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Podcast - Into the Airbnb

Into the Airbnb EP 8: $100k Penthouses for Airbnb in Quezon City

Today’s guest is Joyce from Quezon City, Philippines – a home for 3 million people and located next to Manila. Joyce owns 10 AirBnB properties, mostly penhouses in a condominium. 7 out of 10 listings are now closed due to the pandemic, 3 of them are rented for nurses. 

Typical similar penthouse costs around $100,000 now, and net profit is around $1,500 per unit. The occupancy rate throughout the year is above 90%. 

airbnb-apartment-quezon-city

From the first condominium rental to the tenth Airbnb listing

jaeseok an

Can you tell me about how you got started with your first vacation rental?

Joyce

In April 2017.

jaeseok an 

So you started on April 2017.

Joyce

Yes, I started 10 years ago. I posted on other sites.

jaeseok an

Right, which website did you use?

Joyce 

Homeaway, booking.com. That was 10 years ago. After that, I use only Airbnb [Jae: Right.] til now.

jaeseok an  

Okay. 

Joyce

I’ve had a great experience with Airbnb. That’s why I continue using it.

jaeseok an

Right. So, you mentioned that you started 10 years ago so that was 2010. [Joyce: Yup, 2010.] And how did you start it?

Joyce

I started with one condominium at the back of a hospital. Then after that, when the business is very good then I buy another condominium. And another one and then another one. And it becomes 10 units.

jaeseok an 

Right. So, did you buy it or did you rent it out? 

Joyce

I buy it. 

jaeseok an 

Right, so you bought it with mortgage or did you just buy it in cash? 

Joyce  

No, I just buy it in cash, because I have other businesses in different locations of condominiums in Philippines.

jaeseok an

 Right.

Joyce

So I have three locations. [Jae: Okay.] One is at the back of hospital, other is near a park, the other is *inaudible*

jaeseok an  

So all of them are in Quezon city? 

Joyce  

No, different. Three in Quezon city, at the back of hospital, five in business area, one in university.

$100,000 condominium in Quezon City

jaeseok an 

Right. How much are they usually cost to acquire a studio condominium in Quezon City or those in the business area?

Joyce  

In Philippine peso, it’s around 4-6 million.

jaeseok an  

Right, so that’s around 100,000 US dollars per unit?

Joyce  

Yes, and it’s rented out for $1000 a month.

jaeseok an  

What do you mean by $1,000 a month?

Joyce  

For each unit. 50,000 pesos 

jaeseok an  

So you’re saying that you have made around 50,000 pesos per month from your rentals? [Joyce: Yes, from my rentals.] Right. And at that time you posted your rental on agoda and homeaway?

Joyce   

Agoda and homeaway.

jaeseok an  

Right, I understand and when did you buy your second property for short term rental?

Joyce  

I find the first condominium 2010 [Jae: Right.] And the second one is November 2011. And I can’t quite remember the others.

jaeseok an  

Right, so can you tell me about the timeline? Like from your first one in 2010? Second one in 2011? And how did you get to the 10? 

Joyce

2014, I buy three.

jaeseok an 

Right.

Joyce 

Then in 2015 I buy one and another one in 2018 and ’19. That’s it.*inaudible*

Above 90% occupancy rate

jaeseok an 

Right, that makes sense. So yeah, you bought your first one in 2010 and then one on 2011 and three on 2014. And you bought one every year since 2018. [Joyce: Yes.] Right. Okay, I understand that. So you have now 10 listings and what’s your average occupancy rate of those 10 listings?

Joyce  

Before the pandemic [Jae: Right.] in March, almost no vacant space.

jaeseok an

Oh, so does that mean above 90%?

Joyce  

Yes, 90-100%. Everyday I have a lot of guests. [Jae: Wow.] But now [Jae: Right.] only three condominiums are functional, seven of them are closed because of COVID-19.

jaeseok an

Right, those three condominiums are fully booked for next how many days? [Joyce: Until April 22.] Right until around April 22. So is it just one of the condominium or three of them or…?

Joyce 

The three of them. Actually, one of them is long-term. [Jae: Right.] Two years.. more.. And the two condominiums for Airbnb rentals.

jaeseok an 

Right, on Airbnb? 

Joyce

Yeah, on Airbnb. Because on Airbnb it’s more profitable. High rental.

jaeseok an  

Right. So you mentioned that you had to close down seven other rental properties. Is it because of the regulations or is it just not profitable?

Joyce 

No, because of the COVID-19. Safety first before money.

jaeseok an  

Right. So, is it that you opened up the bookings, but people are not booking it? Or is it that you should…?

Joyce 

Actually, there’s lots of guests who want to book, but the condominium refuse to [Jae: Oh.] accept guests. They don’t allow us to accept guests. Also I have *inaudible*…also closed now. Because of the COVID-19.

jaeseok an

Right. I see, so is the condominium refusing to getting the guest?

Joyce

Yes, only the condominiums near the hospitals are allowed to accept guests.

Net profit of $1,500

jaeseok an

Right, interesting. Right and that’s the three ones in Quezon that you’re still running. I see. I see. So you mentioned that you have achieved around 90-100% occupancy rate for your 10 listings. What was your revenue per unit? So let’s talk about just one unit. Let’s just talk about one unit near hospital, or what’s your average revenue per month? 

Joyce  

Around $2,000 per month.

jaeseok an  

Around $2,000 per month, and how much was the profit per month?

Joyce 

$1,500. 25,000PHP for the utilities, electricity and cleaning… that’s all.

jaeseok an  

Right. So that means it should be around $70 per night for that Airbnb listing. Is that correct?

Joyce

Yeah, sometimes it’s high, sometimes it’s low. [Jae: Right.] Depends on the month.

Benefits of Airbnb smart pricing

jaeseok an  

How do you do pricing then? 

Joyce  

Actually Airbnb send me the pricing [Jae: Right.] if I can go higher or lower. It depends on the season.

jaeseok an

Right, so you’re using the smart pricing from Airbnb? 

Joyce   

Yeah, the smart pricing. 

jaeseok an

Right.

Joyce  

We’re using it. Pretty updated. They, Airbnb staff call me or message me. You can upgrade or downgrade or discount for the guests, so that we don’t have idle days. [Jae: Right.] No vacancies. That’s their strategy.

jaeseok an  

I see. It’s interesting, because I have talked to a few hosts and most of them doesn’t trust Airbnb smart pricing anymore. Because it’s pricing too low. Have you ever thought about it or those the price work for you?

Joyce 

Yes, the price works for me. [Jae: Interesting.] They know the statistics of the guests.

jaeseok an 

Right.

Joyce 

*inaudible*

jaeseok an  

Right. Yeah, so it seems like yeah, smart pricing might work better in your area. So what’s the price they’re suggesting to you? That’s around $70 per night for a studio? 

Joyce  

Yeah. Because extra guest, there’s additional fee.

jaeseok an

Right, I see.

Joyce  

Yeah, one of my condominium can accommodate up to five, [Jae: Right] but the base price is without any *inaudible*. Then after additional first one there’s another fee.

jaeseok an

Are they 50 pesos per night?

Joyce

No, another 500 pesos. [Jae: 500 pesos.] For every person. So it would be around…1,800 plus 500..two thousand-

jaeseok an

That’s around $10 per new person.

Joyce

Yeah, $10 per new person. [Jae: Right.] So for four persons so is $40, plus another… how much is 1,800? Also $40, so $80 per night.

jaeseok an  

Right. Yeah, that makes sense. So it sounds like Philippines like especially Quezon and other areas that you’ve purchased your properties seems to be very lucrative to the Airbnb. And because…how much are the condominium price right now to buy a studio? You mentioned it was $100,000 it was $4-6 million pesos 10 years ago, or is it current price?

Joyce 

No, it’s the current price. Ten years ago, it’s lower. Almost half the price.

jaeseok an

Right. I understand now. Okay, that makes sense. And do you hire cleaners to buy supplies?

Joyce

Yeah, I have cleaners.

jaeseok an  

Right. And how much do they cost in your area?

Joyce

It’s only $10 per unit [Jae: Right.] or less. Sometimes less, because actually the units are very clean.

Penthouses are best

jaeseok an

Right, okay. And how do you do your market research before acquiring a new property?

Joyce    

Actually, I’m a business graduate.

jaeseok an

Right?

Joyce  

I research by the best condominium. I always find the best unit. For example, I find in Sanchez hospital a penthouse with a very beautiful view.

jaeseok an 

Right.

Joyce  

Yeah, and a balcony. I always buy the quality units, almost all my units are penthouses. 

jaeseok an  

Right. So I’m pretty sure when you buy a new penthouse, there will be different penthouse in different locations or different condominiums and how do you choose which one is the best for you?

Joyce 

Morning sun and best view, always. *inaudible* You can see the picture.

airbnb-condo-with-view-in-quezon-city

jaeseok an  

I see, right. What’s the price difference between penthouse and just like normal house in the same condominium?

Joyce  

Purchasing price? [Jae: Yeah. How much are they?] It’s more expensive in the penthouse.

jaeseok an  

Around by how many percent?

Joyce 

Around, I think, 20-30% 

jaeseok an

Right, interesting.

Joyce   

But the profit you will get is bigger than normal flat.

Supporting the COVID-19 front liners

jaeseok an   

Right. I mean yeah, it’s quite interesting that you can buy a penthouse in Quezon at 100,000 US dollars and you can make around thousand 500 US dollars per month. I think that’s really good return on investment, very good rental net profit. So my last question here is, how are you dealing with the Coronavirus situation?

Joyce

I paused the seven units. [Jae: Right.] Because for me, safety first then money. Then only the three condominiums now is renting. And actually I give them 50% off for month of March to April. They only renting it, it’s usually 1,500, now renting it only for 750 for this month.

jaeseok an  

Right, so you lowered your price by 50%

Joyce

Yes, I lowered the price by 50%. And I did not ask for additional fee for that additional person [Jae: Right.] They only pay for one person, so the four person is for free because they are nurses in Philippine health center. They are the front liners in the COVID-19.

jaeseok an

Right, I respect your will. That’s really kind of you and it’s nice that you have the places to help them, support them.

Transcribed by https://otter.ai