Do you know that there are now over 31,900 AirBnB listings by property owners in Malaysia? (Latest report in TheStar, dated 17 March 2018) Would you like to venture into this potentially lucrative short-term rental business? Many successful AirBnB property owners have reported profits which are above what they could from the longer term rentals. Please be reminded that not all property owners would achieve great success with the rental market, whether via AirBnB or long term rental. To maximize the potential for success, here are 6 steps to start our AirBnB property investing.
1.Finding a strategic location
- This is not that hard to do these days. Just go to AirBnB.com, search for the location that you intend to buy or where your property is. Look for 3 things.
i. Are there units in the listing which already have lots of reviews? This indicates a good demand for the particular location.
ii. For these units with lots of reviews, look at what the reviews say. This helps us to understand the reasons why the units are popular.
iii. Look at the typical prices per night for different types of properties. Do some calculations. Conservatively, think about being able to rent out just the 8 weekend nights per month. By the way, once our unit has many good reviews, the number of nights that it could be rented out would trend upwards.
2. Local regulations
At the moment, there are no specific laws and regulations for AirBnB here in Malaysia. In other words, it is not illegal. Strata owners could also put up their units in AirBnB. However for strata owners, this depends on the management body which may decide during the AGM or EGM. Without an AGM or EGM which specifically bars owners from AirBnB, there are no restrictions.
3. Managing by ourselves or letting others do it
If our spouse is not working and has the time, it is possible to manage the rentals without the need for a third party. However, If we have a full time job, it may not be in our interest to manage it ourselves. We may ask the local real estate negotiators who may be willing to assist us on a profit-sharing basis or we could also check out lazyhost.co which provides a range of services for AirBnB hostings.
4. Accounting for all the costs
There are certainly fixed costs that we would need to be aware of. Initial investment would be to make sure the unit is comfortable. Please get lots of ideas from all the other more successful listings in AirBnB. As much as possible, DIY instead of getting a professional interior designer. Recurring costs include cleaning, electricity, water, usual servicing of the air-cond units and even the internet connection. (this last one is a MUST nowadays).
5. Set the right price
Right price here would mean we benchmark against all our ‘peers’ (similar units) in the same area. Remember, a good review is 75 percent of the battle won. It may be in our interest to start with a slightly lower rate and quickly gain many good reviews right from the beginning. Yes, it is also possible to rent to all your good friends first!
6. Expected returns from our AirBnB adventure
Everything starts from finding that property which we could change it to give us recurring incomes. This is usually a property which is well designed and not too expensive to begin with. Buy it from an established developer. In fact, this could be a lucrative ‘business’ venture which may even give us enough returns to get another unit in the future.
Article was first published in 1sendayanblog
written on 30 April 2018
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