Rob: Hi, it's Rob from Property Investments UK. And in today's video we're going to be
looking at specifically what properties actually work for serviced accommodation and why.
We've looked at the locations that you should consider. Next up we're going to consider specifically
what type of properties work. So serviced accommodation is, we've spoken about the corporate
let type tenant profile. So does that dictate, I guess, what kind of properties are ultimately
going to make sense? Paul: Yeah.
Rob: The type of tenant - where it's going to be - but the type, the size. All that kind of
stuff. So what is it that you guys actually look for?
Paul: I mean some fundamentals is, we need some sort of concierge system.
Rob: Okay. Paul: So we'll do a meet and greet but we'll
also, we'll either key hold ourselves or we'll need a key holder as well.
Rob: Yeah. Paul: So that way you can access anything
you need. Apartments generally. Because they're just cleaner, they're easier to do.
Rob: Yeah. Paul: And you have got that service available.
You know, if you've got a normal house, you've got no one to meet you there.
Rob: Yeah, that's right. Paul: You know, et cetera. And they're easier
to maintain as well. Rob: I guess for apartments, you wouldn't
get a house at this location. Where we are now, it's city centre. So you're
only gonna get apartments in that respect, for that particular location. And so, apartments,
so you ... So a certain size of apartment or number of bedrooms that you tend to focus on?
Paul: We will only focus on one or two bedrooms. Rob: Okay.
Paul: Studios are a no go, for us anyway. And three bedrooms are not, because then you're
getting into a house of multiple occupancy here again. So one bedroom is great for the
professional, for one professional or the couple.
Rob: Yeah. Paul: You know, the, well a professional is
on the contract or apartment. Two bedrooms can facilitate a family. You know, with a
child and it's usually only one at this stage. Rob: Yeah.
Paul: But where we're going. Three bedrooms, it's probably harder with the regulations
as well. Because I know they're stricter with HMOs now and the amount of people that you
can have in there. Rob: Yeah.
Paul: But it's getting a little bit cluttered then, you know. And I don't think... I can understand
if you've got a two bedroom apartment, you might get two separate professionals.
Rob: Yeah. Paul: Instead of two hotel rooms, which again,
is more cost efficient. But I think with three, it then becomes sort of shared. A combination,
more than anything. Rob: Yeah. And I think one person, where
a corporate has stayed in there for six months and it's one individual, probably feel
like they're raffing around a little bit, in a three bedroom apartment.
One bedroom I think is fine. It's more cost effective for the company.
Paul: And for the person whose bought it through you but it's obviously gonna be more expensive.
Rob: Yeah. Paul: And we want to be able to still say
that, you know, we can give you this rental guarantee or this the new share you get.
Rob: Yeah. Paul: You know, because relative we'll charge
more for two bedroom. We'll charge more for three bed but no one's gonna book a three bed for
one person. Rob: Yeah.
Paul: So obviously they're gonna look for a one bed or two bed first.
Rob: Yeah. Because it uses that type of market. I mean, it's still an estimate at the end
of the day because they're buying it based on yield or return.
Paul: Yeah. Absolutely. Rob: They've got to get that kind of-
Paul: And I think historically, with apartments we've sold three beds generally, are always
bought by residential buyers I would have thought.
Rob: That does make sense. So there are some terraces, there are some semis that I think
can work and do work in some maybe holiday let type ares. But I think for the corporate
let model, it's that prime location isn't it? It's being in the right city. The right
kind of spot within the city and that very often lends itself to this.
Paul: I'm thinking with the short terms and the houses, it's hardly usually next door to
a house the person who owns it, et cetera. Rob: Yeah.
Paul: To make it easier. Because you do need someone close to it. The last thing you want
is just to be left stranded alone in a house and you've got no contact with anybody else
who'll come. Rob: Yeah, yeah.
Paul: Yeah. It's just worked out, how it's transpired is this is what people want when
they ask us, you know. They'll say, "Do you have a one bed or two bed apartment?" And
that's it. So we've stuck to that model, there's no point in changing it.
Rob: And it makes sense for everybody involved in the chain. So it makes sense for the investor,
the yields are very often kind of slightly higher, slightly better. Makes sense for you
guys as management. Obviously the structure is in place. You've got the ability
to offer the concierge service. You know the locations.
Paul: And the retail aspect as well. The biggest market is still one and two bedrooms, you
know. So when you look into a few exit strategies you've still got an apartment that is gonna
be highly sellable. Rob: Yeah. So if an investor or a homeowner
is gonna buy that apartment, one or two bedrooms is gonna work best. Studios, you struggle
a little bit. Maybe three beds, maybe struggle a little bit. So it's the right fit.
Paul: Studios, because of the clientele we're looking for, you know. They don't want to
be sleeping in the same living area and the kitchen area.
Rob: That makes sense. Paul: Yeah.
Rob: Yeah, perfect. So hope this give you some ideas in terms of what property types
are gonna work for serviced combination. Certainly where we're focusing our strengths and growing
our portfolios well in the future. It's gonna be focused around these prime locations. And
you've got to consider the end user in mind. So that corporate tenant profile. They're
gonna want a certain type of property and that's very often location, size and also
the type of property and the service that goes with it. So yeah, hopefully that helps.
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