A view of the Farm Ville Cafe & Homestay in Kuala Selangor. NSTP Pic.
Catch Akmal Nizam Abdul Halim at the MyRumah Property Showcase at SACC Mall, Shah Alam tomorrow.

TEMPORARY home and vacation rentals are now in trend. A recent AirBnb statistic listed 20,042 active homeowners who were willing to share their houses with an income of RM29 million generated on average within a year.

However, many hosts/homeowners still opt to list their properties on other platforms like mycribbooking.com, booking.com, homeaway, etc and the amount has yet to be unidentified.

Before I proceed, let me clarify that the term “homestay” is widely misused by home-sharing entrepreneurs, as what they usually offer for their guests is just a space without them even living together and interacting with them.

Homestays must be registered with the Tourism and Culture Ministry. So, it will be an offence to simply use the term as the unregistered homesharing entities can be identified as guesthouses.

Why is there a rise in the emergence of these places? It is obviously a good way to earn the extra income and leverage the unused space that we have but I have learnt that there are three main reasons for this phenomenon.

NEGATIVE CASH FLOW

Due to the rising cost of houses, especially in Klang Valley, many units are priced not less than RM400,000. Even for a basic apartment, for a homeowner or an investor to serve their loans, he will actually have to pay at least RM2,000 while the maintenance fees can add and exceed that figure.

The truth is that for investors to rent out such houses according to their mortgage repayment is almost impossible and they can probably lease the houses for RM1,200 to RM1,400. That puts them in a loss because they have to top up at least another RM600 to RM800 monthly.

Imagine if they list their property in the homesharing platforms and could actually get to rent them out for RM200 per night on weekdays or perhaps RM250 per night on weekends? Let’s just take the total days of weekends, including public holidays this year, which are probably 163 days (45 per cent occupancy). The homeowners can actually earn a revenue of RM40,750, or RM3,395 monthly, which is more than enough to pay for their mortgages and with a lot of balance left. It is really worth it.

INTERNET FACILITY AND WIDE MARKETING PLATFORM

This is another huge factor because before the digital era and Internet of Things (IoTs) it would be difficult to promote the guesthouses offline. In fact, with the advancement of technology nowadays anyone can advertise their service at no cost via social media and a myriad of other platforms.

In brief, the success of homestays and guesthouses depends on the digital marketing techniques and many would agree that it is not about just investing in a property but embracing the current technology.

RISE IN DEMAND

When there is no demand definitely there will be no supply and this applies to the homesharing industry.

Generally, many customers or guests opt for temporary home and vacation rentals because they find it cheaper than the traditional lodgings and accommodations at hotels. Of course the homes can accommodate more people all at once thus making them a preferred choice for large families on holidays. This is also preffered by private companies to cut their cost.

CONCLUSION

Home rental is just one way for property investors to achieve a positive cash flow. Whatever it is, you have to really study and know the market before converting your house into a guesthouse to avoid any unforeseeable circumstances. Last but not least, do also abide with any laws imposed by the local authorities and resident’s society.

Akmal Nizam Abdul Halim is the chief executive officer of MyCribBooking.com which is co-developed by Malaysian Communications and Multimedia Commission. He will be speaking at the MyRumah Property Showcase which starts tomorrow.

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