One of the hardest parts of investing in Rent to Rent SA is understanding all the components involved. For someone new to this industry it can be an absolute mine field to navigate so we have Put together Key takeaways you need to consider as an investor TO INVEST PROFITABLY, QUICKLY AND EASILY IN RENT TO RENT SERVICED ACCOMMODATION.
1. SIZE OF THE PROPERTY
The size of the property compromises of 3 aspects. How many bedrooms? How many living/sitting rooms? And how many shower/bathrooms?
This is important to understand right from the start because this will determine who your property is targeting and also where you are going to be looking for properties. For example, if you are looking at a studio apartment you would expect this to be in the city centre close to the largest train station to compete with hotels. On the other hand, if you were looking at a 3-bedroom house then you would not be looking in the city centre but more on the outskirts up to a 15/20-minute drive.
2. LOCATION, LOCATION, LOCATION
Locating the property correctly is key to success. You should be very clear about who you are looking to target by entering in that market and the good things and potential drawbacks of operating there.
For example, if we were looking at Leeds as a city then we would consider that professionals, tourists and contractors will all visit this area. On top of this, the city has attractions such as Leeds United which will attract travelling football fans, universities which will attract families visiting there children for the weekend and a fantastic night life for hen/stag do’s to enjoy.
3. PARKING
Whether your property needs parking really comes down to where the property is. If the property is right next to a large train station and is a smaller property (studio – 2 bed) then parking would not necessarily be required because we would expect public transport to be used. If the property is further out (10+ minutes from the area your guests want to be) then regardless of the size it would be preferred to have parking options available. Even if this is simply on street parking, it’s key to make sure there are no restrictions through the day where you guests may have to pay extra to park.
TOP TIP: One thing we have done at our properties that do not come with parking is contact local parking facilities and enquired about renting a monthly space for a certain price. Even if the space costs you £60 extra a month this will be well worth it as your guests will stay for longer and be a lot happier.
4. MANAGEMENT
Managing a serviced accommodation unit can be time consuming and you may need to be on standby for all hours. Therefore, you need to decide if you would like your rent-to-rent serviced accommodation portfolio to be active or passive income. Actively, you should receive a higher net profit as you are not paying any management fees. However, if you do it passively and choose a management company who can outperform your bookings then you could actually get a higher net profit passively.
TOP TIP: Make sure your management company is experienced and has a strong track record. They should be able to clearly tell you their target market and how they attract bookings into your property. Excellent communication is absolutely key to be a successful manager so make sure they are good at communicating with you.
5. BILLS
As the tenant to the property, one of the responsibilities you will have is paying for the bills. You will need to make sure you do this as soon as possible because broadband can take up to 2 weeks to be installed which could hinder your bookings to start with. If you are getting your property managed the management company may offer to do this for you for a slightly extra charge.
6. FURNITURE
Furnishing the property to make it stand out is an essential piece of the puzzle. Most investors starting out would probably say they would prefer furnished properties because it saves them money but 99.9% of this time the furniture is not up to standard so we have to spend more time and money removing the old furniture to replace with our new furniture. Therefore, the majority of the time it is better to have properties that are unfurnished so we can go in and make them look amazing without any hassle.
TOP TIP: Make sure that your property has some unique features in there and is not just a standard serviced accommodation pack. This will make guests want to book your properties over competitors and increase your revenue and net profit. This could cost an extra £100-300 to start with for artificial plants, ornaments etc. but could generate thousands over the term of your agreement.
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