Hong Kong attracts the largest number of visitors per year [ref], yet it does not have as much Airbnb listings as other popular tourist destinations like London (70,000+) or Paris (50,000+). Hong Kong was showing a rapid growth in both Airbnb supply and demand until the 2019 Hong Kong protests. Despite the current climate, we believe that it is an exciting market to keep an eye on.
How many total Airbnb listings are there in Hong Kong?
Hong Kong has 6,760 unique active listings on AirBnB [2020 April], over half (52.4%) of which are private rooms.
Entire place: 2383
Private room: 3541
Hotel room: 356
Shared room: 480
Other popular short-term rental channels are..
Tuijia.com is the AirBnb’s major China rival, which offers around 2,000 listings.
VRBO offers similar types of properties but has less than 500 unique active listings.
Around 100 serviced apartments are listed on Booking.com. However, Booking.com does not allow above 30days’ booking.
Where are the Airbnb properties located in Hong Kong?
Number of entire place listings per district
Hong Kong has 18 districts, with six districts supplying 85% of the entire house listings. They are located in:
Tsim Sha Tsui region:
Sham Shui Po
Yau Tsim Mong
Kowloon City
Hong Kong Island region:
Central & Western
Wan Chai
Eastern
Tsim Sha Tsui is a major tourist hub where Victoria Harbour and many museums are located.
The Hong Kong Island also has some significant tourist attractions, such as the Peak and large shopping malls. It’s also the hub of numerous global financial institutions’ offices.
What is the Average Daily Rate of AirBnB in Hong Kong?
This chart shows the median of the Average Daily Rate of 2 bedroom apartments in Hong Kong by district and Superhost status, excluding anomaly prices.
Extremely high nightly rates is one of the common anomaly patterns.
The median is the better representation (than the mean) the typical Airbnb listing price in individual districts.
The ADR of 3 districts in Hong Kong Island (In the south) is around 15% higher than the ADR of 3 districts in Kowloon (In the north).
This difference is similar to the difference in the housing prices between Hong Kong Island and Kowloon, which are also 15%.
What is the occupancy rate of AirBnb in Hong Kong?
In the time of writing [April 2020], the occupancy rate has been below 20% on average since the COVID-19 outbreak in HK. We expect this to get back to above the 50% region when the global travel activities resume after the pandemic.
Hong Kong’s AirBnB occupancy rate peaked in 2018, and it started declining after the Hong Kong mass protests which started in June 2019. Within a quarter, the occupancy rate went down to almost half. Unfortunately, before the market was able to fully recover, COVID-19 struck HK, causing the market to drop further.
Occupancy Rate of entire place listings in Airbnb Hong Kong
Demand of Airbnb in Hong Kong - All types of properties
The occupancy rate aligned with the demand – This is the demand of all types of accommodations on Airbnb.
The superhost status positively affected the occupancy rate. An average two-bedroom property running by a superhost in Yau Tsim Mong and Wan Chai is 34% and 50%, respectively. [2020 April], and it is 27% and 27% if it is running by an average host.
How much can a two-bedroom apartment make in Airbnb Hong Kong?
During the pandemic, RevPAR of an average two-bedroom apartment in Wan Chai is around HK$360 ($46), with 30% occupancy rate and HK$1,200 for three guests.
The RevPAR does not look good considering a two-bedroom long-term rental can easily achieve above HK$20,000/month. (~ RevPAR HK$655)
But the top 10% Airbnb properties in HK are still doing better than long-term rentals even during the pandemic period. It is not the case for an average property. If you want to find out what are the top 10% properties are like, use Airbtics to explore.
What is the most commonly spoken language by Airbnb hosts in Hong Kong?
English is most commonly spoken, but majority of hosts also speaks Simplified Chinese.
*If 1 host can speak both English and Chinese, they are counted in both statistics.
Is Airbnb legal in Hong Kong?
If you are letting out a house for less than 28 days at a time, you need to have a license provided by Home Affairs Department.
Conculsion
Demand of Airbnb in Hong Kong - All types of properties
The market doesn’t seem pretty, but why did I mention that I’m “excited”about the HK market?
I mentioned earlier that the Airbnb’s share in the HK market is relatively low in comparison to London or Paris. I think the HK Airbnb scene (in 2019) before the mass protest looked very similar to the London Airbnb market in 2015.
For instance, London market has experienced quick growth in both supply and demand. It showed 4 times of increase[ref] in supply within 3.5 years while maintaining above 50% occupancy rate [ref].
Consequently, it brought lots of opportunities to the professional Airbnb property managers and companies in London.
Therefore, I believe that there is a chance that the HK will resume that rapid growth it showed between 2015 and 2019.
Stay Insightful
Airbtics is the short-term and vacation rental market research platform. We help rental hosts, property investors, realtors to understand the rapidly changing rental market by providing insights via our web service.
If you have any further questions about the case study, please contact us at [email protected].
All the data here without explicit references are sourced and processed by our technologies.
Rental Arbitrage is an excellent option for property investors who will sublet properties for a limited budget. It’s ideal for those who have the natural charisma to speak with landlords and get them to agree to sublet their property for Airbnb. This method is a popular way to earn a passive side income!
Discover the pros and cons of rental arbitrage and the best areas for Airbnb in Dallas, Texas. We’ll also feature a discovery tool to find the most profitable areas within your target market.
Learn what it’s like to do rental arbitrage in Dallas as we feature an exclusive interview with an Airbnb host. Hint: He achieved a 70% occupancy rate despite the pandemic.
To begin with, its population growth and low cost of living are just the icings of the cake. Did you know that there are also favorable taxes and laws for property owners? And not only that, but its vast market can generously bring great profit potential.
Despite this, not all property investors can afford to purchase a property in Dallas. This is where Rental Arbitrage comes in! Rental arbitrage is an expert technique where you sublease a property for the sole purpose of Airbnb. If you’re wondering about its legality, the good news is that it’s perfectly legal and allowed in Dallas with your landlord’s approval.
How much can I make on Airbnb in Dallas?
According to Airbtics’ data, Airbnb is definitely profitable in Dallas, Texas. The level of profitability will generally depend on your location, property type, and amenities among others. An Airbnb host in Dallas, TX, can expect to earn an annual revenue of $33,320 with a 59% occupancy rate for a 2-bedroom apartment/flat.
Pros and Cons of Rental Arbitrage in Dallas
The major pro of investing in a rental arbitrage is that you don’t need to purchase a property. Perfect for beginners! It also offers low upfront costs and has higher chances to repeat and scale easily.
If your business continuously blooms in time, the revenue can be used for other investments or businesses. Eventually, if you still dream to purchase your own property, you can do so. Rental arbitrage is the stepping stone.
On the other hand, the only con with rental arbitrage is that you have to invest money and time to furnish the property. This is for the purpose of making it look more appealing to guests and receiving bookings. It can also be a struggle to find a landlord who will allow you to sublet their property, but you can do your best and convince them.
Interview with an Airbnb Host in Dallas: Sharing The Rental Arbitrage Experience
Let’s listen to one of our featured Airbnb hosts in our podcast, Into The Airbnb, as he shares his rental arbitrage experience in Dallas.
Today’s guest is Christian. I found him from an Airbnb Facebook group. He shared a screenshot of his Airbnb listing’s calendar, which was fully booked for the next 30 days during the pandemic. He achieves above 70% occupancy rate, making above $1,000 net profit per unit.
It was an interesting experience to interview two hosts from Dallas (previously interviewed DeShan) as I found some numbers to be quite similar, such as starting cost, monthly net profit, and occupancy rate.
Can you tell me about how you got started with your first short-term rental and how you grew it to four listings?
Christian
Sure. Before Airbnb, I had been in real estate. So traditional rentals like long term, year long leases, have some rental property and flipping houses. And so I got into short term because I stumbled across, maybe some of you might know him, Shawn, here out Dallas, who’s a arbitrager. And I started watching some of his content and just really started learning, I probably watched like 99% of all his videos. And then after that, what I did was, you know, reaching out to different complexes and seeing if they would allow me to use in a short term, so I went under a corporate lease, and do it that way. And so we started back in December of last year, and already had, you know, four listings. And we’re planning on scaling up and so all this stuff started happening so kind of slowed us down there a bit, but we’ve been able to continue to fill our calendars luckily so
Jaeseok An Sweet. What has been your occupancy rate like in past four months?
Christian Well, I’m down here in Dallas, Texas, have a unit in Fort Worth, Texas, a unit in Grapevine, Texas, which is right by DFW Airport. Have a unit near downtown Dallas and have a unit in Richardson which is about 15 minutes outside of downtown Dallas, and we first launched in Fort Worth. And that was the first unit and it was wintertime so I wasn’t too sure how occupancy would be. So the first month I think we had about 80% occupancy and then going into January and February, I think February was the best month that we had so far which had about 27 out of the 29 booked.
Jaeseok An
How many bookings did you have to get to fill up 27 days?
Christian I think that one was about 10 or 11. So for that specific property, [Jae: Yeah?] it’s right next to, like an entertainment area. So you do get mostly shorter bookings. But we do make profit on the cleaning because we have our cleaning rate is for that specific apartment is $25 per clean. And I think we’re charging like 40 or something around there. So the cleaning wasn’t an issue because we made profit on that side as well. But on the other one, there are more long terms from what I’ve noticed.
Jaeseok An
Right. Yeah, if you have achieved around 80 to 90% occupancy rate, how much of the profit roughly do you make per listing?
Christian So we’ve noticed about eight to $900 net on about 85% occupancy. Once we’re in close to 90 to 95, we’re over $1100-1200 profit. That’s just from the listing, that doesn’t include our like profits from cleaning fees.
Jaeseok An
Right. So I guess if you get lots of short term bookings, like the one near the entertainment area, the profit could go maybe up to…?
Christian Yeah, actually, that’s probably our best performing property. It is a little bit more meticulous, just because there are more bookings. So you had to, we had a lot of automation in place. So it’s not, it doesn’t take but two hours a week for us. But uh, yeah, the most we’ve got on that property was probably 1300 or 1400 net. And that was probably like pushing 95-96% occupancy.
Jaeseok An
Right, that’s nice. How much do you need to start a new rental in that area?
Christian Ah, not much at all, honestly. I mean, anywhere between four to five grand, our furnishings have been around $4,000. And then of course, so we mostly target apartment complexes, we don’t do the single family. Simply because with apartment complexes using a corporate lease, and applying under your LLC, you have economies of scale. So like, we were planning on picking up another unit or so in that same complex, so the cleaner can stay in that same complex. You know, doesn’t have to drive around everywhere, we’re able to use one unit as like a central hub location for supplies, almost like a distribution hub. And a lot of complexes do offer concessions for like a month or even two months. So really what you’re paying on the getting into the complex is just a deposit and application fee and all that stuff. And then that’s about it. That could be about $400-500. And then on your side is the furniture, which is spent from anywhere from $4000 to $4500. And, typically, you know, you should get that back within four to five months. So yeah, that’s about how much it costs.
Jaeseok An
Right, so that means you just need 4000-5000 to start, and you’re making around thousand dollars per month per property. So that means at this rate, you can actually acquire a new property almost every month. Are you on that speed right now?
Christian I think we acquire a new property about every month, yeah. Every two months because the last two properties that I picked up were both in March. So we picked up one December, picked up one and I think in February it was and then I picked up two in March. And then so this is not my only stream of income. I also flip houses. And, [Jae: Right.] you know, like I said, have traditional rentals and I do all kinds of other stuff that supply income. So this is just one of the streams. I don’t recommend if this is your only stream system just to try to start building up one a month, but uh… I mean it is very, it’s an easy entry as long as you can continuously try to find the complex that will say yes. They do know that we do Airbnb. So that’s, I don’t like to tell them anything different. And it’s been a good relationship so far.
Jaeseok An
Right. And how do you go about acquiring a new property?
Christian Yeah, so a lot of times I’ll start off with we have a tool. I’m not sure if you guys have it up there, but it’s called Zillow. It’s basically a website that has houses for sale and for rent. So I’ll start whatever area – I was born and raised in Dallas, so I know the entertainment areas, I know which places are going to be popular. And I also, before getting into an area, I go on Airbnb and just look at the other properties in the area and see how they’re doing, how booked are they, I can do like my own self analysis first of that area and Airbnbs in that area. And then I try to distinguish what could I be different from them? So for example, we had planned on, I hadn’t got a chance to do this yet, but going into two bedrooms because there are like half less two bedroom properties in the area than there are one. So that just makes you, you know, a little bit more competitive because, you know, you have more market share at that specific criteria. So once I do that, I go on Zillow, and then I look for that certain area. Zillow has this thing where you can just do an automated message. And so I just sit there and send automated messages of who I am, what I do. And I send like a couple hundred a week [Jae: Right.]. And the ones that are interested and do offer corporate leasing, they get back to me and then I look at the property, I see “is it easy for a guest to go into?”. So like I know a lot of apartment complexes especially here in downtown Dallas have like a concierge service 24 hours… [Jae: Yeah?] I don’t really like those. I like something with like a private entry, like a private patio entry which two of them do. And so they can get to the lockbox quickly, get inside and that’s it. And then also like parking how easy it is for them to park. So those are the few things I look for. And then once they have those all checked out, I go and make a visit to the property, introduce myself and my business. And if I like it, I look at the room and you know if everything checks out, I sign the lease.
Jaeseok An
Okay, sounds good and around like how many people that you have to send automated emails to get, let’s say like one call?
Christian I would say if you’re sending 100 emails out, you’re gonna get, maybe, five to 10 reach back out and say, yes, we do offer corporate leasing. I don’t mention Airbnb until I am in right in front of them. I just do a simple message: “Do you offer corporate leasing for my business?” And then once they say, “yes, we do”, they will either call me or they email me. And then from that point on, once I’m in front of the manager, I let them know how my model works. Sometimes, we do house our own clients for real estate purposes outside of Airbnb. And a lot of the time we do Airbnb, so I kind of pitch it to them as in like, you know, I have my own clients come in and also have you know, some business professional people that stay that I find off of hosting sites such as booking.com or Vrbo, Airbnb. I even throw in that I have like travelling nurses staying. You just want to sound as professional as possible. [Jae: Right] A lot of people have a bad taste in their mouth about Airbnb.
Jaeseok An
I see. Are you only on Airbnb or are you on any other channels as well?
Christian I’m only on Airbnb and Vrbo.
Jaeseok An
Right. Have you tried out any other platforms? Like a little bit more on the long term side?
Christian No, since we had just started in December. The first month we launched, we’re only on Airbnb. Cuz you know, you have to integrate calendars and make sure you avoid double bookings. [Jae: Right.] So we didn’t want to start off with two right away. So we just started with Airbnb just to kind of see how it went. The second month, that’s when we threw in Vrbo and integrated our calendars. And aside from that, yeah, just those two that we’re on right now.
Jaeseok An
Alright, and you told me that you’re Dallas native, and you know the area pretty well. And you’re also doing like flipping, but how do you do market research before acquiring a new property for Airbnb?
Christian So we have what’s called Airdna.co, which I’m sure is everywhere, I think. It’s basically a short term rental analyzer. I wouldn’t say it’s 100% correct. I say, you know, take with a grain of salt because when I was first going into the Fort Worth area, I think this was like a B and occupancy rate was like a 69%. And revenue was like 2100 or something like that. And so I kind of took a chance with Fort Worth, and I just went ahead and got the lease anyway. And we’ve blown that occupancy out the water, but we’re like, average at 90% or so on occupancy and our revenues are tremendous. So I would look at AirDNA as a guide, I wouldn’t say use it as a ‘for sure, this is what it’s gonna be’ kind of thing.
Jaeseok An
Right. So when you use AirDNA, what kind of numbers did you look into? Because you can just look into by houses by houses, as well as you can do some filtering, like ‘what’s the average occupancy rate in Dallas area for two bedroom houses?’. What kind of features did you use?
Christian Um, so I do go through it by how many rooms it is, and then I filter it down to how many guests, you can change to how many guests you can provide for. [Jae: Right.] So in a one bedroom, I typically have four guests, is what I have, because I have a sofa, a king sized bed and then I have a pullout mattress or, you know, a foldable mattress that I put in the properties as well. So I do with four guests, then I look at kind of just the month over month revenue, I look at how many other listings are in the area. [Jae: Right.] And then I’ll be looking at both Airdna and Airbnb at the same time. [Jae: Right.] I look at Airdna’s numbers and I go to Airbnb and kind of cross-reference and see what other hosts are listed for. And then I also looked at what other post listings looked like. Because I’ve seen a lot of hosts out there who don’t care about their pictures, the space is not decorated well, and they’re still doing all right. So it’s like okay, so if I come into the space, and I blow them out the water on pictures, I’ve blown out the water on the space, the decorations. And that’s what we did in Fort Worth. Like we have professional photos done, we focused in on how to design the space. And a lot of people love the space and we’ve gotten their views on it that they love the space, they love the area. That’s another way to succeed, you know, look at your competition and how they’re presenting their properties. And if you can do twice as good, then you should be alright there too. But always back it up with data from, you know, Airdna and your own referencing from Airbnb.
Jaeseok An
Right. So final question is, what’s your tips on dealing with this Coronavirus situation?
Christian Yeah, so, man it’s been tough, I tell you. Right now, Dallas is shut down, Fort Worth is basically shut down. So all restaurants were shut down. Basically, everything else bringing a lot of people to the Airbnb platform is shut down right now. So what we’ve done is, I mean I kind of had to play with it a little bit, find ways to switch to long term rentals, right? So, you know, posting on my status, word-of-mouth. Someone who needs on a month to month, I think two days ago, and they’re only staying for about two months, possibly three. So I told them, I can guarantee two months. And then we look at Mark and Steve, if you want to do three or not. And that one, I mean, I’m not going to profit a huge amount, but really, I’m not worried about profiting a whole lot. I’m just worried about covering my expenses, as most posts should be focusing on. And then I just landed, yesterday as well, a month-long booking at my Richardson location. They booked off the Airbnb so that one was not off the platform. [Jae: Right.] But I have been incentivizing bigger discounts on month-long stays and then so my title say ‘deep-cleaned’, ‘40% off’ or ‘50% off’, whatever you want to do. And ‘long term’. So I put those three words in my title. And that seems to have been driving some traffic, as I got a 31-day booking yesterday and then in our Grapevine property, I think last week, landed a month-long rental on that one. Now we’ve got to focus on this Fort Worth one too, I got to change the wording on that one. I haven’t yet, but focus on getting that one booked for another month or so. So really, I think just taking this month by month is probably your best bet. You know, you don’t know what the future is gonna hold. And you don’t know how long this thing’s gonna last. So it could look way different next month, you never know. So I don’t want to promise a six month lease for someone. I could be losing out on some revenue if everything clears up in the next two months or something.
Conclusion
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Today’s guest is DeShan. He does Airbnb rental arbitrage on four listings near Dallas in Texas with his one business partner. He started last year September with one property and is on track to add one rental property every month. His first two properties made $2,100 to $3,000 profits every month – the initial investment needed was around $6-8,000 for renovating those two properties. During this coronavirus situation, more than 70% of nights are booked in the next 30 days.
Working with private investors The first listing started on 1st Sept 2019 The second listing started in mid-Nov 2019 Third listing started in Jan 2020
Setup cost / lease
Starting cost is around 3-4k for renovation (2bed 2bath) + 1-month amount of rent for the deposit (1.4k)
A typical lease is 12 – 18 months (Got 1-month free month)
Coronavirus situation handling
Aggressively lowered price Changed title to “Need a social distance? Stay with us” Emphasizing how the house is sanitized and deep cleaned Made cancellation policy flexible Messaged previous guests and offered them the discount When getting cancellation requests, he tried convincing them to keep the reservation by moving the booking to a later date.
Pricing / Occupancy Rate
50% discount for monthly booking The sweet spot of the number of nights booked is 1-2 weeks
Hostfully for a guestbook Turnoverbnb to arrange cleaning
Full Interview Transcript
Jaeseok
How did you start it from your first one to now? Looking for the fifth one? Tell me about the story about how you made it.
DeShan
Yeah, so, um, we got into that Bnbformula program and started implementing it in like August of last year. So, we started learning about it all. And then we started doing our research and looking for a property. And then once we went through all the course material, and we found a property, we contacted a few homeowners and we found a house where the owner was okay with the idea, was interested in the idea. So, what we actually do is we do rental arbitrage. And in order for us to continue to grow, we work with private money investors,
DeShan
So we have, we have people that we’ve networked with, or Facebook and personal relations that have worked with us and given us some capital to acquire these properties and furnish them and everything. And that’s really the business model that we’re currently running in and will probably continue to run over the period of our business.
Jaeseok
You started your first one around last year August, is that correct?
DeShan
Yes, we started it at the very end of August. But we didn’t list it until the first of September. So we really started like the first of September.
Jaeseok
Right, and how long did it take for you to get the second listing?
DeShan
So we got our first listing started on September and then our second listing, we finished in the middle of November.
Jaeseok
Right. And the third one?
DeShan
The third one we started in January.
DeShan
Yeah. So I was saying that our goal was to start a property every month.
DeShan
And so we were a little bit behind on that. However, I think that our growth has been pretty good so far. And we are going to continue to acquire properties as we’re doing our fifth one next week and everything, so definitely got off to a good start. And we’re just looking forward to continue to grow
Jaeseok
And how much does it usually take to start a new two-bedroom house in Dallas area to run on Airbnb.
DeShan
So it really depends on the kind of property that it is, the size of the property… I know you said two bedrooms, but even the square footage of the property can make a big difference.
DeShan
Um, one thing that we’ve probably found, are trying to stick to, is for a two-bedroom, let’s say like two bathrooms, we’ll try to spend anywhere from like three to four thousand on furnishing. That’s usually kind of like our budget. And then it depends on the style of property that we’re doing because our business is called “Different”. And so every property that we have is different than the last one that we did. So each style kind of comes at a different price. But I would say on average is around three to four thousand.
Jaeseok
What’s the typical amount of deposit that you need to put in to secure the house?
DeShan
Yeah, so the deposit here is always the same as whatever the rent is. So for an example, one of our properties, the rent is 2,350. So that’s how much the security deposit was also. But typically, what we do is we try to get a front-end lease concession. So we try to get at least the first month free, and a lot of times, we might just sign a longer lease in order to get that first month free. And that’s what we usually try to go for when we’re setting up a property. But we don’t always get that, especially if you’re working with like an apartment complex or management company. So…
Jaeseok
How long is your contract? For the house usually?
DeShan
Yeah, so it varies if we’re able to no longer lease, yeah, we’ll do that. So for an example, we have one property, we signed a 13-month lease, and we were able to get one month free up front. And then another property, we signed an 18-month lease, and that allowed us to get one three-month upfront. So if we’re able to get that concession, we’ll usually sign longer than a year. But if we don’t get a concession, then we typically just stay at a year.
Jaeseok
Right, understood. You have 21 days occupied in the next 30 days for the listing that you showed. That’s about a 70% occupancy rate right now, which is pretty good, considering all those cancellations happening. What’s your strategy?
DeShan
Yeah, so I’m in a lot of the Airbnb Facebook groups, and so what I typically do, like once or twice everyday and kind of just either get my advice on questions or see what other people are doing. Recently, there have been quite a few people that have posted some advice about what to do. And pretty much everyone saying kind of the same thing. And so what we’ve done is the number one thing that you can do is lower your rates. So we’ve definitely tried to stay aggressive on our rates and be lower than our competition. And that’s probably the first thing that we did. And then after that, we optimized our title and our descriptions to cater to the situations that have happened recently. As you can see from the title that you are reading from our listing about social distancing.
Jaeseok
Yep.
DeShan
And then, in our description, we talked about how our cleaners are making sure that every property is deep-cleaned after every guest. We have a picture in our main photo reel that talks about the house being clean and sanitized after every guest, just to ensure that the people that are looking to book are comfortable in that regard. And another thing that we’ve done is made our cancellation policy flexible because Airbnb has given more search ranking to listings that have that. We were originally strict, so at this time, in addition to the Airbnb, extenuating circumstances policy that they’ve they’ve had, we already know that even if we have a strict cancellation policy, Airbnb has shown that they’ll basically go around that. So there’s really no reason to have a strict policy at the moment. I would say those couple of things are the most important. And I guess another bonus thing that we’ve done is, we went back and messaged all of our previous guests, giving them a discount for themselves and for their friends and family if they wanted to make a reservation with us, and we’d give them a 20% off discount. And then for guests who tried to cancel or were asking about cancellation, what we did is we spoke to them and told them all the facts about the virus and tried to kind of ease their tensions that they’ve seen all throughout the media and everything. And basically try to convince them to keep their reservation in place, but just move it to a later date. And also adding on, giving them an extra free night, in addition to keeping the reservation in place. So those are the things that we’ve kind of been doing that allowed us to either keep bookings or get new bookings. And it’s been working pretty well for us. So…
Jaeseok
I see. Yeah, that’s pretty impressive how proactively you took those actions to ensure that you have good bookings. And so you mentioned that you lowered your price. Now I’m seeing $79 per night? How much was it before all those cancellations happened?
DeShan
So the listing that I sent you is actually a brand new listing. And so what we do with brand new listings is we try to, when we first list them, we try to be lower than the competition by about 20%. And so taking that into account, and the fact of all the virus stuff that’s going around, we had to be trying to be as aggressive as possible with our pricing. So when, when all of the virus stuff starts to go away and we start to go back to all of the normal bookings and everything, we found that at our area, other hosts have been charging anywhere from $100 weekday to around $125-150 on the weekend. So that’s probably going to be our goal moving forward. But right now, as I said, because of everything that’s happening, and the fact that it’s a brand new listing, we have it at that price. And we also have a dynamic pricing strategy. So the closer we get to a day, if it’s open, the more we’ll lower the rate. So it depends on how far out the booking is, as well.
Jaeseok
How do you do the dynamic pricing? Do you use any tools?
DeShan
I actually do it manually, myself. So what I’ll do every morning is I’ll check all of the calendars and try to see what’s going on in the past couple of days and try to reference that across the next few days. So what I usually do is, I’ll look to about 72 hours into the future. And if there are any days that haven’t been booked yet, then I’ll start lowering the price pretty aggressively. And what that usually does is it keeps us able to get bookings at the highest price possible. Mainly because as you get closer to that day, there’s a lot of other hosts that get booked. And so inventory starts to drop. And once inventory drops but there’s still a demand, that allows us to get those higher bookings closer out and also maximize as much profit as we can.
Jaeseok
Right. So using that strategy, how much of the occupancy rate have you achieved since last year in September?
DeShan
So I haven’t checked recently, the last time I did check, I believe that our average occupancy was about 87%.
DeShan
So we’re doing pretty well. The listing that you saw, and that I shared with you, as I mentioned is a brand new listing. And so we actually started that one last week. And so the first day that it could be booked, was actually last Saturday. And since then, we’ve been fully occupied.
DeShan
…and will be fully occupied for the rest of this month. So since that one’s been available, it’s at 100 occupancy since today, so…
Jaeseok
And how much are you paying for the rent for this property?
DeShan
So that property, the rent is actually 1400 per month. It’s a two-bedroom, two bathroom apartment in a smaller apartment complex.
DeShan
But with that one we actually got a pretty good deal where we didn’t have to pay a security deposit. We didn’t have to pay for the first month’s rent. And so because of that very low. And in that area, it’s an area that’s in transition, so there’s a lot of construction being done in it.
Deshan
But it’s in a really good area, so it’s close to a lot of good spots that are in Dallas.
Jaeseok
So you’re giving a 50% discount to people who are booking monthly, right? Are you going to continue doing this after all those coronavirus things?
DeShan
Yeah, so what we’ve noticed recently is because of all of the travel restrictions, especially in our area, we’ve gotten more regional guests or people who were passing through here, but have been stuck here. So a lot of our reservations recently have been longer. I would say probably about a week or so.
But with our current pricing strategy, we will be trying to get guests for monthly stays or more than a week’s stay. But that is something also that we have to keep in our mind with our pricing strategy because if our calendar is wide open, mainly if it’s open 30 days, and we lower our prices too much, guests would have the opportunity to basically get the property at a very low price. So we do have that in place, though. And I have in the back of my mind when I’m lowering prices, and just making sure that we have that covered in the back end for sure.
Jaeseok
Right. So can you describe the ideal future bookings that you have? Ideal as in, number of nights that people booked? How would you describe it? Do you get what I mean?
DeShan
Yeah, so for us, I would say that the ideal number of nights would probably be…The longer the better, but probably under a month. We’ve haven’t had too many guests that have stayed that long, but we did have one specific guest that did stay that long and they didn’t take great care of the property. They didn’t destroy it. But there were some items that were broken. And the cleaning after that period of time did take a lot longer than usual. So I would say that we’d like to have guests stay as long as a week to two weeks or so. Mainly because of the fewer amount of turnovers that we have to do, the more we can keep more profit in our pocket. So that’s usually what we strive to do. But the actual thing that happens is, we’ll probably have guests that stay about four nights, four to seven nights on average.
Jaeseok
When I looked into your price, if someone book for three to seven days, it was $67 per night. But you mentioned that you’re going to increase the price by 20%. So that is going to be around $80 per night. And if you can achieve 87-90% occupancy rate, that’s gonna be around 2.1k income per month. Is it something realistic for you?
DeShan
Yeah. So right now, with everything going on, our main goal is to stay occupied. So with that, we know that we’re not going to profit as much as we’d like. But in the end, the occupancy matters more than the actual profit, as long as we’re able to cover expenses. Because right now, the main thing that most hosts are worried about is paying off all of their expenses. So as long as you can make enough to cover the expenses, and you can make sure that’s not a problem over the period of time that all of the events that are happening right now, then that’s probably our main concern. And so because of that, our profit is kind of like on the back end, if we can make a good amount of profit for each property, that’s pretty much a bonus. But as long as we can cover all of our expenses, that’s probably our number one priority.
Jaeseok
Right, I see. I think it’s hard to talk about the fourth property because this one is quite recent, but the previous ones, when you achieve almost 90% of occupancy rate, what was your net profit?
DeShan
I would say, quick numbers are on average, our first property is in a different location than Dallas. So it doesn’t perform as well as our properties in Dallas, that’s one of the reasons why we decided to get properties in Dallas. But our first property, that one on average, we make around $600-1,000 in profit monthly. And that’s obviously gone down a little bit, because of the seasonality and the events that have happened, but that’s what it is. And I would say our expenses are our rent, which is 1850. And then our utilities come out to be like $200. Most of our expenses come out to be like to $200 to about like $400 when you add in the cleanings. So that’s what it is for our first property. Then our second property has been doing a lot better. That one usually gets us between like 1500 to 2000 for profit.
Jaeseok
1500-2000? Alright.
DeShan
Yeah, for profit, monthly, and then the expenses on that one is rent, which is 2350. And then our utilities, which come out to be somewhere around 500. And then our cleaning fees, which probably add on another 3-500 as well, depending on how many guests we have that month. So, those are the main overview of the statistics for those first few properties that we have.
Jaeseok
Right. That means for like your second property, you’re earning above $5,000 per month. Is that right estimation?
First Airbnb property: 2018 Aug First Airbnb co-hosting: 2019 May Currently co-host of 6 properties: 2020 Mar Owner of Airbnb marketing agency – www.bnbthesmartway.com
Key metrics (6:10)
Target minimum $160 per night / 65% occupancy rate In average $3,500 – $4,000 per month in revenue (Assumed $170 / 75% occupancy rate = 3,888) (8:40) In Greenville, you can get a 2bedroom house around $200,000 (7:10)
About bnbthesmartway.com (9:25)
Run Facebook Ads to keep their Airbnb Search ranking up.
Software stack (11:15)
Yourporterapp.com Turoverbnb.com Pricelabs.co
Reasons why Renee is co-hosting instead of rental arbitrage (12:45)
How does she find co-hosts? (13:30)
Networking Member of BSI (Business Network International)
Airbnb tips (14:48)
A comprehensive 5-6 pages checklist of everything that needs to be in the house Small things like ice cream scoop, snacks, water, soda, welcome message on the fridge, 25-page guide book. Extension cords wherever needed for guests convenience (eg. near a bed) Beach towels for pet owners Dog dishes, dog house.
Today’s guest is Renee. She co-hosts 6 properties at Greenville in South Carolina. Co-hosting here means she primarily runs someone else’s property and gets a 20% commission from revenue. She also runs a marketing agency for Airbnb hosts. It’s www.bnbthesmartway.com. Her listing is called “Open Hearth Cottage- 3 miles to Downtown + Furman,” is generating $46,000 in revenue (after paying a cleaning fee, service charge, and supplies). Considering that this type of property can be bought at below 200k, it is an impressive rental yield.
Renee 00:57
Hi everyone. I’m Renee, I’ve been at Airbnb host since August of 2018. And I first discovered Airbnb and became passionate about it when I was in 2015. Right after I got married, my husband and I were having trouble affording a honeymoon and we were able to, someone told me about Airbnb, and we were able to find a place to stay. And I fell in love with the idea and knew that I wanted to do that one day, I had no idea it was going to become kind of my full-time job at that point. But later, we ended up buying a house. And when we looked for that house, I wanted to make sure that I had a space that I could separate from our living space and do Airbnb. So the house we bought actually had a built-out attic space with a separate entrance. So we could do a one-bedroom, one-bathroom listing from our home. That was an entire guest suite. It took me about a year to convince my husband and let me start but we did begin renting that place out in like I said august of 2018 And I rented that place until it just closed up for an interesting reason at the end of January of this year, but it had great reviews, we had really consistent bookings. And we did about 1200 dollars a month in revenue at that property, which was fantastic. As I continued hosting at that property, I began to learn a little bit more or wondered why my property wasn’t as high in the search rankings as it was when I first started. And why my bookings were slowing down about a few months into it. So I ended up developing an advertising technique that allowed me to keep my properties higher in the search ranking. So after testing that for six to nine months, I ended up offering that service to other hosts in May of 2019 Yeah. And so I ended up offering that to other hosts and started kind of trying to do that alongside my own Airbnb. So one day one of those clients that I did advertising for told me that She didn’t own any of her properties and that she was a co-host. I looked into co-hosting but wasn’t entirely sure that you knew it was going to be something I wanted to do. But she explained it well to me and really helped to train me. Her name is Laura meats and she has a course called co-host accelerator. And she really helped teach me how to be a co-host. And so what I ended up doing after that was in September of this past year. So just September of 2019, I decided I wanted to be a co-host and I got the first property that I managed in October and since then till today, I have done that with five other properties. So actually sorry, six other properties because now I don’t have mine. So I really had seven at one point that my original one is no longer listed. So I’ve had a lot of success with that I’ve been able to get a lot of great reviews and really replicate all that I’ve learned with my home into providing really comfortable safe places where people always say, you know, she thought of everything. And I was able to do that very affordably for my property owners. By furnishing everything, bringing it to my standards and I have a great cleaner I work with and we take care of everything for our owners. So that’s what we’ve been doing.
jaeseok an
Interesting. You said you are co-hosting with other people and how does it work.
Renee
So basically what happens is they end up signing a contract with me for at least three months, I get 20% of all the bookings and that is before the Airbnb fees are taken out. And that doesn’t include the cleaning fee. What happens is I helped to set up the property to the way I like it either by adding linens or by completely furnishing it from start to finish we’ve done that before. And then I list the property under my name on Airbnb as with me as the primary host. So really, I’m not technically the co-host, I’m technically the primary host and I’m managing it for them. And so I list that on there and, and run it just like I would any of my other listings and then I use YourPorter income reports to help me at the end of the month to separate out all of the income that I got from each property. And then they have a thing that allows me to show what’s my 20%. And what’s the 80% for the host. So in the first of every month, I send direct deposit checks to all of the owners with their 80% and I keep the 20%. I also purchase all the supplies and things or like small repairs I’ll handle as well. And then just deduct those from the final total that I give to my property owner. So it basically becomes very passive for the owner, where they just sit back and collect the checks while we handle all the day to day running up the Airbnb, and all the advertising. And it really allows us to present a solid brand to our clientele. They know that they stay in a Westbrook hospitality home, that it’s going to have a certain feel and a certain brand. So that’s really helped us keep guests coming back and has helped us get great reviews.
Jae Seok An
I see when I had a look at the listing that you provided. I found that the occupancy rate for next month is 76%?
Renee
Last Month.
Jae Seok An
Right. And is it $200 per night on Average?
Renee
Actually, in February, we were at 93%. occupancy. But I was a lower average nightly rate because we had a longer-term booking. Let me see it might have been March. It was looking really good until everything change. I guess my statistics are all editing. I’m here as they changed the other 76 was probably for this month before cancellations. Before cancellations. I think we were set to have 76% at 170 occupancy or average revenue per night. But yeah, that all changed. That is our goal with this property is at least $160 and at least 65% occupancy.
Jae Seok An
So, right that leads to somewhere between $3,500 to $4,000 or even higher than that amount, which is Yeah, I think that’s a pretty big number considering the housing price in Greenville around $200,000 for 2 bedrooms,
Renee
yeah, well the housing prices in Greenville are still kind of at the national average. But for us who’ve lived here a long time it is a little high. This house though the owner is doing very well on because she was able to buy it and really fix it up she actually did a lot of of the design in that house and we just came in and did a little bit at the end, but she was able to fix it up so she doesn’t have a lot of expenses in that house. So she’s doing really well with that. But yeah, the average price in Greenville is probably around you know, 200 to 250. Now, it used to be 130. But what I normally tell people is if they can buy between, you know, anything under, 200 normally we can make it work for them after my 20%. Where they’re coming out with a pretty good return on their investment. And so that’s another thing I do for my property owners is I do give them an estimate of what I think the revenue could be based on the comps in the area so that I can help them make the best decision moving forward.
Jae Seok An
Well, so that means right let’s say the housing price is $200,000.and you’re making $4,000 per month, which means that it is going to be around $50,000 every year of the just gross profit.
Renee
that’s the revenue Yeah, we gotta take out the 3% to Airbnb and we got to take out you know, that 20% that goes to me But yeah, the gross should be around there. These are all like I said, pretty new properties. Yeah. So um, we are working hard to get them up there. And a lot of them were really gaining steam before all this happened and I think they’ll go right back to doing well, afterward. Thankfully, one of our biggest seasons here is actually the fall, because we have Clemson football, as well as like all the leaves. So I’m really hoping that at least by fall, we’ll be doing really well again, and hopefully, I’m thinking everything will pick up again in July, though, um, you know, of course, no one can know,
Jae Seok An
what’s the service that you’re providing? Is it a software? Is it consulting?
Renee
No, it’s basically we run Facebook ads in order to help people keep their search ranking up. So we have a one time fee for creating the ads and then we can manage it for free for up to six weeks, sometimes a little longer. And then after that, it’s a monthly fee to manage their ad. But basically what we do is we’ve determined that sending traffic through Facebook ads to your Airbnb listing shows interest in the listing and Airbnb will put you higher in the search ranking. So we create an ad for people’s listings that we run into That will help to keep that search ranking high. Just kind of easy explanation. And then every week on Monday, we send a report of their current ranking and how their ad is performing. And we work on making that better every week. So I’ve helped so many hosts you can see on my website “www.bnbthesmartway.com” you can see all the results that we’ve gotten for hosts. So we’ve taken people from not being on any of the pages all the way to page one or page 17 to page one. We’ve had clients in the UK, Philippines, Kenya and all over the US. So we do have free evaluations you can sign up for to see if it’s even a good fit for you but that’s one of the secrets to kind of keeping my places booked as keeping my properties high on the search rankings so that when people do come to Airbnb and look for a property I’m one of the first ones
Jae Seok An
that they see awesome, understood. Are they paying for a fixed fee?
Renee
A one time fee to me for ad creation and then they pay the face the advertising costs to Facebook. They don’t have to pay attention to regular monthly maintenance fee, we teach them how to take care of their ad themselves. Yeah. Or they can choose to pay us $35 A month after that initial free period, excuse me so that we can run it for them.
Jae Seok An
Okay. And what’s the software that you’re using for you for running your Airbnb is that
Yeah, I think that’s it. Oh, and I use “pricelabs.co“. I love Pricelabs. I used “usewheelhouse.com” before. And I switched to price labs in January and I’ve been really happy with them. They actually have a special pricing tool called coronavirus that they’ve developed an occupancy-based pricing system. That is, you know, what they recommend you turn on for right now to try to get some bookings and I have gotten a handful of bookings. But of course, I’m also looking more at that longer-term situation. So I use Pricelabs. So those are the three Pricelabs YourPorter and TurnoverBnB are the ones I use I’ve used you know, other things besides turnoverBnB, I used it like Google Calendar, but it’s just not quite as great as turnoverBnB. And my cleaners really appreciate the efficiency of turnoverBnB and the way it allows them to leave notes and checklists and things like that. So that’s what we’re using, but YourPorter is a lifesaver. They are my channel manager between VRBO and Airbnb, as well as my automated messaging. I do a lot of automated messaging for check-in information and things like that. I use their auto review feature as well for good guests. And it gives me my income reports that I use for accurately figuring out what I owe all of my owners. So that’s a huge software that I really love and I use a lot.
Jae Seok An
Do you have any plans to buy or rent your own properties to run it without doing costing one day?
Renee
Yeah, I don’t have the funds right now to buy my own and I don’t have the funds right now to do rental arbitrage and don’t have enough in the bank to cover what like three months If coronavirus happens so that is in the plans but it’s looking like it’s gonna be it’s been a lot of craziness in my personal life in the past year that has changed a lot of the plans I had so for now co-hosting is fine I really enjoy it and I’m making good money doing it. I think I sometimes saying co-hosts might do better than people in rental arbitrage and we have a lot less risk. So right now that’s the model that works for me I would definitely like to buy, but only once it’s wise to do so for me.
Jae Seok An
How are you doing with finding the properties to co-host? Do you run Facebook ads?
Renee
Just networking honestly, I’m a member of something called BNI business networkers International. It’s a networking group and they have found three of my six houses and the other, some just, you know, word of mouth, getting my name out there. I haven’t really paid for any advertising. Just people know what I’m doing. They’ll tell people and that’s just kind of how it’s spreading. I do want to start doing some local stuff. seminars with people and investors are especially people who are worried about the stock market now looking at a different way to invest, I want to do some seminars to educate them on this opportunity. But I haven’t honestly had the time I’ve been so busy setting up the leads, I do have and you can’t kind of outgrow what you have, you know, I need to make sure I’m taking care of everything I have. first, before I push too hard for acceleration. And then of course, with COVID, everything is changing, but I do still have several people interested. And later in the year, I’ve probably got three or four homes that are kind of pending to for sure. One investor is gonna buy soon, one investor that wants to buy one person’s gonna start July, and another house that probably before the end of the year will start as well. So I’ve got a lot in the pipeline. And yeah, just go from there.
Jae Seok An
Tell me about your secret of getting 4.9-star reviews.
Renee
So the thing is, well, first of all, we always have a very comprehensive checklist of everything that needs to be in the listing. We’re talking like five, six pages. So we’ve learned really well like math like every kitchen implement that I feel like is necessary because we don’t want to like Like, for example, it’s really easy to forget an ice cream scoop people would really appreciate ice cream. At least in the US people love ice cream. So things like that. We provide some snacks and water and soda, we provide like one water for each guest and then a couple of soda options. Half the time people don’t drink them, but they always appreciate seeing it. So it’s like a win-win. And if they do drink them, then we switch them out, I provide a little snack basket for each guest. I have a little welcome message on the fridge with all the rules I have a huge 25-page guide book to the area with everything you’d want to do with ours of the places the address and how far away it is from everything that took me like forever to develop that I put in all my properties. Another thing I have, it’s very easy and very cheap as I use these kinds of an extension cord, things from Target that have like three plugs and then two USB ports on them. Yeah, and I put those and I take a Velcro-like Velcro thing and I Velcro those to the nightstands or to the wall next to the bed or to the end table where it’s easy for people to plug their phone or computer and so right for an outlet, so I put like seven, eight of those in each house. So there’s no hunting for outlets. I’m always thinking of where are they going to charge their phone? Where are they going to plug it in? So things like that. What else do we do? We use white linens we make sure they’re very nice for them. We use makeup towels that are black. When I have houses that allow dogs I get some really ugly beach towels from Costco and I hang them next to the door and a basket next to the door and I have a cute little frame and it says you know these are dirty dog towels for dirty dog paws dog messes or any big mess and that saves my white linens and right that makes them feel comfortable. If it rains they can drown their dog paws. With dog houses. Sometimes I’ll put in a dog bed or something dishes for their dog are little treats for their dog as well. So just all those little touches. Oh, and then we put York peppermint patties on each bed and a little dish as well. So all those little touches really make people feel like it’s special and makes it feel like they’re right at home.
Jae Seok An
Thanks so much for sharing.
Renee
Nice to meet you. Yeah, thank you and have a nice day. You too. Bye.
If you enjoyed this episode, why don’t you check out Teri’s story and Umar’s story?
Work with a realtor who uses AirDNA to estimate vacation rental income
Today’s guest is Teri. She runs two listings near Charlotte in North Carolina. Her revenue from a four-bedroom house is around $4,000 to $5,000 per month (plus cleaning fees) depending on the season. Similar properties around the area are rented out at $2,000-$2.500 per month. Teri has 52 reviews average at 4.98 for this listing.
Jae Seok An 0:40
What do you do outside of running this Airbnb?
Teri 0:43
Ah, well, I am recently retired from a profession in cardiac surgery. I worked in an operating room for 22 years. And I’ve always, not always for the last 15 years or so, I had seven rental properties. I managed on the side as traditional rentals. So I had tenants who would live there for a year or two years and then move out. And then I get a new tenant. I did that and I did that in Chicago. And after relocating to Charlotte, North Carolina a couple of years ago, I learned about Airbnb property management from my neighbour who is also in real estate and real estate development. And I was interested in getting another rental property so I decided to try Airbnb. And it’s been great up until recently.
Vacation rental career
Jae Seok An 1:44
When did you start your first one? And when did you get your second one?
Teri 1:55
Okay, so I purchased my first property in the fall of 2018. And it is a single-family home. And we had to do a little bit of renovation to it just to kind of update it. And I listed it and had it up and running on Airbnb in December of 2018. So I received my very first reservation on the first day I listed the property. So I hosted my first guest in like the third week of December and it’s been rented. Just about every weekend. Since we had such success with it in early 2019, I decided to purchase another single-family home, which is only about five minutes from my current property and had that place up and running. within three weeks. However, the property suffered a fire, which destroyed the interior of the home. Oh, and it’s been under renovation since May of last year. And I am still about three weeks away from getting that property up and running.
Coronavirus handling
Jae Seok An 3:28
what’s your strategy to deal with this coronavirus situation?
Teri 3:44
Yeah, so right now
I am trying to think outside the box. So, I have listed the property on furnishedfinder.com, which also works with travelling nurses. And I have also tried to put my listing on different Facebook groups just to let people in the area know that if they have family who may still need to come into town they would have a safe place to stay while they’re here. I’m lucky that I did have a family who needed a temporary place to stay because their house is being renovated, locally, so she has been staying with me for two weeks now while her roof is being replaced. But after that, I’m just hoping that the restrictions on all the states and all the travel will be lifted within the next 30 to 60 days so that we can start accepting bookings again.
Occupancy rate
Jae Seok An 5:01
What was your occupancy rate like in the last two months before this coronavirus thing hit,
Teri 5:09
so my occupancy rate in January, February, was over 50%. My weekend bookings were 100% booked Friday, Saturday night. I had a few that were staying throughout the week and I’m very into great customer service. So I respond to requests within an hour and I make sure to welcome my guests when they arrive and I send them a welcome message. And I leave things in the home for them that just kind of make it special, so that they feel like they’re getting a little bit more for their money. And I always want to make sure that they’re happy before they leave. So I check in on them and ask them that I strive for a five-star review at the end of their stay. So if there’s anything that I can do to make sure that happens, they can always reach out to me right.
Price
Jae Seok An 6:21
When I checked your listing, the price was around 280 to 310. Is it right estimation, or did you lower it recently?
Teri 6:31
So recently, I have lowered it a little bit 10 to 20%. But on average, yes. I was getting on Around $270 on average, per night, it is a four-bedroom home. So eight to ten people can sleep in the house. Right. And at $300 a night that’s still a very reasonable rate.
Jae Seok An
When I had a look at Zillow, it seems like a similar property in the Burlington area, which is well known for the wealthy neighbourhood was rented out at around three to $4,000 per month.
Do you agree with that price?
Yes, yes, I do. Right. And you mentioned that you’re getting around $300 per night. And if you get a 50% occupancy rate that’s around $4,000 per month in revenue. Yes. Right. Okay, then that isn’t too much higher than renting out long term, long term. Right, cuz that’s around three to 4000.
Long-term rent
Teri 7:42
Well, so I think it’s your, your assessment of those rates depend on neighborhoods. So the neighborhood I’m in those homes would probably rent out additionally for 2000 to 2500 a month. All right? Yes. And even, even if I were able to get 3000 a month, yep, I would much rather still have my home be a short term rental. Because I find that long term tenants tend to not take care of the property as well as a short term tenant does. And so there is less wear and tear on your property with a short term tenant because it’s for one They are only there for a few nights. And for the nights that your property is not rented, it’s staying clean. It’s, it’s being maintained by you, you have plenty of opportunities to go in there and fix something when it’s broken. Yep. And so, I think even if I were making the same amount, or even a little bit less, I would, I would still feel like I was doing better with a short term rental than the long term.
Jae Seok An
Right, understood most till you’re making a lot higher than renting out in the long term, which is between $2,000 – $2,500.
Teri 9:22
So yes, yes, this has proven to be better than a long term rental, especially during the really big travel seasons, which is the summertime, right, summertime rates were much higher. I was I had more of an 80% occupancy rate in the summer.
Jae Seok An
So you were putting it at a higher price how much higher than let’s say January or February about
Teri
About 10? To 15%?
Jae Seok An
Right? How do you do the cleaning? Do you hire a cleaner or do to yourself?
Teri
I do both actually. So on days, when I have the time myself, I will go do it myself. But if I happen to be travelling or if I’m busy during checkout, then I do have a crew that comes to help me.
Jae Seok An
What software do you use to run your Airbnb?
Teri 10:20
So I list on airbnb.com and on vrbo.com. I have tried beyond pricing calm to see if their algorithm would help with doing smart pricing on-demand pricing. Yeah, I use them. I use them for a little bit. And I think it all just depends on your market. I felt like I could keep up with my pricing just as well as they can. So yep. I’m still kind of playing around with that.
Jae Seok An
Earlier during this interview, you mentioned you had seven properties in Chicago. Yes. Are you still running them as the long term rentals?
Teri 11:19
No, I’m not. I decided to sell all of those properties when I moved because I didn’t want to be maintaining them long-distance,
Jae Seok An
right. And do you plan to expand your Airbnb operations in your area? into the future.
Teri 11:41
Yes, I actually do have a contract on another single-family home, which I am supposed to purchase at the end of next month. And right now, I haven’t made any decisions, but I’m a little bit concerned with the real estate market in Charlotte, because of the coronavirus. And so I’m not 100% sure if I’ll be moving forward with that at this time, but I haven’t made any decision yet.
Jae Seok An
I see. That’s interesting that you were thinking of buying a property just to run as an Airbnb rental. Is that correct?
Teri
Yes.
Market research when buying a new house
Jae Seok An
Can you describe how you did your market research to decide that property is yours like to run Airbnb?
Teri 12:29
So as I mentioned earlier, by a neighbour who is has been in the real estate market in Charlotte for over 20 years, he helps me do A lot of the research and he uses AirDNA.
Jae Seok An
Right? So I guess from there, you were able to estimate how much you could make by running this?
Teri 12:53
yes. So we would look for properties that were for sale that were undervalued where we could purchase them at a really good price. And ones that buy with the AirDNA data, told us or predicted a nightly rate that we could get for that property. And so based on those numbers, we would decide which property we try to purchase specifically just to run as an Airbnb.
Jae Seok An
And yeah, that was it about the interview. Thank you so much for sharing and taking your time on it.
Today Guest is Rhees. He is preparing to run 6 Airbnb listings in Kanab in Utah. The listing is called “Timber & Tin C 2 bed 2 bath w/ Pool & Rooftop Deck.” They are still under construction and his first guests will arrive in May. There is no historical data about the occupancy rate.
Rhees: They’re actually duplexes. All right. And so there’s gonna be two, two sides of each, you know, so there are two sides to the duplex. Each side is about 1000 little over 1000 square feet. two bedrooms, two baths, and is going to be able to sleep about 7 on each side. There’s going to be 3 duplexes on the property. And then we’ve also we’ve put in a pool and a nice Recreation Area pavilion, and we’ve restored an old barn that was my great grandparents’ barn we restored that so that’s going to be a cool kind of gathering place for everybody that stays at the property
J: What makes you want to get into this?
Rhees: I’ve always wanted to get into real estate investing to try to find a way to get into. That makes financial sense. I feel like this is a way that you can get into it even without, you know, necessarily finding the best, you know, super cheap, low priced deals that a lot of real estates investors are looking for I mean, you can still buy In a regular priced home or unit somewhere. And if you do it the right way you can, you can turn a profit and a good profit did a good return on your investment with Airbnb. And you know, just vacation rentals, short term rentals. So that’s kind of why I started to get into it is because the financial opportunity is there.
J: What’s your expected return or monthly
Rhees: Right now our expected ROI, our vacation rentals are in Kanab Utah, which is where I’m from my hometown. And it’s right in the middle of a bunch of different national parks Zion National Park, the Grand Canyon, Bryce Canyon National Park. So it’s just a really beautiful area a lot of tourists come through here. So, even if we calculate, you know, at the price point that we want to introduce the conservative price point We believe we can get for the rental and a conservative amount of nights booked a year, which we say, you know, $100- $150 a night at our rentals and 200 nights a year is pretty, pretty average around here in Kanab in this tourist area. And so with if we hit those numbers we’d be able to turn about at 12 to 13% return on investment based on our expenses and what we’d be able to pull from it.
J: What channels will you be using?
Rhees: Yeah, we’ll be using Airbnb, VRBO, Homeaway and then we will also work to, you know, Get bookings through our own website, which we’re currently building.
J: Do you use any kind of service to build a website?
Rhees: We’re just No, I’m actually just doing it myself using Wix.
J: How did you price?
Rhees: Yeah, that’s a good question. So the way we’ve kind of looked at it is we try to price you know, we always want to price competitively but we don’t want to sometimes that Airbnb suggested prices are a little low or just, you know not quite right for our market and so we’re pricing we kind of priced day today we’re always checking in. We are always looking at the prices. So you know, we have a set price that we don’t want to go below but then if we have, you know, days in between bookings that need to be full when they once it starts getting closer to that time that we can, you know, drop the price to see if we can fill those dates.
J: How did you do your market research?
Rhees: We just know a lot of people around town that run Airbnb. We went to the travel council got stats from them of how many people are coming through every night and how many are staying in hotels versus vacation rentals and then we just did a lot of research on Airbnb, ourselves scrolling through seeing what people are pricing their places and seeing what the places look like and how we can gain a competitive advantage right. So newer places with amenities like a pool or a hot tub always booked out first and so we figured we could create a place like that right that we don’t do well in the market,
J: What Market Research tool do you use? Eg. AirDNA, Mashivisor, Alltherooms.
Rhees: We kind of tried to look. We tried to use one of those right but the town we’re in is pretty small and so they didn’t have a tonne of There’s a couple weeks of depth, there wasn’t a tonne of data, just not on our town.
J: How many listings are there in your area?
Rhees: There are about a little over 250 listings around town. Yeah.
J: What were the exact problems you had with data from AirDNA and other tools?
Rhees: There were over 200 listings on Airbnb and VRBO. And yeah, we just when we did our market research, we just kind of tried to find, like, what were people doing right. And also what were other hosts not doing that we could do and just kind of make our place more marketable.
They just didn’t have some of the bigger cities around us, right? Like they had done they put the data together on But they didn’t have it like Wheelhouse pricing, or AirDNA, alltherooms. We tried to look up data just on our specific town and for some reason there just wasn’t a lot. Right. So. Okay,
J: And do you use any other software to run your Airbnb?
Rhees: Um, no, we just have a plug-in on our Wix site that we’re able to, you know, have bookings. And then we and then we have, you know, a scheduler for gaming and stuff as well.
J: Is this scheduler integrated with Airbnb?
Rhees: Well, yeah, it’s a calendar that’s linked to Airbnb and VRBO and all of the platforms – using Onerooftop.
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Today’s Guest is Alexander. He runs 1 Airbnb listing in Redwood City – at the heart of Silicon Valley in California. The listing is called “Cozy 1 BR Pool house with bdrm loft“. It’s a self-contained one-bedroom pool house. The average occupancy rate is 80%. Nightly rate is 160$, so it’s generating over $3,500 per month before tax.
J: When did you start and why did you start?
Alexander: Sure I have had a painting cleaning business for 16 years and what I do is very much tied in with real estate rentals, people buying selling, moving renting and what I would do for the last you know 16 years is making a place look perfect after the family. We would move out, right. And I was doing a job in Redwood City for a very young couple. And I’m 41 Yeah, this young girl was probably 10 years younger, and they had a little baby, you know, went to their house and I was gonna give them a quote for painting and cleaning. And I asked her, so what do you guys run this place for? I always asked to know because my wife and I had the house in our backyard. We always rented for yearly rentals, we bought this house in 2009. And at first, we were a little skeptical to rent it out because we wanted our privacy and we were young. And then we started realizing quickly that we have a lot of bills and the money can be great. So we rented it for a year to an older woman grandmother, right for a very low amount just to test the waters out. Yeah. And after she moved out, we got a young Facebook kid because Facebook’s headquarters are in Menlo Park, which is 5-10 minutes drive from here. Yeah. And so the Facebook kid was wonderful and he was great. He stayed a year and a half. And when he left is when I went to that young woman’s house, and I asked her what she rented for. And she had a one-car garage that they converted into a little studio unit. And their unit was much smaller, you know, less desirable neighborhood. It just wasn’t anywhere as nice is our unit. Yeah. And she told us that she was making over $3,000 a month. This is years ago. This is one that the unit should have rented for 1300 dollars. Yeah, and I could not believe that they were getting so much money. And so I came home super excited after asking so many questions. Then, I told my wife and she goes, No way. We’re not gonna have a hotel in our backyard.
So I knew that that was my biggest hurdle was my wife. I had worked on her And the ideas and answering all of our questions and the details for six months. And finally, she agreed to do it. So we started buying furniture for Airbnb. And when we finally had it set up, which was really easy to do, just like anything new in life when you’ve never been on Airbnb or been on the website, it’s confusing for the first person but when you really sit down and set it up, it’s very, very quick, very user friendly. But for the first two or three weeks ahead, and this is exactly what you probably want to know we were nervous we had put money into buying a couch, a TV, paying for cable, buying all the toiletries in the class where the kitchen was so after good weeks and not getting a hit. We were a little nervous. and we were starting to get scared. And then all of a sudden our first hit came. Yeah. And it was a woman from Turkey. And she said, Hey, I, I’m moving my husband and we were going to be working for a tech company. And we’d like to rent your place for seven months.
J: Is it common to have like long term guests in your Airbnb?
Alexander: Yeah, so we’ve been very fortunate there. It very much depends on your situation. Our rental is across our backyard and owning a painting, cleaning business and being in the hospitality industry. It made it very easy for us to get long term guests. There are people who rent rooms on their house or just have a small apartment with as homey as our pool house. They may not get the same long term rentals that we’ve had for us.
Yes, most of our renters are little long term and currently, we have someone that is remodelling their house in a neighborhood and they rent our place for three months, you start to come up with it as a new renter, or sorry, as a new Airbnb host, you start to come up with who would rent my place who would want to be here for six months? Who would want to be here for two months? And the answer truly is you don’t know. It’ll be your neighbor’s grandmother. It’ll be your neighbor of the block and you’ve never met, just had a grandchild in the area and they want to come to stay, but they don’t want to stay with their son and their daughter in law because it’s too close and too personal. So they want to be close, but they don’t want to be in a hotel. Right and get screwed by all the hotel taxes and occupancy taxes and parking taxes. So yeah, most of our rentals, renters and guests have been long term, I’d say a minimum of three weeks and most of the months.
J: Are you just on Airbnb? Or do you use any other channels like Homeaway
Alexander: so we have only done Airbnb. Because of a few reasons why my wife and I years ago started a VRBO and we had a bad experience. Another reason for using Airbnb is because they do have a large platform for helping out they do have a million-dollar policy to help out. If something gets broken, They are a great middleman for solving things and they have resources. The third reason why we love Airbnb and haven’t tried anyone else is they have worked out a deal with our city so that if someone stayed less than 30 days, they were will facilitate and directly take out of the situation of the equation, the occupancy tax, which is also known as the hotel tax, which is 12% or area. And all of the other sites have not done this yet. The first couple of years. Airbnb hadn’t worked out any deals with any cities. But recently in the last six months, they had worked out a deal with Redwood City so we don’t have to come into Redwood City with paperwork and say I’ve had this many guests for this much time. How much do I owe? It just comes out of the equation and it’s really easy on our end.
Paying 400 dollars per month to rent an apartment, and making 300 dollars profit before cleaning and utility fees.
J: What’s the typical demographic of the guest.
I would say most of our guests are younger, and I wouldn’t say you know, teenagers or 20. I would say most people are young families, I would say probably about your age, late 20s to early to mid-40s. But not to say we haven’t had a few grandparents or haven’t had a few 50s or 60-year-old but most people are families looking to relocate, or people coming to try and start a new business in Silicon Valley. Or people coming to visit college-bound children so they might have people at UC Berkeley or Stanford. And then also there is people just come in to visit family in the area, which is also a big one. But really, it’s just amazing that you never know why they’re coming or who they’re coming to see until they tell you, but there is a lot of opportunity in our area. I have looked recently on a map to look at my competition and I was shocked to find there are tons of new listings. I mean, I would say, forty new listings in my area from the last time that I looked at it a year and a half ago. Because there are more listings, obviously, that’s gonna affect the price. So I should be technically lowering my price by about $20 a night, but I have yet to do that because we are lucky enough with having enough booking.
J: Do you personally block your calendar for a certain purpose like for your private use?
Alexander: Yeah, actually, the people that we are renting to right now, for three months, are remodelling our house – I blocked a week after they’re leaving. The reason why I did this is that they have young children. They have pets. And I could tell just in the first week that they were saying that they’re going to be very hard on my property, meaning I’m going to need a day to fully do touch up paint, running needed day for carpet cleaning, and I’m probably going to need two days of cleaning. I know that sounds excessive. But I didn’t want to have someone book two days after they’re leaving, and not be able to return my property into the pristine condition that it deserves to be in for the next guest. We also my wife and I will book things in the summer if family members are coming to town and we want them to stay with us. That’s what gives us the flexibility to Airbnb for us allows us to make more money monthly for our client or for our family, which pays our high mortgage in the Bay Area. A mortgage in the bay area can be anywhere from 4,000 to 12,000. And if you have an average job, it’s a lot to pay so Airbnb gives us the flexibility to use our pool house and allow family members to stay there and us to use it but it also allows us to make more money monthly than we would have for regular rental.
J: What’s your occupancy rate? You’d say? Because right now I can see that you’re fully booked for the next two months.
Alexander: currently booked more than I would say that we are easily 75 to 80%. That would be the best. Because I know that most, we usually have renters for two to three months at a time. Yeah, two times a year. And on the other times, we’re still booked three nights a week. So I would say we’re doing very good.
J: I saw that your price was higher on the weekend. How did you price them?
Alexander: Oh, yeah. So here’s the funny thing. I set up those prices three years ago. On the weekend, and I didn’t know what I’m gonna do. Just like just choose some numbers The best I could and I have yet to change those because they still worked for the last three years. Every time I start when someone doesn’t stay with us for two weeks and I start getting worried and I’m about to lower the price. Someone books it for three months and they don’t like it. Please. So I chose Friday and Saturday nights to be higher prices just like hotels do. Then Monday, Tuesday, Wednesday, Thursday, are cheaper. But really, now that I’m saying this out loud, I’m kind of doing it backwards because in Silicon Valley, all of these fancy hotels that we raise for $700 a night for Monday through Friday for the tech workers, and then the weekends when they all are gone. They dropped to $200. So maybe I should be doing mine backwards, but so far, it’s been working.
Today’s Guest is Umar. He runs over 25 Airbnb listings in Shah Alam in Malaysia – a city 30 minutes away from Kuala Lumpur. The listing is called “SmartHome iCity Shah Alam NETFLIX/WIFI/G00GLE HOME“. The average occupancy rate is 80%. Renting an apartment at 1,200 Ringgit/month ($280), and making 1,000 Ringgit ($220).
J: When Did you start and why did you start?
Umar: So I started back in 2016 when I was studying, I don’t consider myself as full-time force back time then. I was studying in the states so whenever my friends went back to Malaysia during Summer. I put it up on Airbnb and oh it’s actually making money. So when I came back to Malaysia last Summer in June, that’s when I decided to put real money on Airbnb. That’s when I started my first house on June 2019. It’s less than a year.
J: Do you use any other channels than Airbnb?
Umar: At the moment, we are heavily on Airbnb, but some of the listings we put it on Agoda. Apart from Airbnb and Agoda, most of the bookings are coming from direct bookings. People who have stayed on my Airbnb, they are more inclined to book directly with me, instead of going to Airbnb – through WhatsApp.
J: What’s the typical demography of your guests?
During the weekday, it’s people who come here to work. During the weekend, it’s the people who go there with family. It’s close to the shopping mall. Or people go there for just weddings. There’s a lot of wedding places over there. So I tend to get a lot of bookings from students as well because there’s one of the biggest universities in Malaysia here.
J: How do you price your Airbnb?
Umar: I target every unit to make 1000 ringgit (233usd as of 14th March)) profit, which is around 350 USD. So what I do is I would backtrack, so I put my target day as 25% occupancy. So I calculate how much I need to price myself in order for me to get 1000 ringgit profit.
J: do you use any of the listings for personal use as well?
Umar: No, no. I mean like it’s under percent for the business purposes right and I don’t use it for my personal use, like five minutes away from the police. Right?
J: So yeah, when you get those houses, do you rent them out or do you buy them?
Umar: So I think suddenly all of the units that we have we rented outright because I personally think that if you want to get into short term rental game games, it’s not wise to buy the real property yourself. Right.
J: What’s the like monthly rental cost of a typical one-bedroom flat
Umar: 1,200 ringgit ($280 as of 14th March 2020)
J: So I guess you’re hiring cleaners, right? Because you have to manage quite a bit of properties.
Umar: Yeah, I mean, like when I first started, I outsource it to an outside contractor. Yeah, but then as I’m expanding, there is no economies of scale. So it is similar. If when I have one listing, I paid them for example, $30 When I have 15 listings, I still pay them $30 rotini. So that’s when I was I think that Oh, it’s more. It’s much safer for me to free my utilities instead of hiring an outside contractor.
J: What is the software that you use for Airbnb?
Currently, I’m using superhost tools (https://hosttools.com/), but I don’t have any favourite software, because there is no software that can cater to the South East Asia market. Catering for the Malaysia market, they don’t have that kind of software. I’m using a lot of different party software, they are created by people who are staying in the United States. So in states people don’t use WhatsApp, they use like, they use email, they use message. They don’t use WhatsApp. People in Malaysia, they tend to use WhatsApp, almost for anything. I’ve been trying to find a software that has connectivity with WhatsApp, but it’s not available yet in the market.
J: Okay, I see. Gotcha. And what’s your plan with? Like this whole Airbnb thing? Like, do you want to keep growing it? And do you have any like, long term goal? Like Where do you see yourself in one year with Airbnb?
Umar: Okay, so I have a few goals that I want to achieve. The first one is that, so I want to be able to gain control of the specific market in ICP Shah-Alam. So there’s a lot of competition over there. So I’m planning to become one of the main operators over there, and to do that, what I’m planning to do is having a competitive price. So when you have a lot of listings, that’s when you can have a lower cost. So what I’m planning to do is like to have a lower cost so that I can put a very, very low price. in order for the competitors to exit the market. Another goal is to reach out to other cities in Malaysia. So right now we have 24 in Shah-Alam. We have one in the KLCC (Kuala Lumpur City Centre) area. So we are planning to expand in the KLCC area.
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