You may live comfortably in a furnished serviced apartments for the duration of your visit because it is fully equipped. Serviced apartments provide the same level of luxury as a hotel but with more room and a much safer environment.

Your expenses will go down if you rent a furnished place. Greater flexibility – Renting a completely furnished apartment makes sense whether you’re switching homes or just need a temporary somewhere to stay for business.

A condo or apartment that has been completely furnished has all of the furniture, appliances, and household goods that a prospective homeowner would require to live comfortably.

This raises a compelling argument: Are Serviced Apartments Really A Good Investment?

Now let’s discuss something different!

How Are Serviced Apartments A Good Investment?

A serviced apartment offers both the advantages of an apartment, such as a kitchen, living room, and workspace, and the conveniences of a hotel room, such as a cleaning service, completely furnished rooms, and room service.

Both short-term and long-term stays are offered in service apartments, which are frequently own by private persons but are leas back to the operator for use as lodging.

The contract between serviced apartment owners and the manager of the building may take many different forms. There are two standard types of serviced apartment agreements, though.

Long-term:

With this concept, the owner is able to run the apartment much like a hotel room and offer it as short- or long-term lodging. In this scenario, the apartment’s owner just uses it as a rental property and does not live there.

Short-term:

A short-term lease permits the owner only sporadic use of the property, and while the owner is not using it, the operator may rent it out for brief stays. 

This is frequently the case with resort properties, where the owner may use it as vacation housing for a portion of the year and let the operator rent it out as short-term housing for the remaining portion.

Why Is Investing In Serviced Apartments A Good Investment?

Furnished serviced apartments provide investors with cheaper purchase prices and total expenditures, as well as high demand from certain tenant categories and possibly high rental returns.

Serviced flats that are furnished are a popular choice among real estate investors. Because of their high capital appreciation and cheap rental rates.

Unlike ordinary rental properties, serviced apartments often provide a higher income, with an average yield of 6.5%-9% per serviced unit. While the expense of property maintenance is frequently higher, the opportunity to incorporate seasonal pricing, short-term stays, and long-term stays.

A one-bedroom serviced apartment in London, for example, may cost up to £150 per night with weekly housekeeping. That is £4,200 for a month with 28 nights occupancy. 

3 Key Advantage Of Furnished Serviced Apartment 

Serviced apartments might differ from more conventional investment properties in a variety of ways.

• They ensure an income for renters

In serviced apartment contracts, the operator of the serviced apartment building frequently bears the risk of vacancy. In other words, the operator pays a set sum to lease each individual property from its owner and then rents the flats to travelers.

• They may provide profitable rental income

The rate of return is usually much higher than for other types of residential property. Because many serviced apartment agreements provide the property owner with a predetermined fee.

According to the most recent poll, the combined capital cities’ gross rental yield is expected to be approximately 7% in 2022. Serviced flats have a net rental yield of about 11%, in contrast.

• You don’t have to carry out upkeep or repairs

A serviced apartment’s operator is responsible for doing all necessary maintenance and repairs. This means you won’t have to deal with renters’ concerns about repairs or maintenance requests from property managers.

In many agreements for serviced apartments, the operator is also your tenant and handles maintenance yourself.

3 Drawbacks Of Investment A Serviced Apartment

• Lower capital growth is possible

The majority of investors purchase real estate in anticipation of future capital gains. Smart investors want to acquire properties that are expect to appreciate in value, even though they also want to create cash flow from them.

• The resale market can be challenging

You can have a hard time finding a buyer when you want to sell your serviced flat. The market for resale is limited because these properties draw a very certain sort of investor with a very particular investment plan and risk tolerance.

• Their performance is frequently influence by their management

For most investors, the promise of consistent, continuous income is the most appealing element of a serviced apartment. This warranty, however, is only as good as the management of the serviced apartments.

The strength of the vacation and corporate accommodation industries may cause a badly managed serviced apartment to rise and fall. 

Things To Consider When Investing In Serviced Accommodation

• Location

The location is critical when investing in serviced accommodations. You must guarantee that you have the finest possible location for the market you wish to rent to. Most tenants will not be seeking a touristic location. They will look for locations with close facilities and work.

• Connectivity

One of the most significant distinctions between serviced accommodation and a buy to let investment is connection. Professionals prefer serviced lodgings. As a result, consider close transportation links, a central position, and proximity to the city center.

• Excellent facilities

It will assist to ensure that the apartment is well-furnish and has high-quality amenities. An older apartment will have more difficulties that need to be resolve. especially if someone is visiting weekly to clean and report the damage.

FAQs

Why is infrastructure important to investors?

This is why property investors should take an active role in analyzing both present and proposed infrastructure improvements in various markets.

How long can you stay in a serviced apartment?

A serviced apartment is design for stays of one month or more. Shorter stays of a week or longer may be possible, depending on local rules and restrictions.

Is investing in serviced apartments a good idea?

According to several credible sources, the average yield from serviced apartments is generally between 6.5% and 9%, which is a decent yield for any investment. This means that income from serviced apartments is often higher than income from other rental properties.

Conclusion

Serviced apartment investing is a wonderful option for all investors. If the correct properties are invest in, one may experience large returns on their investments.  Mortgage finance can enable you to invest in buildings that are worth considerably more than your existing cash, which can be easily paid off with the handsome rental income that comes with serviced apartments. Please contact us if you require any other information.