Not all but some of our readers
will agree with this post. We recently got a chance to study the functioning
and business model of Serviced Apartments in Hyderabad (India) and felt the
need to share the same with our readers. Let’s see how effectively we can
communicate our views on this topic.
Serviced Apartments – What are they?
For those who are not aware of
the term Serviced Apartments; they
are no different from normal residential apartments, but with an exception that
they provide complete services to the tenants.
Serviced Apartments are fully
furnished houses including all the white goods that are provided to the tenants
for use. The tenants residing in these apartments can make use of all the “free
services” provided by the owners – house-keeping, food, electricity, laundry
etc.
In short, a Serviced Apartment
can be thought of as a variant of a PG (Paying Guest) accommodation, with some
exceptions.
Business Model
This is one of the most exciting
and profitable business models that can exist as recurring income source in
real estate. Here instead of charging for apartment as a whole, tenants are
charged on per bed basis. This will become more clear from the following example:
Shown below is a residential
apartment in Hyderabad having 25 apartments of 3 bedrooms each –
Now consider these 2 scenarios –
Scenario 1: Rent as an apartment
Earnings
Rent per apartment/month
|
No. of apartments
|
Total/month
|
Rs. 25000
|
25
|
Rs. 625000
|
Costs
Cost per apartment/month
|
No. of apartments
|
Total/month
|
|
Misc
|
Rs. 2000
|
25
|
Rs. 50000
|
Net Profits
Profit
|
Rs. 575000
|
Scenario 2: Rent as Serviced Apartment
Earnings
Rent per bed/month
|
Total beds per apartment
|
No. of apartments
|
Total/month
|
Rs. 10000
|
6
|
25
|
Rs. 1500000
|
Costs
Cost per apartment/month
|
No. of apartments
|
Total/month
|
|
Housekeeping
|
Rs. 2000
|
||
Electricity
|
Rs. 2500
|
||
Wifi
|
Rs. 1500
|
||
Food
|
Rs. 6000
|
||
Misc
|
Rs. 3000
|
||
Total
|
Rs. 15000
|
25
|
Rs. 375000
|
Net Profits
Profit
|
Rs. 1125000
|
So after looking at the figures
of both the scenarios, we have very less to explain anything. You can cultivate
money in the second scenario and at least we are considering jumping in this
arena as soon as possible!
Disclaimer: The figures quoted
above are exact figures of a Serviced Apartment in Hyderabad, but we are not
sure whether this will hold true in other cities as well.
------ Thanks for reading RealT Horizon J ------