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Tag: airbnb

What’s Happening With Real-Estate Right Now

There’s a story being reported left and right. The story is about commercial real-estate. With the global lockdown happening right now, commercial properties are going to go through a massive setback. Retailers have united to the call of not paying any rents until the businesses open.

Most small businesses have cash that would last no longer than a month. Many of these will have to permanently close down. As a cascading affect, commercial real estate as a whole would be losing value. REITs are already trading much lower.

There’s another story being reported heavily. It’s about the travel industry. No one expected or prepared for travellers to disappear. Many airlines would go bankrupt without financial support from the governments. I can’t imagine how bad hotels are right now. Especially small and medium hotels who are running the show on rented properties. Many of these will permanently close down.

There’s another story but that’s very under-reported so far. It’s about the residential real-estate which I originally thought would stay unaffected but I’m curious whether that’s the case. It’s about the Airbnb’rs. The super hosts. Semi-pros who are in a pretty bad situation. Their odds of coming out of this just as good as someone trading crypto on a 10x leverage. Slim. Let me explain myself.

Airbnb hosts begin by renting a property. They are able to then sublet this property at a 3x higher price. After setting aside profits, they are in a pretty good position to rent or mortgage the second property. Eventually many super hosts are hosting as many as 10 properties. And they have absolutely no one staying at any of their properties. Their cash is evaporating fast and there is a real trouble brewing.

The question that I’m trying to find answer for though is whether this could affect residential prices just as I expect the commercial real estate to suffer.

How I Found Success On Airbnb As A Host in Pakistan

I haven’t frequently hosted properties on Airbnb in Pakistan but I listed one property in 2018 that I rented to sublet just for learning purposes and found success with it.

While there could be many tricks and hacks you may use to find success on Airbnb, my personal favorite is simply a pricing hack that I’ll share later in this post.

I think everyone agrees that the core success of any property comes from how good the property is, and what is the value for money. So you certainly cant discount that advice. Your property photography needs to be really good for the whole thing to look good and your pricing needs to be competitive with what others are offering in the neighborhood.

The second most important thing for your Airbnb listing is your landing page. It should be super informative. There’s little need for you to get creative, just look at the highest rated properties, and try to copy everything that they’ve done on their landing pages. Try to provide as much information as other top properties have done. If you don’t find anything extra ordinary in the neighborhood, explore properties in other countries such as US and UK and find the best parts for your sales pitch.

The third thing, that I was able to really make money from, is simply a pricing hack. When you search a property, Airbnb displays the base fare on the front-page. If you have ever booked a property, you may have noticed how your $50/night and 10 nights never add up to become $500. Instead, you’re always paying $750 or something. This happens because when you open the property, the pricing now includes price per number of guests staying, weekend pricing, cleaning fee, airbnb service fee etc.

Since I was only interested in rentals that were at least a week long, I set the minimum length as 7 days, and took advantage of the weekend pricing. I set the base pricing as $50 or about 20% lower than my competition. By doing so, Airbnb not only ranked me higher than my competition but I also looked more interesting and generated a higher clickthrough rate from my audience. My weekend pricing was twice as high ($100) as my base-fare and since the rentals were always week long, there was no way to avoid weekend pricing.

In the end, my pricing structure would sell 5 nights for $50/night, and 2 nights for $100/night cumulatively giving me $450/week or an average nightly rate of $65/night.

After taking the final pricing into account, I costed about the same as my competition, but appeared 20% cheaper, appeared higher in airbnb search ranks, and had a better click-through.

This is just one of the many ways you can take advantage of the Airbnb pricing system to generate higher revenue and occupancy rates than the rest of the neighborhood.

PS: This was only an experiment that I ran a couple of times and not something that I presently do.