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.