Sometimes you get a better bang for your buck if you invest overseas but you’re not quite sure as to what to do. How do you build that team? How can you trust somebody from overseas that you’ve never seen before? One thing is to invest in another state but now we’re talking about another country. How do you get familiar with the regulations and with the rules and how to actually run a business in a very successful way, especially when it comes to a platform like Airbnb?
Let’s figure out how to do it the right way. Today, we’re going to talk about Airbnb overseas, particularly, in Mexico.
We are going to be making a comparison of the before and after the pandemic. How was business before the pandemic and then how things changed afterwards?
Things obviously changed dramatically after the pandemic, not just for them but for everybody and they had to learn how to tweak a couple of things here and there in order to just basically stay afloat.
A lot of overseas business owners got all the Airbnb reservations they had for the season cancelled and they also wind up losing money because of what happened with Airbnb. The platform was favoring the customers in itself more so than the actual hosts so they wind up losing a lot of money. Some of those properties that they owned actually had a mortgage while some of them did not.
How did they adapt to these tough times?
One way for them to adapt was just to simply move money around from one property to another so that they could manage to meet their responsibilities, their financial responsibilities, with the bank and still be able to pay the mortgages and not default on those payments.
Some of these investors were mentioning that a few months later, they pretty much felt confident that they had come back on track. The only difference is the type of customers that they’re getting after that situation started. Before it was mostly people who were just traveling for leisure trying to get to know Mexico City, now they’re getting more and more people who are looking to work remotely.
This is a change that we’ve seen in the US where you know that you had the flexibility to work from home, you could work from anywhere. For example, if you live in New York, now you can get a bigger house in Connecticut or you can get a bigger house down in Florida. A lot of people are considering the fact that they can just simply travel all over the world and still be able to receive that paycheck without having to worry about showing up to the office.
The clientele that Airbnb investors in Mexico have been getting post-pandemic has been mostly professional people. Now those are the type of people that they’re catering to. Sometimes they travel individually or maybe are couples but sometimes they cater to families now who just simply take their children all over because school has also become digitized. Now, they can just simply log on to an online platform and also have access to classes as well.
What about the prices?
In terms of pricing, they have to adjust as well because everything dropped. Now because there’s very little demand, they have to figure out ways to attract new customers. One of those ways is by basically adjusting the premium that they were charging.
The nightly rates have actually decreased a lot but at the same time, they also realize that they need to learn the Airbnb algorithm.
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They noticed that every time they made an update to their posting, meaning the algorithm in itself of Airbnb is going to post or push their listing from the very bottom all the way to the top 20. Because, at the end of the day, there’s a ton of other listings out there. How do you differentiate yourself? How do you make the consumer look at your posting who could be 10 pages down the road versus the ones that are in the top 20? That’s in essence what they did.
They mentioned that every little change that you do to your post, call it changing a picture, call it changing the listing, or maybe making an adjustment like changing a rate of $200 a night to 199.99 also allow the algorithm to boost your post and, in essence, will make you rank at the very top because the way the algorithm sees it is that you’re making changes and you’re engaging with the consumer because there’s activity in your post in itself.
They also noticed that as there are other people looking at their posting, once they make those changes, there’s a higher likelihood to actually rent out your property because not only they’re engaging with you but also Airbnb tends to recommend that post because there are other people seeing it.
Properties on Airbnb: The digital war is here
The digital war is here to stay. The pandemic, what it did was to accelerate it and our hosts did their very best to actually just simply adapt and take advantage of the technology. They didn’t have to do anything overly expensive. In particular, they didn’t have to promote their posting, they didn’t have to pay for any advertising, all they did was just to make smaller upgrades as well.
They offer personalized services for people who are looking to rent out their Airbnb. For example, if they’re renting out to a family with children and they’re traveling and they’re arriving late at night and the family is requesting for groceries, they can actually help you stock up with any groceries that’s needed in the fridge in a way that by the time you arrive with your children, you don’t have to worry about finding a supermarket to get the necessary groceries for your children.
Customization
This is also another thing that Airbnb investors offer in addition to what was already offered. They rely heavily on the reviews but at the same time, they also take a really good advantage of the digitized platform that Airbnb has to offer.
How do they do market research?
How do you know what’s the right area to invest in? Assuming that you have done your Google research, you get an idea of what’s the right neighborhood for you to invest.
The next stage is “What is it that my client or my customer is going to need?” A very interesting exercise that they put in practice was actually to live in the Airbnb. Every time they get a new Airbnb available to add to their portfolio, they will decorate it in a way that it’s family-friendly but at the same time, it will cater to the majority of the audience as possible.
For example, if you’re renting out an Airbnb with a kitchen, they will live there a month or two just to make sure that they understand what the needs are. What is it that the neighborhood has to provide so that they’re familiar? If they like to cook, a couple of pots is not going to be enough. Maybe a couple of extra dishes or maybe a couple of knives and a water filter just to make sure that they have everything that’s needed.
Every single little detail that the host set in place in their apartment was the result of them residing there before they even rented it out so that way they understand what type of customers to cater that too and what is it that it’s needed for their customer.
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That’s their way to conduct their market research. Every single one of us has different ways to do it. The right amount of towels, the right amount of soap, the right amount of fish liquid soap. Whatever is it that your neighborhood dictates, or whatever is it that you think your client will need in that particular neighborhood, you can anticipate that by just simply residing in there a couple of months. That way you can have everything that’s needed readily available in the apartment or in the property that you’re planning to use for Airbnb purposes.
Having an AirBnB
Having an AirBnB involves coordinating scheduling, coordinating cleaning services, coordinating the families that are leaving and not bumping into the family that’s about to come in. It’s also coordinating availability if the families or if your client is actually showing up late. Sometimes people take night flights and they don’t show up until very late hours at night. How do you ensure that they get the proper access into your property in itself?
It’s obvious that you get a high return on investment but is there any other reason why you prefer to invest in Airbnb as opposed to all the other types of investments out there?
The customer doesn’t always pay or it doesn’t always pay on time. Airbnb contains the best of both worlds. It is a business that is active. The more active the business, ideally, you expect to make more money off of it. What the difference is that with Airbnb, you get to charge beforehand, you get to collect the money beforehand. Unless your client or your customer pays for the reservation beforehand, there is no way you’re going to book the apartment and make it readily available for them.
Rent and grow your Airbnb: It’s all about the clients
The hosts care more about customer service, they care more about the reviews, and the experience that the customer will get out of that state, and that Airbnb of theirs versus the amount of money that they could possibly be making. It actually sounded very similar to the concept of Amazon. Amazon, it’s all about the client, it’s all about customer satisfaction. The customer needs to be happy because if the customer is happy, then they’re going to come back. If they keep coming back to the same vendor, then the Amazon platform will keep boosting you and that’s in essence the same that’s happening with Airbnb.
The more positive reviews that you’re getting on the Airbnb platform, the more the algorithm is going to start pushing you so you can go ahead.
Attracting quality customers
At the end of the day, we all want to deal with people that are pleasant to deal with and not someone who gives us a headache. Especially if you’re renting out a property that’s fully furnished. Some of us we’re afraid that getting a bad tenant could destroy our properties and we’re only talking about the actual walls or the hallways.
With an Airbnb portfolio, you have to worry not just only about the walls but you’re also worrying about the table, the bed. Whatever furniture that you place in that apartment, that becomes in a way something that could be damaged and it could be a liability as well.
How do they manage that?
They do high-end properties that tend to attract a clientele that is willing to pay more. In their experience, when the client has the purchasing power to pay more, they tend to take good care of stuff because chances are, in their home they probably have something that’s better than whatever is it that they’re providing.
In order to attract more clientele, they ended up lowering the premium just so that it could become more accessible for other people who are willing to travel. That way, at least they can have some type of income, as opposed to just no income at all. Hosts are noticing that once they lowered the premium that they were charging, they realized that the quality of customers were not the same.
They were more careless and at the same time they demand more and they created some minor wear and tear damages, which comes with the territory, it comes with the business, but they were surprised to see that there was a big difference in the quality of people from before pre-pandemic at very high rates versus the quality of people that they were renting it out today, at a much lower premium.
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