Table of Contents
How to Grow Your R2R Serviced Accommodation Business
Scaling Your Serviced Accommodation Business is not an easy task. You may have successfully set up a handful of units, and are keen to replicate your success. What’s next? Facing cash flow concerns? You might not need to – read on to find out how you can fast-track your growth.
How It All Started
My journey into property management began 2.5 years ago at the Serviced Accommodation Masterclass by Touchstone Education. Before this, I had zero property experience, working as a sales manager for a large corporation. Feeling trapped and unfulfilled, I decided to invest in my education.
Where I Am Today
In just 2.5 years, I’ve grown to manage 37 serviced accommodation units, including a mix of Rent 2 Rent, managed, and owned properties. The most common question I get is, “How did you scale so fast?”
The answer is simple: I use strategies to keep my setup and running costs low, focus on one specific market, and cut down on operational expenses. This approach maximises my profits and allows me to continually invest in new units.
I’m not an all-round property expert, but I’ve mastered this particular strategy. For those looking to increase their cash flow quickly, this is an ideal method. Traditional buy-to-let investments can be slow and offer modest returns, while Rent-to-Rent and serviced apartments offer a quicker path to generating cash flow.
Fast-Track Scaling Your Serviced Accommodation Business
1. Never Pay a Deposit
This is non-negotiable for me – if a landlord requires a deposit, I walk away. From a business perspective, it is inefficient to have capital tied up without purpose. It’s important to recognise that you are presenting the landlord with a valuable opportunity, not the reverse.
Once you learn how to position it correctly, you’ll never pay a deposit again. By avoiding deposits, your initial costs are lower, allowing you to use that money to set up your next unit.
2. Never Pay Rent Upfront
You should always aim for 1-2 months’ rent-free – if you position it correctly, it’s achievable. My goal is to ensure income from bookings before paying any rent to the landlord. You need to adopt the mindset that you’re offering the landlord an amazing deal.
Once you know how to close the deal, securing 1-2 months rent-free becomes straightforward. By saving on both the rent and the deposit, you can use that cash to set up additional units.
3. Don’t Pay Upfront for Furniture
Furnishing a serviced apartment is usually the most costly part of the setup, but there are several budget-friendly options:
a) Lease Furniture
Many companies offer furniture leasing, allowing you to pay a monthly fee instead of an upfront cost of £5-7K to furnish the property. This improves cash flow and reduces initial costs, giving you more funds to invest in additional units.
b) Furnished Apartments
Many apartments available come fully furnished and are essentially turn-key ready for use as serviced accommodation.
You can add a few soft furnishings to customise them. I have several fully furnished apartments where I spent just £200-300 on soft furnishings before listing them for bookings.
4. Build the Right Power Team
Building a strong power team is crucial for scaling your business effectively. The right cleaners, maintenance staff, and guest relations teams keep you from getting bogged down in day-to-day operations. If you’re always handling cleaning and maintenance yourself, you won’t have the time or focus needed to grow your business effectively.
5. Hire a Managing Director/Operations Manager
When I reached four properties, I hired an operations manager. I quickly realised that systems and organisation weren’t my strengths, and I didn’t enjoy that side of the business. What I excelled at was acquiring new properties, negotiating with landlords, and constantly sourcing new opportunities. With the operations side fully managed, I could focus entirely on growth and scaling the business.
6. Focus on Bookings
You can scale your serviced accommodation business and build an impressive portfolio, but if your properties aren’t fully booked, they won’t be profitable. Ensure you set up apartments in the right locations where there is demand from your target market. Don’t spread yourself too thin by setting up properties all over the place, only to have them half empty. Start in one area, streamline your operations, fill your units, and then replicate that success in other locations.
7. Prioritise Direct Bookings
In a Rent-to-Rent Serviced Apartment business, keeping an eye on your margins is crucial. Paying a 15% commission to Booking.com can cut into your profits, and servicing every 2-3 days increases operational costs. I use Booking.com as a lead generator but always aim to convert current guests into direct bookings to avoid these fees. I focus on the contractor market, where bookings typically last between 3-18 months, with no booking fees and just 1-2 cleans per week. This keeps operational costs low and maximises profit.
Scaling Your Serviced Accommodation Business with Gordie Dutfield
