The UK’s residential real estate market is valued at USD 120.2 billion and is expected to grow at a CAGR of over 3.4% throughout the forecast period.
Currently, the real estate market offers many investment opportunities, particularly for those seeking to enhance their property portfolio or climb the ladder.
Whether you are a first-time property investor or a master in the field, the R2SA investment strategy is one of the most profitable property investment methods, offering the potential for significant passive income and increased investment returns.
So, don’t you want to achieve desired financial growth by choosing R2SA?
But it’s not that simple.
You should know the nitty-gritty aspects of the R2SA investment, including the risks and rewards.
Let’s dive deep into understanding both sides of the coin.
Key takeaways:
- Know about how R2SA investment can be beneficial for you as a property investor.
- Understand the downside of the investment strategy and make the right decisions to overcome the hurdles with finesse.
Rewards of R2SA Investment
In R2SA property investment, you can rent out the apartments daily, weekly, or monthly and offer multiple amenities to your tenants, like housekeeping, laundry, and concierge services.
The strategy can help you reap multiple rewards:
1. Regeneration and redevelopment
You can achieve a steady and higher rental yield once you invest in a rent-to-serviced apartment. It can be rented out on a limited term to tourists, travellers, or individuals who want a temporary home-like stay.
Explore areas near business districts, tourist attractions, or universities. It can help you get more rental income, which can maximise rental income and increase the return on investment.
2. High occupancy rates
Investing in residential serviced apartments can help you achieve higher occupancy rates than a traditional apartment.
But how?
Because serviced apartments are often located in popular tourist or business destinations, demand for short-term accommodation is high.
Also, you can offer more flexibility in terms of length of stay and lease terms which can maximise the appeal and occupancy rates of your serviced apartments.
3. No maintenance or repair
Because a professional management company manages the serviced apartments, the day-to-day property management responsibilities, such as maintenance and cleaning, are taken care of by the company, which reduces your workload and tenant complaint hassles.
Once you purchase the property, the property management company handles most of the major aspects. You can escape the management aspect, receive the agreed rent from the management company, and have peace of mind.
4. No tenant management issue
In a rent-to-serviced apartment model, the serviced apartment operator takes the risk of a vacant apartment instead of the property owner.
They lease the apartment from you at a fixed price and rent it to people who need a place to stay every month. You will receive a guaranteed fixed rental income every month, even if the apartment is vacant because the operator is responsible for finding tenants and ensuring that they pay rent.
It also reduces the risk of long vacancy periods, a common problem with other investment properties.
These are the primary benefits of choosing an R2SA investment strategy. Now let’s understand the major risk involved.
Risks of R2SA Investment
There are several risks associated with R2SA investment, including:
1. Property market fluctuations
Like all real estate investments, rent to serviced apartments can be impacted by fluctuations in the property market.
If there is a sudden drop in demand for short-term accommodation or an oversupply of rental properties, rental rates and occupancy levels may decrease.
2. Economic conditions
The state of the economy or rising inflation can also impact the demand for short-term accommodation and the rental rates of serviced apartments.
During periods of economic downturn or recession, demand for short-term accommodation may decrease, impacting the occupancy levels and rental income earned by property investors. Also, if your property is financed through the loan, the rise in interest rates can impact your returns.
But all this can be nullified if you have associated with the best property investment company in the country, which can help you bypass all the complications.
If your agreement with the property operator includes that, you’ll get a fixed rental amount, and then you don’t need to worry about the market situation or other risks involved in the R2SA.
You just need to be thorough with all the legalities and the reputation of the company you are associating with and invest in the right residential property which can be used as a serviced apartment.
That’s where you can trust Pluxa Property.
Pluxa Property – Experts at Managing Risk
As a client-centric, trusted, and Birmingham-based investment company, we have a strong team of experts who can analyse your requirements and help you achieve your desired results.
We are a leading property investment company with over ten years of experience. Pluxa Property has successfully addressed numerous issues related to serviced apartments and can do the same for you.
Our team of property investment experts has the knowledge and expertise necessary to assist you in significantly impacting your investment portfolio in the years ahead.
We provide a tailored rent-to-rent service accommodation investment plan that guarantees you will make a profitable investment in your serviced property.
Invest wisely in your rent-to-service property and achieve all of your investment objectives.
Contact R2SA property investment experts to kickstart your investing.
FAQs
What are the potential risks associated with R2SA investment in property?
Like any other real estate investment, renting out serviced apartments has potential risks. Some potential risks can be associated with the economic slowdown, resulting in declined demand for serviced apartments. Also, with the rising competition and oversupply of serviced apartments, you can get low rental rates and occupancy. You can’t ignore the management, legal, and property risks associated with investment strategy.
What are the rewards of R2SA investment in property, and how can I maximise my returns?
Investing in rent to serviced apartments can offer various rewards, like a steady stream of rental income, since the apartments are usually rented out on a short-term basis, often to business travellers and tourists. Also, you have a higher chance of renting out serviced apartments compared to traditional apartments because of their more flexible lease terms and amenities offered to the tenants.
Peter Juhasz is the founder of Pluxa Property, the biggest property investment company in UK and Group CEO of AIP Capital Group and a property investment expert with over a decade of experience in the UK market.
He built a successful property company using innovative cashflow strategies like Serviced Accommodation and HMOs, scaling to 200 units in four years.
Peter leads a team specializing in property and business acquisitions across various sectors. A former co-host of “Cashflow With Property,” he shares his expertise in real estate investing and business scaling.
He is committed to continuous learning and helping SME owners and investors maximize their returns, driven by his passion for empowering others to achieve their financial goals.
To learn how Pluxa Property can help you in UK property investment, contact our experts.
