The Top Five Serviced Accommodation myths and solutions Part 1.
My name is Paul Smith, and I've trained literally thousands of people with Serviced Accommodation. Many, many people don't get into Serviced Accommodation because of some myth, or some idea that they've had, something that somebody's told them. Somebody said, "They don't allow it." Well who the hell is they?
If you're one of those people that would love to have financial freedom through a Serviced Accommodation business, or indeed through a property business, then I want to help you with addressing the 'Top Five Serviced Accommodation myths' that I've been presented with over the years. In each case I want to give you some examples of how to resolve it, and we'll make it very actionable.
Please feel free to share this with your friends. Because I know many of you will not only want to help yourselves, but you want to help friends, family, and your loved ones. Okay, so here we go.
5 Rookie Serviced Accommodation Mistakes
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The Top Myth - "Well I would love to get into property, property investment, but I haven't got any. I don't know anything about it."
The top myth that I get time, and time, and time again.
Well here's the thing, Serviced Accommodation is not really a property strategy. Serviced Accommodation is a business strategy. How many hotel groups, Hilton for example, own the properties that they operate? Hardly any. Just because you don't have any property doesn't mean you can't get into Serviced Accommodation.
You do, of course, need to learn the critical information that allows you to do it properly. Not having any previous property experience whatsoever is not a barrier to entry to serviced accommodation. In fact, in many ways, it's a good thing. Because traditional buy-to-let investors have to be untaught first, or the assumptions that many buy-to-let investors make run contrary to quite a lot of things that you need to do with Serviced Accommodation.
For example, there's one right there. "In order to profit from the property, you have to own it." No. Booking.com and all the other OTA's, the online travel agents, don't actually care who owns it. They want to know that you've got the exclusive right ... These are their words, you might write these down... the exclusive right to display rates and availability. So they'll want proof that you've got control of it, but it's not on their radar that you own it. I'm not saying that you can't own it, you can of course. If you're a buy-to-let investor reading this and you want to turn that into a serviced accommodation unit, absolutely no problem. But you won't be suffering from this myth.
There's a whole set of people out there, in the UK, that don't have any property. The estimates vary, but they agree that there's roughly 65 million people in the UK. Just over 2 million of those, most people would say, different sources, but the most common figure that I see is 2.1 million. But if we just simplify that to say 2 out of 60, that's a 1/30th, round numbers. So, 1 person in 30 is a landlord, which means 29 people out of 30 are not landlords. So if you're one of the 29 out of 30 that isn't a landlord, you're the 29 out of 30 that need help with this myth. So here's the myth again. "I don't have any property experience. I don't have any property, any rental property." Doesn't matter. I can give you example after example, after example of people that have come, they've learned, they've absorbed, and they've put into action the serviced accommodation strategies and techniques that we share through our training.
So to give you an example, barely 18 months ago, Gordon Duffield came and started learning about Serviced Accommodation. Within less than 3 weeks he had 2 units that he was operating, that he didn't own, and by the end of the first year he had 28 units. Of course it varies, the type of unit, I'm just calling it a unit. It could be a room, it could be a flat, it could be a house or it could be a castle. The way we tend to talk about this in serviced accommodation is just a unit. So what is it that the guests can hire from you by the night, or by the week, or by the month? We'll just call it a unit, because you could have a serviced room, you could have a serviced boat or you could have a serviced castle.
The fact that you don't have any property knowledge is not a problem, take Gordon as an example. Gordon has never ever had a mortgage in his life. He has never owned a property. The only thing he's ever done with a property is rented it to live in. Until of course, he came on educating himself and he learned how to do rent-to-rent properly. That's a way of working, a modus operandi, that you might be familiar with, you may have heard of that. We teach, we share a very specific way of doing that. Because if you rent the property on some sort of AST, an assured shorthand tenancy or equivalent, you'll lose a fantastic amount of the benefits, and you won't really have an agreement at all. So yeah, you need to know the correct structures, you need to have the right legal documentation. We'd recommend a management agreement that we have in our document library.
The very fact that you don't have any property, just like Gordon, within 2 or 3 weeks of starting to educate yourself on serviced accommodation and how to do it properly, you could have 2 or 3 units, and each unit on average, throughout the UK, if you average it through the year, will earn you around £1000 per month after all costs. If you like the idea of moving from zero property income, to a property business income of £2,000 or £3,000 a month, in just weeks or months, then serviced accommodation is for you. I hope I've addressed that. But I can give you example after example, after example of people that have come through our serviced accommodation education and training courses with no property at all. They've never owned any because they're one of the 29 out of 30 people in the UK that are not buy-to-let landlords.
If you haven't got any property or any property knowledge, you're one of the normal people. If you're one of the 1 in 30 that's got buy-to-let, you're one of the exceptional people. But again, you're not going to be too bothered about that, because you've already got property, you already know how to buy investment property. So again, I repeat, control is what is important, not ownership. We can show you many different ways to control the property without necessarily owning it.
Here is an image of the Diamond Walker House in Glasgow.
If you're now questioning the myth, ‘If you haven't got any property, or property experience then you can't do serviced accommodation, I want to help you with that, and I want to quote Einstein at you. What Einstein said is, "Information is not knowledge." All the information in the world is available on the internet, so how come not everybody knows everything? Well that's the difference isn't it? Knowledge is what you need. So to go back to Einstein again, "Information is not knowledge."
What did he mean by that? Knowledge is the application of information in a useful way, and it demands education. If you like the idea of educating yourself as to how to control property without necessarily owning it, again I'm not saying you can't own it, you can if you want, but control through ownership is only one of many different ways that you can control property. You can get started extremely fast. We'd love to work with you here at Touchstone to begin your Serviced Accommodation education so that you're equipped with knowledge. A really good way to start will be perhaps by reading my book, The Serviced Accommodation Success Manual – https://www.amazon.co.uk/Serviced-Accommodation-Success-Manual/dp/199976160X.
Myth 2 - "I don't have any money."
Okay, I'm going to move on to myth number 2 now. "I don't have enough money." Well yeah, okay. However much money you've got, if you buy enough property, you're going to run out pretty fast. Here's the number 2 most common myth that I get confronted with. "I don't have any money." Okay. Well here's the news, you don't need any. Arguably, you need some money to invest in your education, but that's a tiny amount of money. Once you've made that investment, you'll quickly learn that you don't actually need money to control properties, as I mentioned in myth number 1.
How could you control the property without any money? I'll give you an example. You could manage it for somebody else. You could partner up with an existing landlord, or a developer, or an investor, and they may or may not already have a property, or they might buy it for you or with you. They provide the property, you provide the knowledge and the education, and then you operate it for them. I'm not saying this is the only way, I'm just giving you an example to prove that you don't need any money.
If you could insert the example here of Grand Central in Birmingham, and Richard McGuire, John. This is the block of 102, where Richard hasn't invested any money. How the developer's built the project, he's furnished the project, he's put in the WiFi, and what Richard is gonna do is just manage the serviced accommodation unit for him, for a fee. Okay? Here's an example of Grand Central in Birmingham. It's 102 units in a block. I'm not saying you've got to start with 102 units, but you can if you want. My very good friend Richard McGuire has done exactly that. He's operate.
That's it for this blog, hope you have enjoyed the myths so far. More to come soon!