Quite a few of my students have asked me about the
opportunity in Short let – the official term is Serviced Accommodations.
The principle of Serviced Accommodations is that you can
charge a premium to people staying short term (or sometimes short to medium
terms) and provide accommodations with more services than basic residential
lettings. You can run it like a hotel, or like serviced apartments.
A common question I have heard from my students and other
property investors using the Rent to Rent strategy is that: if a Rent to Rent
deal can make me £700-£1000/ month, why can’t I turn it into Serviced Accommodations
(i.e. Short let) and make much much more?
Or another version of essentially the same question is
that: if it takes me x amount of effort to get a decent Rent to Rent deal, why
can’t I aim to get a Serviced Accommodations deal with the same profit instead
but with less effort?
The answer to the first question is – you can. Provided
that you comply to the 90 day rule in greater London. (If you want to rent out
a residential property for over 90 days in London, you need to obtain planning
permission.)
The answer to the second question is more complex.
Technically you can. And it probably is easier to find properties that can make
you £700-£1000/ month if you use a premium rent. However, the difference here
is risk. If you are relying on achieving a premium rent to make your target
profit, your business could run into cash flow trouble if this factor is
affected (by pandemic for example, or season, or anything else).
I will write an article comparing the two strategies in more details later this week – as I know a lot of you are sitting on the fence
undecided between the two strategies.
Rent in a lot of prime areas (for example central London)
are heavily discounted at the moment due to pandemic and lockdown. This can be
a rare lifetime opportunity to pick up some great deals, whether you want to do
short let or long let.
Use adversity to your advantage,
Emma
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