- What Is A Service Accommodation Or Apartment?
- Reasons Why One Should Think About Starting A Service Apartment Business
- Planning Your Service Apartment Business
- These Are Important Things To Consider, When Starting A Service Apartment Business.
- Serviced Accommodation Insurance
- Types And Examples Of Serviced Apartments
- How To Find The Right Serviced Apartment Property
- Is Starting A Serviced Apartment Business Profitable?
- Are There Any Downsides To Serviced Apartments?
- The Future Of Serviced Apartment
- Key Takeaways
What Is A Service Accommodation Or Apartment?
A serviced apartment is a completely furnished apartment that offers all of the "hotel services," such as room service, laundry room, and fitness center, both for long and short visits. The majority of high-end residences are serviced.
Reasons Why One Should Think About Starting A Service Apartment Business
Serviced flats are a great investment since they appeal to individuals looking for short-term stays of a few days as well as those looking for long-term stays ranging from about six months to over a year.
The large market demand and growing accommodation needs might provide homeowners with a never-ending, consistent stream of rental revenue.
These condos are more expensive than other residential properties because they provide greater guest services.
Generally speaking, here are some reasons why you should consider starting a serviced apartment business:
- Income can be 4- 5 times more than regular rent even with 40 – 50 % occupancy.
- No trouble with tenants.
- Once you learn to manage service apartments, you can increase the scope for multiple service apartments at different locations and get to become a big shot player in the service apartment industry.
Planning Your Service Apartment Business
If you're going to invest in serviced accommodation, one thing to keep in mind is that you'll need to plan ahead.
Because they are deemed a conventional residential property under one of the planning acts for this sort of property. It's essentially a vacation rental.
That's very much how they're going to handle it in terms of planning.
As a result, you'll require planning permission. This will have an impact on and influence other factors, including how you finance the apartment.
When it comes to funding for serviced apartments, the sort of financing you'll require is different from other types of financing you'd use for a buy-to-let property. You'll require a commercial mortgage.
We must emphasize that you should not purchase a home with the goal of utilizing it as a serviced apartment using a buy-to-let mortgage.
Then don't dismiss the planners. We'll get to insurance in a minute, but be sure you have the correct coverage. Do things right the first time because if anything goes wrong, you can be in serious trouble.
If you acquire a house with a buy-to-let loan with the intention of using it for serviced housing and your mortgage company finds out, they will be furious.
They'll almost certainly demand their money back, which might lead to a slew of issues, including missed mortgage payments.
These Are Important Things To Consider, When Starting A Service Apartment Business.
Here's a basic rundown of how to get started with a service apartment.
Investment and expenses
If you are the owner of the property, all you have to do is renovate it and equip it with modern amenities such as refrigerator, washing machine, oven, water heater, air conditioner, induction stove, basic cutlery, coffee maker, iron box, and water purifier.
Everything will be one-time expenses, and bank assistance can be obtained to meet investment requirements.
This will be an extra expense if you are leasing the property. However, with a successful business, the expenditure on these things can be returned in 2–3 years.
Location is everything
In the service apartment industry, location matters an awful lot, and it is recommended that the property be in a strategic location, probably in a high-end neighborhood, with quick access to major highways and other facilities.
You shouldn't be bothered if there are several other service apartments in the area, since this will increase competition and competitiveness can be good.
Another potential opportunity for you is the location of your property, being close to corporate headquarters and hubs.
The design and floor layout should create the impression of a house rather than a hotel. Make sure there is enough space for a lounging area, dining area, and kitchen for example.
Obtain a letter from the local government stating that there are no objections.
If you wish to run the service apartment as a separate business, register it with the local police department, create a bank account, create a pan account, pay all taxes on time.
Make sure you observe all of the regulations outlined in the legislative acts that control the accommodation and guest house laws.
Security is a crucial requirement for any service apartment. This is what any client will be checking for first and foremost.
A security guard or a team of security guards should be on duty 24 hours a day, CCTV cameras should be installed in strategic locations, and a logbook should be kept to trace access to, and exit from the service apartment.
Contractors, visitors, and employees who visit the facility must be identified and undergo a background check.
Be kind and patient; guests come in various kinds and personalities. Hire employees who can stay true to the company's concept.
Make no compromise on your quality of service, including the food being served; arrange the menu to accommodate multi-cultural diets.
To minimize problems, be upfront about the rules and regulations and convey them to guests. Doesn't change the fact that you have to make your visitors feel special.
The way you conduct your business determines its success. Make a feedback book available and gather testimonials from every guest.
Providing a few basic services, such as arranging a cab, assisting them in planning their local transport, and providing basic information, may delight guests.
Read more: Serviced Apartment Property Management Software 2022
One of the most critical aspects of survival for your service apartment business is marketing and advertising.
You can list the apartment on metasearch websites such as booking.com, airbnb, agoda, and others.Obtain a contract from commercial workhouses to ensure consistent occupation.
Finally and most importantly, create a standard website for your service apartment business and you'll attract more clients on a regular basis without having to spend any extra money on marketing.
As a matter of fact, for you to list your apartment, other listing platforms collect a percentage of your revenue, and in case you can't afford that, your website is the most cost effective solution
Compliance is a term that, without a doubt, terrifies all business owners. But it's considerably more difficult when there's no precedent to follow.
It's easy to be eager to become compliant throughout all areas of safety and do it quickly. However, being careful will do you a lot of good.
You can make it work in the end by cultivating relationships with individuals you trust and exercising patience.
Regulatory work isn't often the most exciting aspect of the job, but once it's done and in place, it's a lot of fun.
Serviced Accommodation Insurance
We talked about insurance previously. That's another important thing. You must ensure that you have adequate insurance coverage.
If you have a fire and don't have the correct insurance, you're going to be in a lot of trouble. So, don't take shortcuts and make sure you have the correct policies in place.
Let everyone know what you're up to. Get insurance for serviced apartments tailored to your needs.
Securing the assets is another part of security. Have a decent comprehensive insurance policy that protects you from burglary, natural disasters, and fire.
Types And Examples Of Serviced Apartments
1) On-site managed and off-site managed serviced apartments
On-site or off-site management is available for serviced flats. A receptionist and a property manager are normally present in an on-site managed serviced apartment.
There is no personnel on-site at an off-site managed serviced apartment, and keys are normally retrieved from a lockbox.
Both methods of administration have advantages; off-site management allows greater privacy, whilst on-site management assures that personnel is there to help.
2) Single property
This sort of serviced apartment, which is housed within the same single property, provides the ultimate solitude for temporary lodging.
Although complete houses are sometimes offered, they are still referred to as serviced apartments.
While this sort of housing is popular on crowdsourcing sites like airbnb, some platforms follow strict health and safety standards, assuring a safe and comfortable stay.
3) Residential serviced apartment
Some serviced apartments are located in buildings that are mostly residential. Frequently, the serviced apartment will be furnished in the same manner as the other units in the building.
For people that want to relocate and long-term assignees, we propose this sort of serviced flat. Staying in this sort of apartment allows relocatees to get a taste of what it's like to stay in a certain region before settling for a long-term housing option.
Long-term assignees (as well as those who follow the increasingly fashionable nomadic travel lifestyle) benefit from this property type since they will be surrounded by residents rather than guests.
An aparthotel pushes on-site management to the next level by integrating amenities often seen in a hotel.
A bar, gym, and concierge services may be available in addition to a receptionist and a property manager.
This sort of serviced apartment is ideal for people who want the flexibility and privacy of a serviced apartment while still having access to hotel-like amenities.
All of these components work together to give the ideal guest the best experience available.
How To Find The Right Serviced Apartment Property
We don't recommend approaching an estate agent and saying, you're looking for a property that can be used for serviced accommodation.
If you 're searching for properties that are suitable for a service apartment business, we would suggest decent quality buy-to-lets.
However, you must know your target market and also who you believe would be interested in your properties.
Are you planning to purchase properties in the city center competing with local budget hotels?
Are you considering purchasing a property in a tourist-friendly area? So, it'll be folks wanting to rent out your properties, as a vacation home.
Is Starting A Serviced Apartment Business Profitable?
For the most part, in terms of revenue, serviced apartments are particularly profitable because they require greater rentals and percentages than other property types.
They thrive in residential flats, penthouses, villas, and townhouses when it comes to capital growth.
Are There Any Downsides To Serviced Apartments?
Investing in a serviced apartment involves risks and benefits, just like any other investment.
Before you commit to purchasing a serviced property, you should know precisely what you're getting yourself into.
While the potential profits on a serviced apartment are higher than those on most other property investments, operating a serviced apartment also requires a lot of effort from you, the investor.
You also should be aware that serviced apartments may be subject to the mortgage and lease limitations. Many investors envision purchasing a serviced flat and then renting it out on Airbnb.
Nevertheless, you should examine the conditions of your mortgage, if you do have one before you start renting out your serviced apartments on a regular basis.
Many mortgages include restrictions that prevent you from renting out your home for less than a year.
If you violate these terms, you may face significant consequences, including the termination of your mortgage.
The Future Of Serviced Apartment
Only about ten years ago, terms like "serviced flats" and "business living" would have elicited blank stares in the hospitality industry.
Even though this sort of housing was becoming more prevalent, individuals still preferred to remain in regular hotels for extended periods of time.
Only a few types of lodging provided travelers with a kitchen, a space to work, and other facilities.
The serviced apartment industry is booming right now, with new companies joining the marketplace and investors seeking suitable properties to add to their portfolios.
Traditional hotels and their vast designs are quickly running out of room in many cities, however, serviced apartments do not need to be placed in soaring tower blocks, with so many sprouting up in structures with developed usage over time.
While the business is now associated with new-build high rises and ultra-modern furniture, a shift to renovated buildings and upcycled fixtures will appeal to individuals who prefer the classic lifestyle to the minimalist lifestyle.
Serviced accommodation may be an excellent business approach. It all boils down to picking the perfect property. You must first determine to whom you will be leasing the property to.
It's all about making the property look appealing enough for people to want to visit and stay.
One of the most important things to remember is to keep it clean both inside and out. The photos you post should make the property 'pop' in order to attract the ideal prospects.
There's no reason why this business venture shouldn't be a viable option for you if you can accomplish that.
Also, you cannot successfully run a serviced apartment business without an authentic serviced apartment property management system.
Booking Ninjas offers a Cloud-based Serviced Apartment Property Management System that has an all-in-one software built on salesforce to manage your properties under a single interface.
It will make administration activities for your serviced apartment super easy and organized. It is a lifesaver for investors and property managers that intend to thrive in the ridiculously large but profitable serviced apartment market.
Schedule a free call to learn how our Booking Ninjas can help you update your property management and enhance your productivity and profitability!