In this video, I’m going to show you The Basics of Serviced Accommodation and teach you what I’ve learned in scaling my portfolio to over 300 properties in less than three years. What is serviced accommodation? What are short lets? What are holiday furnished lets? In principle, you’ll probably know it as Airbnb. It’s where we take property, and instead of renting it out to a tenant, we actually rent it out to guests that are travelling to the area and need accommodation.
The reason why it has become so popular is people are now wanting more than just a hotel room. People quite often want to visit cities and they want to stay for longer periods of time. And they can do that more economically by renting out a full house, which also has the facilities that they’re used to when they’re living at the home. They can relax in their lounges. They can cook in the kitchens. They can store their own food and drink in their fridge. There are many benefits to renting a short let over a hotel, and this is why we’ve seen the surge of the Airbnb industry, as it’s known.
All over the world, people like myself and like you can make a profit by quite easily hosting guests and becoming part of the hospitality game.
In my experience, it is quite a simple process. However, there are many moving parts to it, which you need to figure out first. And over this course of Serviced Accommodation, I’m going to show you exactly how we go from beginner starter investor in the serviced accommodation industry, all the way through to managing a full portfolio and how you can then leverage other people’s properties. So make sure you subscribe to the playlist and make sure you subscribe to the channel to make sure that you don’t miss an episode. But let’s get back to today’s episode.
So what is it? Is it safe? And how do we do it? It is safe and there’s a lot of technology in play now that allows you to verify the guests that are coming in, and to ensure that we can eliminate any of the party bookings and all the bad news things that you see. But in the main, like anything in life, we work on the 80/20 rule, where 80% of your guests are absolutely fine and 20% of them might cause a few niggles. But touch wood, nothing too disastrous has happened so far for me. And on the main, having coached many, many, many people in the same industry, and networking with many people in the same industry, there are like all the same where the majority of the people that stay are absolutely fantastic and they come back time and time again and it makes the business worthwhile too.
So, let’s talk now about the lessons that I’ve learned in scaling my portfolio. So in the beginning, it’s very exciting and you can acquire property in a majority of ways, which we’re going to touch base on throughout the series, but you can rent a property from a landlord. You can co-host, where you actually just manage it for somebody else and take a split of the revenue for that. And obviously, you can buy two SAs so you can buy properties. You can develop properties, anything from small little residential properties, studio flats, all the way up to big developments, blocks of flats, huge houses in states, you name it, that’s your decision, how you want to run them if you are developing them. But the exit strategy is always the same. We’re hosting the guests. And then the type of guests that you might have depends totally on where you are at.
So my Dubai portfolio, we actually attract a lot of expats who are moving over from all the different cities around the world and different countries around the world and they’re moving over, but they can’t necessarily get the contract straight up because they haven’t got visas. So we actually rent to them. We also see an influx of tourist traffic in the peak times, which is the winter months in November through to sort of April. And that becomes a very, very good time for that. On the flip side in the United Kingdom, they’re terrible times. The November, December, and January are pretty bleak, and unless you’ve got some strong direct bookings in there, then you’re going to maybe suffer a bit. However, as I say always, SA is a 12-month game and we must make sure that we play it for the 12 months.
Because at the end of the 12 months, we will be profitable. And I guarantee you’ll be more profitable than if you had tenants. In the UK, we have various different travel types. My personal portfolio is attracting the contractors that are travelling for work throughout the week. Personally, I think that’s where the majority of the money is. And that’s where the majority of the profit comes from. And then we have the weekenders, if you are fortunate enough to be in a city that has a lot of contractor business, but also attracts the weekenders, then that’s a great place to be in as well. Because that really opens up the door to both avenues, seven days a week booked or at least six, and you’re going to make some good money. So let’s just look at the basics right now and how we apply them. Basically, what we want to do is find a property. Now we can find a property in a majority of ways.
So, as I said earlier, we can rent it from a landlord, which I’ll come onto later on in the series, we can buy property specifically for this purpose, and we can also manage, or as it’s known as co-hosting, which is a very risk-free way to get into the property. You can also add an additional strategy to this, which will be deal sourcing. If you did not want to actually run the properties, there are many, many individuals who do, and they’re always looking for good deals. So you can actually source a property that’s perfect for short term lets and serviced accommodation. And then obviously you can sell that deal on as well. So there are loads of ways that we can make money out of these, but ultimately we need a property as the starting point to be able to create the cash flow. And that’s what I’m going to be showing you how we can do across this series.
What I’ve learned along the way is there are multiple ways to do it. So what I do is I use the rent-to-rent strategy or the rent laboratory strategy, as it’s known in most countries, apart from the UK. And that becomes my quick cash flow strategy. You can acquire these properties very quickly when you know what you’re doing. And I personally acquired 21 in my first seven months. So once you nail that strategy, you can create quick cash flow. This cash flow for me then helps me buy my own assets, which I then obviously own. And, they fall into my asset, my net worth. And you will make more money on those types of properties, renting as serviced accommodation because naturally, the mortgage debt is cheaper than the rent that you’re going to have to pay the landlord on this strategy.
And then once you get the experience, once you’ve built the systems and the processes up, you can then go into managing and co-hosting and you can charge anywhere from 10% to 25% as a fee of the revenue that you generate. And you do that for basically just looking after the property, getting a guest in there, making sure that the cleaners turn it over and making sure that there’s any maintenance. And then at the end of the month, you pay the invested difference back. So that’s how I have typically built my business. Now in terms of how we make money. So let’s assume here that the rent is a thousand pounds per month. So we then look at what we would charge on a nightly basis. Now, a property that rents for a thousand pounds a month is a thousand pounds a month. And that’s all you could typically earn from it.
So if I was to rent one of my own properties out, I would get a thousand pounds a month for it. Or I could run it as a short term let, and I could potentially charge 200 pounds per night. Now you’re not going to be occupied 31 or 30 days a month. Very rare you’ve got a hundred percent occupancy throughout the whole 12 months of the year, but you will get occupied around the 75% to 85% mark. And in the peak seasons, 95% plus, in the down seasons around 60%, 65%, as long as you’ve got a good game and you know what you’re doing, you’re marketing yourself in the game. We’re going to show you everything throughout.
But let’s just look at the average here. So if we looked at 20 nights booked, then naturally that is going to bring in 4,000 pounds worth of revenue, versus the thousand pounds worth of revenue that we could get if we just rented this property out. Now on this basis here, obviously there’s no cost to consider. The tenant pays for the council tax, the tenant pays for the utility bills, typically the tenant pays for the wifi, et cetera. On this model here, we have to cover those bills. So we’ve got the utilities here. We’ve got the wifi. We’ve also got the turnover costs, as obviously we’re going to need cleaning after every single stay.
And naturally, because there’s a bit of movement through the property. There is a bit more maintenance to consider. However, the good side of that is we take deposits from guests. So naturally, we’ll just charge the guests for any damage that they have caused. However, there are things that guests don’t damage and it’s just where and tears the property. We have to brunt the cost of that. But done correctly, there is enough margin in this. Because, even if we assumed our running bills here were a thousand pounds worth, thousand pounds rent, thousand pounds running bills, we’re getting four grand from being occupied 20 days a month. There’s 2000 pounds worth of profit. And those figures are genuine. You can pull that off. There are properties all over the United Kingdom. There are properties all over the world where you can pull this off.
I mean, I know people in the states that are doing almost like, add another zero on that. That’s what they’re charging a month for luxury villas and big apartment blocks. And you know, there are so many different ways you can make money out of this strategy. However, the basics are that we take the house rather than just getting the rent for it. We run it on a nightly basis with a bit of a hotel-style operation involved here. And we end up with a nice tidy profit at the end of it all. And that, then you can decide what you want to do with that. Whether you pump it back into the business like I did to buy assets or continue to settle more rent-to-rent deals.
It’s entirely up to you, but ultimately cash flow is king in this game. So you want to make sure that you keep yourself liquid. You keep yourself with more cash flow coming in, and you can only do that by securing properties, which we’re going to come onto later on in the series. Don’t forget to hit the subscribe button and join the playlist, because in the next module we’re going to be talking about what properties work for service accommodation. So you don’t want to miss that and feel free to drop any comments on my Youtube, and I’ll answer the questions personally.