Tips to Avoid Pitfalls in Owning and Investing in a Serviced Accommodation Property

Owning and operating investment Serviced Accommodation property can provide several important advantages. There are potential disadvantages to owning Serviced Accommodation property; however, you can help to minimize possible pitfalls by following certain guidelines to protect your investment.

First, always make sure that your expectations regarding investing in SA property are reasonable and realistic. You should always approach the investment of Serviced Accommodation property to achieve a positive cash flow; however, do not expect that you will be able to buy a new vacation home within a year.

In addition, it is important to make sure that you take the time to do your research and ensure that you understand the rules and regulations regarding the ownership and operation of Serviced Accommodation properties. As the owner of an SA property, you must abide by certain laws which provide specific information regarding your liabilities and responsibilities.

Along those same lines, it is important to be certain that any terms and conditions agreements you handle are legal. If you handle a lease or rental agreement which is not legal, you may experience several problems if a guest happens to violate your terms and conditions. To be safe, it is best to have an attorney draft your terms and conditions.

Before purchasing any property, be sure to have the property inspected or else you may discover you are facing a set of expenses you did not anticipate. Having the property inspected by a professional before you sign on the dotted line will involve an expense; however, compared to the expenses you could face by purchasing a property without an inspection, it is certainly well worth it.

When you begin the process of renting out your property, take the time to verify your guest identity and make sure to have a damage deposit in place. These are both steps that many novice operators often overlook in their rush to fill their properties and begin turning a profit; however, it can be detrimental. Remember that having an empty unit is always better than rushing and having an irresponsible guest who may destroy your property.

Joining the Serviced Accommodation Groups in your local area can also prove to be helpful by putting you in connection with experienced investors and operators. You can also gain access to reliable contractors, inspectors and other professionals who can make the process of operating SA property much easier.

It is also imperative that you make sure you have adequate property insurance as well as liability insurance. Property insurance will help to protect your investment while liability insurance will protect you in the event anything should happen to someone while on your property.

Finally, make sure you take the time to establish an emergency fund to cover expenses that may crop up unexpectedly. Remember that you are operating a business and as such you must be prepared for those times when expenses arise. The exact amount that you wish to contribute to your emergency fund is ultimately up to you; however, it should be sufficient to cover typical expenses that may arise. The general rule of thumb is to put aside 20% of the value of your property. To make the process of establishing an emergency fund easier, consider setting aside a certain amount of your profit each month into a special account is recommended.

Tips for Finding the Right Rental Property

The decision to invest in rental property is an important one. The first step in getting started is choosing the right property which will generate a sufficient amount of income whilst requiring as little maintenance and upkeep as possible. Ideally, it’s best to develop a list you can take with you when you begin the process of searching for the right rental property. This list will help to keep you on track and focused on what you’re looking for as well as what you should avoid.

When looking for the right rental property, you will want to consider several factors:

First, you should always consider the condition of the property. Generally, it is best to keep in mind that if you come across a property with a price that seems too good to be true, there is usually a reason why the property is priced so low. Many property investors like to point out the fact that you can determine your profit when you purchase a property.

While you may not consider selling the property for some time and will instead be renting it out, it’s still important to take into consideration the cost of any necessary renovations and repairs before you make a final decision regarding whether you will purchase the property or not. After considering these factors, you may find it will be ultimately cheaper to buy a property that’s in better condition, as it won’t require any expensive work or renovations that will make the final price higher as you prepare to rent it out.

Location is one of the essential elements of purchasing the right rental property. Keep in mind that properties that are located directly on a busy street may not be appealing to tenants who like a quiet and peaceful neighbourhood. On the other hand, a property which is located near schools or parks will likely be more appealing to families.
It is also important to find out the history of the property and specifically whether the property has ever been used as a rental property; this is important as in some cases previous tenants can cause a property to develop a bad reputation that’s tricky to remove.

If the property is currently being used as a rental property, you also need to consider whether tenants are already on the property. If that is the case then you may need to honour the current lease with those tenants. This means that you may not be able to raise the rent until the lease has expired. There may even be laws in some cases which could regulate how much you can raise the rent: something that should be carefully considered. While there is the obvious advantage of already having tenants on the property, you may find later that this is somewhat of a bit of a disadvantage so be sure to carefully consider this factor.

The maintenance and repair needs of the property should also be taken into consideration. If you are not able to personally maintain the property or repair it, this will translate to hiring a property manager and/or tradesperson. This means extra expenses which will reduce your profits. Of course, it also gives you some free time so you will have to weigh the advantages and disadvantages.

Finally, consider the price of the property. You always need to make sure that you will be able to cover not only the mortgage payment if you have one, but also other expenses such as taxes and insurance. In the event the property is not occupied for a while, you will still need to meet all of those expenses so be certain that you can cover them before you obligate yourself

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