Could 2021 Be The Year Of Serviced Accommodation?
Could 2021 be the year of Serviced Accommodation?
Discover the top three reasons why I believe 2021 could be a year with massive potential for Serviced Accommodation...
In this episode, I want to cover why I believe Serviced Accommodation has massive potential in 2021. I'm going to cover whats currently happening in my business and some of the big changes I'm already starting to notice this year. I'll also share some Serviced Accommodation tips and tricks with you that will hopefully help you on your property journey.
I have seen a recent spike in demand for short to medium term accommodation in my property business. An increase in the number of people relocating, in some cases, people relocating and waiting for their houses to complete so they can beat the stamp duty.
A key customer for my Serviced Accommodation properties has been construction workers who are not suited to long term accommodation through traditional agents. They want to avoid commitments, setting up bills, cancelling bills, so they usually put their teams in hotels. Construction workers have access to large budgets, and you are competing with hotel prices so that you can charge a premium. Recently I have received as much as £6,000 for a property, earning three and a half times the guaranteed rent. Rent to Serviced Accommodation can be a really powerful and lucrative model.
Listen to this weeks episode to discover the three main reasons why I think 2021 could be the year for Serviced Accommodation.
In this episode, you will discover
An insight into Serviced Accommodation in my business
How and why demand has spiked in 2021
Key customers/Target markets for Serviced Accommodation
Why you should be cautious if you are not diversifying your portfolio
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Podcast Transcript↓
[00:00:56] Hi, how's it going? Welcome to another episode of the podcast Simon here and today I want to break down why I think 20, 21 could be the year of S a, the year of rent to serviced accommodation. I'm seeing massive things already, and I'm going to explain what's been going on in my business in this last week.
[00:01:20] It's been one of the biggest weeks, probably. In the last 12 months and I'm seeing massive, massive demand. So I just want to share that with you, give you some insight into what's going on in my business and, you know, share a few hacks and tips along the way to, to hopefully help you. So, first things first, a little bit of housekeeping.
[00:01:44] I'm going to be doing another masterclass on Sunday, the 17th of January. It will be exclusively available in my Facebook group, the creative cashflow group, I'll link the group in the description. So if you're not a member, be sure to join in time. If you're listening beyond those dates, you know, you dig in the archives and you missed it.
[00:02:12] Damn. What a, what a, what a masterclass that was you missed out. Um, but don't worry. There'll be more. So this week it's been manic, to be honest with you. And what I have seen is a lot of businesses, a lot of companies, a lot of people relocating, waiting for their houses to complete so they can beat the stamp duty and has been a massive demand for short to medium term accommodation.
[00:02:44] And what that's meant is that Airbnb. Booking.com direct bookings and inquiries have been firing on all cylinders to the point where we've ended up having to rush. I say rush, we've had to fast track a couple of refurbs that we may have taken a little bit longer on just to meet the demand. And what that's looked like is we've bagged a massive construction company booking in two of my properties.
[00:03:14] They need eight beds. And they're paying on a nightly basis, which basically provides massive cashflow. To be honest with you, in terms of when you've got generally speaking people, associate recurring monthly income as HMO or residential income. And that's amazing because it comes in every month. And I love that.
[00:03:36] I rely on that. That's my bread and butter. But with SA, what happens is companies, construction companies, corporations. They essentially work on a nightly basis and they won't be in a position to be able to provide long-term accommodation. They don't want to have to, you know, rent properties from traditional agents set up the bills, set up the cancel tax commit to long ASTs.
[00:04:05] They don't want to do that. So they either put their team up in a hotel, the travel lodge, or, you know, the holiday Inn. Or they will look for serviced accommodation. And the interesting thing is they've got massive budgets compared to just a long-term stay because they're comparing what they'll pay you to what they would pay in a hotel.
[00:04:29] So I find that average nightly. Ray is maybe 25 to 50, 60 pounds per person per night. So if you do the math on that, and you're talking about, you know, four, five people in a free or four bed house, perhaps on a service accommodation basis, short term, not an AST that can add up quite considerably. And I've had situations whereby I may have been guaranteeing a landlord, a thousand pound rent.
[00:05:01] And I burn receive in as much as five or 6,000 pounds for the, for the, for the property, um, earn in three, three and a half thousand pounds per month from one deal, one property that I don't even own. K um, it's really, really powerful stuff. So I believe that this year 2021 could be a massive year for.
[00:05:27] Serviced accommodation. And it could be a massive year for rent to serviced accommodation. So if you're in a situation where you maybe haven't got a huge amount of money or you want to move quickly rent to serve, as the accommodation could be amazing. And you know, if you're brand new to the show, the way I look at rent to rent is it's not us.
[00:05:53] It's not a strategy. I don't like to look at it. As, you know, some people just refer to HMO as rent to rent, and then they refer to rent to serviced accommodation is, are two SA or rent serviced accommodation. I don't do that. I don't see rent to rent as rent to HMO. For me, rent to rent is the way of controlling the property.
[00:06:16] It is a alternative to buying the property and that's 50% of what. You need to grasp the last 50% is how you cash flow of it. And I personally specialise in HMO and SA because I believe they provide the perfect cocktail, the perfect balance of diversification covering your downside monthly passive income, but then the big injections of, um, you know, the lump sums that you want.
[00:06:53] And that's amazing. So, you know, these eight guys across two properties are going to generate amazing cashflow every single month, more than they would on a HMO basis. And they're locked in for six months and what's crazy is I'm building a few relationships and stuff and they actually need 30 or 40 more beds in the area.
[00:07:15] So I'm going to be working hard to try and meet that demand. So how can you do this? You know, how, how can you do this and take advantage of this market? So today's podcast, I'm going to talk about the three main reasons why I think this year could be massive. For SA. And then I want to just give you guys a couple of little tips and I will go into loads of detail on this, on the masterclass, which is going to be happening as I said on Sunday, the 17th January.
[00:07:50] Um, so please make sure you join the group and I'll see you then. So number one, construction. Last year was a tough, tough year for all businesses. And even construction took a hit. At one point, I remember we went through about eight weeks of not being able to get any plaster and plaster as a key part of construction.
[00:08:17] So a lot of things just stood still and it was, it took a little while for them to adjust and realize, yeah, you know, some of the. Construction companies were able to still supply materials so nobody could get any materials for a while. This time around, even though we're in an of a lockdown, it's bad because the companies have basically put in an infrastructure too, handle the lockdown.
[00:08:45] And what's more is that because a lot of these construction companies were delayed last year. They rarely need to play catch up. They need to earn some serious money to make up for what was lost. And I'm seeing a huge demand from existing clients and new clients. And the key thing here is you need to be visible.
[00:09:08] You need to have your dummy ads. You need to have your real ads. You need to have an online presence. Uh, you need to network in order to attract those bookends. Number two is. The corporate book ins. So whilst you've got a lot of people that I'm finding all working from home, so some of the corporate in chest has dried up.
[00:09:34] However, I'm seeing this new wave now, because once again, people are playing catch up, but what I'm also seeing a lot of is. Because of a lot of people have had to relocate. They've lost their jobs or they've been reallocated. You've got all these professionals. That have relocated and they're waiting for house completions, or they want to try before they buy, or they had to move quickly to meet their demands.
[00:10:02] So they're looking for short term accommodation. I'm seeing tons of those. I've got those in three properties at the moment, or that have booked for four, six weeks and a likely to need to extend paying at close to hotel rates. So on one of those, you could be looking at 1500, 2000 pound net, passive income a month from one of them bookings.
[00:10:27] And last but not least. And this is an interesting one. We don't know exactly where the air travel is going to go next year. So my opinion is the majority of people. Not me, cause I definitely want to try and get away, but a lot of people are going to either be afraid to leave the UK. They're going to be unable to leave the UK or perhaps they're not going to be able to afford to leave the UK, which means more and more people are going to be interested in the staycation UK holiday model.
[00:11:01] They're going to want to get away and travel internally around the UK, which means. You've kind of got the trio. You've got the hat chick, you've got the construction clients, you've got the corporate clients and you're going to have massive tourism and leisure from all around the UK. So now is definitely the time to set up your rent to serves to combinations.
[00:11:28] Or if you want to have a combination of owning as well, then sure. Get involved. You have to be quick. Searches are taken forever. But now he's going to be a big, big, big, big year for SA in my opinion. But, and this is the big bird
[00:11:48] I saw. So many people get crushed last year from just doing SA. And I think one of the reasons why we've managed to scale through COVID is because we've had a balance. And that's the great thing about rent to rent. You control the property and then find the best way to cashflow it. And that's what we've done.
[00:12:12] So we get the property, we try and make sure that it's quite flexible and then we cashflow it so great time to be an SA. Let me know what you think. Do you think 2021, year's going to be a big year for SA. Last year was a tough year. A lot of people collapsed last year. I would absolutely recommend diversifying of course, make sure you've got your bread and butter, you know, your recurring income long-term tenants, your let and forgets us important.
[00:12:45] And I think if you can get that balance, right. And if you can move quickly, there'll be huge demand. And I'll tell you another thing. There's going to be huge demand in terms of just acquiring these properties as well, because landlords have been hit hard last year. They've got empty properties and they're motivated.
[00:13:08] So that's all from me. I will see you on Sunday, the 17th of Jan for the little masterclass. Um, I'm not sure what I'm going to call it. Yeah. I'm going to be releasing that. Probably in a couple of days. So stay tuned for that comment. Subscribe like share. Please hit me up on Instagram, Simon Smith, online.
[00:13:34] Any questions I'd love to help as always. And guys, please, please, whatever you do. Don't wait 25 years. Get creative.
[00:13:54] Thanks for listening. For more information, check out Simon Smith, online.com. See you next time.