In recent years, homestay, airbnb business has seen a strong boom. According to Phan Cong Chanh, personal real estate expert, General Director of Phu Vinh Group, while many investors have won big with their homestay and airbnb investment, many others have made losses.
Mr. Chanh pointed out 5 major obstacles that homestay, Airbnb investors should beware of.
Home stay, Airbnb investors need a thorough understanding, actual experiences, and persistent effort to fight with obstacles ahead.
1. Oversupply
Along with the boom of the apartment market, the supply of homestays, Airbnb homes has also increased strongly and got bigger and bigger. In Ho Chi Minh City alone, in the last 3 years, at least 25,000 apartments have been completed each year. Large supply appears quickly in a short time, making the competition more intense. First of all, the rent is reduced, followed by occupancy. Oversupply is a huge obstacle that prevents homestay, Airbnb investors from earning profits.
2. Poor management
In term of Airbnb investment, investors have two options: buying a house to rent, or renting a house and then re-renting it. Those who buy house have to spend a lot of money but only get short-term rent. It takes them a long time to reach the break-even point and earn profits. If the financial management is not good, they may make losses.
Investors who rent a house and re-rent it for profit, they may not understand customers' tastes. Their business operations may be not as smooth as expected, so it’s difficult to reach the break-even point.
3. Personnel obstacle
In the new days of investment, many people are willing to do everything themselves to save costs. This may lead to work overload, disappointment and dispiritedness. But at that time, it’s also hard for them to find someone to work with and share financial burdens. Low revenue in the first days makes the investment not attractive to potential partners.
4. Small investment scale
In the first phase, the scale of investment is quite small, so it’s easy for individual investors to manage, but the profit is not as high as expected. In order to increase profit, investors have to increase investment scale by expanding their homestay, Airbnb chain. But along with the increasing scale, pressure also rises. Managing a real estate chain in many different places is also a big challenge.
5. Illusion
The homestay business model, airbnb with the glory of the winners will make the inexperienced individual investors delusive. They follow the crowd despite lack of preparation of knowledge, experience, finance, personnel, so they will give up quickly and surrender when facing difficulties.
Mr Chanh said the homestay, Airbnb business model is a battle full of hardships and challenges. In order to succeed, investors need a thorough understanding, actual experiences, and persistent effort to fight with obstacles ahead and gain profits.
