One hands-off property investment strategy which you’ll regularly hear banded about in property market circles, is that of the hands-free services accommodation.
The hands-free part means no direct involvement for the investor, and the services is where the tenant is provided with much more than simply a roof over their head and regular maintenance checks (as in a buy to let).
Serviced apartment rentals
With a serviced apartment rental, for instance, the tenant would have his or her own private one, two or three-bedroom upmarket and very contemporary flat, with access to a 24-hour concierge service, laundry service and health club included. The rent may also mean communal access to a swimming pool and movie room. If it sounds a lot like living in a hotel suite, that’s because it is. Only it’s a lot more homely and you’re allowed to have friends stay over without any additional room charge! These tend to have longer rental terms too than the traditional buy to let model (up to three years isn’t unheard of).
Serviced holiday lets
Another type of successful serviced apartment is the serviced holiday let. This is obviously a much more short-term affair, from one day up to a couple of months (or more if the landlord is willing). Again, it’s a similar model to the serviced apartment rental, where visitors book an apartment complete with concierge and additional services for a set time. If there is a crowd of guests, then it’s a far less expensive option than a hotel. Also, there’s no-one in the hotel room next door to object to the odd late-night party.
Why it’s not Airbnb
A serviced apartment is similar to Airbnb but with added extras, and the amount of time guests stay tends to be for longer. One of the biggest differences between the two though, is that serviced apartments are run by companies, not individuals and couples. And this is where the hands-off investment strategy comes in. The company will manage the investment and source a property management outfit to ‘staff’ the building. They will hire staff to run the concierge desk and help tenants access the services on offer. All you have to do is invest in the company.
How statistics back up the trends
Trade body The Association of Serviced Apartment Providers (ASAP) recorded an occupancy level of 81.7% last year. And, a survey by the Business Travel Show, published towards the end of 2016, showed that four in ten corporate companies would prefer to book serviced apartments rather than hotels or other forms of temporary accommodation.
Of course, in order to be as profitable as possible serviced apartments should be in desirable locations. On the whole, apartments in cities fare best – especially the larger ones such as Manchester, Glasgow, Liverpool, Leeds, Newcastle etc. London and Edinburgh meanwhile, were the most popular locations for serviced apartments. The capital recorded an occupancy rate of 83.8% in 2017, while Scottish capital Edinburgh’s record was even more impressive at 84.4%.
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