Why Short Term Rental Can Fetch Higher Yield

Serviced Apartment

Have you ever think of renting your property for a short term basis, to fetch a higher rental yield?

It can be as short as on daily rental, up to like weekly or monthly basis.

I can tell you there are lots of demand out there, looking for short term rental. But the inventory is under supply.

As a property investor, do you see any opportunities?

If you want to tap into this niche market, you can start to make a plan – perhaps your 2013 new year plan.

I have years of experience dealing with this segment of consumers, both clients from local and international.

I did explain a little bit on this matter in my website – http://www.jefferylam.com/kl-short-term-rental/

Even until today, I am still servicing this group of people. And, it is a pleasant experience to deal with clients from all over the world.

Towards the end of the year, each year, is a festive seasons, just like now! Most of the people is in their holiday mood and started to travel locally or overseas.

Do you stand a chance to get some business from those travelers?

Yes!

Nowadays, the spending habit of our consumers has changed. If they are coming to travel for a few weeks to months. They most likely will opt for accommodation such as Serviced Apartment or Serviced Residence.

 

Why Serviced Apartment / Residence?

  1. More spacious - 2 to 3 bedrooms with a big living room, dining area and a kitchen to settle their basic cooking needs. It makes them feel more homey.
  2. It is fully furnished that come with services like house keeping once or twice a week, WIFI, and condo facilities like gym, swimming pool, sauna and etc.
  3. More suitable for family staying
  4. You have a much proper place eg. dining area, for discussion with friends or business associates, while having a casual drink
  5. Some apartment are even pets friendly

 

The Opportunity:-

Fetch higher ROI
Eg: A 2 bedroom fully furnished apartment can fetch RM3000 per month if you rent on 1 year tenancy; but if you rent for RM250 per night, 1 month = 30 nights x RM250 = RM7500

If occupancy per month is just 60%, you are still collecting RM4500

Gross Return On Investment (ROI) Calculations:-
ROI = (RM3000x12) / RM500k* x 100 = 7.2% [Conventional 1 Year Tenancy]
ROI = (RM4500x12) / RM500k* x 100 = 10.8% [60% Occupancy Daily Rental]
ROI = (RM7500x12) / RM500k* x 100 = 18% [100% Full Occupancy Daily Rental]
*Bought the property at RM500k

Demand higher than Supply

Limited Serviced Apartments in town

Not many owner / investor willing to rent for short term

If you are smart enough, you know what I meant. Gotcha?!

All right, that’s the basic understanding and concept of Why Short Term Rental.

I will update this post again later when I have additional points to elaborate on. Because now I want to continue listening to my Christmas Songs….

Hooo hooo hoooo……!!!!

Wishing everyone Merry Christmas 2012 :)

Stay tuned by subscribing to my Email Updates below!

Comments

  1. ivy says

    Thanks for sharing another idea. Just a thought, based on calculation the return is higher. But is there a way we can gauge the demand? Also, will this method more workable for outstation or overseas aiming resort and holiday.
    What about risk? How to market it means to tell people your house is available for short term rent? If Developer take charge for us and provide guarantee return then can consider.
    I saw “mini hotel” in our neighborhood. In KV is booming very quickly, perhaps some demand is there. Outstation peple come and stay for few days etc.

    • says

      I can see there are lots of demand out there.

      As long as you have someone, can be friend, relative or the property management to take care for you, the property can be at anywhere – local or oversea.

      It is easy to do the marketing! You can:-

      1. Create a blog to upload all the apartment details and add in a contact form for the prospect to contact you
      2. Try out some short term rental portal, like iBilik, AirBnB and Roomorama. I personally using Roomorama. You can try to explore that at my website http://www.jefferylam.com, there is a Roomorama widget at the page sidebar
      3. List with your property agents
      4. Advertise in local newspaper classified and etc

      Developer’s GRR package is also another option,but that’s another scenario and strategy.

      Bare in mind, if you are doing this type of rental business in big scale, especially providing daily rate rental, you might need to obtain a hotel license.

  2. Janice Oh says

    Hi Jeffery,

    Thank you for your sharing. I personally use Abnb before, price paid is much cheaper than hotel. Anything else that we need to be awared before we go for the short term rental?

    Thanks and Regards,

    Janice

  3. jspang says

    I am not sure if this method is good for Penang or not. When our apartment is rented for short term or as a homestay, we will get complaints from our neighbourhood.

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