Soundbite: Make Money While They Sleep – Profit From Room Rentals

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Why would you rent out a room in your own home or investment property to a stranger?

Robert Kiyosaki suggests that our own home is definitely not an asset, because it does not put money in our pocket each month or year…in fact, it usually only takes money out of our pocket! Therefore, if we can find a way to change this imbalance, then we can turn our home into an income-generator…and so satisfy Robert’s cash in pocket asset test at the same time 😊

So, it’s an easy way to maximise earnings and leverage your own property to make money! Listen to in to find out why this is relevant right now.

Resources mentioned & used

Booking.com sign-up link here

#booking.com #collab #bookingyeah

Rent-a-Room Scheme from HMRC

Save Time, Save Money & Make Profit in your property deals with the Property Deal Tips service from The Property Voice

Link to the Podcast feedback survey

Today’s must do’s

List a room at home or in your investment properties by joining Booking.Com

Don’t forget to check out the new Property Deal Tips service to help insure you have great return on investment properties in your portfolio.

Subscribe to and review the show in iTunes…and while you are at it please help us to spread the word by telling all your friends too!

Property Investor Toolkit – here is the book link on amazon.co.uk & amazon.com

Get talking!

Join in the discussion, either here in the comments section below, or by emailing us at podcast@thepropertyvoice.net

Start a conversation on Twitter with us @PropertyVoiceUK or on our Facebook page

Transcription of the show

Hello and welcome to another episode of The Property Voice podcast. My name is Richard Brown and, as always, it’s a pleasure to have you join me on the show again today.

Today, I am joined on the show by Helen Pollack, as we have a discussion about renting a room, either at home or indeed in one of our investment properties. So, let’s get into the discussion to see how we can make money while they sleep and profit from room rental right now.

Property Chatter

Richard:

So, why would you rent out a room in your property to a stranger?

Robert Kiyosaki suggests that our own home is definitely not an asset, because it does not put money in our pocket each month or year…in fact, it usually only takes money out of our pocket! Therefore, if we can find a way to change this imbalance, then we can turn our home into an income-generator…and so satisfy Robert’s cash in pocket asset test at the same time 😊

So, it’s an easy way to maximise earnings and leverage your own property to make money! This podcast, produced in collaboration with Booking.com, is for newbies and also for people who are already renting out rooms, but want to increase listing visibility.

Booking.com is now reaching out to property owners and short-term room rentals in private homes, so I thought this would be the perfect opportunity to have a chat about the idea of renting out space by the night or week either at home and in our investment properties under the heading of Serviced Accommodation or Short-Term Letting.

We will share some tips on how to make it work and what my personal experience has been of this strategy. I have rented out space in my own homes and in investment properties. I am joined today by my colleague, Helen Pollock, who has been working with me on Serviced Accommodation properties for around eighteen months now and also rents a room out in her own home.

Considerations for the SA newbie…

  • Richard – why should our listeners consider renting out space at home?
    • Helen – Renting out a room at home is a baby step into property and a means to learn about Serviced Accommodation, even if you don’t have an investment pot. It’s a way to meet interesting people from all over the world for the host and a great way to get an authentic experience of a place for guests. Fundamentally we’re all for it, but it may not be for you if you’re not a people person.
    • Richard – Not only is it way to meet people and make a step into property investment, it can also help to grow an investment pot as well. In fact, the taxman will even help you to achieve this with generous tax-break. The first £7,500 in income from renting a room in your own home is completely tax-free, just look up the ‘Rent a Room Scheme’ on the gov.uk website, or follow the link in the show notes to find out more on that.
  • Richard – When should we start doing this?
    • Helen – As soon as possible! You don’t need much to get started. Get your room and wider property ready, because your Room Rental or SA business will live or die based on your reviews – especially in the early days. People may not expect five-star hotel service if you are just renting out a room in your home, but there are two things that guests are not willing to compromise on – cleanliness and comfort. Your room and any bathroom/s and kitchen/s that your guests will have access to must be spotless. We once found that out the hard way.
    • Richard – to elaborate
    • Helen – The other point is that you need to have decent and welcoming bedding and soft furnishings. Not only does the bed itself need to be comfortable (do you need a new mattress or a memory foam mattress topper, perhaps?), but you should invest in some high quality, hotel style-bedding…Dunelm Mill’s Fifth Avenue collection is a reasonably-priced place to start. You will also need at least two complete sets of bedding and towels, one to wash and one to wear. Two sets of high quality bedding and towels might seem extravagant, but they will be washed after every stay and will therefore need to be able to stand up to heavy use. You should also think about little extras you could offer to make guests feel special. Could you provide breakfast, perhaps showcasing local produce? Tea and coffee-making facilities with a range of nice teas and coffees? Bath/shower toiletries for the guests to use? A homemade cake, bottle of wine or box of chocolates? Not all of these things, obviously, but one of these will make the guests feel especially welcome.
    • Richard – I agree with you on these points Helen, in fact, often I have 3 sets of bedding…with one acting as a spare in case any get damaged or unusable for any reason. I also like to have a real-world experience with my own short-term rentals and so have slept in most of them, or have asked someone else to do so on my behalf at least. There is no better way of putting yourself in your guests shoes than by spending a night in the same space that they will be asked to do!
  • Richard – How should you get ready to market the room?
    • Helen – Now that you’ve got your room ready to go you need to take some great photos (smartphone pics will be fine) to make your booking platform profiles look truly inviting. Buy some flowers, make sure the room/your property looks soft and welcoming. Turn all the lights on and if you have any extra lamps, shine them at the room you’re photographing from the door to add light. It makes a huge difference to your pics. Take photos of everything your prospective guests will want to see – outside the property, the garden, the kitchen, bathrooms, living spaces, any of your special finishing touches. Take several photos of your room from different angles. Then pick the best of these and move on to creating profiles for your room. Mention channel management systems and software eg Tokeet
    • Richard – I remember when I have used the booking sites that having plenty of photos, inside and outside the property and even showcasing any local attractions or features does make a huge difference to the appeal of you property. There is nothing worse than just seeing a dingy photo of a sparsely decorated bedroom…we need to showcase the experience a little. Don’t forget to use keywords in your descriptions as well, secure or private parking, free Wi-Fi, flexible check-in and out, breakfast if you are willing to provide this are all highly sought after and so highly valued by your guests too! Also, don’t forget that with room rentals in particular, we are moving away from sterile hotels and guest house and into more of a home-from-home type of concept. People seem to like this idea and that’s why there is a growing niche for room rentals in people’s home, as well as other segments for full property rentals along with the hotel & B&B type of concept. The sharing economy has enabled some of this rapidly growing market to a large extent.

Richard – A quick word for those of you who are rent-a-room pros…

If you already rent out space in your home, you will know all about kitting out your property and what you need to do. It may be useful to you to know that Booking.com is active in the room rental market, a great booking platform with enormous reach is now at your disposal.

Richard – Helen, this is a people business more so than say standard buy-to-let, so dealing with people and customer service is very important isn’t it?

Helen – It’s fair to say that if you’re not really a people person, then room rentals or SA is probably not for you. You will need to give great customer service to your guests if you want to get good reviews. This will entail several points of contact with your guests. We’d recommend the following:

  • Message upon booking, thanking the guest and asking if they have any special requests/find out arrival/departure times.
  • Message upon payment, if made in advance (this cuts down no-shows)
  • Message a day or two before arrival, making sure all is well, giving directions etc
  • Asking in person if everything is ok just after arrival and in the morning after the first night’s stay if possible.
  • Message the day after departure asking how you could improve service.

The sharing economy is all about social proof and social or peer-to-peer recommendation. Many of your customers will leave reviews and you want to be making sure that you have picked up any problems and hopefully solved them before they leave a bad review. Bear in mind that if you do SA for any length of time you will get the odd bad review in all likelihood. There are some difficult people out there and there are also cultural differences and differing expectations to overcome.

There have been a couple of occasions where I have been quite cross with guests, but have had to keep calm and be professional. Over the summer, a guest stayed with us in Derbyshire and I spent 20 minutes on the phone to him, when he called me to ask some questions prior to arrival. We had a good chat, I recommended lots of places to visit in the area, good restaurants etc. I felt like we had struck up a good rapport, but then he went quiet when I contacted him after his arrival. I didn’t hear from him again until he gave us a bad review. He complained that the neighbours were nosey and there was no washing machine (we don’t say there is one) among other things. Full credit to Booking.com for publishing my lengthy, yet positive, reply which essentially left him looking like a bit of a tool. As in the previous case, if the vast majority of your reviews are very positive, the bad ones will not be in keeping and many prospective guests will disregard them. Be thoughtful and polite in your dealings with guests and try to put yourself in their shoes. Reply to reviews, good or bad, calmly and with gratitude and you’ll look like someone who is professional and caring, which are attractive qualities in a host.

Richard – OK, Helen…let’s share a couple of our personal experiences with room rentals and SA now shall we. It’s fair to say that in a small minority of occasions, things have gone a little bit rogue haven’t they?

One of the problems with room rentals and Serviced Accommodation is that it can on occasion be used by people with, well, shall we say dubious motives….

Helen – People often think that items of property will go walkies when you have strangers coming into your property, but we haven’t found this to be the case. With a standalone SA property, you really need to be furnishing it in a comfortable but fairly minimalist style. Most people don’t want there to be too much clutter or personalisation in a house rental. This also minimises the amount of nickable stuff! Bizarrely, the only things that have gone missing for us are two lilac throws that decorate the end of the beds! Not once but twice! The first time I called the guest and they sent them back after erroneously packing them up with their stuff. You do wonder how, though….I have never packed up something that big by accident, and I’ve stayed in a lot of places. Then a couple of months later, one of them has gone again. I called the guest and spoke to the family concerned, but they reckoned they know nothing about it. I have recently added a damage deposit to our profile on Booking.com to combat this potential problem, plus a mention in the small print.

Richard – I have a couple of stories that I could tell and Helen, I know you have more than you are letting on as well! But one story I will share is when a guest complained that the sink in their ensuite bathroom had collapsed under the marble counter in which it was mounted. They seemed most annoyed when they contacted me. Needless to say, I arranged for my handyman to pop straight over and take a look for them. His assessment of how the damage was caused was that the sink had sunk as a result of heavy weight and excess movement being placed on top of the counter. It took me a few seconds to realise that what he was saying was that they had probably had sex on the counter, which caused the sink to become detached. Oops!! This does bring me to the point of making sure you have the right insurance in place to cover breakages and theft, make sure you notify your insurer that you are renting a room out a home to make sure you are fully protected. Also, consider taking a deposit or have some wording that allows you to recoup the cost of anything that does get lost or damaged. It is not very common, but it can happen as you can see.

To put things into context, I have seen well over a hundred short-term bookings now and these sort of stories are very few and far between, so don’t let it put you off.

Richard – one of the biggest game changers of this new sharing economy is the ability to advertise your room or property to a wide variety of people. The method of promoting your room or property listing is through what is known as a Booking Platforms – so, Helen, help me out a bit here, how have we found them?

Helen – We’ve had experience of listing properties on multiple platforms and we are talking about this today because Booking.com – with something like 27m rooms worldwide and 20 years in business, is providing services for homeowners looking to rent out a room for very short term lets. This is a great idea, because Booking.com provides well over 90% of our SA bookings. People often think of AirBnB for SA, which has provided us with a handful of enquiries, but our experience has shown that actually, Booking.com brings us far more short-term rental bookings. TripAdvisor has brought us a few bookings and seems to be used by people looking for medium term rentals – we’ve had several enquiries for those.

Our experience of Booking.com has been very positive. The company’s systems are pretty intuitive and there seems to be a genuine drive to continuously improve them. Creating a listing is easy and you can control your house rules and booking settings so that your room rental and SA business is on your terms. We did encounter some issues with system clunkiness at the beginning, but that has subsided as the support team seemed to listen to their hosts and improve the system. A big plus for the property owner or host is that because Booking.com is so big, there is someone on the phone 24/7 who speaks your language and generally can sort out any issue you might have.

Richard – I have a saying ‘if it passes the Richard can use it test, then it gets my vote!’. I like the idea of what technology can bring, but it has to be user-friendly and intuitive. I can produce listings on both Airbnb and Booking.com, so that’s a good start! Both have the apps allowing you to manage listings and booking on the go as Helen previously alluded to. What I like about the booking.com platform is that we can decide whether to collect payment at the point of booking, separately, or even upon arrival / departure ourselves if we wish. I have also found the level of revenue-based listing improvement suggestion to be more prevalent with Booking.com. It does strike me as being more of a business generation tool rather than just a room listing service.

Helen: In terms of my practical experience of using Booking.com as a host, I find it really easy. I love the Pulse app, which is Booking.com’s smartphone app for hosts. I get a ker-ching notification sound when we get a new booking, message or review and that’s great. I can reply to guests immediately even if I’m out and about. In fact, I carried on managing properties while I was on holiday myself last August. It’s not too onerous, although taking payment has to be done from my laptop. One thing I like very much is the message templates available on the extranet website. That makes communicating with guests so easy, for those standard emails that you send before, during and after every stay.

One thing that is quite clear from the emails we regularly receive from Booking.com is that they have really thought about how owners can best to promote their listings and grow their SA business. We definitely don’t get as much help with this from TripAdvisor or AirBnB. This is very worthwhile and helps owners to maximise earnings. It’s an especially big help to newbies in the field!

In terms of commission, by far the most expensive and tricky platform to work out is TripAdvisor. The way that they charge commission is to share it between owner and guest. This makes working out special offers or non-standard stay pricing really tricky! AirBnB charges less to hosts than Booking.com, but they do charge between 6-12% to guests and certainly some people in the AirBnB community forums feel that this is not particularly transparent. We feel that the Booking.com commission charge is fair, bearing in mind the great support that they offer and the sheer scale of their global reach.

Richard – people often remind me that it’s all about the money or the business case with my property investing. Renting out a room or serviced accommodation is no different, we should do our sums and see if it all stacks up. By far the most compelling thing with room rentals is what is known as the occupancy or utilisation rate. Top hotels manage to achieve around 70% occupancy with their booking rates. What I like particularly about Booking.com is the sheer scale of their reach as Helen previously pointed out. In my opinion, if you want to get high occupancy levels from your room rental or SA business, then you absolutely have to be a part of the biggest show in town and that show is Booking.com.

Conclusion

Richard – if you want to turn your home into an income-generating asset, then renting out a room is an excellent way of doing this. As we said at the start, it’s a great way of dipping your toe in the water and getting going in property, whether or not you want to expand into more formalised short letting or serviced accommodation. I think we all would appreciate that renting out a room at home until now had limited options, with the likes of Airbnb.

However, with the massive scale and reach with its adept marketing engine behind it, Booking.com raising awareness in the homeowner room rental market will bring even more visibility for your listings.

If you’ve been considering renting a room out at home or short-term letting / SA more generally, now’s the time to do it. It’s Wednesday today – you could have your room ready and listed by the weekend and making you money. For those of you who are already using other platforms to rent out space in your home, you can go big by creating a profile on Booking.com and maximising your visibility and your earnings. It truly is a no brainer! Just go to join.booking.com to sign up! Alternatively, go to booking.com and then click on the button that says ‘List Your Property’ instead.

Hand-on-heart, I suggest having the best possible coverage is essential to drive up those all-important occupancy rates, so it just makes sense to have a presence in the biggest platform as far as I am concerned. If nothing else, then remember that the more people see your listing, the more likely you are of having your rooms booked out consistently.

Helen, I would like to thank you for joining me on today’s show and for sharing your experience of the various booking platforms.

Wrap up

So, there we have it…if you have space at home to rent a room, or already do rent out rooms on a short-term basis, then today’s show is for you. I am grateful to Helen for joining me today as he has a lot of hands-on experience using the booking platforms. As for me, well I have just completed a renovation in a property I have in Copacabana in Rio, so I thought I would put the list on Wednesday and start earning by the weekend suggestion that Helen made to the test right now as I am going to list it for rental on Booking.com for the peak New Year season.

That’s all for this week, and as usual, you can email me podcast@thepropertyvoice.net if you want to talk about anything from today’s show or more generally in property investing. Also, the show notes will be over at the website www.thepropertyvoice.net

But for now, all I want to say is thank you very much for listening once again this week and until next time on The Property Voice Podcast…it’s ciao ciao.

The post Soundbite: Make Money While They Sleep – Profit From Room Rentals appeared first on The Property Voice.

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