Richard sits down with serial entrepreneur Laura Noble to discuss the popular and often misunderstood world of Serviced Accommodation. Laura opens up about the good, the bad, and the ugly, leaving no stone unturned.
- Which investors would be interested in serviced accomodation
- Laura’s story as a young, serial entrepreneur
- Laura’s accidental stumble into the world of S.A.
- The power of networking and contacts
- The power of mentors and coaches
- R.O.I. compared to normal residential BTL returns
- Location, location, location
- Who forms the market for S.A. tenants?
- Airbnb versus Booking.com
- Bigger start-up costs to keep in mind
- You’re furnishing a home, not an empty rental
- What Laura would do if she was starting over again
- The critical point of turning over between rentals
- Outsourcing different S.A. headaches
- Laura’s lesson involving a baby and a pair of scissors!
- Systems and structures
- Laura Noble
Connect with Laura on Facebook
Connect with Laura on LinkedIn
- Richard Swan
Connect with Richard
EPISODE LINKS AND RECOURCES
LINKS AND RESOURCES
Richard: Hello and welcome to today’s episode of this week in property, I’m your host Richard Swan and in today’s show we are going to be tackling the subject of ‘Serviced Accommodation’ and to get stuck into that topic someone who knows the good, the bad and the ugly with serviced accommodation, she’s nodding her head right now, is Laura Noble who I’ve got with me just now. Hello Laura.
Laura: Hi Richard.
Richard: Yes, you were nodding your head there, I don’t know if you were nodding your head at the good or was it you were nodding really frantically at the ugly.
Laura: At the ugly, definitely.
Richard: You know the ins and outs don’t you and that’s what we are going to delve into. First we are going to have a wee chat about the whole world, I am quite sure out of the 1000s of listeners that we’ve got, there’s people that are going to be in serviced accommodation, there will be people who are maybe just landlords, you know they’re maybe just looking at the tax things, that just come into my head there. I know a lot of landlords that looked at the tax, looked at the budget, the clause 24, all this kind of stuff and some of them are afraid and some of them are wanting to dump everything, “I want to sell my entire portfolio, I’m getting out of this game.”
But some of them are looking to pivot, looking to adjust and the world of service accommodation comes in, a possible option there. So yeah, there is going to be the novices listening in as well, because they follow the show because they know the world of property but they know it’s massive and they are like “Well what do I do? I’m in full-time employment or I’ve cashed in on my pension or I’ve built up these savings, where am I going? Am I going to become a Buy-To-Let landlord, am I going to do refurbs, do flips, what is this serviced accommodation thing?
I’m hearing about good returns, should I go down that road?” So aye it’s going to be a flavor for everything I think and that is why I wanted to get you in, you definitely know your stuff and you do know, I will repeat it again, The Good, The Bad and The Ugly. But before you jumped in to serviced accommodation, what was your business world? You built up a wee empire before that, didn’t you? So tell us about that.
Laura: Well I’ve got a commercial cleaning business, so we do a lot of cleaning for bars, restaurants, night clubs and we do stuff for letting agents, dental surgeries, doctors surgeries, like the full scale of cleaning. So, I kind of stumbled into Serviced Accommodation, with regards to someone wanting me to clean the property and then actually having a short discussion, we decided to put in on Airbnb…
Laura: And I would just guarantee the rent and so forth, that’s how that happened.
Richard: Fantastic, and the cleaning thing, was that, how did that even start? Just to dip into your business acumen, did you start that from school? Did you start that from a family business?
Laura: No, I was about 20 when I started another business…
Laura: I had a cafe.
Richard: Fantastic! The entrepreneur aye? So there is going to be a few listeners loving this. Right.
Laura: I had that for 5 years and then I had to sell it, it wasn’t doing as well as I wanted it to, too many hours for not enough return.
Richard: Ah right, okay.
Laura: So I sold that and I decided that I had to get into a business where it was a need, people needed something like every day and I thought, well cleaning.
Richard: You weren’t going to be an undertaker?
Richard: You put that one aside.
Laura: There’s definitely a need for that.
Richard: Well this is the thing, you can make money there…
Laura: So, I decided to start my own cleaning business…
Richard: Brilliant, any knowledge of that at all?
Richard: Well that’s fantastic. Love it.
Laura: A bit like the Serviced Accommodation… No no, no idea whatsoever, but you learn, you live and learn.
Richard: Yes, good on you.
Laura: So, I decided to start the cleaning business, started that and I joined a networking group and that’s how it grew, through my contacts.
Laura: And just started doing some work for letting agents, then I decided to go for bigger contracts. I had a business coach and he helped grow that.
Richard: Fantastic, you are ticking all the boxes here, so you know, you’re the entrepreneur mind, jumping into things and trying them, you’ve got the networking aspect I picked up on there, that’s something we talk about a lot and we’ve got our own property networking events.
So you have used that power of connections and relationships and different networks you might not have been in yet and then you’ve ticked the other box there, a mentor, a guide, a coach and stuff, that’s fantastic.
Laura: You definitely need, especially, I was only 24, 25 when i opened the cleaning business. So it’s always good to have someone guide you.
Richard: Right and you’re finding that just now with ALG as well, cause we mentioned the great man a couple of times in our wee chats, Steve McKenna and he is kind of guiding you along as well as a mentor figure as well. Fantastic, right so let’s channel in on the serviced accommodation, now then, so you stumbled into it, that’s hilarious, I like that. So it was a landlord who was looking for you from the cleaning perspective, but were they wanting to pull you in and become that serviced accommodation person as well? Or did it not start that way?
Laura: It was just a suggestion, I had said to her that we put the flat on Airbnb, but she is really busy so she wasn’t really interested in doing it but we decided we would try it once and we put it on last December and it started to get bookings, but the bookings were coming in for January, February and so forth so we got, December was okay but it was the very first month it was on. So I could see the bookings coming in for January and February.
Richard: Could see that potential.
Laura: And when it came to January, she couldn’t decide if she was going to go for a long term let or sell the property and I had spoken to a friend who is an accountant and he does a lot of serviced accommodations and he said to me, “If you don’t take the property of her, I will, I’ll just guarantee her the rent” So I knew there and then, this is too good an opportunity to pass up, so that’s why I went back to her and said I would guarantee the rent and put it on Airbnb and that’s basically how it started.
Richard: You can already see the profits ahead of you, above that rental figure and just as a kind of general guideline for listeners who want to know about returns, is it a market I want to get into, how good can it be? When you talk about, if you look at a rental figure, how much potentially is there of that.
So if someone is a landlord and they’ve got a choice, they can let it out and look at the local rental figure or they could use that exact same property but flush it through the serviced accommodation structure, how much of a difference is it to do that, you know as a general guideline, is it 4 times better, 6 times better, what you finding?
Laura: I would say double to 3 times what the rent was, but it all depends on the property and the location, which you’ve got to get the good reviews, you’ve got to have it up to standard and the location definitely.
Richard: Would you say location more than the property? Or property more than location? What are you finding there?
Laura: I would probably say location, more than the property.
Richard: Location first, interesting, right okay.
Laura: I would definitely say you would need to have a property that is close to transport links, so the one that we have is brilliant, it’s right at the bottom of Byers road, there’s train stations, subway, bus taxi, anything, right on your doorstep.
Richard: And you mentioned the other ones to me earlier, like Ingram Street and so on for people who are not in Glasgow, these are real city center locations and the West End, which is another area again which is more of an affluent part of Glasgow I would say. So who is the market, who are coming into these places because obviously the landlord has in his head that the kind of Joe Bloggs.
The avatar we like to call them of who the tenant is going to be, you know who they’re looking for and sometimes it’s a DSS because they want that money guaranteed from the council and stuff or no no, I’m specifically looking for a professional or I’m looking for a family, it’s a 3 bed I’ve got, so you know I’m going to advertising, looking for those people, I want them to stay for 2-3 years at a time. What do you think of when it comes to the avatar for serviced accommodation, who are the people? Who’s using it?
Laura: We’ve had people from all over the world in the West End flat, both West End flats.
Richard: Is it tourists? Is it professionals? Is it both?
Richard: Is it?
Laura: Airbnb is such a big, such a wide scale of people that is on it. A few weeks ago we had someone whose son came from Trinidad to come to university in Glasgow, so they wanted to come with him for 3 weeks to help him settle, so they stayed in the property.
Richard: And they stayed for those 3 weeks?
Laura: Stayed for the 3 weeks.
Richard: Fantastic, because I’ve used it as a user, usually when I go down to London to do some seminars, workshops and stuff, I’ll grab it for a couple of days at a time, so someone can find a market to grab someone for that length of period. What is the kind of longest you find then or have even heard in the industry?
Laura: When you put a property on, obviously your calendar is pretty empty, so you get quite a lot of people wanting to take it long term straight away but then they want a discount.
Richard: Right, they start to haggle with you?
Laura: They are just looking for a decent property and we’ve had quite a lot. People at university have approached us to do long term.
Richard: So like to cover the full term of the Uni?
Richard: Ah right, fascinating and does that work better for them as a consumer rather than trying to find a place to rent out then?
Laura: I would say that they would be better going to somewhere that does long term lets unless they are willing to pay the nightly price.
Richard: That’s fascinating.
Laura: Which is better for us if someone takes it for 6 months and they want to pay the nightly price.
Richard: The going rate, aye, damn tootin’ But I suppose it depends who is behind that person as well doesn’t it? Maybe they have a wealthy family, who as you say, people come from abroad to go to specific universities, they have a great name over especially in Scotland but in the UK in general and if the mum and dad behind that are wanting them set up in a quality place as close as possible, aye okay, that’s interesting,
I never thought of it from that perspective but then again that’s me just thinking of how I have used it personally and that’s what I want to get into, I really want to hammer all these different angles from you, your different experiences, opinions and stuff. So thinking as a landlord, thinking as that person, we want location first, you’ve covered that, the amenities, the transport, could be a tourist, could be a Uni student that kind of stuff, could be some kind of visiting business man coming for a couple of days in a particular city.
Then the property, what are we chasing from that point of view, is there a criteria that serviced accommodation normally covers or have you got your own personal criteria? Because obviously you’ve been through the whole protégé training that the company does and the platinum training the company does, we always talk about criteria, get yourself fixed, yes there is a billion different things you can do but focus, what is your criteria Laura, what are you going to chase a business model?
Laura: Always the location and then we will set up the flat.
Richard: So you say flat?
Laura: Most of the time it’s always a flat.
Richard: Okay, okay and you’ve got a penthouse place haven’t you, so that’s there as well, did you specifically target that.
Laura: That was the first one.
Richard: It was just an opportunity.
Laura: Was just an opportunity.
Richard: Right, okay okay, so is that more high-end then?
Laura: It’s a duplex, so it’s over two floors. It’s in a nice building with a lift, it’s quite convenient for people.
Richard: Right, a wee kind of funky place to stay in as well, i like that.
Laura: It’s got a balcony that overlooks Glasgow, so it’s got really nice views.
Richard: Beautiful, beautiful, and then flats is the other thing, any house at all, do you know of any service accommodation people that are using houses, detached…
Laura: There’s lots, there’s loads and loads on Airbnb and booking.com but with city center and west end, it’s mostly flats that you’ll come across.
Richard: Aye, so that’s what you’re targeting. Does it matter in the size? 1 bed, 2 beds, etc. Is there a specific experience you’ve had with the money and the returns.
Laura: No, they all seem to be pretty full, so with the penthouse, that’s 3 bedrooms but that can sleep up to 8 people, because we put in like a sofa bed or a blow up bed.
Richard: Ah right, okay.
Laura: It’s better that it’s a sofa bed some people don’t like a blow up bed, so we’ve learned from that.
Richard: Now, it might be because I’m a man, I’ve got red flags going off in my head as you started describing that place, 8 people, stag nights, you know yahoos, is there a danger there?
Laura: Most people on Airbnb are verified and they’ve got reviews as well, so when they do a booking or pre-book, I’ll have a look through their profile and decide whether we are going to go ahead or not, then there is a deposit that we put to cover any damages but we’ve not yet had to take off anyone.
Richard: Touch wood, fantastic, that’s good because we need to know the good and the bad and we need to know these different options because the listeners can start to weigh these things up, might be things they’ve never thought off, might be criteria, might be potentials that they’ve never entertained and you know maybe open up their minds on what they’re looking for.
Right okay, funnily enough you say that because my friends and myself, we’re planning a big trip next year to go down to the Grand National and this something one of the guys touched upon, rather than going away into, let’s grab so many hotel rooms and we’ll get together in the foyer, we’ll get together in the hotel bar, this kind of stuff.
Now let’s get down, let’s get a service accommodation on Airbnb, find something really nice, let’s have a great time together and they’re all great guys, these are people who wouldn’t tarnish a place and then you’ve got that place, you know you’re living in a big house kind of thing, it’s a nice experience, so aye it’s a good angle to come from.
Laura: And it definitely works out cheaper, because if there 6, 8 guys then you’ve got it divided, so if it’s like £150 a night and you’re there for 2 nights, it doesn’t work out very expensive.
Richard: Exactly, to try and contrast that with a hotel and getting so many rooms and stuff, yeah definitely, excellent. Right, well let’s step back a wee rewind there and pretend that none of the listeners know what we’re talking about when we say Airbnb, cause you touched upon how that’s a system to get your market in, get the bookings but you also touched upon it’s a good risk mitigator as well because of this review structure.
So am I right in thinking it’s kind of like Uber from the point of view is you get the driver who is verified, he’s got a rating structure, but you’ve also got the rider as they call them, the person taking the taxi ride, they’ve got rating structures as well, so you’re seeing that from your side, you’ve got Uber that’s looking at you for ratings and see how good you are as a provider and your apartment and stuff but Joe Bloggs coming to stay in your place, you can do the reverse, you can mitigate them.
So what kind of thing is you’re seeing? So it’s an online portal, Airbnb as it’s called if the guys want to check that out, we’ll have the links in the show notes, how does it work from a user point of view? I’m Joe Bloggs, I’m going to Glasgow and I’m looking at the city center, what am I seeing? Is it a map? Am I seeing wee pin points?
Laura: No you’ll put in how many dates you’re going for, how many guests there are and there can be an map and you can filter it if you want city center, west end, east end, wherever, so it narrows it down and then you’ve got the dates that you’re going, so that will filter what flats are available or what houses, what properties are available.
Richard: And can I filter the type of properties? You know 1 bed.
Laura: Yeah, 1 bed, 2 bed, a flat, a house, a cottage.
Richard: Ah right, that’s good and the next stage, do I select one and then I can see your reviews, your ratings and this is from people who previously stayed there and they’re putting up some kind of feedback, is it stars? Is it out of 10?
Laura: Stars yes, so it’s 5 stars. 1-5 stars, so you’ll see what people have reviewed you and they write a small note, telling if there was any issues or how the communication was between obviously myself or another host, you can use a friend as a host, to check people in or check people out or deal with any issues that may arise.
Richard: Right, excellent okay and just as you say that, I’m going to jump, just as you say that, jump off on a tangent again for the listeners. You’ve done a clever thing, you’ve set up all these different systems, so you’ve said that could be Laura as the provider and you’ve maybe just got one place but then you’ve got 2, 3, 4, 5, okay I’ll start using a friend, start using a cousin, but you’ve went a step further than that, you’ve actually used a physical device, outsource that part of the puzzle for you, haven’t you? So what have you got on the properties and stuff for the kind of key points and entries and things?
Laura: Well we’ve got a box, like a padlock box that’s outside the properties that the person will just put a code in and a set of keys will be inside.
Richard: Right, excellent, so you’re not having to physically go down there anymore?
Laura: So someone doesn’t have to physically go down cause it’s fine if it’s 1 or 2 properties but..
Richard: But when we’ve scaled up, yeah exactly and I remember funnily enough the last one I went to in London, because of my flights, I think I arrived there at 11 o’clock at night, so again let’s think of it again as the investor, we don’t want that in our lives, we don’t want to have to traipse down to some property at 11 o’clock at night and you know let some person in.
Laura: Especially when the check-in time is not during the day or someone is coming from a flight in America and they land at 9 or 10 o’clock at night, you’re not wanting to be hanging about waiting on them or if they’re delayed and it happens to be during the night, so it works better with a key system, that way they can arrive at the flat whenever suits because some people, some guests assume you are a hotel, so you have to wait there for them at your convenience which is not very good.
Richard: You’re the concierge.
Laura: Yeah, if you’ve got plans.
Richard: So Laura what’s for dinner? So you’ve had that before? You’ve seen those expectations, oh dear. I like that, so that’s a good point, we can start to outsource things, we can start to make things easier, let’s systemise these kind of key safes, pin safes as you say, that flags up the risk, oh wait a minute I’ve got somebody coming to my place and I’m not there they can grab the keys but you’ve mitigated that risk because you’ve already checked them, you’ve had Airbnb covering you, why they’ve got 5 stars as a person who’s stayed, so that’s good to keep in mind. Right okay and then, how can we make, so I’m going to flag up devil’s advocate here.
So Laura’s not coming to greet me, I’ve got a personal experience, she’s not shown me around, she’s just leaving me a number, I’m picking up my keys and I’m going into this place. So how do you then improve upon that? Have you a system where you are welcoming them in, if I need to know the Wi-Fi password, if I need to know where the local Italian restaurant is, how are you guiding me along that way?
Laura: I’ve got a small booklet in the flat, that will tell you the Wi-Fi code, how to work the TV, where the sky box is, where the TV remotes are, where the lights are, everything, any emergency contacts, we even put in local restaurants, local taxi numbers. So anything we think they’ll need, we put it in the booklet.
Richard: And that’s you giving the personal touch without having to be there, aye so they feel connected that way, i like it. Okay, so let’s go back to investor mode, I’m going to go into this, I’ve picked my locations to the city centre of Glasgow, Liverpool, wherever, I’ve then sourced a great deal of course, which we talk about a lot.
Let’s say it’s a 2 bed flat, I’ve got that, what do I need to do to set that up? So I’m not a residential landlord, I’m not thinking I’m just going to have this unfurnished and I’m going to put it up for rent and we’ll see how we go, I’m going to do serviced accommodation. So what kind of things do you have to go through to set that place up? What kind of materials, resources are you investing in to get in there.
Laura: Well to set up each property, you’ll have to upgrade the furniture unless it’s already a really nice flat, so you’ll have to put in, the first flat we had, had everything in it but as we went along we’ve upgraded everything, put new carpets in, we’ve had it freshly decorated, we’ve had bits and bobs fixed, just some maintenance on it.
Richard: So that’s a good typical thing for a Buy-To-Let landlord, what do we need here, let’s skin this place back, add plaster whatever it needs required, painting the walls, floors, covering and stuff and then within in that we’re providing stuff, so what would you provide for a person coming into stay in your place, are we talking the couches, the television, is it like a home? Is that what it’s like?
Laura: Yes, it’s a home from home.
Richard: So you’re putting yourself in that kind of mindset?
Laura: So we’ll have everything from, wine glasses, champagne glasses, bottle opener, all the cooking facilities…
Richard: Cutlery, crockery, the full thing.
Richard: Right okay, I need to think about this as an investor, this is my kind of startup costs, right okay. Have you learned anything by doing that? From the point of view of making it more cost effective, making the things last longer, have you come across any learning curves in that area?
Laura: Well with the first flat that we had there wasn’t everything that we needed, so as we went we started to get reviews maybe that there was only maybe 4 wine glasses and not 8 but it can sleep up to 8. So no we’ve got an inventory of every flat that we’ve got, that if it can accommodate up to 6 guests, we’ll have 6 of everything and then some spare in case of any breakages but we’ll have 6 wine glasses, 6 champagne glasses, knives and forks, we’ll put everything in, like a total starter pack of everything that you need to go into the serviced accommodation.
Richard: Nice one and then you’ve systemised it again, you’re going to replicate that every time you start up a new place, you’re ready to go. Okay you mentioned one earlier, where you talk about bedding and stuff, you learned the hard way with that, what was the one item that you wish you had thought off?
Laura: Mattress protectors and pillow protectors, had a lot of stains, like fake tan, we’ve had eyelashes, everything.
Richard: The bad and the ugly side.
Laura: That was only the men, that wasn’t the women.
Richard: The Glasgow west end men, the metropolis male, brilliant okay. So you’ve got that, so you think home, aye so it is a different mindset because if you’re a landlord you’re just looking for your tenant, you’ve got a completely different mindset, you get it set up and yeah you might furnish it but you’ll only do that to a certain level but this is different, it’s a different world.
So big startup costs, you’ve got to bare that in mind, bigger, that’s bigger than a Buy-To-Let, we’re providing services, we’re providing utilities, you know the gas, the electrics on top of that, you’re paying for that again, so that’s something else just to bear in mind while we are working out our figures, not like the tenant is going to be covering it for you, we’ve got the TV the sky broadband or any broadband i should say, sorry. You’ve got your TV license, you’re covering council tax, things like this, it’s like just one of your homes really.
Yup so we need to keep in mind those costs, that’s brilliant. You’re getting the return of course which is great. Legals, regulations, this kind of stuff, what is the market like there?
Laura: It’s basically what you’d do for a Buy-To-Let, to make sure everything is up to date, you’ve got your insurances, you’ve got your gas certificate.
Richard: So are you handling 2, are you doing building and contents, you’ve got that as an investor, okay.
Laura: Then you’ve got your gas, your electric, everything all your safety certificates.
Richard: Right of course, you need to keep on top that, very important. All your, what is it, all your EICRs and what have you for your electrics and what have you and I think right okay okay, anything on top of that legally that we need to set us up in a particular way? Is it regulated by a certain body? Or is it really just these portals, these Airbnb’s for example, is that it? Yeah right, okay.
Laura: There’s the other portal is Booking.com which is a wee bit harder to get set up on, Airbnb is instant, you can literally put a property on and it’ll be on that day.
Richard: Ah really, okay and that’s you coming in completely fresh, a new person. Ah right okay.
Laura: They do verify you, you have to put your bank details and address and identification, stuff like that. Booking.com takes a wee bit longer, they do a bit more checks on you and that can take a few weeks, but the return from booking.com is the cost, is better. You get more money through booking.com than you do through Airbnb.
Richard: And is that because…
Laura: But Airbnb seems to be busier…
Richard: Is it? Right so that’s the offset.
Laura: So you’ve got to work both.
Richard: Right, so you have got to do both markets, right okay why am I getting a better return with booking.com, Is it because I’m charging a higher rate or is because they are charging less fees?
Laura: A bit of both.
Richard: Is it? Right.
Laura: They suggest a price to you, you don’t have to go with that suggestion or they’ll put smart pricing as well, which is they’ll discount if you’ve got empty periods, like empty days, so they’ll put a discount on to try and fill it.
Richard: So they’ll automatically cover it, the system just does that if you select it?
Laura: If you select the smart pricing yes and then it will update you things, you go on and there’s maybe a festival or the properties seem to be booking out it will suggest that you put your price up and get a good return.
Richard: So they’ll just suggest it, they won’t automatically tweak it.
Laura: No, if you select the smart pricing, they can automatically. You never really know exactly how much you’re going to get from Airbnb because it varies on price, so you’ve got like a nightly price, so just for instance say £120 and that’s with a minimum of 2 guests but if they decide that there’s going to be 6 guests or 8 then they add on, you can put a price on per person, so then it will be 4 nights at £120 plus 4 nights with 4 extra guests so you’ve got an extra £15 per person per night and then there will be a cleaning fee on top of that because obviously they need to get cleaned every time someone leaves or if someone is there for a long period of time, maybe 2 or 3 weeks I’ll offer the cleaner to come in and change the beds and do a clean for them.
Richard: Right got ya, interesting and costs for starting up these portals, these Airbnb’s what’s the rough guide?
Laura: There’s no costs to start them up.
Richard: So they’re just taking their fees?
Laura: Maybe a 3% per booking, which is pennies.
Richard: Especially if you’re in business all the time aye.
Laura: If business is constant yes.
Richard: Booking.com, similar?
Richard: Right okay, so again another wee flag goes off in my head, Joe Bloggs can book through Airbnb, Joe Bloggs can book through booking.com, have we got any problems there? How does that work out? How do we combine those systems? How do we…
Laura: You have to sync your calendars and if you don’t sync them straight away, you may have a double booking.
Richard: She says with a giggle and when you say calendars, is that your calendar within your business or is actually an Airbnb calendar, a booking.com calendar and you’ve got the facility to hook the two of them together?
Laura: You have to go onto a desktop to do it, you can’t do it on your tablet or on your phone. You’ve got to go in so you can view the whole portal, so you can copy and paste from booking.com the link and you do the same with Airbnb too, back and forth or you can use like a channel manager which is someone else who deals with the double bookings, so they’ll block it on that calendar straight away.
Richard: So pros and cons of using them, not using them?
Laura: Well I would only use a channel manager the bigger you grow, so the more you’ve got because if you’ve got 2 flats and you’ve got 1 on Airbnb and 1 on booking.com so that’s two different portals you’re using but then if you’ve got 4 flats it grows, do you know what I mean? So you’ll be able to see all these different calendars for all these different flats, so it’s better as you grow to use a channel manager.
Richard: Is it? Right okay and where do we get that? Where does that resource come from? Is that an Airbnb thing?
Laura: No this is a different, a totally different company.
Richard: A third party, right okay and is that company called Channel Manager, is that the title of them?
Laura: No there is Kygo, there’s a few different ones I think.
Richard: Right Kygo, right okay we’ll leave wee links for that.
Laura: They’re a wee bit more expensive and they want a percentage as well of your bookings, so you just need to be able to factor in the costs when you’re paying Airbnb a few percent, if you’re paying Kygo a few percent, if you’re paying booking.com a few percent and then over and above that as you grow. So you’re trying to keep your costs down. So I think with Kygo you’ve got more than X amount of properties the percentage comes down, so I would wait to have X amount before joining then I can negotiate.
Richard: Of course it’s like a kind of bump discount really isn’t it? Right interesting, okay. So you mentioned the word cleaning again, pulls us back to your starting world. Is that the biggest factor for you when it comes to the maintenance part as an investor, is that what you need to keep on top of?
Laura: That’s the thing that will keep you ticking over and you constantly need to obviously clean it each property as each guest check out, so if you’ve got guests checking out every single day you need cleaners there every single day, you need extra bedding, you need dry cleaners.
Richard: Of course, all the stock, that’s true.
Laura: So, you’ve got to have a good system in place where the cleaner leaves, they maybe take the bedding with them or you’ve got a dry cleaner who will come to the flat, pick up the bedding, take it away, bring it back. It’s another good issue if you’ve got the key system, if you’re working with one company that’s doing all the dry cleaning, you can actually just go, use the key, put the dry cleaning in.
Richard: Do their bit.
Laura: You don’t have to work around times or anyone.
Richard: Yeah, I like that, excellent. Or one better if you happen to be a business mogul who has their own cleaning company that might be handy.
Laura: It is.
Richard: Aye I bet it is, fantastic and what is the rules when it comes to check in and check out times? Do you set that as the investor, as the owner.
Laura: So we’ve found that the best times for check out is 11am and check in is 2pm.
Richard: That’s kind of hotel times, isn’t it? That’s quite similar.
Laura: Which gives you that 3 hour window to make sure the property is cleaned, get everything cleaned out because sometimes you’ll go in and it will look as if no one has been in the flat, because it’s so clean and tidy and then other times you’ll go in and it can look like it’s been hit by a bomb.
Richard: You’re teenage daughter or something. Oh my goodness. Right, now my mind jumps back to all the stuff you spoke about from furnishing the place, you know the super 8 wine glasses, you’ve mentioned wine a lot, I’m not going to that road, maybe that’s the stresses of serviced accommodation, but you know the cutlery, the plates, everything. How does that work, if I’ve stayed in it, am I supposed to tell you if something has happened, chipped a cup or broke a glass or something.
Laura: We’ll leave a book, a communication book, or they can put it on the feedback or they’ve obviously got access to my telephone number, we get a lot of messages back and forth, a lot of people are on whatsapp, so they’ll just send a whatsapp saying “I’m staying in the penthouse and there’s a problem with this or there’s an issue with that or just to let you know that something got broken bust mostly people either tell you or they’ll replace it.
Richard: Right okay, that’s fair play, excellent.
Laura: We had a group of 8 men and they had a couple of complaints with the noise so we were expecting when we went to clean it..
Richard: What am i walking into here, tenant from hell type thing?
Laura: It was actually, probably one of the cleanest times, I think they’d maybe had a wee bit of fear, they had to get the place clean and they went out and replaced a broken glass, which was nice.
Richard: They weren’t the same guys who left the eyelashes, no? No comment, ah fair enough. Data protection. Right okay and do you then, do you also keep an eye anyway? Do you have like a monthly system, where you’ll have a wee look around the place and see what you want to start up or something?
Laura: Yes, I’ll usually pop down once a week when the cleaners are in and just have a look around and see but the cleaners usually, generally feedback if there’s a leak or they’ll say there’s something broken or we need some new glasses. So it’s quite good having a cleaning company.
Richard: At least it’s your people, you can really trust their judgements and stuff and things, great.
Laura: So I’ve got that level of communication with them where it’s just an instant phone call or message just to say and then I’ll just add that note on to the system and say right we’ll need to get new bedding or…
Richard: Right, let me think, you’re in the very fortunate position, you’ve got your own company, if I’m an investor in Glasgow and I’ve got my flat so I know I need to fill it like a home, I know i need to do all the utilities and everything we’ve spoke about, if I then need a cleaner, I’m not going to do it myself, I’m going to be clever and outsource, what’s the average prices for bringing a cleaning company in, to do that switch over? Again that’s just Glasgow.
Laura: Anything from like £35-£55 depending on.
Richard: The size of the place, is it?
Laura: But as, with Airbnb you add that cleaning fee on, so they’ll pay the fee to stay in plus cleaning fees, so you set the cleaning fee.
Richard: So you set that, got you.
Laura: So their booking can be £400 plus £55 for cleaning.
Richard: So if I don’t select that as Joe Bloggs, is it upon me to clean up that place and leave it the way I found it.
Laura: No it’s an add on, you can’t add on or take it away, it’s just a must.
Richard: It’s just a must do, ah okay. Just so the listeners understand that part of the puzzle. Good, so there is a cost there, we can factor that into the money that we’re getting anyway. Right okay, from accounting point of view, tax point of view, the figures point of view, is there anything different there? Is it just a typical thing? You’re declaring your income, you’re declaring your expenses and we take it from there, that’s it?
Laura: Yeah, as long as you’ve got a good accountant.
Richard: Which of course I do.
Laura: You don’t want to be focusing on that kind of stuff, that’s what they are there for.
Richard: But there’s nothing there, I suppose my mind is going off on a tangent into the whole budget thing, you know a lot of the listeners are worried about the mortgage relief chipped away, bit by bit by bit. Does that affect me as a serviced accommodation person? Am I still just a typical landlord? Am I still considered that way?
Laura: You would have to tell your mortgage company that you’re doing short term lets.
Richard: Right that sounds class in their eyes.
Laura: And there’s discount with council tax with short term lets.
Richard: Right so you’ve got that as well, so we can look into that, more costs we can cut, right. Right let’s step dip into the good the bad and the ugly, let’s learn from others, they say you should learn from your mistakes but it’s even better if you learn from somebody else’s, so let’s learn from Laura’s. So if you had to start all over again Laura, what are the things you wish you had known up front?
Laura: I wish that I had someone like a 24-hour call out from the beginning of electrician, plumber, that’s really mostly it, your heating engineer.
Richard: Those trades and I do have some inside knowledge here, can you paint a picture of how if you didn’t have that, you personally might of been dragged into something in particular.
Laura: We had 8 ladies who were over from Denmark doing a fitness course and the heating stopped working, so the hot water stopped working and so they couldn’t get a shower, so this was like 10 o’clock on a Sunday morning, I got the phone call and there’s nothing else for it, I had to go down.
Richard: You had to go down yeah.
Laura: With my 2 year old.
Richard: It gets worse yup.
Laura: Because my husband was working, so I had to take her with me and I got down, so I was thinking in my head, the pressure has probably dropped
Richard: With the boiler
Laura: With the boiler and that’s why the water is cold, so I thought, I’ll go down, I’ll top the pressure up and when I got down it was an old boiler so you couldn’t just turn a lever to top the pressure up, it was, I needed a screwdriver to do it but that was something that I never had on me.
Richard: Should’ve had that yup.
Laura: So I had to use scissors and a knife to top the pressure up to get the hot water but meanwhile my wee girl woke up half way through me doing this in a strange flat, 8 strangers staring at her, so she wasn’t too keen to sit nice, so I had to hold her while I’m doing this.
Richard: While leaning over with scissors and trying to jam a boiler.
Laura: Trying to open the pressure to top it up and then close it back over.
Richard: So listeners, I put that picture in your head, learn from that mistake.
Laura: Learn that if you have to pay someone £80 to do it for you own sanity.
Richard: Yes for your own sanity, Let’s outsource. Any other things you wish you’d learned from, just from a starting point of view?
Laura: I should of checked when we first moved into that flat, I should of checked everything that we had everything, that we had an inventory from the start, of everything that we need going forward because there’s things missing.
Richard: And then you are in the process of trying to catch yourself up aren’t you?
Laura: So sometime it’s best just to go into a flat totally empty and start from scratch and you know that you’ve got everything rather than going in and thinking everything is here.
Richard: And trying to remember, no no there’s glasses there and then all of a sudden you’re getting a phone call, “where’s the cutlery?” Oh god, right so an inventory, go in with that in mind, okay so that’s good. Anything else just from the starter point of view? Before I move you onto other stuff just in case there’s any lessons, that cover the many things for you?
Laura: Yeah, just make sure that you calculate everything that you’ve got to pay out.
Richard: So get the numbers right.
Laura: Yes, get the numbers right and then base your price on that with Airbnb they suggest it a nightly price going with the area but talking to other Airbnb hosts they don’t really go with the price.
Richard: No? Not at all?
Laura: Maybe £40-£50 over that, Airbnb obviously want you to go lower to be busier.
Richard: Right and then they get more fees of course, right that’s their angle. Booking.com, do they suggest.
Laura: No, they don’t suggest a price.
Richard: Because that can be anything, can’t it, booking.com they’re covering all sorts of people, they can book hotels and everything don’t they? Because I’ve not used it for a while. Right okay, is it classed differently if I look at something on booking.com? Or will I not know this is Laura’s serviced accommodation.
Laura: No, you’ll not know.
Richard: I’m just knowing that I’m looking at a flat.
Laura: Airbnb is different, it’s more personal, you can see the person’s picture, you can obviously go into their profile and see the other flats that I’ve got, stuff like that. Booking.com
Richard: Is just the place, that’s the kind of lens that you’re looking through. Ah right okay, if you had problems and stuff with someone that had stayed, what are you going to have to do? Do you go to them first? Do you report through Airbnb? What’s the kind of process for that? Thankfully you’ve not had to deal with that.
Laura: No, we’ve not had any major problems.
Richard: Which is excellent, would it just be a case of going back to that person.
Laura: You go back to Airbnb and review them if they were not a very good tenant, you would put in the notes or if there was anything broken and you can contact Air-BnB by telephone and speak to an adviser over the phone.
Richard: Ah right okay okay.
Laura: And they’ll contact the tenant and say “Well, you’ve broken this, you’ve did this, you were too noisy” things like that.
Richard: And you don’t want their rates to go down, From an investor point of view, what have I got to keep an eye on from my ratings? Is there any kind of trigger points that I’m going to get penalised?
Laura: You’ve got to stay above 4 stars.
Richard: 4 stars, quite high.
Laura: Or else they freeze your listing for, they can do 2 days, 5 days, 3 weeks.
Richard: Wow and you’re immediately frozen if you fall below that marker?
Laura: They’ll send you tips to improve, they’ll take from your reviews if there has been something on going, if a few people have mentioned it, they’ll say obviously this has to be sorted out to get your standards up.
Richard: Right excellent, so the 4 stars, it’s pretty critical, it’s just out of 5, that’s quite a line to look for, you’ve really got to be on your game there, yeah okay. So you’re getting more turn around and again this is just me comparing it to a residential landlord, more turn around, high air rents should we call them, more business, more profit but you’ve got to way up they figures. More outlays, more startup costs, more maintenance, you’re having to keep on top of things and then I suppose your quality is going to have to be better because otherwise your revenue stream could be stopped, right okay.
That is pretty fascinating, right we have went around tones of stuff there, we’ve had high level chats on things, on looking at it as a business, we’ve went right down to some of the nitty-gritty things and threw around some figures as well, from that chat is there anything we’ve not touched upon that you think we should mention for the listeners? Or have we captured the most of it that they can have a run at.
Laura: I would suggest getting the locks outside is a good thing as long as you’ve got good, clear directions to your flat because some people tend to get lost because they don’t know the area, so where you think is really simple, is it at the bottom of Byers Road or on Dumbarton Road to someone who is coming from America it doesn’t mean anything to them, so as long as you’ve got good directions to your flat, good communication that’s one of the main things that people always comment if there’s good communication between the host and the tenant.
Richard: Right and you’re going to help by doing those things. So do you try and think of yourself as that Joe Blogg person? The next time you set up your next new place, right okay what do I need to know.
Laura: I just think, what could go wrong? And work backwards.
Richard: Work back from that, tick off all of those risks. I could get lost okay well how could I do that? I could some photographs, I can do some maps, I can do whatever.
Laura: The Ingram Street flat, there’s a door, just like a close door to get in with a key but when you get up to the landing there’s also a security door before the flat door. If they come out the flat door and out the security door without the keys, they won’t get back in.
Richard: And you’ve got to stress that? Right okay, it’s something that could go wrong. So long as you think, walk through it, if I’m staying here, not an investor, if I’m staying here, what could go wrong?
Laura: Having a good few copies of keys, we started with one set, one set for a flat and we were just giving them to the tenant and then going back and getting them. At one point, my husband said “What would you do if the tenant had lost the keys?” and for some reason I never really thought about it and he says most of the time it’s someone in Glasgow for the weekend especially when we started last December. So it was like weekends, so it was maybe for shopping, Christmas markets.
Richard: Festive period, it’s always mobbed, always busy.
Laura: And then I think, what if?
Richard: You’ve been a lucky women.
Laura: So always having lots of sets
Richard: Multiple copies, aye got your back up.
Laura: I keep a set of all the keys and then the cleaners have got a set.
Richard: So they get a separate set, because you’re running a business.
Laura: They’ve got a separate set and I have a master set. And there’s maybe 3 sets for the tenants when they go in, because if you’ve got maybe 8 people or 6 people, you don’t want one set of keys, sometimes they don’t even want 2, they want maybe 3 or 4.
Richard: Right, maybe different stages of their night out. Like we’re going for a meal, going to the festival or we’re going to such and such, yeah I can see that point. Yeah whereas if they’re staying in hotels and stuff there might be just 2 of them in a room. You know I’ll take the card, you take the card, right but you need to cover that because you’ve got one place and it’s covering for six people, 8 people whatever. That’s an excellent point. Good Stuff.
Laura: And also, something I hadn’t mentioned but we’ve got a cupboard that’s locked away from the tenant, so they can’t get into it, so that’s got all the bedding, the extra toilet rolls, kitchen rolls and anything like cleaning materials.
Richard: Yeah, that’s good. Earlier on when you were talking about the different properties, then having the different stuff to turn around, the linen and so on I’m thinking so where do I need to keep that, in my loft, in my garage, that’s a great angle.
Laura: So we just got a joiner to put a lock on it, I’ve got a key and the cleaners have got a key and that’s it.
Richard: And it’s all stored on site, there you go, I think that’s a perfect tip just to finalise with. Been through a tone of golden nuggets, there you go listeners, you’ve been absolutely spoiled rotten there, from the high level to the low level detail and that was the world of serviced accommodation.
So I would like to thank our special guest on today’s show Laura, absolutely brilliant coming in here and giving you that information and if you would like to connect with Laura all you have to do is go to thisweekinproperty.com and check out the show notes for this episode and you’ll find the contact details there if you need to get in touch and we’ll also put in links and resources from anything that’s been mentioned in the show.
Now two other links that I want you to write down just now if you can algpropertynetwork.com and that’s if you are looking for some high level networking events in your area. Laura mentioned the power of networking and contacts and so on and that’s valid for any business and secondly if you are looking to start your property journey or if you are already on that journey but you want to take it further then head over to algpropertyacademy.com and you can check out the resources there. So from Laura, from myself Richard as your host that’s all for today, thanks for tuning in and we’ll see you in the next show.