It’s no secret that cities around the world have been enforcing laws that have restricted Airbnb rentals. It was just recently that Airbnb announced that for the first time that they will restrict the number of days hosts can rent out their pads in two cities. One of those cities is Amsterdam where Jasper has his apartment. Because of this Jasper has made the decision to sell his place and buy multiple Airbnb’s around the world!
In this episode, Jasper talks about what he will be looking for when purchasing property in 2017!
Some of the topics covered:
New Airbnb regulations impacting hosts in Amsterdam
Jasper’s decision to sell his apartment
Conditions for a suitable pad
Condition 1: Price must be no more than 150 thousand Euros
- This price range excludes many Airbnb hot spots
Condition 2: Friendly legal conditions toward Airbnb.
- Are anti-Airbnb regulation likely to be enforced now or in the future?
Condition 3: Jasper’s personal like or dislike for the location
- Why a property in the Southern Hemisphere might be a good fit
Condition 4: ROI (return on investment)
- 10% is optimal
- 7-8% is acceptable
Condition 5: Real estate pricing outlook
- Little upside in Europe or the United states (in Jaspers opinion)
Condition 6: Jasper's existing contacts in the area
- Help with buying and maintaining the place
City in consideration: Santiago, Chile
- Why Santiago checks all of the boxes
Jasper’s weekly video about his journey:
Connect with Jasper
This episode is sponsored by Hostfully.com!
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Complete Transcript for Get Paid for Your Pad Episode 114:
Welcome to Get Paid for Your Pad, the definitive show on Airbnb hosting, featuring the best advice on how to maximize profits from your Airbnb listing, as well as real experiences from Airbnb hosts all over the world. Welcome.
Hosts, a great guidebook can make all the difference to your guests. My guidebook is made using Hostfully, a company that has a platform just for Airbnb hosts to create beautiful guidebooks. Visit www.Hostfully.com/Pad to get a special offer, a free consultation exclusively for Get Paid for Your Pad listeners.
Welcome, everybody, to episode 114 of Get Paid for Your Pad. Today, I'm going to talk about what my plan is for the next couple months, because as you may or not know, Airbnb has recently decided to cooperate with the local authorities here in Amsterdam and to help enforce the rules that the city has set for Airbnb hosts for renting out their entire homes, so the rule is that you're only allowed to rent out for 60 days in one calendar year, and this has been the rule for a while, but they never really enforced it. So there's plenty of people out here who are renting out their entire homes for longer than that, but now Airbnb is going to make that impossible because they're going to block the calendar after you've rented out for 60 days. It's literally going to be impossible to rent out on Airbnb if you have an entire home for more than 60 days.
Next week, I'm interviewing an expert on this topic, somebody who runs a short-term management company here in Amsterdam. We'll talk more about the rules and what exactly is going to happen on the Airbnb platform. I've already decided what my next move is going to be. The options that I have is, I could rent out partly on Airbnb and use some of the other platforms such as VRBO, HomeAway, Booking.com, et cetera, but in Amsterdam, Airbnb is a really dominant player. I think there's 80% of the market is covered by Airbnb, and so it doesn't seem like a very attractive option, plus it's going to be harder to manage because I'll have to deal with multiple platforms, and in addition, I wouldn't be surprised if the other platforms are going to follow in Airbnb's footsteps, because it seems unfair that they would ban one particular platform and not all the other ones. I feel like there's just not a sustainable, long-term opportunity here in Amsterdam to rent out a home on Airbnb, and so I'm going to sell my house and move somewhere else, basically.
Before I get into that, I wanted to talk a little bit about how I'm dealing with the situation, because I've gotten a lot of reactions from people around the world who have, you know, sent me e-mails and messages, which I really appreciate, and a lot of people seem to think that this must be a huge shock for me, because obviously I've been doing this for four years and I've used the money generated for my apartment, I've used that money to support my lifestyle, and it's enabled me to travel around the world. Losing that source of income obviously is a big shock, but I see it as an opportunity. You know, it's just something that I can't control, so there's no point for me being upset about it. It's just the way it is, and I have to deal with it. I don't really get upset about it. I just start thinking about, “Okay, well what's my best option right now?”
I recently read a book. It's called Obstacle is the Way, by Ryan Holiday, which I definitely recommend to everybody out there. He talks about how when something happens in your life that you initially think is not a good thing, let's say you lose your job, or what happened to me, or any other sort of obstacle that comes in your way. He talks about how in the end, that obstacle is a blessing, because it pushes you to be creative, to think outside of the box. Probably do something that's out of your comfort zone, and eventually that's what makes you grow as a person. There's a good chance that your life actually will improve as a result. That's kind of the mindset that I have. I see it as a great opportunity, to move on to maybe even greater and bigger things.
What's the plan? Well, first, I'm going to sell my place in Amsterdam. I'm in Amsterdam right now. I'm going to visit family for Christmas and New Year's, and I have an appointment with a broker tomorrow, and then I'm going to go through what the exact plan is for selling the place. I've never sold a house, so I'm not exactly sure what the procedure is, but right now the real estate market in Amsterdam is pretty hot, so it's not going to be very hard to sell this place. It's in a very popular neighborhood, and by the way, if you're interested in buying a two-bedroom apartment in the best neighborhood in Amsterdam, in De Pijp, and you don't want to do Airbnb, then feel free to reach out at Jasper@GetPaidforyourPad.com, and the house is probably going to go for around 400 to 450,000 Euros. That's my guess, but obviously we'll have to see. My plan is basically to reinvest that money in multiple properties around the world to rent out on Airbnb and reside there myself for part of the year, and that way I'll have multiple homes around the world, if you will, and I can decide where I want to be at what point, and that way I don't have to stay in a hotel or I don't have to rent short-term accommodations. I can just stay in my own homes around the world.
The question is, where am I going to go? Well, I've written down a number of conditions that my new locations have to fulfill in order to be a candidate. I've actually created a pretty big Excel sheet, and I'll go through some more of the details later. I've gotten a lot of questions from people who are also thinking about investing some money in an Airbnb somewhere around the world, so I think that it would probably be interesting for people to hear sort of what my process is, and what I'm looking at.
The idea is to at least have three homes, which means that every home shouldn't be more than about 100 to 150,000 Euros, because I'll have about 400 to 450, which is my estimate. The first condition is, in this particular location that I'm looking at, can I actually buy something for 100 to 150,000? That kind of excludes, I'd say, most of the big cities in Europe and also most of the big cities in the US, because for that price range, you can't really get anything in Paris, London, New York, San Francisco, Santa Monica, Miami. In those places, I don't think you can really get something for 100 to 150 unless it's beaten down or it's like in a very remote neighborhood, or if there's something else wrong with the house, basically. I'm probably going to look at the more off the beaten path locations, such as places in South America, places in Asia. Maybe even places in Eastern Europe.
The first condition that has to be fulfilled is, “Is it affordable? Can I buy something for under 150K?” If so, then the second condition is, “Well, can I rent out an Airbnb in that location? Is it legal, or if it's not, are the rules being enforced?” The reality is that in most locations outside of Europe and the US, there simply is no regulation, or the government or the local authorities have banned it as, kind of as a lip service to the local hotel industry, but they're not actually doing anything to enforce it. The question then really becomes is, if they're not enforcing it, what is the chance that they will do so in the future? To sort of estimate that risk, I'll be looking at, are there a lot of complaints about Airbnb? Is it in the media? Are people demonstrating against it? Et cetera. If no one really cares, then there's very small chance that the local authorities will really bother to put in any enforcement, because obviously that requires manpower, it requires money. They will only do that if there's a lot of resistance from the local population.
The third condition is, well, do I actually enjoy being in this location? I really want to spend some time in those houses, and so if I buy something in a place where I just don't really want to be, then it's not really an option. What are the locations that I'd like to be in? Well, I'd like to be in the US and Europe in the summer, let's say June to September, because then it's nice weather. Most of the time when I'll be staying at one of my places, it will be between October and May. I'm looking at places where the climate is really favorable during those months, because I don't really like the winter. It's a bit cold, and I kind of prefer the warmer areas of the world. October through May, where is it warm? Well, obviously around the equator, countries like Colombia, Panama, countries in Southeast Asia. It's always warm there, so it doesn't really matter what time of the year. There's also places more on the southern hemisphere of the world, places like Argentine, Uruguay, the south of Brazil, Australia, or South Africa. There it's summer, when it's winter in the US and Europe. Those could be good locations as well.
The fourth condition is, what does the rate of return look like? Obviously I would like to make a decent rate of return, or I should say, return on investments. If I can make 10%, that would be really great. If I can make 7% or 8% after taxes and costs, that would be still acceptable, but I don't really want to go much lower than that, for the simple reason that I will need this money to support my lifestyle. I do make some money with some other stuff, but not enough to support myself. I'll definitely be looking at the return on investments when I make this decision.
The fifth condition that I wrote down is, well, what does the long term real estate market look like? Do I expect real estate prices to go up in the future, or do I think that they might go down, or might be stable? That's another thing that is important, obviously, in making this decision. Now, this is a tricky one, because I don't have a glass ball that I can look in and that will tell me what the real estate prices in the future are going to do. What I can do is I can think about what's happening in the world, and how does that influence potentially what real estate prices could be doing in some areas? One thing that I think about is the fact that there's a pretty solid trend going on where people are starting to be able to work remotely. Now, I am myself an example of that, but I'm not alone. There's more and more digital nomads around the world. People who can work on their laptops from anywhere in the world.
If you're not fixed to a certain location, then why would you reside in the US or Europe where our living expenses are really high, and where you have to deal with really cold winters, if you could also spend a couple months in, like, Vietnam, Colombia, Argentina, or some other places where the cost of living is a fraction of what it is in the western world, and you'll also be enjoying the warm climate and the interesting cultures they have over there. I think more and more people will start doing that, so I think there's a lot of upsides in real estate prices, because obviously more people are going to visit those areas, and they have to stay somewhere, which will put an upward pressure to the price, especially if you own something that is particularly kind of customized towards the western taste.
Let's say I'd buy an apartment in Ho Chi Minh City, the capital of Vietnam. I know there's already a fairly substantial digital nomad community out there, so if you think about, “What do western people like?” Well, they like nice apartments, right? They like nice furnishings. They like everything to be very comfortable. There's probably not that many sort of luxury, quote-unquote “luxury” apartments in those places, so that's definitely something that I would be looking to do. Other than that, when I think about the real estate market in Europe and the US, well, I think they're both quite overheated. I do expect that prices are either coming down in the next couple of years or they might just stay stable or go up with inflation. I just don't really see much upside potential, given how much the real estate prices have already gone up.
I mean, I think for example in the US, house prices are higher than they were in 2008, before the financial crisis. The mortgage rates, they're a little bit higher now than they were a couple months ago, but they're still extremely low if you compare the rates over the last, like, 100 years or so. I just don't see how these rates could stay low forever. I don't think it's sustainable, so eventually they will go up, and as the mortgage rates go up, people can't afford to buy expensive houses, and that will put downward pressure on the prices of real estate. Now, mind you, I'm not a real estate expert. I've only bought one house in my life, so don't necessarily take my opinion as the truth, but these are just kind of my thoughts.
One common question that I get from listeners is, “What should I send to my guests before they arrive?” It's really common for hosts to send a long e-mail or text to guests with information about check-in and also local recommendations. A better way to solve this problem is by creating a beautiful online guidebook. For my guidebook, I use Hostfully. They have a great product that helps me send all the details to my guests, and it's built for Airbnb hosts and their guests. If you have a chance, check them out at hostfully.com/Pad.
The last condition that I'll look at is, “Do I have any local contacts in the area?” This is kind of important because it's really important to have somebody who manages your place. I've been very fortunate to have an amazing lady, who used to clean my house, to look after my apartment over the last four years, and she's done an outstanding job. I've never had to worry about anything. She was always there in case there was any problems, and that's just golden. It's so important to have that. It's not that easy to find somebody, so if I have some local contacts already, then that will make it easier for me to find somebody to look after my place. Also, it will make it easier for me to find a good place to buy, because in a lot of these places I'm looking at, I don't know how you buy a house there. There's a lot of complexities involved in some of these areas, and I'll go through the places that I'm looking at in a moment. Definitely having some local contacts will also help me with the buying process, and sort of researching everything.
The places that I am considering. First of all, I'm looking at Santiago, in Chile. It's very affordable. There's no area regulation regarding Airbnb at this moment. It's a place that I really enjoy staying. I've been there in 2011. My brother is married to a woman from Chile, and even though they live in Holland, her family still lives in Santiago, and they're an amazing family. They're a big family, so I have a lot of contacts there. I really enjoy staying in Santiago. It's summer there when it's winter in Europe and the US, so during November through February is a great time to stay in Chile. It's very affordable. They have awesome wines. Well, there's a lot of other reasons why you might like Santiago. You're very close to the beach, but at the same time you're also very close to skiing resorts. You could actually be on the beach and ski in the same day, which is kind of cool.
I've looked at some prices of houses and sort of what I could charge for an Airbnb, and it seems like there's a decent return of investment. Also, Chile is economically a very stable country. It's the most stable country in South America, I would say. It qualifies for all the conditions, the major six conditions that I went through. Just to summarize, let me just quickly go through them again. First of all, it has to be affordable. Second condition, is Airbnb legal, or is it not legal but they don't enforce it? Do I like to stay in that location? What's the return on investments? What's the outlook for the long term real estate markets, and do I have any local contacts?
Now, I've actually created an Excel sheet with a lot of other conditions, or just kind of like everything that I could think of that somebody who would invest in a certain place should think about. I'll quickly go through all the things that I wrote down, and sort of discuss whether Santiago is a good option or not. Just some, in the category “general stuff.” How stable is the political climate, right? Because, you know, if you buy a house in Venezuela, and suddenly the government decides to disown every foreigner, and you just lose your house. That could happen, right? Political climate should be stable, which is the case in Chile. What's the economic situation? This is important when you think about the real estate prices for the future. Well, Chile is a very stable and prosperous nation in South America. The government has very little debt. They have a lot of resources, and their economy is pretty free. There's a high degree of economic freedom, and there's very low corruption. Chile has definitely been growing very stably and very fast over the last 10, 15 years. I expect that to continue, so that's a good point.
Now, another question is, is it safe? Well, Santiago's definitely a fairly safe place. Depends a bit where you go, of course. You know, what type of visitors does this area attract? Are there a lot of tourists? Do I speak the local language? That's another point. Well, I do. Spanish. Are there barriers to invest for foreigners? Well, there's not a lot in Santiago. Is there a well-functioning judicial system? That's another thing that's important. I mean, I've heard stories about people buying a house in Thailand, for example, and then one day you return home and the locks are changed, and suddenly your girlfriend apparently owns the place, and you go to court, and good luck with that. The judicial system is pretty good in Chile, and that's something that's of concern as well. Another thing to think about is, are there any concerns regarding foreign relations? How easy it is to visit the area? Do you need a Visa? How long can you stay? Well, Chile's, it's very convenient. You don't need a Visa, as a European, at least, and I can stay for 90 days. That's great.
The next category is regulations. How Airbnb-friendly is this location? What are local regulations? Are the regulations likely to change in the near future? I've already talked about that. That seems pretty good. Then as far as investment, how much did the property cost? What are the costs involved in buying a property? Can I get a mortgage, and if so, what's the interest rate? Now, getting a mortgage in foreign countries is quite tricky, I believe. I haven't done a ton of research yet, but in any case, the interest rates tend to be much higher in countries outside the western world, so I don't think getting a mortgage is really an option unless I can get one in Holland, because here the mortgage rates are pretty low. My assumption for now is that that's not going to be possible for me, because I don't have a job.
Next category: Profitability. What's the demand on Airbnb? Are there other available Airbnbs around? How much can I charge? What's my expected revenue? What are my costs? How much income tax do I have to pay? Are there any other taxes, like property tax? Is there anything else that I need to be aware of? Also, how does demands vary over the different seasons? Because if you're, for example, let's say you're in Toronto, Canada, then the summer might be great on Airbnb, but when it's like minus 186 degrees, then there might not be a lot of people who want to visit during the winter. Santiago has visitors all year round because, like I said, in summer you can go to the beach, and in the winter, there's the ski resorts that are nearby. That's definitely a pro.
Last category that I identified is management. Do I have any local connections? Which I do. If I don't have contacts, is there short-stay management companies available that I can use? Which Airbnb tools are available? I really like using Airbnb tools. Like I use Beyond Pricing. I use the Hostly. I use Aviva IQ, and it's nice that these tools are available, but they're not always available everywhere. That's something to look at as well, and the last thing I wrote down is, and this is more kind of dependent on the property that you buy, but it would be nice if I could install a remote lock system so that I don't necessarily have to find somebody to do the check-ins. That's kind of what my plan is, and the research that I'm doing right now. As I've already said, I was looking at Santiago. I'm also looking at Colombia, [Metagene 00:25:17], Katrina, Cali, Bocota. These areas is very affordable and also a cool country to hang out. I'm looking in Ho Chi Minh City, Vietnam, and I'm also looking at Chiang Mai in Thailand. Then the last location I'm looking at is Panama City.
Those are the five locations that I'm looking at right now. I'll probably have to travel to these locations in the near future to do some more research on the ground, and if you're interested in following this journey, so if you want to know how I go from selling my house to setting up all these different Airbnb businesses around the world, well if you're interested, I have good news, because I'm going to document every single step that I take. In fact, I've already started. I'll be releasing a new book hopefully this year that includes, first of all, my journeys. I'll literally describe, like, where am I going? What am I doing? What's the experience? What are the challenges that I run into? Et cetera. The second part of the book will be a how-to guide. In the second part, I'll just put all the different challenges that I ran into, the tips and the advice that I have for other people who want to do something similar. It'll be kind of like a two-part book. It will be a cool follow-up to Get Paid for Your Pad, the original book that I wrote.
I'm also going to do a weekly video. I'm planning to do it every Friday, just to sort of update, do like a two, three, four minute video, just to give you guys an update on how everything's going. If you're interested in that, I will be posting that on YouTube and Facebook. I'll probably do smaller videos on maybe Twitter and Instagram. If you want to follow, you go ahead and subscribe to my YouTube channel. Just go to Airbnb Hosting, and actually I'm thinking about changing it to Get Paid for Your Pad just to make it easy. On Facebook, Get Paid for Your Pad, and Instagram as well, and Twitter. If you want to be updated on everything, you could also go to GetPaidForYourPad.com/AirbnbInvesting and you could sign up for news updates there, so if you fill in your e-mail, your name and your e-mail, then I'll send you regular updates about how everything is going. Also, I'll send you early bird options for the new book when it comes out.
That's it for now. I hope you enjoyed this episode, and next week I'll be back, interviewing somebody from Amsterdam, and we'll talk about the regulations over here. Thanks for listening, and I'll see you next time. Bye bye.
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