Evan is the founder of Go PropertyHop, an Airbnb rental property management group. With the Coronavirus pandemic, Airbnb reservations have been canceled as businesses and individuals cancel their trips. This has hurt the profits of people doing Airbnb rental arbitrage.
But surprisingly, my own Airbnb properties have been doing well. In this episode, Evan, who helps me manage my Airbnb property, shares with us the different strategies they’re using to stay afloat at this time.
Go PropertyHop focuses on a short-term rental, mostly involving Airbnbs, and corporate rental channels. They cater to business travel leisure and are successful in the room to room rental business in the Bay Area and are expanding into other areas.
Evan helped me with a flip in Santa Clara that had gone terribly wrong after the market shifted. By converting it to the room to room rental model, he was able to help me profit off the property rather than sell it at a huge loss.
Short-term rental has its advantages because you don’t lose the opportunity to still show the property and sell it since there’s no long-term tenant living there.
An Airbnb offers business travellers the perks of paying for the price equivalent or less than a room in a motel while getting parking, a kitchen, and free WiFi.
By renting out every single room, you earn more than when renting out the whole house to one guest.
Another interesting benefit is that people who rent Airbnb rooms are much easier to please compared to those who rent an entire house and have too high expectations.
Occupancy rates are higher with room to room because even if you lose the reservation of one guest, you’d still have the reservation of the other guests for that period.
When the pandemic hit, Go PropertyHop saw a 55% drop in bookings as companies cancelled their trips. They decided to restructure right away and met with their cleaning team.
They purchased cleaning supplies such as bleach, alcohol, and even tissue before everything ran out. This way, they were able to increase their cleaning protocol to follow CDC cleaning recommendations.
While other Airbnb hosts weren’t able to stay on top of everything and blocked out their rooms, Evan and his team provided their cleaning team with supplies to keep them going out there. Even with the more comprehensive cleaning routine, the cleaning team agreed to work hard since they were losing bookings from other Airbnb hosts.
Evan included their cleaning protocol in their listing and that let travellers know that they’re doing their best to protect the guests.
Some people still need to travel for business even when there’s a crisis. Also, doctors and nurses prefer to rent rooms rather than go home and possibly put their families at risk. Evan thinks by providing much cleaner rooms at lower prices they are helping.
Strip malls and housing complexes are taking a hit. Tenants are asking for payments to be deferred since they’re not making money.
Investors are also suffering because they still have to pay their mortgage and not all banks are constitutional banks.
Evan thinks the government needs to do more. He believes the mortgage forbearance isn’t enough. People who can pay their rent or mortgage should still pay because the resources should be for those who desperately need it.
Before the Coronavirus hit, the syndication model was marketed as a no-fail method. But it didn’t factor in the possibility of a pandemic shutting down an entire country. Now, with people unable to make rent, investors have to face the people who pooled their money to buy the property and make the best of what’s to come.
Every hardship creates opportunity. Evan is talking to Airbnb hosts who aren’t able to manage their properties at this time. He’s giving them advice with their cleaning protocols and how to effectively run their business.
He’s also picking up properties that cater to their room to room rental model.
Since there’s more free time, they’re upgrading their internal system and onboarding a new property management system that allows them to integrate with more channels such as Booking.com, Vrbo, HomeAway, and Expedia.
They’re also integrating some data analytics to get numbers on the maximum daily rate and average daily rate of a property.
Their goal with the technology upgrade is to scale their business to handle more volume and be more efficient by streamlining their process.
They want to be able to provide their clients access to their own accounts and see the bookings of their property and their income and expenses.
With commercial and retail places getting hit the hardest, Evan thinks that there’s an opportunity to buy those properties at a good discount in the near future. As long as you have a good business model and things are done differently, he thinks it can work out.
Retail has been falling due to the rise of online shopping, which is making a killing during this pandemic. So putting up experience-based businesses like gyms in those places might be better.
Evan thinks people in the Airbnb business need to be proactive and do more. Since people aren’t travelling now unless they have to, it’s important to make them comfortable, be responsive to all questions, and attend to all the problems.
Short-term rental is in demand because of the perks it offers. So hosts have to step up and do more, even if they have to do more for less.
The residential property market is hyperlocal. Even if people lose their jobs, their area has a strong job base and good income. People who purchased homes in the last 5 years most likely will be able to find another job after this is over.
Buying a house is about long-term equity building. The market may go up or down, but as long as you have the money to buy a house, it shouldn’t be an issue.
It’s still important to be cautious when buying property and getting lending.
Do your calculation and make sure the income that your property will bring in can cover your debt.
For those doing master leasing, don’t be afraid to ask if the owner can drop the rent.
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