11 Feb

Homework of the week – Business plan for Airbnb

Ideas which have been on the shelf for quite some time – passive income generating AirBnB

This week my mind is occupied with another dream of mine which I was preparing since about 3 years 🙂 setting up an AirBnB. 
I do not own a property suitable for AirBnB, but there is a property at our disposal currently which stays vacant for quiet some time. Beautiful location, facing the Marina with gorgeous yachts. So it is a pity that people who would love to visit the island of Malta don’t have the opportunity to stay at such an awesome location.

The current state of the flat is rather dated and there is no furniture besides two sofas in the living room. It is in deed as a dream come true, as I love decorating and furnishing challenges.

What has been done so far

I have already a bunch of items which I have been purposefully purchasing, when the opportunity arises (check my budgeting mistakes post here for the opportunities funds). 

About 3 years ago when I was attending an interior design class created the mood board of my dream future AirBnB. including color scheme and style of the place. I have collected things like high quality cutlery, plates, sheet sets, towels and quilts, even a high end coffee machine. Spending long hours of reading reviews of happy customers, to understand what made their experience unforgettable was really important for me. So I figured there are 3 things which I saw repeatedly in the happy customers post

  • great communication with the host, and small gestures of hospitality go a long way (arranging a transfer, refreshment drinks, info about great things to do around). 
    I swim in my waters there – I have been a tour guide for 6 years and I take pride and joy of having my guests feeling looked after. When I was receiving my training as a guide many moons ago, I was given a very valuable piece of advise – you might repeat the story of this place day after day, but don’t forget that these people have paid their hard earned money for experience, make them fall in love with the experience – they deserve it!
    • cleanliness, safety and practicality – we will have a look into the list of gadgets which I have prepared with regards practicality
  • location – when evaluating a property’s ROI potential we need to consider the competition in that area, we might have the previous two checked with A+ but if our guests are far from any point of interest, they would get bored. Luckily for us our location is awesome, it is actually pity we haven’t taken the steps earlier. The reason being is the following thing- we never thought we can have it automated.

How to get the Airbnb automated

I had a very sweet experience of hosting my first family at my previous flat, which was on the same street with the same stunning view as the property in question . And I was pleased to receive a perfume as a token of appreciation for all the effort I have put into creating a unique experience for them. Having said that, I was never involved into AirBnB on a long term basis and I had to spend some time researching what are the ABC of a successful AirBnB listing as a passive income. 

Choosing the right partners

Yes that is quite right the AirBnB project has to be a passive income generating one. With all projects going on we would not be able to deliver up to our standards, managing the property ourselves. Preferably with a ROI which pays for the refurbishment within a year. Till recently there were no experienced agencies to outsource the management. That changed already and there are few agencies on the market which have a good reputation and we can trust the project in their hands. Most probably we will do a partial involvement, depending on the services we negotiate.
Here is the plan 

1. Doing the math how much ROI do we expect from the passive income generating AirBnB

location of the potential Airbnb
  • Checking the options at the location, similar quality and capacity. And their occupancy this month and 3 months ahead. Like that we can calculate how much we can expect the property to generate per month 
  • Calculate how much the property would generate per year and if the digits are good we will roll our sleeves   
  • Finding the proper agency to manage it – right now there are few agencies on the market, charging between 10 and 15% of the bookings.

Here is what projections i could do based on my research. I selected properties based on:

  • location
  • entire apartment
  • sleeping arrangements 1 bedroom + sofa bed
  • 1 bath
  • amenities
  • I chose places with similar ambiance
I cropped some information, but spent some time researching properties of similar type

Returns Projections

2. Calculating the cost of refurbishment and amenities. 

This is the part which keeps me awake (in a good way) Creating unique atmosphere on a shoe string budget. I love that, I thrive on finding high quality items with a steep discount and placing them together as a jigsaw puzzle. 
Don’t get me wrong, I would not like to fill up a flat with cheep tacky furniture and charge a big bug for a stay. That does not play out good anyway. That is the reason it took so long. Piecing right things together for people to have a great experience, when you don’t have a big budget takes time, a lot of time. But then when the stars align 😉 and with the right partnership – things fall into place. 
I am still waiting for some quotes on that part – so expect part two of this post

3. Raising to the challenge of being a 2019 A list BnB – plan for automation, safety and ambiance

smartthings home automation

We need  a proper base to build an efficient and safe environment – efficient for our guests and of course for our bills. 
To achieve efficiency and smart home experience for our guests we need the following items:

  • Samsung smartthings starter kit – to set up the home automation hub and to build the base of our automation system
  • A self check-in door handle with Z-wave by Yale – a must have for automated experience. Plus no lost keys or keys taken with guests by mistake
  • Google home – good concierge 24/7 for our guests 
  • Smart TV with Netflix – entertainment for the tired souls after all day of snorkeling or sightseeing. Wifi connection and printer(to print boarding passes) – we already have some spare ones
  • Samsung SmartThings Multipurpose Sensor for the balcony door + Nest Smart Thermostat – to control A/C consumption when doors open

Safety, and other appliances:

safety kit list
  • First aid kit and a fire blanket. Fire extinguisher
  • Nest Protect 2nd Generation Smoke + Carbon Monoxide Alarm
  • A new efficient boiler. There is nothing more annoying for few guests to have to wait too long to take shower. 
  • kettle, toaster, iron

Extra gadgets for good ambinet 🙂

Roughly 400 eur on automation, a bit of a splurge but a cost effective one and creating an easier experience.

Expect Part 2

2 thoughts on “Homework of the week – Business plan for Airbnb

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