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.