Speaker 1: Okay, so that can be very, very good that you're not just stuck with one person who could be a complete pain.
• 10:13
  Speaker 1: You have a diversification of different people coming through all the time.
• 10:19
  Speaker 1: Premium pricing is something that you want to be really, really looking at.
• 10:23
  Speaker 1: We call it revenue management, other people call it dynamic pricing.
• 10:28
  Speaker 1: This is your nightly rates.
• 10:30
  Speaker 1: It's not like a buy to let property where you will set one rate and then that's it.
• 10:35
  Speaker 1: When it's advertised, somebody will either do that rate, maybe negotiate with you or something like that, but that's it.
• 10:39
  Speaker 1: With serviced accommodation, it'll go up and down and it can go up and down on a day to day basis.
• 10:46
  Speaker 1: So you need to understand again your market.
• 10:50
  Speaker 1: You need to understand what's happening around there, because if you're near any horse racing and things like that, you're near anything like that.
• 10:57
  Speaker 1: At that point, when there's the biggest sort of horse racing show going Grand Nationals on, if you're in Liverpool or anything like that, you're going to be servicing and putting out a premium price for people staying there, and it's probably going to be more down to you to get that right than relying on anybody else to do it for you.
• 11:16
  Speaker 1: Okay, so it is great that you can really plan for the future with those.
• 11:19
  Speaker 1: You can get those bookings there.
• 11:20
  Speaker 1: Some people will book it out each year and you'll get those repeat bookings as well.
• 11:24
  Speaker 1: So start to try and look for direct bookings.
• 11:27
  Speaker 1: Start to try and look for people who want to come back.
• 11:30
  Speaker 1: Give them a discount if they don't go through your bookingcoms, your Airbnbs and things.
• 11:35
  Speaker 1: Remember you're going to give them 10% those platforms when you're using them.
• 11:38
  Speaker 1: So give them a 10% discount to come directly to you and, of course, that will help your profit margins as well.
• 11:47
  Speaker 1: And the last one, realistically, is I think it's a pro it's treating it like a business.
• 11:51
  Speaker 1: Service accommodation, short-term holiday lets or whatever you want to call it is a business.
• 11:57
  Speaker 1: Treat it like a business.
• 11:59
  Speaker 1: There's lots of tax benefits you can have through having this as a business Capital allowances.
• 12:05
  Speaker 1: You can change all sorts of things depending on your circumstances as well.
• 12:10
  Speaker 1: So it's very, very good.
• 12:12
  Speaker 1: Obviously, if you're working in the business a bit yourself, you can claim certain things through your business.
• 12:17
  Speaker 1: I'm saying certain things and not really saying directly what you can and can't do, because everybody's circumstances are different and you never want to get into trouble with the tax man or woman, but it can be very, very nice to be able to offset some of your business costs for what you're doing in your business as well.
• 12:34
  Speaker 1: Now, do make sure you are doing stuff in your business.
• 12:37
  Speaker 1: We don't want to take the mickey here and get into trouble with anything like that, but you can offset a lot of expenses and a lot of tax by having this as a serviced accommodation business, and HMRC will look at each of your properties as a business, as a going concern, and that can be very, very good for you.
• 12:52
  Speaker 1: Okay, depending on your strategy, depending on how you own the properties as well.
• 12:56
  Speaker 1: You do need to check all of that out.
• 12:59
  Speaker 1: But, as I say, if you need any help with any of this, check out the propertyunleashedcom for free tools and resources there.
• 13:05
  Speaker 1: We also have the ultimate service accommodation business builder training program, where we take you from complete novice to building a six-figure service accommodation business, with our handholding and our coaching as well.
• 13:16
  Speaker 1: So I look forward to seeing you in the next episode very soon.
• 13:20
  Speaker 1: Take care and bye for now.